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Tuesday, 11 September 1984
Page: 1062

Mr ROBERT BROWN(12.56 a.m.) —First of all, I endorse the sentiments that were expressed by the Treasurer (Mr Keating) in relation to the contribution made by the shadow Treasurer, the honourable member for Bennelong ( Mr Howard). I thought the comments of the honourable member were both gracious and generous, as the Treasurer indicated. I am sorry that I am not able to say the same for the honourable member for Denison (Mr Hodgman) who has just completed his remarks. If he had taken the opportunity to listen to some of the discussions that have taken place in this Parliament since the Budget was presented I am sure he would have heard the Treasurer referring to the need for members of the Opposition to distinguish between the tax base and tax rates. It is clear that the honourable member for Denison has not done that. Either he did not listen to the debate or he did not understand what the Treasurer was talking about. When he refers to the rapid significant increase that has taken place in personal income receipts and assumes on the basis of that that there has been an increase in tax, he is confusing precisely those two things to which the Treasurer referred; he is confusing the tax base with tax rates.

There has, of course, been a reduction in the impact of tax rates, and the increase in personal income tax revenue to which the honourable member refers results from the fact that for the first time for a number of years the Australian economy has started to grow. Why would there not be an increase in income tax receipts when we have had an increase in employment of something like 260,000 since this Government came to office? Of course there will be an increase in personal income tax receipts under such circumstances.

I also want to make mention of the fact that probably for the first time- certainly for the first time in my memory-a debate on the Budget has concentrated around the forecasts, the prophecies, the estimates, the furphies and the misrepresentations related to the Budget which is to follow. The debate on the Budget for this year has revolved around all of the forecasts that members of the Opposition have been making about the Budget for 1985-86-the next Budget. Of course, they have found it necessary to do that because this Budget which was introduced by the Treasurer and which is in the process of being considered by the Committee of the Whole has commended itself not only to the Labor movement throughout Australia, as we might expect, but also to all areas of responsible, objective and competent thinking.

One of the matters of concern which has been raised by the Opposition in connection with the question of the effect this year's Budget will have on future Budgets is related, of course, to the increase in spending in 1984-85. The real increase in outlays is 6.1 per cent. But if we discount that 6.1 per cent for the impact of Medicare and the growth in public debt interest, for which we were not responsible and which this Government inherited from the previous Government, the real growth in outlays this year is brought back to about 2.3 per cent. It has been pointed out that that 2.3 per cent increase in real outlays for 1984-85 represents only about half of the average rate of real increase in outlays for the 10 years prior to 1983-84. So there is no need at all for the Government, the Opposition or the Australian community to be concerned about the future impact of those details of the Budget for this year.

Of course, the key to this whole question is real economic growth. If we have real growth of something like 3 to 4 per cent in future years, we are going to find that the 1985-86 deficit will be unchanged in nominal terms. Of course, in real terms it represents a significant reduction. For every percentage point that we can get economic growth over 3 to 4 per cent we will be able to reduce the cyclical deficit by about $500m. So there is no doubt that in the future the Government will find itself in a very secure position as far as its Budget strategy is concerned.

The extent to which we can actually deliver the growth that is necessary in order to maintain the deficit at a sensible level and to start hauling it back, reining it back further than we have already, should be apparent to anyone. After all, we inherited a rate of growth for the previous 12 months of minus 2.5 per cent and within the space of 12 months of this new Government, the Hawke Government, with the policies introduced by the Treasurer, we were able to turn that situation around completely so that June quarter on June quarter we were able to achieve the dramatic increase in economic growth of 10 per cent and year on year we were able to achieve a rate of real growth of 5.5 per cent. Those things were achieved in our first year. The momentum of that real growth will be maintained even taking into account a forecast of some marginal reduction in the rate of real growth for the coming financial year because some of those one-off developments which contributed towards it last year will not be repeated. In the light of that level of growth being maintained all of the concerns that have been expressed about this year's expenditure and this year's deficit and the impact that that might have on next year's Budget can immediately be dispensed with.