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Thursday, 30 August 1928

Dr EARLE PAGE (Cowper) (Trea surer) . - As this is the sixth consecutive budget which I have had the honour of presenting to Parliament, I propose at the outset to make a brief general review of Commonwealth finance during that period. This will involve a comparison of the expenditure of the Commonwealth in 1921-22 - the year preceding that in which the present Government came into office - and the estimated expenditure for the present year.

The outstanding facts disclosed by such a comparison are the continuing burden of war expenditure, the heavily increased cost of invalid and old-age pensions, the effective action for the redemption of debt, the increasing co-operation of 'the Commonwealth and State Governments in matters of national concern, the encouragement of primary production, the expansion of the services of the Post Office, and the rigid control exercised over departmental expenditure.

In 1921-22, the expenditure arising out of the war was £31,337,000. In 1928- 29 it is estimated at £29,822,000. This expenditure has remained practically stationary for several years and must so continue for many years. On the other hand, the cost of invalid and old-age pensions has nearly doubled in the period under review, the increase being £4,620,000. These two items alone represent more than 62 per cent, of the total expenditure under Part I. of the budget.

A sound and adequate plan for the redemption of Commonwealth war and other debt was adopted in 1923, and has materially assisted in the maintenance of the financial credit of Australia on a high basis.

During this period the Commonwealth Government has adopted and pursued a definite policy of co-operating with the State Governments in such matters as the adjustment of the financial relations between the . Commonwealth and the

States, the co-ordination of borrowing through the Australian Loan Council, the redemption of States' debts, public health - with special attention to cancer, tuberculosis and venereal disease, federal aid roads, migration, and general development. Commonwealth revenues paid to the States have risen from £7,035,000 in 1921-22 to £11,035,000 estimated for 1928-29, an increase of £4,000,000.

At the same time, the Commonwealth has used its constitutional power to grant bounties in respect of primary production in order to assist growing industry in such a way that it may be placed ultimately on a permanent self-supporting basis.

The development of the Post Office is a notable feature of Commonwealth finance. By the judicious expenditure of loan moneys, additional and improved services have been given to all sections of the community. In 1921-22, the working expenditure of the Post Office, including debt charges, was £8,189,000. In 1928-29, it is expected that this expenditure will reach £12,889,000. The revenue from the expanded services has, however, so increased that, notwithstanding a reduction in charges, a small surplus is anticipated.

The rigid control of departmental expenditure is evidenced by a comparison of the estimated expenditure in 1928-29 and the actual expenditure in 1921-22. The cost per head of population of the departmental expenditure in 1921-22 was 10s. 7d., whilst in 1928-29 it is expected to amount to only 9s. l0d. per head. Despite the costs of new services such as administration of Bankruptcy and the Department of Markets, and the increased expenditure due to expanding business, such as that of the Department of Trade and Customs, the control of departmental expenditure has been so effective that the cost of administration over all shows a decrease of 9d. per head as compared with the year 1921-22.

Notwithstanding this excellent record, the Government is continuing to explore other avenues in which expenditure may be reduced. During the year it has undertaken a complete overhaul of all Government expenditure and has secured the co-operation of departments. in a continuous economy campaign beginning with Departmental Committees, which, working in co-operation with the Public Service Insspectors in the several States, will deal with all phases of administration and organization. The reports of these committees are dealt with by a Central Advisory Committee, which will make recommendations to the Government from time to time.

The estimated expenditure out of the ordinary revenues of the Commonwealth in 1928-29 is £9,058,000 in excess of the actual expenditure in 1921-22. Of this increase, £4,000,000 is accounted for by the payments to the States and £4,620,000 by invalid and old-age pensions- ra total of £8,620,000. These two items of expenditure have been made in accordance with the policy of the Government, which has already been endorsed by the people or accepted by the States of the Commonwealth. The other variations in the expenditure in the period under review are not of great significance and are not out of proportion to our increased population and development.

A similar review of the revenue discloses a greatly increased yield from indirect taxation and substantial reductions in direct taxation. The revenue from indirect taxation in 1921-22 was £27,630,000. In 1928-29 the estimated revenue is £43,300,000 - an increase of £15,670,000. Direct taxes yielded £22,049,000 in 1921-22, and are expected to yield £15,110,000 in 1928-29- a decrease of £6,939,000. The net increase from taxation as a whole is estimated at £8,731,000.

With the unavoidable expenditure which existed in 1921-22, and still exists in 1928-29, and the additional expenditure which has since become necessary, through the development of the Commonwealth and the establishment of progressive social reforms, a decrease in the total revenue from taxation could not be looked for. An entirely wrong impression, however, is gained if the weight of taxation is measured without regard to the movements in production and population, which, after all, are the bases on which taxation rests.

In the year 1921-22, when our production totalled £344,302,000, the taxation amounted to £49,679,000, being 14.42 per cent, of the value of production. In the year 1926-27 - the latest year for which production statistics are available - the production had increased to £446,874,000. In the same year £58,995,000 was collected from taxation, representing 13.2 per cent, of the value of production. Thus the burden on production has decreased although the nominal amount of taxation revenue has increased.

The second test of the weight of taxation is based on population. On this basis the taxation per head in 1921-22 was £9 0s. 4d. The estimate for 1928-29 is £9 4s. 4d. In the same period the payments to the States out of Commonwealth revenue increased by £4,000,000. These additional payments to the States have to that extent obviated additional State taxation. Had the payments of Commonwealth revenue to the States remained stationary, the taxation per head in 1928-29 would be estimated at £8 lis. 8d., as compared with £9 0s. 4d. in 1921-22.

During the period under review, substantial remissions of direct taxation have been granted. These have been made possible by the general buoyancy and growth of the revenue from indirect taxation. The temporary financial stringency that characterized the year just closed was, however, reflected in the yield of customs and excise revenue, which failed to reach the estimate, and as a result the revenue account of the past year closed with a deficit.

The YEAR 1927-28.

The transactions of the Consolidated Revenue Fund for the year 1927-28 may be summarized thus : -


Further consideration will be given to the deficit when dealing with the anticipated revenue of the new year.

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