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Wednesday, 21 May 1980
Page: 2962

Mr DOBIE (COOK, NEW SOUTH WALES) - I draw the Treasurer's attention to the recent campaigns that have been conducted by such organisations as the Australian Automobile Association and the National Roads and Motorists Association in which they have urged the Government to earmark revenue from the crude oil levy for funding additional road grants. Is the Treasurer aware of these campaigns? Can he indicate to the House the Government's attitude to this campaign and, in fact, to the whole question of hypothecating funds for particular expenditure programs?

Mr HOWARD (BENNELONG, NEW SOUTH WALES) (Treasurer) - As it happens my attention has been drawn to the campaign conducted by, amongst others, the National Roads and Motorists Association and the Australian Automobile Association in the interests of obtaining an increase in the Commonwealth's provision for roads. Whilst I make it clear at the outset that I can understand, as indeed I am sure all members of this House can understand, the interest of many organisations in securing the greatest possible support for road building in Australia, I also make it clear in reply to the honourable member for Cook that the Government does not accept for a moment the principle of earmarking or hypothecation in relation to raising revenue and spending money.

We reject that concept for two reasons. If it were adopted in the manner urged upon us by bodies such as the NRMA we would reduce, to a very major extent, the flexibility available to governments in their budgetary planning. If, for a moment, one thinks of the implications involved, one can understand why that statement is correct. There are many areas where it simply is not possible to match revenue and expenditure. For example, what revenue would be earmarked specifically for the provision of funds for education? What revenue would be earmarked specifically for many areas of health? What revenue would be earmarked specifically for many areas of social security? It is very convenient for some organisations to say that, because motor vehicles consume large amounts of fuel, it follows, therefore, that it is logical and proper that oil revenues be earmarked for the maintenance of roads. If one extends that principle to other areas, one finds that it falls down. On the basis both of practicality and of a major reduction in budget flexibility, governments of both political persuasions in this country over the years have rigidly rejected the concept of earmarking. The Government again rejects it so far as the campaign on roads is concerned.

While I am on the subject of roads I remind the House that, as announced last week by my colleague the Minister for Transport, there will be an increase of 1 1 per cent next year in the Commonwealth's provision for roads. It is true -

Mr Kerin - Not for rural roads.

Mr HOWARD - I am glad to hear the honourable member for Werriwa interjecting. It is true, as has been pointed out to us, that spending on roads by State and local government has increased at a faster rate than has Commonwealth direct spending on roads; and so it ought to. It happens to be true that in the five years that this Government has been in office it has increased massively the untied money available to State and local government. If the Government had not spent that money on roads at a much greater measure, it would have fallen down in its job. The provision of general revenue funds to State governments in four years has increased by 74.6 per cent, and to local government by no less than 177.5 per cent. Against those sorts of figures, is it any wonder that the expenditure on roads by State and local government should have increased at a somewhat faster rate than has direct Commonwealth spending on roads? We have discharged our responsibility in this area by maintaining the real level of our spending for next year and, through our federalism policy, enabled the States and local government, with their greater access to untied moneys, to spend more on roads.

I make the final point that some of the claims that have been made on the Government for roads expenditure and, indeed, in a number of other areas, reflect some unreal expectations held in the community as to the financial flexibility of the Government. Some people speak as though the revenues available from crude oil have totally removed all the Government's budgetary problems. The figures are exaggerated. The Australian Automobile Association has mentioned a figure of $3, 000m when in reality the levy receipts are $2, 500m. As every honourable member in this House knows, $2, 100m of the additional $2,500m was provided for in the Budget last year. For very convincing monetary policy reasons, the additional revenue was applied towards a reduction of the deficit. I conclude by saying that those who argue that that revenue should be earmarked for a particular purpose are, in effect, arguing that government expenditure on areas such as defence, social security, pensions, and the responsibility of this Government, where possible, to reduce the deficit and to reduce taxation, should be given a lower priority than the case that they themselves are putting.

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