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Thursday, 22 September 1983
Page: 1196

Mr SINCLAIR(5.15) —I was interested to hear the contribution of the honourable member for Flinders (Mr Chynoweth). I think it unfortunate, however, that the Minister for Science and Technology (Mr Barry Jones) behaved as he has in recent weeks with respect to the Australian National Animal Health Laboratory. I am delighted to hear that it seems as though common sense may yet prevail and that the laboratory will be able to undertake those very necessary functions which the Australian primary industries so sorely need. One only hopes that the allocation of funds now necessary to enable the laboratory to function is provided in the Budget and that today's explanation by the Minister for Science and Technology is not yet another attempt to prevent that very excellent facility at Geelong opening and proceeding on schedule. I was delighted that the Prime Minister (Mr Hawke) intervened as he did to ensure that the dispute between the Minister and Dr Wild of the Commonwealth Scientific and Industrial Research Organisation was resolved. Dr Wild is a very excellent scientist whose advice has been valued by successive governments.

I second the amendment moved by my colleague the shadow Treasurer to the second reading motion. There is little doubt that this Budget has created concern in the two areas which I see as being of prime importance for the recovery of the Australian economy. The first is the extent to which its provisions will generate job opportunities for Australians and the second is the degree to which inflation, as a result of the high deficit and the direction of the expenditure in the Budget, is likely to be increased at a rate which will deny Australia marketing opportunities of competing competitively with those countries with whom we, a major exporter, need to trade. As far as jobs are concerned, I think the whole tactic of the Government in the development of this Budget is highly suspect. It seems to me that the economic theory which suggests that the prices and incomes accord will give the certainty of more jobs to those who are unemployed is good only so long as the accord survives. Indeed, that has already been indicated by the Treasurer (Mr Keating), by the Prime Minister, and by those within the Government who have predicated the whole of their forecasts for the future on the stability of that accord.

Of course, the accord itself is extraordinarily suspect. I think it is of interest that in the edition of Australian Business published this morning the Minister for Housing and Construction (Mr Hurford), who is at the table, was quoted as expressing his fears that the Government's target rate of housing may fall short because of increased costs flowing from the building industry agreement. We all know that the accord is threatened as a result of the housing industry pay settlement involving increases of $17.60 a week. We know as well that increases have been applied in the oil industry and for food processing workers. They have all been disguised as allowances. We are told that they really do not affect the accord because they are not wages.

I want to direct my attention to the general state of the Budget as it affects not only the work force at large but also several people within the work force who I think are particularly disadvantaged. I think we also need to remember the manner and form of the Budget's progressive development. As honourable members will recall, we had the National Economic Summit Conference. I do not think any of us who participate in various forums around Australia at a political and non- political level could have seen a greater snow job as far as the business community was concerned. I think it is very sad that those in business were not listened to and that scenario C, to which the Leader of the Opposition (Mr Peacock) referred earlier today, was not accepted. Of course, the product of the National Economic Summit was that the preferred scenario for the Government was that scenario least likely to contribute more jobs in the community. Equally, it is the scenario that is least likely to provide for those in employment a real increase in their living standards. The difficulty of this Budget, and the product of that earlier National Economic Summit, is that economic strategems have been developed which are not likely either to provide more jobs for the Australian people or to improve the living standards of those in employment, unless on the other hand the prices and incomes accord sticks and unless on the other all of the fringe perks and lurks that are now emerging as the way by which the accord will be broken are in some way removed or at least not allowed to spread.

With regard to the economy, when the Government came into office it is true that two particular features made our economic performance appear far worse than it had seemed such a short time before. They were the deterioration of world economic conditions, with the state of the United States economy and with talk of very high unemployment in Europe and in countries such as Canada-which in some provinces had levels of unemployment as high as 19 per cent-and, of course, domestically the very severe drought. As a result of those two features, we suffered a level of unemployment that was totally unacceptable. We also saw an increase in inflation which prejudiced the opportunities of private business to operate profitably. From the previous Government's point of view we certainly were intent, however, in our 1982-83 Budget not only to contain inflation but also to generate opportunities for the private sector of business so that it could generate the jobs which I am afraid this Budget will fail to provide. We also, of course, provided generous drought assistance. We recognised the significant problems suffered by primary producers around Australia and the difficulties of those who were the generators of wealth. We understood the problems of the mining industry and were intent on creating an economic framework within which the community could not only generate new jobs but also overcome the economic depression from which it suffered.

Following the National Economic Summit honourable members will recall that the May mini-Budget was announced. It was in the May mini-Budget that we started to see the first of the imposts which, when taken in conjunction with the product of the Budget which we are now debating, have led to significant discrimination against a number of very sensitive areas of our community. As I say, we have seen discrimination which I do not believe will either enhance employment opportunities or lead to the containment of inflation, and hence the maintenance of real living standards for those Australians in work or for their families. Three sectors seem to have been particularly discriminated against. These include the rural community-I will say something about the imposts that have affected it-and the aged. There is little doubt that the specific measures undertaken against the aged are not only discriminatory in the extreme but also completely contrary to the national superannuation scheme which on occasions we are told by members of the present Government they are intent on developing. The third area is the education of young people.

With regard to the rural community, there is unfortunately a long list of measures which has prejudiced the ordinary processes of those in the rural sector. What is worse, of course, at a time when farmers are recovering from drought, is an inevitable delay between the rain and the time that they receive their first income. Those who have anything to do with rural electorates will know that while there may well be a potentially excellent crop, the extent to which that crop has been affected by rain, rust and the fact that it has not yet been harvested means that there are significant uncertainties ahead. But this Government has set aside all of those concerns. In both the mini-Budget and this Budget it has taken a series of steps which will reduce the capacity of the rural community to contribute to the domestic economic recovery. Everybody knows that while a lot of money may be generated as a result of the wheat and grain harvesters in the agricultural sector, very little of that money remains in the cockies' pockets. A very large percentage of it goes either to State or Federal governments or to the transport system.

Mr Lloyd —Too much.

Mr SINCLAIR —Of course, as the honourable member for Murray suggests, far too high a percentage is spread. It also goes to contribute to generating employment opportunities not only in country towns and cities but also in our major metropolises. Those same farmers are major consumers. They buy motor cars, tractors and tyres. They buy all the products necessary to sustain agriculture. Yet this Government, in this Budget and in the mini-Budget, has deliberately taken steps to reduce the capacity of those in the rural community to survive and to enable a revival of the Australian domestic economy. That is one of the highly suspect areas of the Budget stratagem to provide more jobs.

The mini-Budget gave a reduction in general depreciation allowances; a removal of the tax incentive from income equalisation deposits; an increase of 2c a litre in excise on aviation fuel; the abolition of the special depreciation allowance for petrol storage; the abolition of the in-out opting provisions of the tax averaging scheme; a decrease in the amount payable under the petroleum pro- ducts freight subsidy scheme; and increased interest payments charged on Telecom Australia and Australia Post borrowings, which resulted, of course, in higher telephone and postal charges. Since then further adjustments have been made by Telecom which mean that for the first time in rural areas local people are called on to pay for local calls at a timed rate. Other measures contained in the mini-Budget were the suspension of parts of the aerodrome local ownership plan and the termination of the home deposit assistance scheme and the housing interest income tax rebate scheme. There was also a reduction in expenditure, of course, in regard to the development of the Alice Springs-Darwin railway line. On top of that, the Budget contained a number of other measures, all of which were directed at the rural community. Of course, many of them will have not only an impact directly on the rural community but also are completely contrary to the undertakings given by the present Prime Minister and members of the present Ministry prior to the last election.

In this Budget only $20m was provided for wool promotion in 1983-84. The wool industry is going through a period of increased competition from synthetics. We are all aware of the general effect of the deteriorating price circumstances of the oil industry and, as a result, the extent to which the synthetic alternatives are becoming more price competitive. As a result, the lowered amount of contribution to wool promotion lessens the opportunity of the wool industry to compete and lessens the opportunity of preserving what could be a significant increase in wool earnings which, in turn, would generate jobs and flow to the rest of the community. As I say, the Budget provided only $20m for wool promotion instead of the $28m promised by the present Minister for Primary Industry (Mr Kerin) before the election.

The Budget provided only $1m towards the national soil conservation program instead of the promised $4m in the first year. Honourable members will recall that the excise on fortified wine which has just been changed still leaves a totally unreasonable impost in the manner of its application. It marks, like the other two changes in the Budget since it was introduced, what I see as the inevitable uncertainty that this Government is intent on generating in major productive sectors of the economy. The excise may well now have been reduced and it could well be that the industry is better off than it thought it was; yet it is incredible that in the presentation of the reduction we are told that the amount the Government expects to take from that excise is about the same-about $ 13m this year. How could that possibly mean that the industry will be any better off?

Mr Fisher —Just a slower death.

Mr SINCLAIR —As the honourable member for Mallee suggests, it only means a slower death for those in the wine industry. The Budget provided for a doubling of the cost of export inspection charges for the rural industry from $18m to $ 36m-we all know what that means for those involved in the cattle industry; an increased excise on manufactured tobacco; the cutting back of the petroleum products freight subsidy scheme; the removal of tax concessions for clearing and cultivating new land and swamp drainage; removal of the sales tax exemption for oils and lubricants; an increase in and indexation of the excise on petrol and diesel fuel; and so on. That is an incredible list of specific imposts affecting the rural community.

As I say, not only the rural community but also the aged have been affected by the removal of the means test which occurred in the mini-Budget. Uncertainty has been generated as a result of the introduction of an assets test; we also had the superannuation tax and the uncertainty of what that would mean. The other area of concern is schools. The discrimination that this Government is introducing against independent schools will significantly prejudice the opportunity for many people in rural areas to give their children the same education that is enjoyed by every other citizen in this country. Secondary schooling is not available as readily in the bush as it is in the city. Many children have to leave home, go away to the city and board. The changes that are being introduced by this Government are going to deny many children the opportunity to receive a normal secondary education, and that is a disgrace.

In another area of prime concern changes have been made which I see as the beginning of the end of the effectiveness of Australia's defence capabilities as a result of the changes in budgeting provided by the Treasurer in his Budget of 23 August. The short-sightedness of the Government will, in my view, result in serious problems by the end of this decade and into the 1990s. A close scrutiny of the defence allocations highlights some frightening prospects. The forward spending on defence has been slashed and the Government is only honouring those capital commitments that we undertook. It would seem that the Government has failed to recognise the long term effect of its decision. It has failed to understand that without additional funds being provided for capital acquisitions for the Services manpower and operating costs will be pruned and the inevitable result will be a reduction in our defence capabilities.

The Government has failed to realise the long lead time-up to eight years- needed for buying major equipment. No amount of catch-up funding by a future government can ever recoup the time lost by the inaction of this Government in this Budget. Yet it is said that the Minister for Defence (Mr Scholes) did well in the Budget. Pity help us if he had done badly. There is no significant new defence expenditure in this Budget. The defence shopping list provided in the Budget Papers totals about $1,100m. It makes it clear that all of that sum is for the tactical fighter, the FA18, the follow-on destroyer, the FFGs, the Orions, the Pave Tack for the F111 and so on. Only $1,025m of this sum is actually provided in the appropriations. As the Budget Papers point out funds provided are in fact below the total obligation level. It will be necessary to recoup $83.7m in Supplementary Appropriations or to take it out of funds provided for manpower or operating costs. The only alternatives would be deferring payments through foreign military sales, rescheduling some other payments or if the exchange rate moved in Australia's favour. In any event that is not the basis on which to allow for future acquisitions as there is no flexibility at all in the funds which are now provided for any new defence capital equipment.

The Government has decided not to acquire an aircraft carrier and to disband its fixed wing aviation division. That is in spite of the fact that the A4s and the Tracker aircraft still have many years of useful life. Indeed the A4s are flown by many countries in our region and are needed not only in their ground defence and fleet support role but also to provide tactical exercises with aircraft that are similar to those of other nations in our region. Clearly, the Government's priorities lie in other fields. Existing forward commitments made by our Government amounted to some $5,612m. We were intent on upgrading the capital capability of the Services. Unless fresh funds are injected into the rolling program there can be no serious consideration of any new equipment in the foreseeable future.

The paucity of allocations for new capital equipment is graphically demonstrated in the papers which have come before us. Department of Defence notes show that only $11m is allocated to new major equipment programs to be announced by the Minister. An appropriation of some $165m is not allocated to any particular service. Let us look at that amount. Some $95m is allocated to a large number of specific projects leaving $70m not allocated. Of this, $39m is specifically earmarked for new obligations and the remaining $30m cannot be identified. The total allocation to manpower, excluding the $110m allocated to cover future wage and salary adjustments, is $2,200m or some 43.45 per cent of the total defence vote. Last year this figure was 47 1/2 per cent of the vote. There has been a fall in the proportion of the Budget allocated to manpower and that, of course, reflects the fact that the Government is intent on reducing numbers as indeed the Budget identifies. It is also doing this through the changes that it has imposed on the Defence Force retirement and death benefits scheme and the elimination of the tax exemption on reserve forces pay. Those two measures are quite diabolic in their impact on the structure of the manpower of the armed forces. This Government is also specifically providing a lower sum of money for operating costs than was provided last year, if we take inflation into account. The result is going to be a lessened ability to maintain training standards and the overall level of corps efficiency.

Whether it is defence, the aged, the young or the farmer, this Budget is directed against the citizens of this country. It will enhance inflation. It is predicated entirely on the wages accord surviving and staying in place. That accord is already fragile; it has already been broken in four select industries. I believe that this Budget, unfortunately, will increase unemployment, not reduce it, and will reduce the living standards of ordinary Australians.