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Thursday, 3 October 1974
Page: 1662


Senator SIM (Western Australia) - It has been an interesting interlude. We have been discussing the Budget and now we have had 2 long discourses on turtles. Let us get back to affairs of State. Senator Cavanagh, in his only reference to the Budget, said that it speaks for itself. We certainly agree with that. Not only does it speak for itself but also it has been spoken about by every section of the community. It has achieved a number of firsts. No Budget has been more soundly condemned by every section of the community. I admit that no Budget is popular and that no Budget receives universal applause, but this Budget has been universally condemned.

Even Mr Hawke, the President of the Australian Labor Party and President of the Australian Council of Trade Unions, in his dual capacity, had some very serious reservations about it. The economists in this imprecise field were once pretty well unanimous in condemning the Budget on a number of grounds.

No Budget has been subject to so many leaks. We had the Deputy Prime Minister (Dr J. F. Cairns), who is now the acting Prime Minister, on television night after night and at Press conferences day after day telling us what he thought should be in the Budget. And most of it was. Others wanted to get into the act too. So we were bombarded day after day by Ministers, members, senators and others with all the things which they thought should be in the Budget.

So the Budget was no surprise. Indeed it was remarkably accurate and one wonders why anybody bothered to present it. They could have put all the suggestions together and we could have had the lot. No Budget has so recklessly ignored the twin evils of inflation and unemployment.

They hardly received a mention in the Budget Speech. No Treasurer was so ignored. Mr Crean, I think, is an efficient and sincere man but no one would have believed that he was the Treasurer responsible for the financial and economic policies of the Government. He was referred to as the puppet Treasurer and the de facto Treasurer but he certainly at no stage was the Treasurer except for the brief moment of glory or otherwise when he was allowed to read the Budget Speech in accordance, I suppose, with tradition and precedent. I remember seeing a cartoon in one of the newspapers which showed Mr Crean going up to Dr J. F. Cairns saying: 'Jim, I can't read that. What does it mean?' That is indicative of the sort of reaction outside to the part played by the Treasurer in the preparation of the Budget Speech.

Of all the firsts, no Budget has been so subject to change forced on a government by a Caucus immediately after presentation. We know that Caucus obviously regarded at least some measures as being, to put it mildly, ill conceived. One of those, of course, was the tax on unearned income. That battle, so we read in the Press today, is still continuing and I will say something about that in a moment. But there is no question about one thing: This Budget was designed unashamedly to bribe the unions into exercising restraint.


Senator Wheeldon - What is wrong with that?


Senator SIM - Is bribing part of a government's activities?


Senator Baume - Did Senator Wheeldon mean it?


Senator SIM - Senator Wheeldonhas a great sense of humour and I take the interjection as being another indication of that sense of humour. But the Government sought by bribery the cooperation of the unions.

Sitting suspended from 1 to 2.15 p.m.


Senator SIM - Mr Deputy President,prior to the suspension of the sitting I was saying that the Budget was unashamedly an attempt to bribe the unions to co-operate with the Government. It is interesting that the Government seeks the cooperation of the unions whereas it confronts every other section of the community. But it does not appear that the co-operation is forthcoming because we understand that the unions have provided the Government with a list of demands which must be met before they are willing to cooperate in the area of wage restraint. So even in this area the Budget has failed. The worst feature is that it is a savage attack on the thrifty and those least able to bear the burden, and it destroys initiative and enterprise. It is really an ideological document with the sole objective of furthering the socialist policies of the Government, without any regard for the economic and social consequences.

One of the most frightening aspects of the Budget is the complete failure even to attempt to deal with inflation. This issue was largely ignored and was hardly mentioned in the Budget except for the Treasurer (Mr Crean) or whoever was responsible for the Budget throwing up his or their hands in horror and saying that there will be an inflation rate of 22.5 per cent in the coming year. By any standard this rate is an extremely high one. No one that I know believes that the rate of inflation will not greatly exceed 22.5 per cent. The figure of 30 per cent is often spoken of. This makes nonsense of the so-called tax concessions that the Government is providing for those on lower incomes. The tables which have been produced show that by the end of this year and early next year they will be paying a far greater percentage of their incomes in tax than they are paying at the moment because of the rise in wages to meet inflation. While the Government has been urging on other sections of the community the need for restraint, it is not prepared to show any restraint itself. The continued growth in Government expenditure is worrying. It is 35 per cent. It is interesting that when the Prime Minister (Mr Whitlam) met the State Premiers in June, he said:

There is however a need for all of us not to try to push ahead so fast that the economy is unable to meet our demands. As part of the battle to contain inflation we will be following a policy of restraint in our own spending.

Some dramatic changes took place in the thinking of the Prime Minister between June and September because if one regards an increase of 35 per cent in Government expenditure as exercising restraint, one must wonder at the type of thinking that goes on in the minds of the Prime Minister and members of his Government.

The Treasurer delivered his so-called miniBudget in July. Honourable senators will remember what a flop that was because right up to the last second we did not know whether he would be allowed by Caucus to deliver it. How emasculated it was. But he did say this: . . the Government acknowledges that public expenditure must also be restrained ... the Government accepts that its plans must be realised with a timing consistent with the needs of sound economic management.

They are very brave words, and we would agree with them. The Treasurer continued:

Those matters will be examined more fully in the context of the 1974-75 Budget . . . The expenditure restraints we have required of the States will be fully matched by our own.

What hollow words. I wonder which State Premier or Treasurer, whether in a Labor or a LiberalCountry Party Government, would agree that the Commonwealth is exercising any restraint. But the Commonwealth is demanding restraint from the States. This is part of the complete irresponsibility of this Government.

One of the most notable phrases used by the Treasurer was that the Government expenditure would take up the slack in the private sector. I do not know what is meant by that, but he said words to that effect. This Government has allowed the private sector to languish. The private sector is the productive sector of the community and provides our wealth. I am at a complete loss to understand where the resources to fuel Government expenditure will come from if the Government is to take up the slack in the private sector. One would have thought that the only correct policy would have been to allow the private sector to expand by, if necessary, a restriction in the growth of the public sector. It is becoming a sick joke but both Dr Cairns, as Acting Prime Minister, and Mr Crean, as Treasurer, are appealing for confidence in the private sector when every decision and act of this Government, if not deliberately aimed at destroying confidence in the private sector, has certainly had that effect. The private sector is witnessing the collapse of organisations and cannot help but feel fearful for the future. This is a symptom which should be worrying to the Government. How can there be confidence when the Government seems to be deliberately trying to increase Government expenditure at the expense of increasing the opportunities for the private sector to expand?

There are the extraordinary antics of the Minister for Minerals and Energy (Mr Connor) which, if they were not so serious, would read more like a comedy than anything else. He has deliberately or incompetently- I do not know whether he is deliberate or incompetent- destroyed confidence and the growth of our great mineral industries. No one knows what his policy is, and the Prime Minister in his address to the United Nations made a mockery of Mr Connor's policies. It is time that the Prime Minister, as I think Mr Peacock said earlier, put up or shut up. When he returns to Australia he ought to do something about it to ensure that Mr Connor at last produces a minerals policy that will allow for the development and sale of the great mineral resources of Australia. There is no confidence today in our mining industries. Even the Labor Government of Western Australia, when it was in office, was highly critical of the Federal Government's policies in relation to the development of our mineral resources.

We have heard Dr Cairns, followed by Mr Hawke, saying: 'Look, you know, really there is nothing wrong with what we are doing. It is the system that is to blame'. They are trying to excuse their own folly, irresponsibility and incompetence by blaming something called 'the system'. I think that one must be excused if one has a suspicion that the policies of the Government are deliberately devised to destroy the system. It is interesting that more and more people in the community are beginning to suspect that. I suggest it is an act of cowardice for the Government to blame something abstract called the system ' for the economic and financial mess that we are in today.

As the Prime Minister callously and cynically betrayed the Baltic people in repudiation of an undertaking that he gave on the eve of the general election on 17 May, so he has equally callously and cynically betrayed the Australian people by his repudiation of promises and undertakings that he gave during the election campaign. We recall that it took us some time to get the Prime Minister to admit that there was an inflationary problem in Australia. At last he admitted it. During the election campaign in May he told the Australian people that inflation had been reduced and was no longer a problem.

The cry was: 'Only Whitlam has reduced inflation by one-third '. Inflation was running at a rate of about 13 per cent during the May election campaign. Today it is running at about 20 to 22 per cent. That is a betrayal of the Australian people. The Prime Minister promised full employment. The Prime Minister said that in Australia alone unemployment and inflation did not march side by side. We know the history of ever-growing unemployment. I believe new unemployment figures will be released very shortly. If the reports are correct those figures will show a dramatic and frightening increase in unemployment in Australia.

I turn now to some of the measures in the Budget. The first one to which I wish to refer and to which the Opposition takes exception- indeed the Labor Caucus also took exception to it- is the proposed tax on unearned income. We believe that this proposal came from one of the bright young boys who surround the Prime Minister. He suddenly had this great idea that we could placate the unions by soaking the rich. The Government, in this Budget, imposed a 10 per cent tax on unearned income. It has had a pretty stormy passage because there was immediately a revolt in the Caucus. I think it was the honourable member for Chifley (Mr Armitage) who I understand is the secretary of the economic and finance committee of Caucus who announced in the other place that this proposal was to be amended. It was not announced by the Treasurer. The poor old Treasurer has been ignored all the time. The Treasurer could not make the announcement. It was made by a back bencher who said that Caucus had decided that this -


Senator Young - He is the under-Treasurer now, under Cairns, isn't he?


Senator SIM - Oh, he is the under-Treasurer. I thought he was a puppet but still, a nicer word is under-Treasurer'. We understand that Caucus- if today's Press reports are correct- discussed the matter again yesterday when some members showed great wisdom in wanting the tax on unearned incomes abolished altogether. That proposal did not receive enough support. We now have a proposal that tax on unearned income should be abolished on incomes up to $5,000 a year. I presume that the Labor Party Caucus believes that anybody earning more than $4,000 is rich and that we should soak them. It is an objectionable and unjust tax -


Senator Poyser - You did not read the report correctly.


Senator SIM - Which report is it, senator? Is it your report or someone 's leak?


Senator Poyser - The one that was in the paper.


Senator SIM - Which one was that, senator? What is the income level? I will take the Press report as being correct and somebody can correct me if necessary. The Press report indicated that the tax would be abolished for people earning up to $5,000 and there were some concessions up to $5,600.


Senator Poyser - Ha! ha!


Senator SIM - Well, if it is wrong, I ask the honourable senator to tell me where. It would be very interesting because I do not think it matters whether the amount is $5,000 or $6,000. The new proposal does not remove anomalies, in fact, it increases them. Is the Government arguing that a man on a taxable income of $6,000 is a wealthy man? Is he in any better position than a man with a taxable income of $5,000 or $5,600? In other words, the Government is still going to penalise the smaller man. Honourable senators opposite can frown if they wish. The Government is still penalising the thrifty people who have saved, the widows--


Senator Poyser - I am listening.


Senator SIM - I am glad the honourable senator can listen. But it is not sufficient for him only to listen. It also takes a little intelligence to let what I am saying go into his head. I am afraid that is where Senator Poyser often fails. The tax on unearned income is penalising the thrifty. It is still penalising the small man for the sole purpose of placating the unions. It is an objectionable tax and it is an unjust tax. Even Dr Cairns is reported to have allegedly said that it was a mistake. I go no further than that. The leaks from Caucus are monumental. Dr Cairns has said that the tax may have been a mistake and could be rescinded in the next Budget. That is interesting. If it was a mistake why is the tax not being rescinded now before it affects many people? 1 am glad to say that the Liberal and Country Party Opposition has announced that when it assumes office very shortly the tax -


Senator Mulvihill - When will that be, senator?


Senator SIM - It will not be long the way you are going my friend. But until the tax is abolished a lot of small people will suffer from this Government's action. The whole way in which this matter has been handled by the Government and by the Caucus is typical of the way in which this Government handles nearly every measure. The

Government has created uncertainty in the community. We can only think that the processes of this Government are not only muddled but are rather queer.

The capital gains tax- we do not know how it will be applied- is a tax which, unless it is applied very carefully, could be vicious and could have disastrous financial consequences. It will place a burden on many well meaning people the value of whose assets will suffer because of the high rate of inflation. The Government has shown itself interested only in the urban areas. It is doing this at the expense of rural areas. The Government believes that it can bribe the people in the urban areas to vote for it. The Government does not care a tuppenny damn for the primary producers. I exempt from that statement the Minister for Agriculture (Senator Wriedt) who I think is putting up a brave fight in the interests of the rural community. But Senator Wriedt is fighting a losing battle.

Nothing illustrates this more than 2 things: Last year the Prime Minister went out and told the primary producers that they had never had it so good. He received a rather savage response to that comment. Today many of our leading primary industries are in serious economic difficulties. In the middle of these difficulties the Government abolished the superphosphate subsidy. The Government has defended that action as being just and sensible. Dr Cairns who does not believe in Cabinet solidarity- that is the last thing in which he would believe- has now said that abolishing the superphosphate subsidy could have been a mistake, too, and perhaps the Government should examine the matter again.


Senator Jessop - Did he not say that the Government should create incentives?


Senator SIM - Yes. But the Government believes in creating incentives only for those who are involved in government. The Government is not interested in providing incentives for those engaged in primary industry or in private enterprise. The position now is that the Government has abolished the superphosphate subsidy. The Acting Prime Minister, Dr Cairns, has said: Well, we could have made a mistake. We could have handled it better and we could have done something else about it. Perhaps we should look at it again '. This again is typical of the muddle of this Government which is creating such uncertainty throughout the community.

In 1 972 the Prime Minister said that the Labor Party was the only government that could unite

Australia. What is the truth? The truth is the contrary because Australia has never been so divided as it is today. It has never been so uncertain as to its future. This uncertainty is felt by all sections of the community. There is today a feeling of despair and a loss of confidence because of the failure of the policies followed by this Government and because of the Government's failure to give leadership. There is in truth a crisis in leadership in Australia. What do we find at this time of economic and financial difficulty? I do not want to use the word 'crisis' in that context. We have a Prime Minister who once again has gone overseas to address the United Nations and to talk to President Ford, desirable though that may be, and then to go up to talk to Mr Trudeau, the Prime Minister of Canada. Canada also has problems and Mr Trudeau decided not to go to the United Nations although it is only a few hundred miles away. He decided to stay at home and provide leadership at this time of financial and economic--


Senator Mulvihill - No. He has a sick wife. That is only part of the story.


Senator SIM - Do not let us get into this other sector. Mr Trudeau said he would not go away because he wanted to be on hand at this time of economic and financial crisis. But it is no problem to our Prime Minister to scoot off and leave us in the hands of somebody else. Even that is not the end of the matter because tomorrow the Deputy Prime Minister is scooting off too. He is scooting off to Peking. I know that Chairman Jim and Chairman Mao are great friends but why is the Deputy Prime Minister going there? He is going to open the Australian exhibition or something or other at the Peking fair, a matter of great national importance. So at one and the same time the Prime Minister and the Deputy Prime Minister are to be absent, at great expense. I do not deny the Australian Prime Minister the right to travel overseas but he has left the country at this time and we are to be left to the tender mercies of the Minister for Minerals and Energy. Well, well, well, the tender mercies of Mr Connor! So the Prime Minister, the Deputy Prime Minister and the Treasurer are to be absent. I quickly acknowledge the right of the Treasurer to be overseas because he is attending a very important conference. Of those 3 people, only the Treasurer has the right to be leaving this country at this time. This is an extraordinary situation. They are being recreant to the trust and responsibility placed on them in going overseas on matters which, however important they may seem, are not as important as being here to provide the leadership and confidence this country requires at the present time.

Before I finish my remarks, Mr Deputy Speaker, I want to refer to one other matter. The Budget again showed how little regard this Government has for the defence forces. It talks about having a mandate. It had a mandate to continue defence expenditure at between 3.2 per cent and 3.5 per cent of the gross national product. That figure was soon down to 2.9 per cent and now it is down to about 2.5 per cent.


Senator Bishop - It is not.


Senator SIM - What are the figures?


Senator Bishop - I gave the figures last night.


Senator SIM - I have not heard them. Give me the figure.


Senator Bishop - Nearly 3 per cent.


Senator SIM -Nearly 3 per cent of the GNP. The GNP has risen tremendously so the figure is well below -


Senator Bishop - What was the Opposition going to do? It did not announce any policies.


Senator SIM - I tell the honourable senator that we would not have allowed our defence forces to run down to the state they are in today. The Army hardly exists. It has only about 30,000 personnel. There has been the greatest number of officer resignations ever.


Senator Bishop - Rubbish!


Senator SIM - Senator Bishopcan give all the excuses for this. The officers are getting out. One only has to get out and talk to them. They are getting out because they do not believe in their future.


Senator Bishop - Quote the latest figures.


Senator SIM - The figures for what- the officers? According to the latest figures the Army increased by 63, or something like that, in the last month or so. Australia has no tanks and has ordered 53 for delivery sometime in the distant future. We have no orders for artillery. We have nothing. The Minister for Defence (Mr Barnard) has been going overseas and looking around, shopping for something for 1980 or some such date. Where is the Navy today? It cannot even patrol the coastline of Western Australia. Our defence research establishments are being deliberately allowed to run down at this time when the Prime Minister has admitted the dangers confronting the world. A little while ago we had the most optimistic forecast of growing world stability, detente and goodness knows what. Honourable senators on this side challenged the Government and said that the forecasts were unreal. Now the Prime Minister has been forced to admit they are unreal. He has been forced to admit that a serious international situation is developing. Never have our defence forces been in such a parlous state as they are today and with no prospect for any improvement.

I conclude by saying that the Government has failed to provide leadership. It has made no effort to appeal to the community for community help in solving this tremendous problem of inflation. There are no easy solutions; no one suggests that there are. Inflation will not be solved by waving a magic wand. The solution will require hard work. I am glad that at last some Ministers are now placing some stress on increasing productivity because that, of course, is one of the solutions. This will require hard work and far greater co-operation between the Australian Government, the State governments, local authorities and all sections of the Australian community, yet there has been no sign that this Government wants to seek that co-operation. It wishes to seek confrontation with State governments. My colleague Senator Baume says that it is destructive. While this Government is engaging in unrestrained expenditure it is forcing the States to impose savage taxes which are themselves highly inflationary and only adding to the inflationary problems.


Senator Mulvihill - Why did the Queensland Parliament give itself a rise? Your Party is in government in Queensland.


Senator SIM - The honourable senator wanted to give himself a rise. He should not blame the Queensland Parliament. He would have had a rise.


Senator Mulvihill - Look at all the State governments. They are trying to sabotage us.


Senator SIM - I shall wait until the honourable senator finishes. If it had not been for honourable senators on this side of the House there would have been a rise for Commonwealth parliamentarians because Government supporters wanted it. Senator Mulvihill should not point the finger at anybody else. I said that there is no easy solution to inflation. This Government unfortunately has abdicated its responsibilities in this respect. It should tell the Australian people in plain terms that it seeks their co-operation, that it will work towards obtaining their cooperation, and that there will be unpalatable policies required. If this Government provides the leadership the people of Australia will respond as they always have responded. This is the challenge this Government faces. It also faces a crisis in leadership and it is about time the Prime Minister started to provide that leadership and stopped waffling at the United Nations. It is time the Australian people were given clear policies for the future and an assurance from the Government that it will exercise the self-restraint required. The sections of the community which provide the wealth should again be given confidence for the future. It is time the Government sought their co-operation. We all require and wish to have a stable Australia.







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