0 EMBARGO: 7.15 p. m.
a: F77/] 8]
FOR PRESS 19 AUGUST 1977
ADDRESS TO THE ATUA\ L NE? SOUtlH -IES LIBERAL PARPTY STAT IC ONVEN7TC N
It is very good to be able to speak at this Liberal Party Convention
so soon after this Government's second Budget has been delivered
a Budget which takes decisive and dramatic steps towards establishing
the kind of Australia that the overwhelming majority of Australians
want; a Budget that encourages the best efforts of all to
endeavour to achieve in the knowledge that achievement will be
rewarded; a Budget that assists the poor and the disadvantaged.
This Budget demonstrates beyond all doubt that our commitment
to a fresh start, a new direction is being fulfilled.
This Budget demonstrates that a responsible and effective
Government can attack inflation and at the same time it can
aid the disadvantaged ; it can provide people with greater freedom
to make their own decisions about working, spending and savinrg;
it can provide the greatest impetus to Australian's confidence
in tlhe future.
This Budget demonstrates the relevance of Liberal philosophy to
Australian society. It underlines if any underlininjg was
necessary the stark contrast between the philosophy of Liberalism,
and the doctrinaire approach to the Labor Party a
doctrinaire approach which restricts individual choice, maximises
Government control and stifles the energy and enthusiasm of
Australians. Soime say that memories are short, but the disastrous Labor years
are inieilible. The Labor Party knows that the Australian people
won't forget the damage the A. L. P. government did Australia.
That is why the A. L. P. is pretending they have changed
that is why Mr Whitlam of all people is saying that Labor
made mistrakes; and that from now on they will be economically
responsible. Yesterday we saw what they meant by economic responsibility when
Mr Whitlam, Mr Tfayden, the Labor Party's economic manager, and
Mr Hurford the Shadow Treasurer gave a press conference.
Mr Hayden said that the Labor Party had no commitment to pocsonal,
tax indexation, but Mr Hurford said that personal tax indexation
was A. L. P. policy. Mr Hayden said that the Labor Party did not
conmmit itself to our tax reforms, but Mr Hurford seemed to rule
out the scheme entirely. Mr Hayden said that he could definitely
calculate some figures, Mr Hurford said he couldn't.
That is the way they ran the Labor Government.
Labor are still-the party of economic irresponsibility, higher
taxes, higher inflation, higher unemployment. The evidence is
there for all to see in Labor's latest excursion into economic
irresponsibility the economic strategy statement published
here in Sydney a week ago.
That Labor document implies a deficit of $ 3.5 billion, a
increase over the $ 2.2 billion deficit we have budgeted for this ., cr.
They obviously want to get back to the deficits of the Labor years.
They pretend that they can increase the deficit, lower interest
rates and cure unemployment all in one breath. But to financa
their deficit they would have to resor-t to the printing press again,
and raise taxes and interest rates again. This would undermine
the exchange rate, give a boost to inflation, provide no real
hope for the unemployed, and put an end -to growth and increased
pros3Derity. Labor's " strategy" is quite simply a recipe for
economic disaster.
Since our government was elected we have made significant
progress in restoring the economy. After just 20 months in of ficW
inflation has been markedly reduced, real growth has been
restored, the expansion of big government has been halted, and
government spending has been contained.
These actions have made it possible progressively to reduce -the
burden of taxation. Indexation announced in May last year stopped
the big tax rake off, it provides a cut in tax on 1 July
every year to protect against inflation; the investment
allowance and the stock valuation adjustment reduced tax payable
by companies
All in all, last year's tax reforms put $ 2000 million extra in the
hands of individuals and businesses. In addition, last year
saw greatly improved social security programmes automatic
indexation is now protecting pensions and benefits against
inflation; the family allowance scheme is the largest and
most effective single innovation in our welfare system for many
years. Our second Budget has consolidated on these achievements
and represents a further major step forward. First
and foremost the Budget will further advance our fight against
inflation. The deficit for the second time has been reduced
by over a half a billion dollars government expenditure
has been contained to around zero-growth in real terms.
Because we have exercised stringent control over government
expenditure, we have been able to introduce revolutionary
reforms to the personal tax system.
The government had a choice to make whether it would spend more
on its own programmes, or whether it would provide tax relief
for people. We chose to help people.
our tax reforms directly reduce the tax payable by every taxpayer.
They constitute a most far-reaching overhaul of our burdensome,
complex tax system; they simplify the tax scales; they restore
incentive to work harder and more productively and to earn more;
they give people the power to decide how a greater part of their
income is spent. / 3
As from February 1, there will be just three tax rates.
By raising the tax threshold 225,000 additional taxpayers
including many pensio. ners3, stucknts, and other low-income earners
will pay no tax. A single person earning less than $ 3750
will pay no tax; and a married person with a dependent spouseearning
less than $ 5485 . will not pay tax. 902 of taxpayers
wil 1 pay only the standard tax rate of 32%. These taxpayers
will no longer be subject to escalating marginal rates, until
their income exceeds $ 16,000. They will all, in effect,
have the benefits of tax averaging, which will protect them
from the disadvantages associated with fluctuating incomes.
The reductions in tax resulting from tax indexation and our latest
reforms are very substantial. For taxpayers with a dependent
spouse, earning $ 7,000 a year will save 33% in tax;
earning $ 8000 a year, will save 25%; on $ 18,000 a year
they will save 20% in tax.
The benefits to taxpayers of the reformed tax system being
introduced on 1 February next will be $ 406 million in 1977-78.
This is in addition to the further benefits of $ 965 million
brought by this year's tax indexation. In total this year,
therefore, the benefits to taxpayers from tax indexation and
the tax reforms will be $ 1371 million.
In 1978-79 the benefits to taxpayers from the tax reform will be
$ 1390 million, plus a further $ 467 million from tax indexation
this adds up to $ 1857 million.
Had there been no new tax reform the benefits to taxpayers
would have been $ 973 million less.
Because these tax reforms have been achieved within a budget
which further strengthens the fight against inflation and
significantly reduces the deficit, circumstances are also
conducive to a much-needed fall in interest rates.
Other features of this budget are that it announces moves
towards an energy pricing structure which should encourage the
search for new energy sources and ensure greater efficiency
in the use of existing resources. The total effect of the
increase in petrol prices on the C. P. I. is estimated at 0.9%,
and this effect will be spread throughout the year.
Ths Budget provides for a small increase in company tax to help
finance the reform of the personal income tax system.
Company incomes have risen rapidly over the last two years,
and the estimated yield of $ 203 million from the company tax
increase is small compared with the $ 600 million which companies
gain this year from concessions introduced in 1976.
It should be noted that the Federal Government has not raised indirect
taxes this year in a way which will have heavy impact on the
December quarter CPI. We expect the States to follow this lead.
/ 4
The incr-eased allocation from the Commonwealth this year
the 14% rise in urnt. ed grants and loan funds -to the States
and thc 18%, L rise in grants to local1 government provide
adequate scope for them to hold their charges.
The budget provides over $ 100 million to fund employment
training programmes designed particularly -to alleviate
youth unemployment. These programmes have achieved an
encouraging degree of success and so far a total of 101,000
people have benefitted from them. If necessary, we will
increase our spending on these employment training programmes
over the year because we are determined to assist every
eligible applicant who seeks support under any one of these
programmes. The Budget reflects our philosophy of providing effective
assistance to the underprivileged and those most in need.
While government spending overall has been kept under tight
restraint, every social security benefit and pension has
been protected. There also is a very large boost in special
assistance to the handicapped. The terms of eligibility for
assistance have been liberalised, and spending will increase
33% on last year.
our historic reform introduced last year of family allowances
continues to assist directly all mothers in our commu
and overall expenditure on programmes of direct assista~ nce
to Aboriginals is up almost
This Budget charts the course for a further expansion of the
economy during 1977-78. Gross Domestic Product is budgeted
to grow at a moderate rate over this financial year.
As the year progresses and the government's policies
bear down further on inflation activity will strengthen further.
This will be assisted by the large increase in everyone's disposoe
income flowing from the reform of the personal income tax system.
This opportunity for further economic progress and a greater
reduction Jn inflation will in large part depend on moderattion
in wage inr: 7reases.
The Government has consistently argued before the
Arbitration Commission for substantial wage restraint.
Yet in the financial year just ended, the rise in average
weekly earnings outstripped inflation.
Tt is essential. -that a flirer li-ne is t-aken in moderating w-, age
riseos. Thiis is tho fasta,, st \ vay to reduce inflation and
restorecemploy-ment opportu'niiuies. The tax cuts we have
. Ln~ ouce should great-ly, assilst in achieving this modration.
We heard a lot earlior this year from union leaders who C; saild
t1hat they would exercise restra:, int in wage cla iis if t ax cuts
wmedr e. Wel sb-anta tax C have been made, and union
. cadlels shiould L_ tink hard about the statements -they made earlier
this vear. They have a mtajor responsibility to ensure that w~ acoe
claims are kl-pt to a minimuit. A sense of responsibil it y Is
-vital for tlhe success of the national fight ag~ ainst inflation,
and it is vital to Prevent further unemployment.
As a recent survey showed, large-: wage rises compel businesses
to reduce labour or obt'-ciin supplies -from overseas. A w age rise
may seem to confer a short-lived benefit on) those emr. ployed, but
it -iS Of no0 u1S to those wh, 1-o become unemploy,' ed as a direct rcesult.
A responsible union approach to industrial disputes is also vital.
And w, e have legislated to bring greater justice, com-mon sense and
consull ation to industrial relations. We have established the
industrial Relations Bureau, a_-nd the N11ational Labour Consultative
Council We have legislated to prov-ide for secreL pustal ballot-s
for the election of officors of unions registered uLnder the
Concil. 11ation and Arbitration Act, and to limit their term oF
ofjfice to four vears. 1We have amended the TIrade Practices At'-
to ba n da2maging secondary boycotts b, em , ployees which dono
concern disputes over colidition, s of epomn. Orfr u
fair : rndustrial policy has achieved aj si 71i4ficant reductionnm
the level of industrial disputeos.
This year, we have had by fEar the lowest level of industrial
dispute . s -this decade. During the first five months, 559,000
workling days have been lost, compared6 to almiost 4 million days
lost for -the comparable period in 1974. F3uIt tha~ t is -no cause
for rela-xati-on of our policies.
We ill -not sta-nd idly b,-y while industrial stoppayes cniu
to d: T11Arnue our economiy and caus . rave : nconilenience to t. he
r pbl1ic, particularly7 -, hnehteossntotphpeaqse s involvce Lb11-
Colnmofiwealth owon epoes SU-i as the Sydney pos tal wras
Yesterday wo introduccd into the ParliamITenlt the Coramonwealth
n~ p1 oyec ( Employment Provisions) Act 1977. Its purpose is to
enabl Commowealt Governmcnt employing authorities, in the
publc inerest, to suspend froi-duty or in appropriate
c-lrcuirn Lances clismLiss, gove~ rnmcnt4-employees who talke industria!
i. o w hi-. ch 0, Lsrupts the provision of services to the Austrnl ian
comm-ulnity-; and s 1Land-dlown without payN gove, 7-rnxment employees who
cannot bec usefully emipl-oyed as a result of indust'rial action
or ' Jho~ en ( jall'd ol f. unct. 1ons, the! ,) orfo rf-Lancc o) f xth-iich is
Th Goe rn~ intf i rmi'ly bel i~ eves tha t thes
ra in t IL -af.:) n1 i t e2r e S / Thn-e.
6.
Many private employers already have far wider powers -to stand
down employees than the new Act provides, for the Arbitration
Commission and various State arbitral bodies have in many cases
inserted in awards autom--Latic stand-down provisions.
These provisions typicallv enable employees to be stood down if for
any reason beyond the employer's control there is inadequate
work available. The new Commonwealth Bill is limited to work
being unavailable because of industrial disputes.
The new Bill provides essential additional powers to the
Commonwealth which are neither unusual nor unreasonable.
And after all, unlike a private employer, the Commonwealth has
the additional responsibility of looking after the public interest.
We hope that it will not be necessary to use this legislation and0
we intend that the Bill will be passed by the Parliament but
not be proclaimed to operate unless circumstances so dictate.
As a result of events of the last day or two, the A. P. T. U.
Federal Executive directed that the New South Wales Branch
lift bans. Members are going back to work.
The great majority of Commonwealth employees and unions have
behaved responsibly. This legislation is directed at the small
irresponsible minority.
The feature which distinguishes Government employees is th E4r
responsibility for providing services essential to the operatcion
of our community. The Government will not tolerate these services
being disrupted.
The Budget brought down last Tuesday offers to Australians
the incentive to work harder and increase their earnings;
the prospect that the ravages of inflation will be reduced;
the benefits of an expanding economy; and at the same tima
the provision of effective assistance to -those most in need.
It is a Budget we can be proud of.
It's no wonder -that the Labor Party is so desperately tryincg to
confuse the public about the facts. Before the Budget they tried to
frighten the old and the weak by saying that there would be cuts in
social welfare payments to individuals.
Now that these fears have been dispelled they are trying to
deceive the public about our tax reforms.
It's up to all of us to make sure they don't succeed in their
campaign of deception facts are more CV Ult:-an deceptions,
and the fact is that by a single decisive stroke of policy, the
Government is able to provide all Australians with the assurance
that endeavour will be encouraged,. that skills will be
worth acquiring, that initiatives will be worth taking and
that effort will be rewarded.. 000000QOQOO~ ooAQTOTQASCEHEE D TABLE.
COSTS TO REVENUE OF REFORMi OF THE fAX SCALES
TOTAL REVENUE COST
REFORM OF TAX SCALES
Ai'D INDEXATION REVENUE COST
INDEXATION ALONE
AND NO REFORM OF
THE TAX SCALES ADDITIONAL REVENUE COST
OF BUDGET TAX MEASURES
3.977-73
Indexation965
Reform of tax
scales ( effective
from 1 Feb. 1976) 406
Total 1371
1978-79
Indexation Reform of tax
scales 467 ( b)
1390
Total 1857
1979-80
Full indexation will apply
SSummary: In 1977-78 as a result of the reform of the tax scales, the
additional costs to revenue ( over and above the cost of full indexation)
will be $ 406M. In 1978-79 as a result of the reform of the tax scale, the
costs to revenue will be $ 973M greater than they would have been in the
absence of reform, but with full indexation.
These figures are given in the Budget Speech on page
The amount of $ 467M represents full indexation of dependant
rebates and half indexation of the rate7: scale.
The amount of $ 884M is the cost of full indexation of dependant
rebates and the rate scale.
19 August 1977 965406 884 ( c) 973