LMRGOED AC-A!_ YST DELIVERY
( abDut 9: 00pm) p
PRIME MINISTER
FOR MEDIA FRIDAY, 21 AUGUST, 1981
ADDRESS TO THE TASMANIAN STATE COUNCIL
OF THE LIBERAL PARTY
HOBART
I am delighted to be in Tasmania at this time. There is no
doubt that the future progress and prosperity of Tasmania and
the whole of Australia depends enormously upon the Liberal Party.
It depends upon what we do, u on the soundness of the policies we pursue, and
upon our capacity to encouraae the spirit and responsibilities
which puts the interests of all Australians and all Australian
States above the sectional interests of groups who seek only
their own advantage at.-the expense of the well-being of others.
The Liberal Party has this responsibility because it is the only
Party with a national outlook, with a realistic philosophy which
reflects the values of rost Australians, and with the capacity
to put forward the kind of policies and provide the kind of
government which Australia needs through the 1980' s and beyond.
First and foremost these are policies geared to providing a
better life for individual Australians and their families. Let
me say right at the start that this central objective of ours is
fully reflected in the Budget we have just brought down.
There is no doubt that Aulstralians are deeply concerned about the
level of interest rates, and that they want to see Australia continue
to move forward strong! y so that the living standards of all
Australians can improve. The Budget is a major instrument for
achieving these objectives, and what is most important about the
Budget is its overall impact on the economy, on interest rates,
on inflation, on employment, on growth.
The Budget is a part of the same strategy for strengthening the
economy that we have pursued consistently since 1975. It has been
a strategy based on cutting back on spending, on bureaucracy,
and pursuing policies to bear down strongly on taxes. It is
this strategy which has made Australia now the most strongly
growing economy in the industrialised world, with stronger
employment growth than any of the major Western economies.
2
In this Budget we have almost completely eliminated the deficit
we inherited fron Labor and by budgetting for a large domestic
surplus we will be easing tremendously the claims for capital
funds, and the pressures on interest rates. The Budget is
therefore a quite major step in making room for the private
enterprise growth essential to growing employment opportunities
and a strong and prosperous Australia. In the two years to May,
as a result of the Government's policies, some 300,000
new jobs were provided by private enterprise, and real wages
increased over last year by some four per cent, so there has
been a substantial increase in real living standards. That
increase in real wages represents some $ 3,000 million more going
to Australian families. Those increased wages and salaries can
only be paid if our factories, farms and mines are profitable,
and if more Australian goods are being sold overseas. The ability
of Australian industry to pay higher wages does not come about
by accident. It comes about because sound policy creates the
conditions for business profitability. Maybe people too often
look at Budgets to see what they have been given directly, whereas
what they should be looking for is a Budget which gives them a
prosperous and secure Australia.
The main test of a Budget is whether it contributes to an economic
environment that provides a sound basis for rising living
standards and a secure future, as this Budget does. The Budget
is designed to make sure that the foundations of the great
economic progress now occurring in Australia are strengthened
further and there is nothing more important than this in showing
the genuine concern of this Government with the condition of life
of the Australian fa. ily. The point that it is the overall
impact of the Budget on the economy that must be considered first
is fund-ental and it is a message we all need to get across to
the comm. unity. If the fundamental policy approach is not right,
no other policies can be effectively implemented.
There has been a lot of comment on the sales tax decisions announced
in the Budget. Let me take a moment to make quite plain the
Government's policy on taxation. The whole objective and thrust
of our policies is to reduce the overall burden of taxation on
individuals and f-amilies. Tax cuts for this financial year,
which will leave some $ 500 million more in taxpayers' pockets,
were announced and in operation prior to the Budget. In addition,
there will be a tax rebate of 32 cents in the dollar for basic
health insurance, returning a further $ 600 million, to taxpayers.
A lower overall tax burden can come about in one way and in
one way only by holding down Government spending. The Liberal
Party is the only Party which can justifiably claim it is the
Party of lower taxation, because it is the only Party committed
to reversing the growth of Government.
Statements that the overall burden of taxation on Australians has
increased since 1975 are totally misleading. Labor in power lifted
Commonwealth spending from less than 24 cents in every dollar
produced in Australia to over 30 cents. We have cut it back to
under 28 cents and our objective is to cut it back still further.
These are the central factors in determining the real burden which
Government spending imposes on the community.
3
3y 1975 Gcverr-. ent spending * w* as rising so fast that tax
collections could not keep up, and there was a huge deficit as
a result. In considering the real burden imposed by Government on
the community the deficit is as important as taxation, for the
deficit must ultimately be paid for in one way or another just
as households must repay their debts. In 1975, when we take
into account both income tax and the burden of the deficit, the
total burden from Government spending on individuals was almost
18 cents in every dollar produced. We have reduced that to
about 14 cents.
What is crucial in the end is the proportion of the nation's
incomes spent by Goverrnent, and under this Government that
proportion is falling. That is the only way the overall burden
of taxes can come down.-
The Budget also has made a valuable step towards shifting the balance
of taxes away from direct on to indirect taxes, and as the
Treasurer stated on Budget night, one of the valuable consequences
of this is that it increases the potential for desirable reductions
in direct taxes, and particularly personal income tax, as economic
and budgetary conditions permit. I emphasise again that only
policies which restrain Government spending as ours do can
pave the way for responsible reductions in taxation, and for a
strong economy with rising living standards for all.
Throughout our period of office one of our principle concerns
has been to protect those who are disadvantaged and most in need
in our commrunity. Spending on social security and welfare is the
largest single item in the Budget and now takes up about 28 per cent
of the whole Budget. This year our spending on social. security
and welfare will rise by 14.5 per cent, a substantial increase in
real terms.
One of our first major steps in this area in 1976 was to
introduce the automatic indexation of pensions and benefits
and the annual cost of this indexation element alone will be
over $ 700 million this year. Beyond this our aim has been to
increasingly direct assistance to those most in need, to concentrate
spending where it can do most good for those who need help most.
This is why, in expanding assistance to families this year, we
decided to increase benefits for larger families for some of the
areas of greatest hardship in our community are among large families.
This measure will help over half a million families including
many of the poorest.
Other groups in special need have also received special assistance
from this Budget. In recognition of the particular hardship suffered
by many needy pensioners in rented accommodation, we have re-directed
and increased the program. e of rental assistance to pensioners and
long-term sickness beneficiaries so as to provide more support
to those paying higher rents. A crisis accommodation programme
is being developed with special emphasis on the needs of families.
Our support for the handicapped and disabled has risen very
substantially in real terms over the period of the Government and
has been increased again in the Budget. Let me also mention here
that the new health arrangements have also been designed to help
those on lowest incomes, and provides for free health care for about
three million Australians. / 4
4-
The Government believes . hnat the determination we have to protect
those most in need in our community is not only a primary
obligation, but reflects the values of Australians generally. We
have also had in mind in this Budget particularly the need to
help our young People find good jobs. The most important action
here again is to pursue responsible economic policies which increase
the ability of private enterprise to provide jobs. Let me say -that'
the merit of this approach has been clearly shown this year. As
une mployment generally has fallen, so young people especially have
been more successful in finding jobs. In fact the number of school
leavers seeking their fiJrst job in June this year is the lowest
for three years and * has fallen by over 13,00o in the last 12 months,
a twenty per cent decline over the year ( down from 46,400 in June
1980 to -33,000 in June 1981)
Our programnme's to help young people equip themselves for jobs have
been very greatly expanded. We are now spending over $ 200, million
on programmues to expand the supply of skilled labour and to assist
young people in search of. employment an increase of 22 per cent
over last year. Some 100,000 apprentices, 5,000 more than last year,
will be assisted throu; h the Craft and Special Apprentice Training
Schemes. in 1982 we will be allocating up to $ 75.4 million on
school to work transition programmes within a one per cent
overall real increase in the education budget. We are giving special
attention to the needs of secondary students from low income families.
We announced in the Bu: et increases in secondary allowances tol
help poorer families keez their children at school, and obtain the
beneft of' additional schooling.
Our decision to terminate the Community Youth Support Scheme simply
reflects our wish that increased 1evel of funding in the area
of youth asSistance shculd be concentrated on programmes with
stronger prospects of leading to jobs. Since we believe other
programmes -are doing much more good our view was that it did not make
sense to maintain a programme concerning the effectiveness of which
there were many doubts.
The Budget is not just a very sound and responsible economic
document it is fundamentally a Budget designed to express the
Liberal Party's con-cern for individuals and for families. With
realistic policies to express that concern I have no doubt that,-the
Liberal Party will continue to have the support of the people
throughout Australia, and here in Tasmania.
The Tasmanian Party is obvriously facing up to the task of comin.-g
into Government 1983. Let me say that if the kind of package
which Geoff Pearsall and Robin Gray put forward as an alternative
Co the Lowe Government's so-called cutting exercise is any
indication and I am sure it is then the State Parliamentary
Party-is surely moving in the right direction.
Tasmania has special needs and special problems which the Liberal
Party at both State and Federal levels is far more able than the
Labor Party to handle. obviously, Tasmania's dependence on the air
transport links with the rest of Australia makes it tremendously
vulnerable both to strikes and to excessive cost increases.
S-0 5
I am well aware of how real the threat of isolation, the threat
of being almost completely cut off from the rest of Australia,
can be. I want to repeat something that I said in answer to
Ian Chalk's question at the Federal Council Meeting this year,
namely that the Commonwealth Government has an on-going commitment
to use the resources it has to maintain air links to Tasmania.
The Government would never tolerate a situation in which that
link was cut.
During the recess there have obviously been significant problems
in industrial relations and in the wage fixing area. Obviously
these problems can be particularly damaging to States such as
Tasmania but I believe that one tremendously valuable thing
that has come out of these difficulties is that there has been
established a strong basis for on-going discussion between the
Government and the ACTU, a basis which it was never possible
to establish during the time when Bob Hawke was President of
the ACTU. The potential value of such discussions must be
obvious to all. I believe that we shall all experience its
benefits in the months and years ahead.
Turning to wages, when the Arbitration Cormmission indicated the
abandonment of wage indexation, instead of a lot of people saying
there was a vacuum, that the sky was the limit, I would have
thought many people would realise that the decision would reinforce
the authority of the Co.. ission and establish thrc-ugh industry and National Wage
decisions a stable er. viironmet. What indexation did was to establish a higher
limit from which people could then set out to negctiate for more. We all
know that that is what occurred. There was a 4% or 5% real
increase in wages last year. Without indexation there is no
vacuum. The Comm. ission is there. All State Governments tell
me that they support the centralised wage fixation system, and
the ACTU also says the same thing. There will be industry cases
that will establish guidelines. There will be a National Wage
Case in February that will establish guidelines. People will have
to argue their cases with a sense of reason and firmness and
strength if they want a result. With indexation, of course,
everything automatically jacked up on to a higher plateau every
year or every six months.
The fact that the circumstances have changed is now being much
better understood. We had a meeting last week again, with the
ACTU, with employers and with Premiers in relation to it. I think
that the decisions that were made then should help people to
understand that there is a system and it is up to all the parties
to make that system work. It is worth noting that all Premiers
of all political persuasions agreed that they would lend their
efforts and energies to achieving that.
Let me also mention briefly the problem of tra-sport costs to Tasmania
which are well recognised by the Commonwealth. Beyond our
anti-inflationary economic policies, the Commonwealth Government
has for some years maintained a freight equalisation scheme, which
is of vital benefit to Tasmania, and it is here to stay.
/ 6 c-
-6-
In addition to that, the airbridge formula, which subsidises
air fares to the tune of 10% at a cost of over $ 5 million, is
designed to encourage travel to and from Tasmania and I believe
it provides the appropriate response from the Commonwealth to the
very considerable costs of travel and also of course in relation
to the tourist industry. These are just two examples of the
Commonwealth Govern. ment's concern for the needs and well-being
of Tasmania.
The Government cares'about the well-being and prosperity of all
States and all people in Australia, not just about the wealthy,
powerful States and not only about the marginal electorates as
Labor so often does. But of course, the greatest contribution
that the Cormonwealth Government can make to the well-being of
Tasmania is to make certain of prosperity across Australia as a
whole. Provided that we can Faintain the stable economic environment which
has-been achieved over the last few years, provided that our
economic recovery and growth can be strengthened, provided we
can avoid the kind of excessive disruption and selfish demands
which have been all too apparent in recent months, we will increasingl
bring about the situation in which people, on the basis of their
judgments and with the use of their initiatives will be able to
build prosperity right across-this country.
000---