_ CTEC -AGAiNST DELIV1.7-
,4> AUSTRJ1
PRIME MINISTER
FOR MEDIA THURSDAY, 24 SEPTEMBER 1981
PRIME MINISTER'S SPEECH IN THE HOUSE ON THE BUDGET
. Central to every Budget brought down by this Government, to
every action with significant economic implications, has been
our recognition of the critical role of economic policy in
creating a favourable environment, for individual initiative
and a ΓΈ growing private sector, for effective humanitarian concern
and greater assistance for the needy, for balanced economic
development throughout Australia and sustained confidence in
our future. This Budget highlights the gulf between the Australian
economy as it was in 1975 and the Australian economy as it is today,
with out international reputation restored, with well-founded
projections for growth, higher employment and better wages, arid
with the enhanced potential for personal income tax reductions
which even the Opposition has not failed to perceive within this
Budget. When this Government came to office in -1975 inflation was high,
it was above world levels, and it was uncontrolled, unemployment
was growing and orivate sector employment actually shrinking
and confidence was shot to pieces. How different is the
picture today, with inflation below world levels, with nearly
300,000 new private sector jobs created in the two years to
May, and with very great confidence indeed in this country,
as evidenced particularly by the widespread investment in the
manufacturing and mining industries that is now taking place.
All of this comes from the steady application of responsible
economic pDolicies by this Government and it comes particularly,
as it will continue to come, from the successive Budgets of
this Government.
I want first to say something about this particular Budget's
strategy in the context of the Government's overall economic
objectives, and I shall put it to the House that the virtual
elimination of the deficit in this Budget will be seen in
years ahead as a landmark in Australia's development, that
any claim that this Government is a high spending or a high
taxing Government does not stand up, and that expenditure
restraint must continue to be a matter of fundamental priority.
Secondly, I want to explain to the House the success of the
Government's commitment to combining expenditure restraint and
economic responsibility, with effective care and concern for
the legitimate expectations, the real needs, and the
authentic aspirations of the Australian community. And I will
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put it to the House, that our programmes are effective and progressive,
that they identify priorities and balance the total range of
human concerns, and that any suggestion that the Government does.
not care, does not understand, simply flies in the face of the
record.
Mr Speaker, the strategy of this year's Budget is unmistakable
in the virtual elimination of the deficit which has been achieved.
The three and a half billion dollar Budget deficit which the
Government inherited from Labor, which would have been even higher
without the expenditure reductions made by this Government when
it came to office, would now be almost seven and a half billion
dollars if we had persisted with deficit financing at the Labor
rate of almost five per cent of GDP. The Government
consistently rejected deficit financing as totally inappropriate
for Australia's circumstances through the 1970' s and into the
1980' s, for these circumstances are quite different from those
-which existed in the 19301s, as Keynes himself would unquestionably
ha'ie recognised.
Australia Is still paying the price for Labor's irresponsible
deficits, for those deficits are still distorting Australia's
capital mark et, and still contributing to excessive interest
rates as the loans thnat had to be raised at the time to fund
the deficit are still1 having to be rolled over and renewed.
The Labor deficit was ncthing more than a way of making the
future pay for the spending schemes of the past, either throuqh
inflation, or throu.. gh higher taxes, or both. Deficit financing
encourages expectations that are unreal and it-means
dishonesty about the r-eal level of taxation.,
With the virtual elimiInation of the deficit in this Budget, we
can plan next year's Budget no longer hostage to this element
of the Lablor Govenr~ ent's mismanagment and with the enhanced
potential -For tax cuts wThich I have already referred to. The
Government has got rid of ; the massive Labor deficit partly by
an honest approach to taxation and partly by rigorous restraint
on its spending. We have worked at the problem from both ends.
Our more honest approach to taxation, which has involved lifting
Commonwealth revenue by 2.4 per centage points as a proportion of
GDP has gone into getting rid of the deficit. The Government's
view has been that our children should not have to pay the costs
of the Government programmes of today.
The Opposition calls this a high tax approach which only shows
again that thne opposition simply does not care about the longterm
development or future of this country. The claim that this
Government is a high tax Government simply does not stand up.
And if we look at the sales tax increases and the Government's
objectives in connection with them, objectives of deficit
elimination, of reduced pressure on interest rates-, of a better
balance in the tax mi-x, and of enhanced potential for personal
income tax reductions; the Government's overriding concern
with reducing the burden on the community of taxation and of the
high costs of Government is again apparent. ./ 3
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The proportion of G. D. P. which the GovernmenL spends is not
only vital to the number of dollars in actual pay packets, it
determines whether-there is enough room for expansion and
growth in the private sector.
In 1975/ 76, the Commonwealth Government spent 30.1 cents of
every dollar of G. D. P. In 1981/ 82, the Commonwealth Government
will be spending 2 cents less than in 1975/ 76 of every dollar
produced in Australia and this reduction, which would be nearly
3 cents but for the extra payday which only comes at twelve
year intervals means that the Government will be spending
3.7 billion dollars less than if the 1975/ 76 proportion had
continued. This Government's reduction in Budget outlays as a proportion of
G. D. P. stands in stark contrast to the increase under Labor
from less than 24% to more than 30%. Everybody knows how much
easier it is to spend more rather than less, and the steady
progress which this Government has sustained in reducing its
expenditure requirements has come about only as a result of the
Government's resolute commitment to the cause of expenditure
restraint and more limited Government.
This Government will continue to maintain expenditure restraint
and will continue the task of bringing down its outlays as a
proporticn of G. D. P. towards the more moderate levels which
prevailed before the Whitlam Government came to power.
Let me t-urn from the Government's expenditure restraint to
its borrc-wing restraint because in the end, borrowing is a form
of expenditure. This year's Budget makes a substantial contribution,
over an, above the reductions already achieved in the Loan Council,
towards reducing Government borrowing requirements and a central
objective of this is to ease the pressure on interest rates.
The interest rates which currently prevail are produced by three
main factors; inflation, the pressure of demand within Australia,
and the impact of overseas factors. A prospering Australia, where
business investment and business borrowing are surging ahead,
cannot hope to cut itself off entirely from overseas trends in
interest rates, and overseas trends have been upwards in
recent years.
This overseas pressure, together with the demand that is arising
out of growth in the Australian economy, explains why it is
imperative that all Governments should pull back their borrowing
demands. Be ween 1975/ 76 and 1980/ 81, the Commonwealth Government
has achieved a reduction of over $ 2 billion in its own and its
authorities borrowing requirements,. and there will be a further
reduction of about $ 1 billion this year.
While substantial public sector borroing is needed to provide
infrastructure for the private sector economic developments
now taking place, that borrowing must not be so high that is
squeezes out these developments. For all loans are ultimately
drawn from the one pool of funds, and larger borrowings by
Governments reduce the availability of funds, not only for large
investment projects, but also for home owners, farmers and small
businesses and. tend to push up interest rates at the same time.
All Governments need to be aware that the dollars which they
borrow could be used for other purposes that the money which goes
into a $ 10 million Government loan might have been used to provide
three or four hundred housing loans.
While interest rates are obviously too high at their present
levels, it must also be recognised that the people who provide
the funds for borrowing will need an adequate return if they are
to continue to invest their capital in this way, and the fact that
the present housing interest rates are little different from the
average rates through the 1960s when inflation is taken into
account serves again to demonstrate the insidious nature of
inflation,-and the continuing need to get it down in the cause
of lower interest rates.
Bringing down inflation has of course been a vital target in
the Government's exzenditure restraint and the continued containment
of inflation obviously remains a primary economic objective of
the Government.
The restraint of this Government, both in terms of spending and
borrowing, has been remarkable by any standards as other countries
recognise and it is even more remarkable in view of the fact that
the priority areas of social security, welfare and defence, which
have required real increases over the period in question, encompass
such a high proportion of Budget outlays more than 37% in fact
this year.
I have been speaking of what this Government has achieved over
almost six years through its consistently applied Budget strategy.
But while the Budget is the major economic vehicle through which
the Government's. philosphy. and priorities are given concrete
expression, many other activities of Government have a significant
impact indeed in their own right on the well-being of Australians
and the prospects for increasing prosperity.
The Review of Commonwealth Functions provides a particular example.
The results of the Review contributed significantly to restraining
expenditure ih 1981/ 82, but to assess the R. C. F. exercise only
in this perspective is to miss its main point. For out of that
review have come decisions which will strengthen the role of the
private sector, reduce Government interference in private sector.
decision-making and restore to State Governments responsibility and
ultimate control over areas of activity which are rightly theirs.
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The impact o-these outcomes is not to be measured merely in
dollars and cents: indeed in some cases their monetary value
would be virtually impossible to estimate, but they will offer
huge long-term benefits in increasing the strength of
Australian federalism and the vitality of the Australian economy.
Another area of Commonwealth Government decision-making, which has
significant implications for long term prosperity is that of
tariffs and protection. This is an area of decision-making
fraught with difficulties, for we all agree that the long-term
benefits of a more competitive and efficient Australian economy
need to be balanced against the costs to those whose employment
prospects may be put at risk and the consequences for those who
have made substantial investments under existing protection
policies. On many occasions the Government has stated its view that Australia
should move progressively towards lower levels of protection
in order to promote the development of a manufacturing industry
which will be more internationally competitive. In the last three
years in particular, as the I. A. C. has moved through its
progressive series of reviews of assistance to all sectors, we
have taken many decisions which over a period of time, will phase
down protection in a wide range of industries including iron
and steel, rubber products, chemicals, sporting equipment and,
starting in 1932, textiles, clothing and footwear.
We have also recently acted to eliminate, except in the case
of certain defence-strategic industries, an additional element of
protection to Australian industry afforded through a margin of
preference in Comconwealth Government purchasing. And now that
the I. A. C. has almost completed its series of tariff reviews, we
have asked the Commission to report by early 1982 on what options
are available to achieve further general reductions in protection,
and I want to emphasise that gradualism and the avoidance of
disruption are indispensable elements in the Government's approach
and policies in this area.
In these and other ways, the Government has sought to promote
the necessary conditions for a dynamic economy and a prosperous
society. In doing so, however, we have not forgotten that change
and progress even prosperity itself inevitably confront people
with pressures and problems, that sound and responsible economic
management must be integrated with care and concern for the needs
of people.
Let me turn to this wider issue, bearing in mind that a Budget
does not demonstrate genuine concern about people or their
well-being unless it faces up to economic reality with firmness,
with conviction, with balance, and with that proper caution which
does not place hard won gains at risk. It also needs to be
understood that Budgetary policy is not just a matter of cutting
up this year's national cake which is what the Leader of the
Opposition boils it down to in the end and that while Budget
allocations have an immediate and critical bearing on the well-being
of a significant proportion indeed of Australians, Australians
overall should obviously be looking to a healthy economy rather
than few dollars and cents in the Budget for their economic well-being.
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What better illustration of this could there be than the
increase of $ 2.7 billion, after tax, in real household disposaYe
income that was achieved last year as a result of the economic
growth and activity which this Government's policies have generated.
In considering this Government's policies on the great issues
of human concern and the real needs of people, the starting point
must be our programmes for young people because it is this
Government which has concentrated on equipping those who are not
academically inclined with useful work skills, and this Government
which has based its policies 6n the premise that young people
who are not at work ought where possible to be in education or
training.
The Government has sustained its original commitment to
the development of a skilled workforce, with particular emphasis
on youth, and prominent among our major initiatives are the
C. R. A. F. T. ( Commonwealth Rebate for Apprenticeship Full-Time
Training) Scheme, the S. Y. E. T. P. Scheme, and the School to Wbrk
Transition Programme. Under these initiatives, a record
95,000 apprentices will receive assistance in 1981/ 82 compared
with only 21,000 assisted in 1975/ 76 by the old apprenticeship
scheme; 90,000 young people will be able to obtain work experience
including longer-term experience for 12,000 of those who have
had the greatest difficulty in finding jobs; and 23,000 young
people will receive training under the transition programmes
in T. A. F. E. institutions alone.
The Government has also introduced a variety of smaller scale
schemes because the Government's initiatives cater for the
real problems in this area.
The programmes implemented by the Government are appreciated
through--ut the community and nobody in the community would want to
deny the importance of the Government's concern in relation to
this matter.
The total allocation in the 1981/ 82 Budget directed towards
training schemes and transitional programmes is more than
$ 240 million, almost 40% up on last year's allocation, and upwards
of 225,000 young people will be receiving assistance. / 8
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Ana the fact that youth unemployment has come down by over nineteen arid
a half thousand in the year to August shows the effectiveness
of our policies.
I turn to the Government's initiatives and support for disabled
and handicapped persons, where assistance is being provided in
1981/ 82 involving an overall expenditure of over $ 1.1 billion.
This figure might possibly be doubled or trebled without the real
needs that exist being fully met, but the real increase
of 39% on the 1975/ 76 figure shows the very considerable and
sympathetic commitment of this Government to the well-being of
handicapped and disabled persons. The Government's view is that
a wide range of programmes and forms of assistance are
required to meet the needs that exist. About two hundred and
eighty projects have been approved to date for the 1980/ 83
triennium in the handicapped persons welfare programme.
A new programme of aids for disabled people who were not covered
by existing programmes was established last June and the national
employment strategy for the handicapped is improving services
and increasing assistance under the training programmes at a
cost of $ 4 million in 1981/ 82. Three new initiatives in
the Budget, which will have a significant impact on the lifestyles
ofhandicapoed and disabled people, are a new permanent scheme
for assistance in the production of audio books in addition to
Braille books, a new scheme of support for the establishment
of radio services to supply spoken word services, and the
new Australian caotion centre, which will provide access to
television prograr-es for people with impaired hearing. / 9
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The Governrment is acutely aware of the difficulty of allocating
priorities in relation to the needs of disabled persons and a
fundamental principle of government policy is to assist disabled
persons to live normal lives wherever 1and so far as this is
possible and our commitment to making real gains in meeting
the needs of disabled persons in our community will be maintained.
I turn to Aboriginal affairs, where health care, employment
opportunities and self-management initiatives are among the
most central . oncerns and objectives of government policy. In the
1981/ 82 budget health grants to Aboriginal medical services, at.
almost $ 5 million, have more than doubled in real terms since:
1975/ 76, and are up 22% on last year's allocation; $ 50 million
is to be provided over 5 years for the Aboriginal public health
improvement programme, $ 8 millionof it this year; $ 47 million
will be provided in 1981/ 82 for Aboriginal education and
training, and a further $ 25 million has been allocated specifically
for employment and related programmes for Aboriginals. Some
$ 78 million will be provided through'various programmes for
Aboriginal housing. Grants to Aboriginal legal services will
increase by almost 20% on last year; to Aboriginal cultural
and recreational organisations by 18%; and funds for social
support schemes will increase by 24%.
The well-being of the Aboriginal people concerns the Government
as it concerns the vast majority of Australians and while a great
many of the initiatives which need to be developed require a
financial commit-ent, initiatives of a different order are equally
required. In relation to the profoundly important objective of selfmanagement-,
the Aboriginal Development Commission is an exciting
initiative, which is attracting overseas interest. It was
established only after detailed consultations with Aboriginal
organisat. ons and communities, including with the National
Aborigina. l Conference. It already has over 60% of its
positions occupied by Aboriginals. In 1981/ 82 it has available
over $ 50 : illion for spending on Aboriginal advancement
progra-mes.
This Government also promoted the establishment of the National
Aboriginal Conference a body elected by Aboriginals to give
independent advice to the government on matters affecting the
Aboriginal people and with which successive Ministers for
Aboriginal Affairs have developed strong ties.
The Government continues to seek co-operative progress in meeting
the special' claims and the particular needs of Aboriginals and
while there is much that may be said about the treatment of
the Aboriginal people in earlier times, I believe that the
record of achievement over the last decade or two a record
to which both sides of this House have made significant and
impressive contributions provides a basis for confidence that
progress will continue as a matter of urgency and of the highest
priority.
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I turn to the Budget allocation for assistance to aged persons.
This is an area which raises issues and dilemmas of profound
significance for the community especially in the situation in
which there is not only an increase in the aged population but
also in which the legitimacy of established expectations and
the policy of directing government assistance to the needy
cannot be recpnciled completely in practice.
Assistance for the aged is directed to three major areas of need
pensions and other income support; services which enable aged
persons to remain in their own homes; and assistance for people
who require either sheltered accommodation or nursing care.
The 1981/ 82 allocations illustrate the degree of this Government's
commitment to its policy of protecting basic pensions against
inflation a policy which we regard as crucial in ensuring social
justice especially for those whose only source of income support
is their pension and the Government has, through indexation,
maintained the rea! value of pensions with the cost of the
1981/ 82 increases amounting to about $ 430 million in a full year.
The upper limit at which an aged couple can receive some pension
payment will be $ 266 oer week after November 1981, compared with
$ 163 per week when the Government came to office. The Government
is continuing tc Drovide assistance for home ' care, meals-on-wheels,
and senior citizens centres, at a cost of over $ 23 million in
1981/ 82.
Support is also being provided towards the capital costs of
nursing homes, hostels and self-contained accommodation, and the
personal care subsidy.
In all, at $ 4.6 billion for 1981/ 82, assistance for the aged
has more than doubled since this Government came to office
a real increase of 20% s~ nce 1975/ 76.
I turn to multicultural affairs and services to migrants where
this Government's achievements are again meeting theneeds, the
concerns and the aspirations of so many. members of the Australian
community.
The Galbally report, which was designed as a review of services to
migrants has become a symbol of a transforming vision of Australian
society. It recommended that $ 50 million be spent on new or
expanded programmes over three years, and we have more than met
our commitment to this expenditure through expanded settlementand
migrant education programmes, establishment of migrant resource
courses, the development of multicultural television and ethnic
radio, establishment of the Institute of Multicultural Affairs,-,
the funding of ethnic schools, and the on-going teaching of
ethnic languages and culture. The Galbally vision is increasingly
becoming a reality.
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There has obviously been major expenditure on a very large
-number of programmes and services for immigrants and for ethnic
communities. But the truly significant-aspect of all this is not
so much the financial commitment involved but rather that
multicultural Australia has been made a reality under the
auspices of this Government, and to a significant extent as a
result of its initiatives and encouragement.
The 1981/ 82 Budget combines responsible economic management
with effective care for people and their concerns and the list
of initiatives and achievements which I have presented is by
no means exhaustive.
The same picture of effective achievement of progressive Liberal
objectives would emerge in an examination of grants for local
government, of grants for overseas aid, of increases in
family allowances, and in attention to veterans' affairs.
Any suggestion that this government has concentrated on economic
management to the exclusion of broader concerns and issues is
wholly groundless. Any suggestion that the Government has lost
sight of its own Liberal objectives, or its commitment to the
way of life which Australians want, is wholly groundless.
Of course, the Government recognises the importance of a strong
economy as a pre-condition for the realisation of wider social and
cultural objectives. That recognition has been written large
in the balance which has been maintained in our pursuit of social
and hum-anicarian objectives and in the rigorous way that we have
always given first place to the highest priorities. It is
this concentration on priorities which has allowed the Government
to make significant increases in allocations to areas of need while
maintaining expenditure restraint and building up the Australian
economy.
Above all, the Government's policies reflect its fundamental
philosophy that individual Australians, and Australian families,
have the right, and must have the freedom, to decide for
themselves their own needs, their own way of life. Our policies
unlike the Opposition's are designed to give a constructive
a positive and a properly limited role for government to make
room for private enterprise, to make Australia strong by moving
in a responsible and balanced way to a more competitive economy,
to give people greater control over their own incomes by firmly
setting this country on the only course leading to lower
taxation, to develop opportunity, choice and power over their
own lives for all Australians by appropriate government
programmes for Aborigines, for migrants, for the elderly
and for the young, to make government strong to protect
the weak and open doors for the disadvantaged, and individuals'"
strong to defend their rights and build the kind of life they want
for themselves.
In six years, Australia has been brought from the chaos of
the Labor disaster to a condition of strength and prosperity
with unrivalled prospects and a magnificent future.
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