APPROPRIATION BILL
SPEECH BY THE PRIME MINISTER, HOUSE OF REPRESENTATIVES,
17 APRIL 1975
JUST OVER FIVE MONTHS AGO, ON 12 NOVEMBER 1974, 1
ANNOUNCED TO THE HOUSE A SERIES OF ECONOMIC MEASURES WHICH
SUPPLEMENTED ACTION ALREADY TAKEN IN THE BUDGET. THE
MEASURES HAD FOUR OBJECTIVES:-
FIRSTLY, TO MAINTAIN CONSUMER DEMAND THROUGH
A SUBSTANTIAL REDUCTION IN PERSONAL INCOME TAXa
SECONDLY, TO ATTACK INFLATION BY REDUCING THE
PRESSURE FOR WAGE INCREASES THROUGH A SUBSTANTIAL
IMPROVEMENT IN AFTER-TAX TAKE-HOME PAY THIS YEARS
THIRDLY, TO ENHANCE BUSINESS PROFITABILITY BY A
REDUCTION IN COMPANY TAX AND OTHER MEASURES.
FOURT'HLY, TO SUPPORT PARTICULAR INDUSTRIES WHERE
SPECIAL PROBLEMS WERE EMERGING,
ANNOUNCING THESE MEASURES IWARNED THAT IT WOULD
TAKE CONSIDERABLE TIME FOR THE MEASURES TO TAKE THEIR FULL
EFFECT AND THAT FOR SEVERAL MONTHS THE FIGURES' UNEMPLOYMENT*
THE COST OF LIVING INDEX -' WOULD NOT BE GOOD, WE ARE NOW
BEGINNING TO SEE THE UP-TURN WHICH WE HAVE SOUGHT SO EARNESTLY.
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APART FROM THEIR DOMESTIC SIGNIFICANCE THE FIGURES
SERVE TO REMIND US OF THE OUTSTANDING CHARACTERISTIC OF
AUSTRALIA'S PRESENT ECONOMIC DIFFICULTIES THEY ARE
INTERNATIONAL, THEY ARE WORLD-WIDE IN CHARACTER AND
WORLD-WIDE IN INCIDENCEY GOVERNMENB IN COMPARABLE COUNTRIES
ARE GRAPPLING WITH THE TWIN PROBLEMS OF HIGH'UNEMPLOYMENT
AND RAPID INFLATIONj MOST GOVERNMENTS HAVE ADOPTED MEASURES
SIMILAR TO THOSE OF THE AUSTRALIAN GOVERNMENT, ALL
ACKNOWLEDGE THAT THERE IS-NO SINGLE OR SIMPLE SOLUTION FOR
OUR COMMON PROBLEMSK NO GOVERNMENT HAS BEEN MORE ENERGETIC
IN THE QUEST FOR A SOLUTION OR MORE FLEXIBLE IN ITS
APPROACH THAN THE AUSTRALIAN GOVERNMENTi
THE EXTRAORDINARY SPEED WITH WHICH ECONOMIC
CIRCUMSTANCES CHANGE IN ALL MODERN MIXED ECONOMIES REQUIRES
AN ALTOGETHER NEW DEGREE OF FLEXIBILITY IN ECONOMIC
DECISION-MAKING WE DO NOT INTEND TO BE SCARED OFF FRQM
MAKING NEEDED AND PROPER CHANGES BY CHEAP CHARGES OF
INCONSISTENCYy ECONOMIC CIRCUMSTANCES HERE AND THROUGHOUT
THE WORLD ARE NOW SUBJECT TO RAPID CHANGE NEVER EXPERIENCED
IN OUR LIFETIMES/ THE BUSINESS CYCLE WHICH USED TO TAKE
FIVE TO. SEV. EN YEARS FOR ITS COMPLETION NOW APPEARS TO TAKE
ABOUT TWO YEARSA THIS IMPOSES UNPRECEDENTED PRESSURES ON
GOVERNMENTS AND REQUIRES VERY GREAT FLEXIBILITY IN POLICY
PLANNING,.
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IN THIS SITUATION ONE HAS TO BE EXTREMELY CAREFUL IN
MAKING PREDICTIONS BASED ON THE LATEST SET OF ECONOMIC
INDICATORS, WE MUST BEWARE OF FALSE DAWNS.
NONETHELESS, THERE ARE GROUNDS FOR SOME CAUTIOUS OPTIMISM,
THE SITUATION AT PRESENT IS THAT SOME OF THE MORE SERIOUS
ASPECTS OF DECLINE IN ACTIVITY ARE NOW BEHIND US. CREDIT
IS FREELY AYAILABLE AND THE DEMAND FOR FUNDS, PARTICULARLY
FOR'HOUSING, IS HIGH, IMPORTS ARE NO LONGER EXCESSIVE
AND THE BALANCE OF PAYMENTS SITUATION PARTICULARLY ON
CURRENT ACCOUNT IS STRENGTHENING. WE ARE SEEING THE
FIRST REAL SIGNS OF RECOVERY IN EMPLOYMENT. WITH THE
LARGE PERSONAL TAX CUTS, INCLUDING THE HOUSING INTEREST
DEDUCTIBILITY SCHEME NOW BEING REFLECTED IN PAY PACKETS,
DISPOSABLE INCOMES ARE RISING STRONGLY.
THIS FOUNDATION FOR RECOVERY HAS BEEN ACHIEVED BY
NEW MEASURES TAKEN SINCE THE BUDGET. INEVITABLY THE RiTIMATES
OF EXPENDITURE AND RECEIPTS CONTAINED IN THE BUDGET HAVE
BEEN AMENDED. WE MAKE NO APOLOGY FOR THAT, JUST AS'WE MAKE
NO APOLOGY FOR THE POST-BUDGET MEASURES THEMSELVES, THE
INCREASED ESTIMATED DEFICIT IS THE NECESSARY CONSEQUENCE OF
THOSE MEASURES. THE BUDGET ITSELF WAS CRITICISED LAST
SEPTEMBER AS BEING TOO EXPANSIONARY. WITH HINDSIGHT, WE
CAN SEE THAT IT WAS NOT EXPANSIONARY ENOUGH.
THAT DEFICIENCY HAS SUBSEQUENTLY BEEN CORRECTED. THE
DEFICIT IS NOW ESTIMATED AS MOST LIKELY TO BE OF THE
ORDER OF $ 2,300 MILLION WITH A DOMESTIC DEFICIT OF ABOUT
$ 1,660 MILLION. THAT DEFICIT HAS TO BE PUT IN THE
PERSPECTIVE OF THE SEPARATE ITEMS WHICH COMPOSE IT. THE
CRY NOW IS THAT GOVERNMENT SPENDING MUST BE CUT. THE
FACT IS THAT THE REALLY BIG ITEMS WHERE SPENDING HAS BEEN
INCREASED. MOST, COMPARED WITH THE BUDGET ESTIMATE, ARE
PRECISELY THOSE WHICH ARE CONTRIBUTING MOST TO THE
RECOVERY IN THE PRIVATE SECTOR.
LET US LOOK AT THE DETAILS. LET THE OPPOSITION
DECLARE THAT IT WOULD CUT SPENDING ON THESE ITEMS. HIGHFLOWN
GENERALISATIONS ABOUT GOVERNMENT SPENDING ARE NOT
ENOUGH. SPENDING ON SOCIAL SECURITY AND WELFARE IS UP
$ 210 MILLION ON THE BUDGET ESTIMATE. WOULD THE OPPOSITION
* DENY THE CORRECTNESS OF OUR PENSIONS INCREASE BOTH IN
HUMAN TERMS AND ECONOMIC TERMS? SPENDING ON HOUSING IS UP
$ 234 MILLIONS. DOES THE OPPOSITION CLAIM THAT THIS IS
ILL-DIRECTED EITHER SOCIALLY OR ECONOMICALLY? 115/ 8
ASSISTANCE TO INDUSTRY IS UP $ 377 MILLION ON
THE BUDGET ESTIMATE. DOES THE COUNTRY PARTY DEPLORE
OUR ASSISTANCE TO RURAL INDUSTRIES OR THE LIBERAL PARTY
DENOUNCE OUR ASSISTANCE TO PRIVATE INDUSTRY?
PAYMENTS TO THE STATES AND FOR NATURAL DISASTER
RELIEF ARE UP $ 224 MILLION ON THE BUDGET ESTIMATE.
IS THIS, INCLUDING DARWIN RELIEF, AN. AREA WHERE THE
OPPOSITION WOULD CUT GOVERNMENT SPENDING?
EDUCATION IS UP $ 103 MILLION, IS THIS WHERE THE
CUT SHOULD BE MADE?
DEFENCE SPENDING IS UP $ 142 MILLION. SHOULD WE
HAVE PARED HERE? 6/.
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THERE IS OF COURSE ONE AREA OF GOVERNMENT SPENDING
-READILY IDENTIFIABLE, READILY MARKED FOR THE AXE. THAT
IS THE SPENDING INVOLVED IN THE NEW PROGRAMS INSTITUTED BY
THIS GOVERNMENT WHICH ARE DESIGNED TO BENEFIT THOSE
AUSTRALIANS WHO HAVE THE LEAST POLITICAL LEVERAGE, THEY
ARE PROGRAMS WHICH ARE POLITICALLY DISPENSABLE BECAUSE
THEIR BENEFICIARIES ARE POLITICALLY EXPENDABLE, THERE IS
A READY-MADE LIST OF EXPENDABLE PROGRAMS THE PROGRAMS
IMPERILLED BY THE HG1H COURT CHALLENGE ON THE
CONSTITUTIONAL VALIDITY OF THE AUSTRALIAN ASSISTANCE PLAN
AND THE REGIONAL EMPLOYMENT DEVELOPMENT SCHEME, ALL THESE
PROGRAMS BENEFIT THE RELATIVELY INARTICULATE OR
UNDER-PRIVILEGED IN OUR COMMUNITY, THEY HAVE A SOCIAL AND
HUMAN VALUE FAR BEYOND THEIR FINANCIAL COST, IN ITSELF
RELATIVELY SMALL COMPARED TO THE GREAT TRADITIONAL AREAS OF
GOVERNMENT SPENDING, To CUT THEM WOULD HAVE NO SIGNIFICANT
ECONOMIC EFFECT BUT IT WOULD MAKE A GESTURE IN THE
DIRECTION OF THOSE DEMANDING CUTS IN GOVERNMENT SPENDING,
THAT LOBBY IS VOCAL AND WELL ORGANISED; THE AUSTRALIANS
WHO BENEFIT UNDER THESE PROGRAMS ARE NEITHER, I SUGGEST
IT IS UPON THESE PROGRAMS AND UPON THOSE WHO BENEFIT FROM
THEM THAT THE-OPPOSITION WOULD REALLY LIKE TO SEE THE
GREAT AXE FALL,
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ON THE OTHER SIDE OF THE LEDGER RECEIPTS ARE
DOWN BY $ 307 MILLION ON THE BUDGET ESTIMATES. WHY?
BECAUSE OF TAX CUTS ADDITIONAL TO THOSE MADE IN THE
BUDGET. WE HAVE FOREGONE A FURTHER $ 230 MILLION NET
IN REVENUE FROM PERSONAL TAXATION AND $ 105 MILLION IN
COMPANY TAXATION. DOES THE OPPOSITION 1 EJECT THESE
CONCESSIONS?* SHOULD WE HAVE INCREASED TAXATION TO
REDUCE THE DEFICIT? SHOULD WE HAVE INCREASED TAXATION
TO SATISFY THE DOGMA-THAT DEFICIT BUDGETING IS' INTRINSICALILY
IRRESPONSIBLE? IF OPPOSITION SPOKESMEN WILL SPECIFY ONE AREA WHERE
A SUBSTANTIAL REDUCTION IN SPENDING SHOULD HAVE BEEN
MADE EITHER ON THE GROUNDS OF ECONOMIC PRUDENCE OR SOCIAL
RESPONSIBILITY THEN WE MIGHT TAKE MORE SER IOUSLY THEIR
FOR REDUCED GOVERNMENT SPENDING,. YET. PRATHER THAN
DO THIS THEIR COMPLAINTS ON SPECIFIC ISSU ES IMPLY NOT 4
REDUCED'GOVERNMENT SPENDING BUT INCREASED GOVERNMENT
SPENDING. WHAT ELSE* IS THE CONSEQUENCE OF THE DEMANDS BY
THE LEADER OF THE OPPOSITION FOR INCREASED DEFENCE SPENDING.
OR BY THE LEADER OF THE COUNTRY PARTY FOR EVEN MORE
GENEROUS ASSISTANCE TO RURAL INDUSTRY THAN WE ARE ALREADY
PROVIDING. THE FACT IS THAT THE AREAS WHERE WE HAVE
INCREASED EXPENDITURE OR FOREGONE REVENUE ARE ALL SOCIALLY
ESSENTIAL AND IN THE CIRCUMSTANCES IN WHICH THEY WERE MADE
ECONOMICALLY CORRECT. THEf EXPANSION UPON THE SEPTEMBER
BUDGET HAS BEEN THE CORRECT COURSE FOR THE CIRCUMSTANCES
UNDER WHICH IT WAS UNDERTAKEN. 188/.
WE HAVE THUS ACHIEVED NOT FULL RECOVERY BUT THE
CHANCE FOR FULL REVOVERY, THE OPPORTUNITY HAS BEEN
HARD-WON, THE AUSTRALIAN GOVERNMENT LIKE ALL RESPONSIBLE
GOVERNMENTS IN COMPARABLE COUNTRIES HAS HAD TO MAKE DIFFICULT
DECISIONS AND THERE WILL BE A CONTINUING NEED FOR MORE
DIFFICULT DECISIONS; BUT THE IMPORTANTTHING IS THAT THE
OPPORTUNITY ALL AUSTRALIANS HAVE EARNED SHOULD NOT BE LOST.
THE FACT REMAINS THAT IN 1975 THE REAL DANGER OF A RESURGENCE
OF THE RATE OF INFLATION AND THE REAL DANGER OF A DOWN-TURN
IN EMPLOYMENT WOULD COME FROM WAGE DEMANDS, GREATER THAN
THE ABILITY OF THE ECONQMY TO ABSORB, THIS IS THE REAL
MESSAGE THAT THE TREASURER AND I HAVE TRIED TO CONVEY TO
EMPLOYEES AND THEIR ORGANISATIONS1 THE WHOLE OBJECT OF
THE PERSONAL INCOME TAX CUTS, OF OUR SUPPORT FOR WAGE
INDEXATION AND THE SUBSTANTIAL IMPROVEMENTS WE HAVE
ACHIEVED IN THE PROVISION OF HEALTH, EDUCATION, PUBLIC
TRANSPORT AND COMMUNITY SERVICES HAS BEEN TO SUSTAIN ANDI
RAISE THE REAL STANDARD OF LIVING OF FAMILIES BEYOND THAT
PROVIDED BY THE PAY-PACKET ALONE, OUR'OBJECT IS TO REDUCE
. THE NEED FOR VAST WAGE INCREASES WHICH INDIVIDUALS AND
FAMILIES FEEL OBLIGED TO DEMAND IN ORDER TO CHASE RISING.
PRICES AND'MAINTAIN THEIR LIVING STANDARDS. THE
AUSTRALIAN GOVERNMENT BELIEVES IT IS THE MORE ENTITLED TO
EXPECT CO-OPERATION INSOFAR AS WE HAVE BEEN SUCCESSFUL IN
OUR EFFORTS TO RAISE REAL STANDARDS AND REAL EARNINGS FOR
AUSTRALIAN-EMPLOYEES, THAT IS FOR THE VAST MAJORITY OF
AUSTRALIANS. ,19/,
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INCOMES OF WAGE AND SALARY EARNERS HAVE GROWN
CONSISTENTLY FASTER THAN THE COST OF LIVING SINCE
DECEMBER 1972. BETWEEN THE DECEMBER QUARTER 1972 AND
THE DECEMBER QUARTER 1974:-
THE CONSUMER PRICE INDEX INCREASED BY
31.6 PER CENT,
AVERAGE WEEKLY EARNINGS INCREASED BY
46.8 PER CENT TO $ 146.90,
SAVERAGE MINIMUM WEEKLY AWARD WAGE RATES
FOR MALES INCREASED BY 53 PER CENT TO
$ 104 PER WEEK,
AVERAGE MINIMUM WEEKLY AWARD WAGE RATES
FOR FEMALES INCREASED BY 75 PER CENT TO
$ 91 PER WEEK.
REAL AVERAGE WEEKLY EARNINGS, BEFORE TAX,'
INCREASED BY 11.5 PER CENT. 0
REAL AVERAGE WEEKLY EARNINGS, AFTER TAX,
INCREASED BY 7.3 PER CENT.
THESE FIGURES FURTHER POINT TO THE BASIC STRENGTH
OF THE AUSTRALIAN ECONOMY AND THE SUPERIOR PERFORMANCE
-OF OUR NATIONAL POLICIES IN MEETING THE INTERNATIONAL
PROBLEMS OF THE WORLD ECONOMY. ISHALL GIVE SOME* KEY
COMPARISONS: -WHEREAS IN AUSTRALIA.. REAL AVERAGE WEEKLY
EARNINGS BEFORE TAX-INCREASED BY 11.5 PER CENT
JN THE TWO YEARS DECEMBER 1972 DECEMBER 1974,
IN THE U. S. THERE WAS A DECLINE OF 5.8 PER CENT&
-IN THE CALENDAR YEAR 1974, AUSTRALIAN GROSS
DOMESTIC* PRODUCT GREW BY 1.7 PER CENT IN REAL
TERMS COMPARED WITH THE PRECEDING CALENDAR
YEAR 1973. IN THE SAME PERIOD THERE WAS A
DECLINE IN THE U. S. OF 2.2 PER CENT; IN JAPAN
OF 3.7 PER CENT AND IN GREAT BRITAIN OF 0.2 PER CENT.
IN WEST GERMANY THERE WAS A' MARGINAL INCREASE OF'
0.4 PER CENT.-IN THE OECD NATIONS AS A WHOLE
THERE WAS A DECLINE OF 0.3 PER CENT IN REAL
GROSS DOMESTIC PRODUCT.
THERE IS NO SUGGESTION IN ALL THIS THAT THE AUSTRALIAN
GOVERNMENT IS COMPLACENT, BUT THE FIGURES DO SUGGEST THAT
CONFIDENCE IN THE AUSTRALIAN ECONOMY IS WELL FOUNDED. THE
KEY TO ECONOMIC REVIVAL THI. S YEAR IS THE'REVIVAL OF
CONFIDENCE IN THE PRIVATE SECTOR. THE MEASURES TAKEN BY
THE GOVERNMENT. IN THE PAST NINE MONTHS ESTABLISH A GOOD
BASIS FOR THAT CONFIDENCE. 11/.
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IN'SEPTEMBER, NOVEMBER AND JANUARY, WE TOOK MEASURES
APPROPRIATE FOR EXISTING AND EMERGING CONDITIONS. WE
SHALL CONTINUE THAT APPROACH, THE APPROACH OF A
RESPONSIVE AND RESPONSIBLE GOVERNMENT RESPONSIVE TO THE
NEEDS OF THE ECONOMY, RESPONSIVE TO THE NEEDS OF ALL
SECTIONS OF THE COMMUNITY, RESPONSIBLE IN MAKING THE
DECISIONS TO. MEET THOSE NEEDS,