S EMBARGO: 9. OOpm
F P PRIM1E MINISTER
FOR MEDIA THUJRSDAY,-19-AUGUST 1982
ADDRESS TO TRE M{ ELBOURNE CaA~ bER OF COW,! F CE
The Budget responds to the needs of the times. it respondls
to the eCOnorric diffic'ulties which face us as a natio. n;
it responds to the particular needs and difficulties of
individual Australians, particularly those hardest hit by the
econo-mic-downturn; and i t does so wit hi -n the broad stra egy
of a disciplin-d, riespor~ sible and responsive approach to fiscal
and monetary policy tliat has been the continuing hallm~ ark of the
Government's . economic policies.
Over the past year, economi~ c conditions-facing Australia have
deteriorated sharply. A major factor in this has be-en the
severe recession affecting the whbl6e of the world ecortemy.
The impact on Australia has been felt throu'gh the reduced
dema-nd fofo-ur ex/ ports, and the lower prices received byF
Australian producers. As result, there has also been a
scaling back of planned investment in. resource-based
and investmrent projects have been fuirther hit by hiigh real
interest rates, affecting activity and employment in many
industries including housing and construction, and seriously
affecting hone-buyers and the prospects for home ownership.
The impact o~ r. Australia of those externa-l factors hav b-een
greatly worsened by unsustainable increases in wages and
salaries over the last y'ear, Wage in~ creases have been
significantly above the increase in consumier prices, and have
occurred at a time when the rate of increase of costs and
prices has cona down in most other countries. Our
international compatitiveness.*'~ s consequently. slipped
substantially, and the effects orf ' the world recession on us
have been made worse. Our inipdiñ-corpetirng industries have
come under-preasure as well as export indvistries, and the
slowdown has become evident throughout the: economy."::-
In these. circumstances we clearly needed a Budget whIch would
both help min-imise the effects of the world recession on.:. th. e
Australian economy, and prepare us to take Lull advantage of
recovery when it eventually comes. We needed a Budget which
achieved-s-balance between a positive response to the
difficulties facing Alastralians, anid a responsible approach to
economic management. / 2
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The Government decided that a modest domestic Budget surplus
of about $ 200 million would strike the right balance. It will
provide the Government with the capacity to help those in need,
while maintaining a firm anti-inflationary stance of policy
overall. To expand the Budget deficit by too much would
cause severe difficulties for our economy.
The socialist approach pursued by President Mitterand of
France until very recently shows what a total disaster a
major increase in the Budget deficit would be. The
Mitterand formula was to increase dramatically government
expenditure in the hope that by doing so economic activity will
be stimulated in spite of inflationary pressures. As a result,
at a time of falling inflation rates in Europe, France's
inflation rate has risen to about 14%; its GDP has contracted,
not expanded, as was supposed to have happened; unemployment
has risen to about 9% and employment fallen; France now
has a record trade deficit; and by the end of 1982, a small
public sector surplus m. y have turned into a deficit
equal to 4% of GDP.
On 13 Jun..' his. Governr-tent announced a turnaround,
and strict budgetary-controls have beenintroduced, and it is
disturbing that there are: i. people and parties in Australia
still praising the mitterand line long after Mitterand has
abandoned Mitterand.
The Government has always rejected that approach. Our objective
within the constraints of responsible economic management, has
been to help those Australians who are being hit by the
recession, while also helping the economy itself. I want
to comment-on how the Budget addresses the difficulties
of three areas of Australian society: families; businesses; and
various groups with specific and pressing needs.
Australian families will benefit in a major way from an
integrated package of measures. The tax cuts are large,
and of major significance. The tax free threshold has been
raised $ 400; the standard tax rate has been reduced to 30 cents
in the dollar; and the level at which the 46% tax rate applies
has been raised. The new tax rebates for all home mortgage
interest over 10%, the large increase in family allowances and the
$ 200 per annum increase in spouse rebate where there is
a dependent child, all work in combination to make the vast
majority of Australian families much better off.
A t5 ical single-income family on $ 300 a week, with two children
and a mortgage to pay off will be about $ 18 per week better off,
taking into accoudnt increases in indirect taxes. For low income
families, there will also be the far-sight ed new family income_ supplarn
of $ 10 per week per child. This supplernt will give greatly
needed assistance and also provide an incentive to work to sorre
people whose families would otherwise be better off on unemployment
benefits. Obviously the needs of different families vary,
and together the P.' det measures will greatly improve the
position of Australian families. ./ 3
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For businesses, the Budget builds on the package of measures
announced on 19 July in the Government's response to three
major IAC Reports. That package was designed to support the
efforts of Australian industry to restore its competitiveness,
and to build itself up for the future through more generous
depreciation provisions, including an extension of depreciation
allowances to all new non-residential income producing
buildings; through a continuation of Industrial Research
and Uleveloprnent Scheme; and through a strengthening of the
; xport iKarket Development 9cheme.
A Variety of measures in the Budget will complement the
incentives provided in that package, particularly while we
await an improvement in general economic conditions. Business
will benefit, from the stimulus to activity and employment
that will flow from the substantial increase in capital works
spending, including a 68% expen'liture increase in 1982/ 83 D. 4get finance
for the civil works progra. m. For e; ar. ple, new arA1 ongoing aviation civil , rk~ s
construction will involve an e xrditure of $ 151 million in ' 1982/ S3; $ 83 million vi
be provided as capital funding for aged or disabled persons'
accommodation; the new bicentennial roads programs will add
a further $ 150 million to roads expenditure in 1982/ 83 in
addition to the $ 734 million provided ui-der the existing roads
program; and direct funding by the Commonwealth of welfare
housing will rise by 27% to some $ 333 million.
The new wider tax rebate for housing should provide welcome
s * timulus to the building industry and related manufacturers,
and the personal tax reductions in the Budget will put about
$ 1,500 million back into consumers' pockets in 1982/ 83,
much of which will generate increased spending and activity.
Some of the tax reforms in the Budget will directly assist
Australian businesses, including small businesses: in particular.
the further increase from 70% to 80% in the retention allowance
for private companies, which meets a 1980 election cormmitment,
will give a full year benefit of $ 30 million to small business.
Moreover, the Government proposes to introduce measures to
allow losses suffered by one company in a group with 100%
comcmon ownership to be offset against taxable income of other
companies in the group, thus removing a disadvantage of company
groups vis-a-vis integrated companies. We all know that
unless private enterprise is in good shape, Australia suffers
as a whole., and the Government is committed to d6ing
everything it can to provide the framework and encouragement
in which buisiness can flourish. The Budget also gives valuable
assistance to a number of other groups in the community.
There are major meas ures for : young people. All student allowances
have been increased, the secondary allowance scheme means test has braeased
greatly and a 20% -increase in the SAS will assist many
low income f amilies to maintain children in-education, and thus
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get vital skills. There are significant increases in training
opportunities. Young people will also benefit from the 21%
increase in employment and training programs, which will assist
252,000 people all up. There will be 74,000 new approvals
for work experience in 1982/ 1983, 22,000 more than last year,
and 111,000 apprentices will be assisted under the CRAFT
scheme, and this is an increase of 12,000 on last year's record.
There are also new measures for pensioners. The new $ 250
pensioner rebate means that pensioners pay no tax up to a
threshold of $ 5429 pa and the rebate is then progressively
phased out; supplementary rental assistance for pensioners
will be increased by a further $ 2 to $ 10 per week; single pensioners
will be able to earn $ 10 more per week without any reduction
in their pensions and pensioner cou-les$ 14.50 more; and the
income limits for: receiving fringe benefits, including pensioner
health benefits, will be lifted by over
S# p P aw O a Set. O # O # jt . j .2 art' * Si4A . Jf8 / jj
In these and many other ways, the Budget assists in meeting
the difficulties faced by Australians during the economic
downturn. But the initiatives contained in the Budget are
not limited to measures that address current problems, there
are-important, visionary initiatives that build for the future
in a direct way.
The Australian Bicentennial Road Development Program is designed
to bring a national roads system to acceptable standards by
1988, to assist the development of major urban and rural
arterial roads, and where desired by the states, to assist
with approved urban public transport projects, to accelerate
construction of current development road projects, including
roads of national tourism importance, and to enable local
governments to upgrade their road systems by 1988.
This bicentennial program will help improve Australia's
transport and communications system. It will therefore benefit
our agricultural, manufacturing, mining and tourism industries
as well as giving a significant boost to the construction industry
and to local governments.
The program will involve total expenditure about
S$ 2 billon over 6 years financed by special surcharge on petrol and
diesel excise and this surcharge will be paid into a trust
fund fromwhichpayments will be made only for the program.
Another important Budget innovation is the encouragement to
small investors by allowing relief from so-called double
taxation of dividends through a rebate at the standard rate of
tax on up to $ 1,000 of dividend income, at a cost of $ 75 million
in a. full year. The incentive provided for employee share
participation schemes by freeing employees from tax on benefits
arising from the price at which shares are issued under approved
schemes is also welcome. This concession should encourage sbhemes
that will create among employees a greater feeling of sharing
in the fortune of their companies and help improve productivity
and industrial relations.
One of the most significant overall elements of the Budqet is that
it establishes arealbasis for co-operation and working together.
It provides for reasoned discussion about the claims of different
groups in the framework of what is best for Australia as a whole.
It is a Budget for all Australians, and by improving the position
of the whole community throuqh tax cuts, improved benefits and
new incentives the Budget demonstrates the Government's
strong commitment to encouraging all Australians to work
together to minimise the impactof the world economic recession
and to ensure we are all-able to take advantage of the world
economic recovery when it finally comes.
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To achieve these objectives, which all Australians share
it is vital that we build on the basis established in the Budget
a moderate and sustainable approach to wages in this country.
Wage restraint has never been more critical to our future.
There have recently been some important and welcome wage decisions.
The Government accepted salary recommendations well below the
current inflation rate for Parliamentarians and senior public
servants, and it was encouraging that the Academic Salaries
Tribunal made similar recommendations.
An important example to the community has been set by these
I actions, and I have written to a number of companies, to State
Premiers and to the ACTU and the CAI explaining the importance
of these decisions. Some major companies have announced a freeze
or very small salary increases, and. leading people in the trade
union movement including the President and the Secretary of the
ACTU have both spoken out strongly in support of wage moderation.
Mr Dolan, the President of the ACTU, was reported last week as
saying that more people would have to accept less pay to keep
their jobs. All of this happened before the Budget and there
is all the more reason for responsible wage decisions'to be made
after the Budget, and in the light of its contribution to
people's disposable income.
The Budget provides a very great stimulus to the groundswell
of support for co-operation, for working together, which has
been growing throughout the community in recent times. It is
through this spirit of working together combined with sound
government policies based on a realistic attitude to Australia's
situation that we can maintain the underlying strength of our
economy. We must keep building on recent successes in co-operation
. which have been significant. The Tripartite Conference showed
an important measure of agreement that excessive wage increases
would throw more people out of work. The co-operation between
unions, management and governments, based on the Crawford Report',
to make shipping flow more smoothly through our ports shows a
willingness to face up to the reality of Australia's. situation.
So does the fact that governments, both State and Federal, have
been getting together with the coal industry to solve the problems
which have plagued that industry. and threatened Australia's
reputation for reliability.
These issues are far too important for anyone to go around
pointing the bone at different people or groups, we need to
face difficulties together, and avoid conflicts. I really think
that some of the things that have been said in the last few days
by the Victorian Government about drought relief are a typical
example of the kind of conflict that ought to be avoided. The
Commonwealth contributes enormously to drought relief. Australiawide
Commonwealth assistance over the last two years has been
$ 100 million. There are well-established arrangements in place
for Commonwealth-State co-operation in drought relief which have
worked fnr many years to the benefit of our farmers,. and I hate
the thought that farmers should be made into pawin I, a disput
which is totally unnecessary because of . the . perfectly satisfactory
arrangements which allow governments to deal co-operatively with
drought. If we are to keep building Australia up, and take advantag
of all our opportunities and strengths we must all-pull togetherk
Everybody knows this and the track ahead of us as a nation i~ to act
upon that knowledge more and more so. that we can give reality
to the kind of Australia we want for our children.
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