X l

ADDRESS BY THE MINISTER FOR FINANCE, SENATOR PETER WALSH,  AT THE NATIONAL PRESS CLUB, WEDNESDAY, 10 JULY 1 9 8 5 :  BUDGET RESTRAINT -  EQUITY AND MARGINAL CHOICES

I WANT TO BEGIN TODAY'S ADDRESS BY OUTLINING THE BASIC STRENGTH OF

t h i s  Government  -  i t s  success  in t u r n in g  around  the c o u n t r y ' s

ECONOMIC PERFORMANCE, IN LEADING THE ECONOMY OUT OF ITS WORST .

RECESSION IN HALF A CENTURY,Â·AND IN FIRMLY ESTABLISHING THE

CIRCUMSTANCES OF SOUND AND SUSTAINED ECONOMIC GROWTH,

Th i s  record  m i g h t  not keep  the a d r e n a l in  of the Press  Ga l l e r y

PUMPING; NOR MIGHT IT MEET THE REQUIREMENTS OF EDITORS EVER READY

TO RECYCLE OLD HEADLINES, BUT IT IS WHAT WILL FUNDAMENTALLY

DETERMINE THE LIVING STANDARDS OF THE AUSTRALIAN COMMUNITY AND,

INDEED, THE ELECTORAL DESTINY OF THE GOVERNMENT. Â·

Since  g a i n i n g  o f f i c e  the Hawke Labor Government  has tak e n  t h e -

ECONOMY FROM THE DEEPEST TROUGH SINCE THE GREAT DEPRESSION TO ONE

OF THE FASTEST-GROWING IN THE WESTERN WORLD, MORE THAN 3 7 0 ,0 0 0

JOBS HAVE BEEN CREATED SINCE THE ECONOMIC SUMMIT IN APRIL 1983, Â·

GREATER THAN THE TOTAL NUMBER OF JOBS CREATED IN THE ENTIRE 7

YEARS AND A MONTHS OF THE PREVIOUS GOVERNMENT.

The Pr ic e s  and I ncomes  Accord  has been  s p e c t a c u l a r l y  s u c c e s s fu l  in

STABILISING REAL WAGES AND PREVENTING THE DEBILITATING WAGE-PRICE

SPIRALS SET IN MOTION BY THE CONFRONTATI ON I ST POLICIES OF THE

PREVIOUS CONSERVATIVE COAL I T I ON . GOVERNMENT, ÃÂªÃÂÃÂ ACCORD HAS

PROVIDED MUCH OF THE STABILITY NEEDED FOR SUSTAINED ECONOMIC

growth , Real u n i t  labour  costs  have returned  to the l e v e l s  of the

e a r ly  1970s, Pr i v a t e  in v e s t m e n t  i s  growing  s t r o n g l y , encouraged

BY THE STABLE ECONOMIC -CONDITIONS ENGENDERED BY THE HAWKE .

Go v e r n m e n t , Bu s i n e s s  in v e s t m e n t  in 1 9 8 4 -8 5  has p ro b a b ly  grown by

around  H H Z , and FURTHER GROWTH OF AT LEAST 7% IN 1 9 8 5 - 8 6  APPEARS

L I K E L Y ,  JUDGING FROM RECENT DATA ON BUSINESS EXPECTATIONS.

r

2.

The Bu d g e t - t i m e  f o r e c a s t  of non- farm  GDP growth  in 1 9 8 4 - 8 5  of 5%

LOOKS ACHIEVABLE, THIS WOULD MEAN TWO CONSECUTIVE YEARS OF GROWTH

above  5%. I n  no other  year s i n c e  1973 has 5% growth  been

RECORDED. ÃÂªÃÂÃÂ VERY PLEASING TRENDS IN PRIVATE CONSUMPTION AND

INVESTMENT ALLOW US TO LOOK FORWARD CONFIDENTLY TO CONTINUED

STRONG ECONOMIC GROWTH IN 1 9 8 5 - 8 6 .

Al l of t h i s  stan ds  i n stark  c o n tr a s t  to the performance  of the

p r e v i o u s  Government  and the p o l i c i e s  of the p r e s e n t  Op p o s i t i o n .

The Op p o s i t i o n  has l e a r n e d  n o t h i n g  from i t s  m i s t a k e s  in

Go v e r n m e n t . That L i b e r a l -Na t i o n a l  Go v e r n m e n t , w i t h  John Howard as

Tr e a s u r e r , had the d u b io u s  honour  of b e i n g  the only Government  in

Au s t r a l i a ' s h i s t o r y  to p r e s i d e  over both d o u b l e - d i g i t  i n f l a t i o n

AND DOUBLE-DIGIT UNEMPLOYMENT. THOSE S IM P L IS T IC , DOCTRINAIRE

POLICIES BROUGHT ABOUT A STEADY DECLINE IN ECONOMIC GROWTH IN

Au s t r a l i a , followed  by an a c t u a l  c o n t r a c t io n  in the s i z e  of the

E’CONOMY IN THE LAST YEAR OF THAT GOVERNMENT .

The Op p o s i t i o n ' s p l a n  to rep la ce  the Accord w it h  f r e e - f o r- a l l wage

DETERMINATION ÃÂ S A FORMULA FOR WAGE BREAKOUTS, INDUSTRIAL CHAOS

AND RISING UNEMPLOYMENT. I t  IS A FORMULA FOR RETURN TO ECONOMIC

RECESSION.

For the second  c o n s e c u t iv e  year e x p e n d i t u r e  has been c o n t a in e d

below the Budget  e s t i m a t e  - s o m e t h in g  which  M r  Howard d i d n ' t

a c h i e v e  even o n c e . M r  Howard ' s c a r p in g  c a l l s  ( no n- s p e c i f i c  of

c o u r s e ) for greater  s p e n d i n g  d i s c i p l i n e  m i g h t  have a l i t t l e  more

CREDIBILITY IF HE HAD DISPLAYED SOME CAPACITY FOR SPENDING

DISC IPLINE WHEN HE HAD SOME RESPONSIBILITY FOR I T .  I n  FACT IN ALL

OF THE FIVE BUDGETS WHICH M r HOWARD PRODUCED, SPENDING EXCEEDED

the Budget  e s t i m a t e  , by a very s m a l l  amount  in one y e a r , but by

NEARLY $2 BILLIO N IN ANOTHER.

A t  l a s t  w e e k ' s t a x a t i o n  s u m m i t , one d e l e g a t e  p o i n t e d  to the

APPARENT PUBLIC CONFUSION ABOUT THE LINKAGE BETWEEN PUBLIC

SPENDING AND TAXATION . H e  CITED A POLL SHOWING THAT 54% BELIEVE

SPENDING SHOULD BE HIGHER AND TAXES SHOULD BE LOWER. WHETHER WE

3.

SHOULD ASSUME FROM THAT SURVEY, THAT ANY POLITICAL LEADER WHO

PROMISES TO DO BOTH WILL WIN AN ELECTION, I DO NOT KNOW, BUT

Andrew  Pe a c o c k , who p ed d les  the snake  o i l  of h ig h e r  s p e n d i n g ,

LOWER TAXES AND SMALLER DEFICITS EVERY TIME HE OPENS HIS MOUTH,

OBVIOUSLY DOES.

I DO NOT PROPOSE TO SPEAK ABOUT TAXATION TODAY, OTHER THAN TO NOTE

TWO CRUCIAL POINTS: '

1. THAT TAXATION LEVELS, AT LEAST IN THE LONG TERM, ARE

DETERMINED BY EXPENDITURE; AND

2, HOW MUCH EXPENDITURE CAN BE FINANCED BY A GIVEN LEVEL OF

TAXATION IS HEAVILY INFLUENCED BY THE PREVAIL 1NG' LEVEL OF

UNEMPLOYMENT,

Many of the p o l i c y  p e r c e p t io n s  w hic h  c o n t i n u e  to d o m in a t e

POLITICAL DEBATE WERE INCUBATED IN THE EARLY 1 9 7 0 s . WHAT NEW

POLICY COULD BE IMPLEMENTED NOW -  WITH UNEMPLOYMENT HAVING RISEN

FROM BELOW 2% TO ABOVE 8% - IS MUCH MORE LIM IT E D . THIS IS RARELY

CONSIDERED.

Thus at l a s t  w e e k ' s s u m m i t , s e c t io n s  of what could  be lo o s ely

DESCRIBED AT THE "RIGHT" DEMANDED THAT COMMONWEALTH GOVERNMENT

OUTLAYS BE REDUCED TO 257= OF GDP.

What i s even  more l o o s e l y  d e s c r i b e d  as the " l e f t " c o n t in u e s  to

DEMAND THAT. EXPECTATIONS FOSTERED IN THE EARLY 1970s MUST BE

F U L F IL L E D .

Hig h e r  u nem plo ym en t  h i t s  the Government  Budget  from both s i d e s .

Revenue  f a l l s  because  income  and other  tax c o l l e c t i o n s  d e c l i n e .

Sp e n d i n g , on welfare  and unemployment  r e l i e f , i n c r e a s e s .

The " r i g h t " sees  25 1 as the i d e a l l e v e l of Commonwealth

Go v e r n m e n t o u t l a y s as a p r o p o r t i o n of GDP. I f s u d d e n l y we had

1.5%  u n e m p l o y m e n t (the 1 9 6 0s/ e a r l y 1 9 7 0s l e v e l) i n s t e a d of

t o d a y' s l e v e l, o u t l a y s would f a l l to a b o u t 27% "of GDP w i t h o u t a n y

POLICY c h a n g e s.

I f we as s u me p u b l i c  d e b t ca n no t be r e p u d i a t e d , to reduce the .

1 9 8 4 - 8 5  Bu dg et o u t l a y s t o.25% of GDP would hav e r e q u i r e d :

, Cu t t i n g  by 2% s p e n d i n g  on d e f e n c e , s o c i a l s e c u r i t y , h e a l t h ,

EDUCATION AND GENERAL PURPOSE PAYMENTS TO THE STATES, WHICH

ABSORB 74% OF OUTLAYS.

. Ca n c e l l i n g  p a y m e n t s for a l l o th er Commonwealth  f u n c t i o n s

WHICH WOULD MEAN NO PAYMENTS TO INDUSTRY, THE ARTS, TRANSPORT

OR FOREIGN A I D ,  AND CLOSING DOWN THE ABC, CSIRO, THE ATOMIC

En er g y Co m m i s s i o n  and t he Ta s m a n i a n  r a i l w a y s  (t h i s l i s t  i s

not e x h a u s t i v e ) .

. Ab o l i s h i n g  a l m o s t a l l the Commonwealth b u r e a u c r a c y  i n c l u d i n g

t he Ta x a t i o n  Of f i c e and De p a r t m e n t of F i n a n c e . There would

THEN BE NOBODY TO COLLECT OR PAY PUBLIC MONEY. GOVERNMENT

WOULD BE REPLACED BY ANARCHY.

Those who c a l l for Commonwealth o u t l a y s to be r ed u c e d to 25% of

GDP ARE i n f a c t h i g h s t a t u s sna ke o i l m e r c h a n t s .

The c o s t of m e e t i n g the e x p e c t a t i o n s  of the " l e f t" i s harder to

QUANTIFY BECAUSE THEY ARE LESS PRECISE. THEY ARE HOWEVER BROADLY

DERIVED FROM LABOR'S "PROGRAM" OF 1 9 7 2 .

I t  was s a i d  in 1972 t h a t  " T he Program " could  be funded  from the

NORMAL GROWTH IN GOVERNMENT REVENUE WITHOUT INCREASING THE LEVEL

of t a x a t i o n . That m i g h t  or m i g h t  not have been c o r r e c t . I t

CERTAINLY CEASED TO BE CORRECT WHEN REVENUE CEASED TO GROW AT

ANTICIPATED RATES WHEN THE ECONOMY SLID INTO RECESSION IN 1 9 7 4 .

The r e c e s s i o n  c o n t i n u e d  to d e e p e n u n t i l a f t e r t h i s Go vern m en t  was

ELECTED. Ã¢ÂÂ

De s p i t e  the im p r o v e m e n t s  t h a t have occurred the e f f e c t s  of t h a t

RECESSION REMAIN. THEY INCLUDE A $5 B I L L I O N  EFFECT ON THE BUDGET

OUTCOME. The e f f e c t i s a good d e a l more i f the r e c e s s i o n  i n d u c e d

INCREASE IN PUBLIC DEBT INTEREST IS INCLUDED. I f  WE WERE NOW TO

5,

MEET EXPECTATIONS BASED ON THE 19 72 "PROGRAM" THIS WOULD REQUIRE

AN INCREASE OF AROUND 20% IN PERSONAL TAXATION. UNLESS SOCIETY

WERE WILLING TO PAY SUCH TAXES, AND I SEE NO INDICATION THAT IT

IS ,  EXPECTATIONS MUST BE REDUCED,

Al l Govern m en ts  make c h o ic e s  among c o m p e t i n g  demands  for p u b l i c

f u n d i n g . Some Governments  s l i d e  around  m a k i n g  c h o ic e s  by

INCREASING OUTLAYS, SOME DEFER AND CONCEAL THEIR

IRRESPONSIBILITY BY GIVING SPECIFIC TAX CONCESSIONS TO SECTIONAL

INTEREST GROUPS -  LIKE M r HOWARD DID IN HIS 1 9 8 2  BUDGET LEAVING

t h i s  Government  to p i c k  up the b i l l ,

The d i s c i p l i n e  of the t r i l o g y , self  im p o s e d  on t h i s  Go v e r n m e n t ,

p r e c l u d e s  such p o l i t i c a l  cowardice  and d e c e p t i o n ,

I n  f a c t , i t ' s worth r e c o r d in g  t h a t c o n v e r s i o n  of t ax e x p e n d i t u r e s

INTO DIRECT OUTLAYS HAS ADDED 1% TO THE RATIO OF OUTLAYS TO GDP.

Th i s  Government  has d e n i e d  i t s e l f  any m a n i p u l a t i o n  of the t r i l o g y

DISC IP LIN E BY REVISION TO TAX EXPENDITURES,

The TRILOGY COMMITMENT IS THAT OVER THE PERIOD OF THIS PARLIAMENT

NEITHER TAXATION NOR EXPENDITURE NOR THE D E FIC IT WILL BE A HIGHER

PERCENTAGE OF GDP THAN THEY WERE IN 1 9 8 4 - 8 5 .  I n ADDITION

PRE-ELECTION COMMITMENTS WERE GIVEN TO REDUCE IN THIS YEAR, LAST

YEAR'S NOMINAL D E F IC IT ,

AS A LONG TERM MEMBER OF THE LABOR PARTY STRONGLY COMMITTED TO

ITS TRADITIONAL BELIEF IN SOCIAL AND ECONOMIC JUSTICE I HAVE NO

PROBLEM ENDORSING THE TRILOGY, I RECOGNISE THAT SOME, EQUALLY

COMMITTED, DO, I THINK THERE ARE TWO MAIN REASONS :

1. The Labor Party ( c o r r e c t l y ) d e v o t e s  much a t t e n t i o n  to the

PROGRESS IVITY/REGRESSIVITY OF THE TAXATION SYSTEM , BUT IT

RARELY SCRUTINISES THE PROGRESSI V I ÃÂ¤ÃÂ¥/ R E GRESSI V ITY OF PUBLIC

EXPENDITURE. I t  IS USUALLY TAKEN FOR GRANTED THAT PUBLIC

EXPENDITURE IS PROGRESSIVE, I n  SOME CASES THAT IS

DEMONSTRABLY WRONG.

ÃÂ

2 .  T he  t r i l o g y  d o e s  not  p r e c l u d e  r e a l  i n c r e a s e s  i n  per  c a p i t a

PUBLI C EXPENDITURE I F ECONOMIC GROWTH I S HIGHER THAN

POPULATION GROWTH, .

T he  t r i l o g y  h as  m e r i t  r i g h t  now  i n  d i r e c t i n g  a t t e n t i o n  to  the

MARGINAL CHOICES CONFRONTING THE GOVERNMENT IN T H I S  YEAR' S

B u d g e t .

O n  the b u r e a u c r a c y ' s b e s t  m i d - J une e s t i m a t e , 1 9 8 5 - 8 6  e x p e n d i t u r e

WOULD STILL REMAIN MORE THAN $6 BILLION HIGHER THAN THE REVENUE

L I M I T  IMPOSED BY THE TRILOGY. A DEFICIT ABOVE $6 BILLIO N IS NOT

CONSISTENT WITH THE TARGET PUBLICLY STATED BY BOTH THE PRIME

Mi n i s t e r  and the Tr e a s u r e r . ’

I WOULD EXPECT THAT LATER REVISIONS WILL IMPROVE THESE FIGURES.

But on the other  h a n d , no allowance  has been made for new p o l i c y ,

OR FOR ANY INCREASE IN NON- INDEXED WELFARE AND EDUCATION

ALLOWANCES SUCH AS TEAS OR PENSIONER/BENEFICIARY DEPENDENT'S

ALLOWANCES.

The payment  to p e n s i o n e r s  and b e n e f i c i a r i e s  who pay rent to

PRIVATE LANDLORDS HAS BEEN INCREASED BY THIS GOVERNMENT IN REAL

terms  by 33%. But the m a x im u m  payment  i s s t i l l  only $15 a w e e k ,

WHICH IS FAR BELOW THE RENTS FACED BY MANY PENSIONERS AND

BENEFICIARIES. ALMOST HALF OF THE SOLE PARENT PENSIONERS AND

BENEFICIARIES PAY PRIVATE RENTS, AND THEY COMPRISE A LARGE GROUP

OF THE DISADVANTAGED IN OUR SOCIETY. THEY COULD BE LIFTED OUT OF

REAL POVERTY BY A MODEST INCREASE IN HOUSEHOLD INCOME. MOREOVER,

BECAUSE THIS GROUP IS EASILY TARGETTED THE EFFECTIVENESS OF

INCREASED PAYMENTS IN RELIEVING POVERTY IS VERY HIGH.

The AVAILABLE EVIDENCE SUGGESTS THAT PERHAPS AS MANY AS 2 0 0 ,0 0 0

CHILDREN ARE ON THE VERGE OF MALNUTRITION SIMPLY BECAUSE

HOUSEHOLD INCOME IS INADEQUATE , I HAVE NO RESPECT FOR MEDIA

PROPRIETORS, P O LITIC IA N S , JOURNALISTS OR OTHER WHO WHIP UP PUBLIC

HYSTERIA TO RESTORE FULL PENSIONS FOR SINGLE PEOPLE WITH THEIR

OWN HOUSE PLUS $ 1 0 0 ,0 0 0  WORTH OF OTHER ASSETS WHILE THE NEEDS OF

MANY PENSIONERS WITH CHILDREN WHO ARE PAYING HIGH RENTS REMAIN

UNMET .

6.

The m i d - J une e s t i m a t e s  l e a v e no room for i m p r o v i n g  the l o t of

THESE CHILDREN WITHOUT BREAKING THE TRILOGY NOT A REAL OPTION -

OR REVIEWING EXPENDITURE WHICH IS AUTHORISED ALREADY.

Fi n a l 1 9 8 4 - 8 5  f i g u r e s  or p a r a m e t e r changes m i g h t e a s e the t e n s i o n

of t h a t d i l e m m a , Ev en i f t h a t were the c a s e, the f a c t r e m a i n s

t h a t Go v e r n m e n t s  mu st f a c e hard m a r g i n a l c h o i c e s on s p e n d i n g

P R I O R I T I E S .

I t  IS WELL KNOWN THAT EARLIER THIS YEAR I WAS PROPOSING SOME COST  RECOVERY FROM TERTIARY EDUCATION. BUT FEW OF THE DETAILS OF MY

PROPOSALS THEN EVER BECAME KNOWN. CAUCUS IN ANY CASE DECIDED AT

THAT TIME IT SHOULD NOT BEÂ·DONE. ÃÂªÃÂÃÂ ABOLITION OF TERTIARY FEES

WAS PART OF THE 1 9 7 2  "PROGRAM" CONCEIVED ON FULL EMPLOYMENT AND

REVENUE GROWTH ASSUMPTIONS WHICH HAVE BEEN INVALID SINCE 1 9 7 4 .

The AVERAGE COST TO THE TAXPAYER OF A UNIVERSITY DEGREE IS AROUND

$ 3 0 , 0 0 0 .  Pe r s o n a l l y  I f i n d  the p r o p o s i t i o n  t h a t  anyone  is

ENTITLED TO RECEIVE THAT SERVICE WITHOUT ANY CHARGE, REGARDLESS

OF THEIR PERSONAL, PROSPECTIVE OR PARENTAL INCOME, UNCONVINCING.

When i t i s known t h a t  the $ 3 0 , 0 0 0  s e r v ic e  i s h e a v i l y  skewed  in

FAVOUR OF THOSE ALREADY RELATIVELY ADVANTAGED THE PROPOSITION

BECOMES EVEN MORE SUSPECT. FREE UNIVERSITY EDUCATION IS A HIGHLY

REGRESSIVE OUTLAY. A MARGINAL CHOICE TO MAINTAIN THAT REGRESSIVE

OUTLAY AND NEGLECT THE NEEDS OF POOR CHILDREN WOULD BE MORALLY

INDEFENSIBLE -  A SOCIAL DARWINIST RATHER THAN A SOCIAL DEMOCRAT

VALUE JUDGEMENT. ' Ã¢ÂÂ

What I was c o n t e m p l a t i n g  e a r l i e r  t h i s  year was a system  that

WOULD HAVE FULLY EXEMPTED ALL STUDENTS FROM FAMILIES WITH A

TAXABLE INCOME LESS THAT $ 2 2 , 3 0 0 ,  PARTIALLY EXEMPTED HOUSEHOLDS

WITH INCOMES UP TO $ 2 8 , 0 0 0  AND RECOVERED 15% OF RECURRENT COSTS

FROM HIGHER INCOME HOUSEHOLDS. ÃÂªÃÂÃÂ CHARGE FOR A FULL-TIME

UNIVERSITY COURSE WOULD HAVE BEEN ABOUT $ 1 , 4 0 0 .  FULL YEAR

SAVINGS WOULD HAVE BEEN ABOUT $ 1 80 M ILLIO N. SOME VALID

CRITICISMS CAN BE MADE.

1. A NEW, CUMBERSOME AND EXPENSIVE ADMINISTRATION WOULD BE

REQUI RED.

8.

2. The f u l l  e x e m p t i o n  l e v e l  for s tu d en ts  at h o m e , though  much

HIGHER THAN THE TEAS INCOME L I M I T ,  WAS LESS THAN THE MEDIAN

HOUSEHOLD INCOME,

3. Ta x a b l e  income  i s  an im p e r f e c t  measure  of a b i l i t y  to p a y .

That d e f e c t  w i l l  be s u b s t a n t i a l l y  r e m e d ie d  when the income

TAX SYSTEM IS REFORMED.

4. Some r e l a t i v e l y  a f f l u e n t  p ar e n ts  could  refuse  to pay fees

FOR STUDENTS, WHO COULD THEN BE DENIED AN EDUCATION.

5. Some a f f l u e n t  par en ts  would  a v o i d  p a y i n g  because  t h e i r

OFFSPRING MIGHT DEFER COURSES BY CONTRIVING TO ESTABLISH

INDEPENDENCE, THEREBY AVOIDING THE PARENTAL MEANS TEST.

Po i n t s  3 and 5 have much more q u a n t i t a t i v e  r ele v an c e  to TEAS but

HAVE NOT CAUSED SO MUCH EXCITEMENT IN THIS CONTEXT. INDIGNATION

IS SELECTIVE.

None of those  c r i t i c i s m s  would  be r e l e v a n t  to an a l t e r n a t i v e

PROPOSITION SUCH AS THIS:

a . Every  s tu d en t  b e i n g  o b l i g e d  to pay f e e s .

b . Every  stu d en t  h a v in g  the r ig h t  to r e c e iv e  an e q u i v a l e n t  l o a n .

I f loan  i n t e r e s t  i s set at c o m m e r c ia l  rates  a f f l u e n t  students

would  p r o b a b l y  pay the f ees  up front  'rather  than  take  out a l o a n .

Most a f f l u e n t  p a r e n t s  would  p r o b a b ly  do the same for t h e i r

s tu d e n t  c h i l d r e n .

Loans could  be advanc ed  to stu d en t s  by p r i v a t e  f i n a n c i a l

INSTITUTIONS, WITH A GOVERNMENT GUARANTEE.

Gr a d u a t e s  who had ta k e n  out loans  as s tu d en ts  could  be o b l i g e d  to

REPAY THE LOANS AFTER THEIR TAXABLE INCOME REACHED A CERTAIN

POINT -  SAY 25 CENTS FOR EVERY DOLLAR OF INCOME ABOVE $ 1 5 ,0 0 0

ADJUSTED UPWARDS FOR ANY DEPENDENTS,

*

fv- f

9.

Three l i k e l y  c r i t i c i s m s  of such a proposal  a r e :

1. It m i g h t  r e s u l t  i n fewer  people  going  to u n i v e r s i t y  or

c o l l e g e . But the r e a l i t y  at presen t  i s not one of empty

SEATS INSIDE TERTIARY INSTITUTIONS BUT OF QUEUES OUTSIDE

THEM.

2. Older  p e o p l e , e s p e c i a l l y  m a r r ie d  women w i l l  never  r e c e i v e  the

INCOME REQUIRED TO REPAY A LOAN. I f THAT IS SO, THEY HAVE NO

OBLIGATION TO REPAY. THAT OF COURSE ACKNOWLEDGES THERE WOULD

BE SOME DEFAULT, BUT EVEN A 100% DEFAULT RATE WOULD BE NO

MORE COSTLY TO THE BUDGET THAN THE PRESENT SYSTEM.

3. Young p eo p le  from modest  or low income  h o u seh o ld s  w i l l  be

DETERRED BY THE LOAN L I A B I L I T Y  FROM DOING A TERTIARY COURSE.

I t  SEEMS UNLIKELY THAT A REPAYMENT OBLIGATION TRIGGERED BY A  $ 1 5 , 0 0 0  TAXABLE INCOME WOULD BE A SIGNIFICANT DETERRENT. To A  CHILD FROM A POOR FAMILY $ 1 5 , 0 0 0  IS A GREAT DEAL OF MONEY. I f

THE REPAYMENT OBLIGATION WERE A DETERRENT, IT IS EVIDENT THAT

EITHER THE POTENTIAL STUDENT HAD DECIDED THAT HIS OR HER EARNING

CAPACITY WOULD NOT BE ENHANCED TO THE EXTENT NECESSARY TO SERVICE

15% OF THE COST OF TERTIARY EDUCATION, OR THAT THE STUDENT DID

NOT VALUE THE COURSE HIGHLY. I n OTHER WORDS, IT IS A POOR

INVESTMENT FOR THE STUDENT. It MUST BE AN EVEN POORER INVESTMENT

FOR SOCIETY WHICH WOULD BE PAYING 85% OF THE COST.

Oppo nents  of any charge  argue that there  are p u b l i c  b e n e f i t s  in

TERTIARY EDUCATION, THAT IS TRUE BUT THE PUBLIC BENEFIT WOULD BE

MORE THAN TAKEN INTO ACCOUNT BY AN 85% PUBLIC SUBSIDY.

10.

1

The above  p r o p o s i t i o n  i s c o n c e p t u a l l y  r e l a t e d  to the graduates

TAX SURCHARGE PROPOSED BY AMONG OTHER PROFESSOR HlCKS, CURRENTLY

BEING EXAMINED BY THE LABOR PARTY'S NATIONAL PLATFORM EDUCATION

and Youth  Af f a i r s  Su b-Co m m i t t e e . But a g r a d u a t e ' s tax would be

POLITICALLY VULNERABLE DUE TO THE SLOW REVENUE BUILD"UP AND THE

ABSENCE OF ANY BUDGET SAVINGS. A n  OPPORTUNISTIC OPPOSITION

Leader  could  e a s i l y  overturn  i t  in the hope of p i c k i n g  up a few

THOUSAND VOTES BY PROMISING TO ABOLISH THIS "iL L -A D V IS E D  AND

d i s c r i m i n a t o r y " m e a s u r e . The larg e  and i m m e d i a t e  Budget  s a v i n g s

FROM A LOAN SCHEME WOULD DETER SUCH IRRESPONSIBILITY.

No DOUBT SOME WILL SAY THAT AN IDEAL SOCIETY WOULD IMPOSE NO

CHARGE FOR EDUCATION AND THAT TO DO SO WOULD BE A STEP BACKWARDS

TO THE EARLY 1 9 7 0 s .  My REPLY IS THAT WE HAVE A WORLD OF LIMITED

RESOURCES AND UNLIMITED DEMANDS. WHAT WAS SEEN AS ACHIEVABLE IN

1 9 7 2  WITH THE LEVELS OF TAXATION AND UNEMPLOYMENT AT THAT TIME IS  NOT ACHIEVABLE WITH THE UNEMPLOYMENT LEVEL WE NOW HAVE. .

Such a f e e s  and loans  scheme  would reduce  Budget  o u t l ay s  by $325

MILLION IN A FULL YEAR. APPLIED OVER A FULL YEAR, THE PROCEEDS

FROM THE FIRST HALF YEAR OF SUCH A SCHEME WOULD BE ENOUGH TO

INCREASE ASSISTANCE TO PENSIONERS AND BENEFICIARIES PAYING RENT

BY 30%, AND TO FULLY INDEX BOTH THE RATE AND INCOME TEST FOR ALL

EDUCATION ALLOWANCES,

I n A MARGINAL CHOICE SITUATION, WHICH OF THOSE ALTERNATIVES

SHOULD BE CHOSEN IS A SUBJECTIVE JUDGEMENT. ÃÂªÃÂ ME THE CORRECT

JUDGEMENT IS CRYSTAL CLEAR. AND I DO NOT BELIEVE I AM SO FAR

ESTRANGED FROM THE TRADITIONAL VALUES OF THE AUSTRALIAN LABOR

Pa r t y *, or the m a j o r i t y  of Labor voters  or the e l e c t o r a t e  at

LARGE, THAT THEIR CHOICE WOULD BE DIFFERENT IF THEY WERE AWARE OF

THE SPECIFICS AND THE ALTERNATIVES.

