Australian Letter Federal Govt. Expected To Refuse To Cut Taxes

Press, Volume CII, Issue 30042, 29 January 1963, Page 6

Australian Letter Federal Govt. Expected To Refuse To Cut Taxes

(By FRANK PUDDICOMBt. N.Z.Put. Special Correspondent)

SYDNEY.

The Federal Government is expected to refuse the strong demands now being made in several quarters for immediate tax reductions.

A section of Cabinet is said to be pressing for income and sales-tax cuts, and business leaders next month will warn the Prime Minister (Mr Menzies) and his Ministers that an incentive is needed for business to expand and absorb more workers.

Mr Menzies and senior Ministers win meet representatives of 11 major business groups on February 11 for talks on the economy. The businessmen, in pressing for taxation concessions are expected to point to the action of President Kennedy in asking Congress to reduce personal and company tax to promote economic expansion. Some business leaders will tell Mr Menzies the Australian economy is facing similar problems to the United States and that similar action is needed. According to political correspondents in Canberra, many Liberal and Country Party Parliamentarians believe action must be taken to improve the Government’s depressed political stocks. They are disturbed that more than a year has passed without any evidence of rising public confidence in the Government, and they consider action to reduce taxation this year would have beneficial effects for the Government next year, when elections are due. The Leader of the Opposition (Mr Calwell) has demanded that the Government bring down a supplementary budget “to provide further stimulation to the sluggish economy,” and he said it must be done "now.” Canberra correspondents say, however, that the Federal Government will refuse all demands for immediate tax reductions, direct or indirect .and has no intention of introducing a “little Budget” this year. They say the business leaders wall be told that the Government’s fiscal policies will remain as they are until they come under review in July before the settling of the Budget for 1963-64. It is expected, however, that the Commonwealth will give the States more money for public works and housing to reduce unemployment. A special loan council and premiers' conference will be held on February 14, fan-

mediately after the talk* between the Government and the leaders of primary and secondary industries. The loan council meeting will review work programmes to see what can be done to find more jobs, particularly for youth leaving school. The Australian unemployed figure rose by 20,314 to 101,248 for December, and is expected to jump higher this month. It was this high unemployment figure that prompted Mr Calwell to call for. a supplementary budget. He has been smbatfaating the Government by recalling the Prime Minister’s promise in December, 1901, to restore full employment in 12 months, and the claim of the Treasurer (Mr Holt) last August that the 1982-83 Budget would get the economy operating at the highest level of activity within the first six months of its operation. * * « Dam Scheme Dropped A move within the New South Wales Government virtually to abandon an important part of the Snowy Mountains hydro-electric scheme brought forth Some strong language from the Sydney "Sun” this week. The newspaper described the move to delay work indefinitely on the £2O million Blowering dam project as “short-sighted, unwise, un-

Australian and disgracefully defeatist” The threat of British entry into the Common Market on bedrock terms was the reason for the move by a section of Cabinet to drop the dam project The State Government is committed by agreement with the Commonwealth to build the dam at its own expense, since New South Wales will obtain almost exclusive benefit from it The dam was intended to store water for irrigation. The Pracaier, Mr Heffron, in his policy speech ait the last elections, promised a start on the dam in the present term. Now, however, strong forces within the Government are urging that the project be abandoned. They argue that Britain’s entry jnto the Common Market threatens great economic hardship for Australian irrigation areas. With Britain's entry, Australia would lose its present preferential dried fruit markets in Britain. Blowering dam would then become superfluous in providing water to develop more land for irrigation which could not be farmed for lack of markets. "Whatever the future of the dried fruit trade, this is not the time for New South Wales to throw desparing hands in the air and cry havoc,” said the “Sun.”