TOUGH BUDGET LIKELY IN AUST.

Press, Volume CXI, Issue 32640, 23 June 1971, Page 19

TOUGH BUDGET LIKELY IN AUST.

(N.Z.P.A. Staff Correspondent) SYDNEY, June 22. Australians are being conditioned for an unpleasant Budget in about two months.

For several weeks the Federal Treasurer (Mr Billy Snedden) has been giving

hints of a tough line, and last week the Prime Minister (Mi McMahon) told the State Premiers that the outlook for the next financial year was “grim, to say the least." He added: “Mr Snedden will have his pruning knife out." Mr McMahon indicated that Commonwealth spending for the present financial year seemed likely to be slooom more than last year. “Revenues will be up, but not commensurately, and our over-all position will show a marked deterioration from what we provided for last August,” he said. Sharp rises in assistance to the states have been given as one of the main reasons for this, but wage rises have also cost the Federal and state governments millions of dollars. According to Mi Snedden, average earnings in the March quarter reached a level 13 per cent above that of the same quarter in 1970. In an effort to help the states out of their desperate deficit positions, the Federal Government last week handed over the payroll tax to them. The states responded by immediately increasing it from 2.5 per cent to 3.5 per cent, a move which may yield a total of sllsm a year. The tax hits employers, but, in the end, the public will bear the brunt of it, in higher prices. Already, in the face of rising wages and costs, the states have introduced increases for Government services. New South Wales, for example, last week announced 50 per cent increases in train and bus fares, and in hospital fees.