AIM OF BUDGET: Tax, benefit, health, savings measures

Press, Volume CXIII, Issue 33252, 15 June 1973, Page 1

AIM OF BUDGET: Tax, benefit, health, savings measures

A Budget claimed to stimulate economic activity was presented to Parliament last evening by the Minister of Finance (Mr Rowling). He told the House, in the Labour Government’s first Budget, that achievement of faster economic growth, as a foundation for the Government’s social programme, depended on the acceptance of change.

Among the measures of which he spoke are increased social security benefits, provision for better health services and recreational facilities, a changed housing policy for those on lower incomes, a new savings scheme for housing, a new system of personal taxation, incentives for regional development, and greater worker participation in industry.

Recognising the likely inflationary effect of the Budget expenditure, and not satisfied with measures to restrain price increases, Mr Rowling last evening announced further anti-inflationary measures which are intended to curb property speculation and to contain wage increases. The new system of personal income tax is designed to give tax cuts to those with incomes of less than $5OOO a year. The Minister said that the system was designed to help those on middle and low incomes, and, in particular, married persons in those groups. For the first time the end of the middle-income group has been fixed—ssooo. The Minister added that no taxpayer would pay any more than he had immediately before the introduction of the 10 per cent rebate announced last year. This rebate is continued, and will give a full 10 per cent instead of 74 per cent last year. Pensions will be increased by §2.50 a week for a married couple, and §1.50 for a single pensioner. There will be a six-monthly review of income-tested benefits to see that pensions keep pace with the cost of living. Most beneficiaries will have their telephone rentals halved from October 1. As expected, the payroll tax is abolished, but from October 1. Other expected Budget announcements include a property speculation tax and a reduction in the subsidies on the cost and transport of fertilisers; subsidies on farm chemicals are abolished.

Price control will be on a new system where firms’ applications are related to wages paid, and the Budget makes it clear that firms are expected to absorb some increased costs by way of reduced profits or increased productivity. Incentives to industry are continued, and to encourage shift work and overtime to result in more production, concessions are allowed on the tax on these payments. Limit removed The limit is removed from State Advances Corporation 3 per cent housing loans, and applications will now be judged on merit and family circumstances. A new form of home ownership account is created to encourage saving for a first home. Mr Rowling said that total net Government expenditure this year would be $2605m, an increase of 17.4 per cent on last year’s $2219m. He estimated total revenue at $2375m. which would result in a deficit before borrowing of $232m. Income tax would yield sl6lom, s3oom more than last year. Works programme It had been agreed to limit the increase in the Government works programme and reading expenditure to 9.3 per cent. Within this limit, priority was being given to housing construction and education building. Basic thoughts Giving what he regarded as his basic thoughts underlying the Budget, he said full employment must be ensured. He saw this in much wider terms than in simply having enough jobs for those seeking work. The Government’s objective was to see that all those' who wanted to work had a job that fully used their potential, and gave them a sense of involvement. ‘‘Our second aim is to encourage people to work in those activities that give the greatest real return to the community,” he said. “This is what economic growth is about. It is not just building factories and power stations, but making sure that we select those tasks to which we are best suited—and then doing them efficiently.” He said the measures an- ■ nounced were aimed at: ; Increasing manufactured exports. ' Encouraging “our already highly efficient pastoral industries” to concentrate more on marketing , and diversification. i Continuing the expansion of forestry, tourism and horticulture. Inflation Uncontrolled inflation would halt the growth process. Changes proposed in price control procedure should help to contain the : pressure on costs and prices. They should also encourage , unions and managements to i approach negotiations with i an awareness of the implications.