THE PRESS THURSDAY, AUGUST 19, 1982. Australia’s Budget

Press, 19 August 1982, Page 20

THE PRESS THURSDAY, AUGUST 19, 1982. Australia’s Budget

The cry for tax relief was raised in Australia as it was in New Zealand, and has been heeded in both countries’ Budgets. Some attempt has been made to deal with the plight of those on lower incomes, though the relief is not substantial. The standard trio of beer, tobacco, and petrol has been hit. Other indirect taxes have been increased in Australia, as was expected. Some minor encouragement has been given to small investors though it may be doubted whether this is sufficient to move large amounts of money into investment in production. One of the notable aspects of the Australian Budget is that it did not include a currency devaluation. Australian farmers and mining interests would have been pleased to have seen devaluation. The Budget was steady rather than drastic. The tax relief may moderate wage demands, as might the increases in family allowances. Apart from being slightly inflationary, the Australian Budget will not do much to stimulate growth.

New Zealand’s inflation rate has been about 17 per cent. The Australian rate has been just under 10 per cent and the next year is expected to be about 10.7 per cent. The Australian deficit is $1674 million, which is relatively modest when compared with New Zealand’s deficit of $1879 million. New Zealand’s deficit, about 6 per cent of Gross National Product was a few percentage points lower than the deficits in the two previous years. Australia’s Budget deficit more than doubled and still represented only 1 per cent of G.N.P. The comparison gives New Zealanders plenty of reason for gloom. The Australians have plenty of reason for gloom themselves because unemployment is expected to increase.

Like New Zealand, Australia is in the position of having to ride out the world recession. If the United States economy picks up, Australia will feel the effects. As it is, the American economy hits Australia in a way that it does not hit New Zealand. Until recently Australia could count on huge amounts of overseas investment. This kept Australian sharemarket prices high. High interest rates and the rising value of

the American dollar have attracted international funds to the United States, so that even the illusion of activity given by an active sharemarket is missing in Australia. The Budget in Australia has been seen by some as paving the way for an early election. This argument has been supported by the fact that, while the sales tax measures come into effect immediately, the tax relief comes into effect in November. However, an early election looks increasingly unlikely. The Australian Labour Party is not in the disarray in which many expected it to be after the leadership challenge in July. At best, the Budget may be seen : as a document in which the Government has kept open its options on an early election. The Government is running out of time to have what could be called an early election. The earliest likely date is September 25 but that date can be ruled out completely because it would coincide with the grand final of the Victorian Football League.

Enough is going against the Fraser

Government without trying to hold an election in competition with that event. Early in October the Commonwealth Games will be held in Brisbane and the Queen will visit. Later in October the Commonwealth Heads of Government Regional Meeting will be held in Fiji and the Prime Minister will be out of the country. This leaves the period between the end of October and December. It would seem foolish to have an election in late October or early November because the tax cuts do not apply until November 1 and there would be no electoral benefit to be had from them. Late in November might be the earliest practical date, though the benefits might not have been felt fully by then. A December election might seem like

an afterthought to the year, especially as speculation, helped, by the Prime Minister, has been rife for months. An early election in Australia cannot be ruled out; but at least the Prime Minister’s comment this week that he would expect this Parliamentary term to run its full course should be reason to pause and view the Budget and the possibility ,of an'election Separately.