Budget 2001-02

Current Issues

The Budget 2001–02

E-Brief: Online Only issued Date 18 May 2001

David Richardson, Analysis and Policy


On 22 May 2001 the Treasurer, Hon P Costello MP, in his sixth Budget speech delivered the Commonwealth Budget and announced his fifth cash surplus projected to be $1.5 billion or 0.2 per cent of GDP for 2001–02. The full documentation for the 2001–02 Budget is available electronically from a number of sources, including the Parliament House site. Other useful sources such as media releases and editorial comment related to the Budget are included in the Parliamentary Library’s Internet Guide to the Budget. In addition there is the recent Guide to the Budget Papers and Documentation. That includes links to editorial comment on the Budget and Ministerial press releases.

Formally, the Treasurer’s Budget speech is delivered as the Second Reading speech for the Appropriation Bill (No. 1) 2001-2002. The Bill's Digest for this Bill is also available. In this Budget the Treasurer’s main themes included:

  • Cuts in taxes worth $5 billion in 2001–02.
  • Reductions in government debt and the associated reductions in Commonwealth outlays on interest expenses.
  • A welfare and work package, Australians working together, costing $1.7 billion over 4 years.
  • A health package concentrating on rural and regional Australia as well as five major health problems.
  • An environment initiative that extends the Natural Heritage Trust for five years with new funding from 2002–03.
  • A strengthening of the quarantine and inspection arrangements.

This Budget does seem to contain more of the detail that users of the Budget Papers had come to expect over the years. However, there remain some notable omissions. For example, the Government has already announced assistance to some classes of HIH policy holders. Budget Paper No.1 contains nothing on that, but Budget Measures 2001–02 (BP No.2 p.201) contains reference to the HIH but only the information that "provision for cash expenditure in excess of $0.5 billion over the next four years has been made." The actual figures for each year 2001–02 to 2004–05 are not given. The relevant table merely has the notation "nfp" or "not for publication" which suggests the Government assumes the timing of the spending but does not want to report that on confidence or similar grounds. Given the policy and economic importance of the issue it would have been desirable to see some clearer indication of how that is actually treated in the Budget papers. There is a case for a more frank disclosure in the Budget Papers and perhaps even reporting the worst case scenario.

Another omission is the amount the Government expects to get in dividends from the Reserve Bank of Australia and from the sale of Telstra. We had to wait until the following day at the National Press Club when, in answer to a question after his speech, the Treasurer said he expected the Reserve Bank dividend to be approximately $2.8 billion in 2001–02. The proceeds from the proposed sale of Telstra are now planned to begin in 2003–04 [BP No.1 Box 2].

The rest of this e-brief covers just a few of the issues that arise from the 2001–02 Budget. No attempt is made to be comprehensive. For a topic not discussed here there will almost certainly be some coverage elsewhere in the Parliamentary Library’s site.

Economic Outlook

As this Budget was being framed, there was increasing uncertainty about the future of the Australian and especially world economies. Earlier, on 11 May, in evidence to the House of Representatives Standing Committee on Economics, Finance and Public Administration, the Governor of the Reserve Bank of Australia, Mr Ian Macfarlane, said:

While it is reasonable to expect that the promising trends of late will develop into stronger momentum for growth, we cannot as yet be confident…

Our growth outlook rests on various assumptions; not least that international conditions stabilise before too long and improve somewhat during 2002. That is a reasonable assumption on which to make a central forecast, but we need to be, and are, alert to the possibility of a weaker outcome…(1)

The Governor identified the main source of uncertainty in the world economy as the role of the US and the possibility that the US economy will perform worse than is now expected:

In fact the world faces two paths: one which is based on modest slowdown for the US, as has happened to date—and all the evidence is still pointing in that direction— and the alternative path is US recession, in which case everyone would feel the effects of that.(2)

The Treasurer reiterated these concerns the day after the Budget. Speaking on radio he said "There's a lot of uncertainty about the United States economy…If there were a major additional crash in America, that would affect us, there's no doubt about it." Nevertheless in predicting for the US economy the Treasurer said " I expect it to stabilise...and pick up..." These concerns were also expressed in the Budget Papers which contain an important warning that the main risk to the global economy, and therefore the Australian economy, is the possibility of a slowdown in the US economy. [Statement 3 BP No.1 Box 1] But overall the Budget paints an optimistic picture for the economic outlook with growth at 3.25 per cent in 2001–02 being driven by a rebound in residential construction, household consumption, business investment and net exports. [Statement 3 BP No.1]

Assuming the modest-US-slowdown-and-pick-up-path, other forecasters expect modest growth over the remainder of 2000–01 and a more healthy rate in 2001–02. For example, The Economist’s poll of forecasters has revised down their forecasts of economic growth in Australia to 2.1 per cent in 2001 (calendar year) before rising to a more respectable 4.0 per cent growth in 2002.(3) The latest IMF World Economic Outlook published in May 2001 forecasts Australian growth at 1.9 per cent in 2001 and 3.5 in 2002.

Other forecasters provide figures in Australian financial years, on the same basis as the Budget estimates. The ANZ Bank forecasts GDP growth of 2 per cent in 2000–01 (the same as the Budget) and 3 per cent in 2001–02 (just below the Budget’s 3.25). The National Australia Bank forecasts 2 and 2.5 per cent respectively while Westpac forecasts 2 and 3.5 per cent. Econtech forecasts 1.9 and 3 per cent respectively. HSBC predicts 2.1 and 3.4 per cent respectively. All of these forecasts are very tightly clustered around the official Government forecasts.

There is little discussion in the Budget papers of what went wrong in last year’s forecasts. Last year's "economic outlook" [Statement 2 BP No.1 2000-01] forecast growth at 3.75 for 2000–01, despite an expected decline in dwelling investment of 3 per cent due to the GST. As we get closer to the end of 2000–01 the current estimate is that growth will be only 2 per cent in 2000–01, with a dominant factor being a 25 per cent contraction in dwelling investment. In fact, in the September and December quarters dwelling investment fell by 35 per cent. GDP fell in the December 2000 quarter by 0.6 per cent, the first fall in GDP since the June quarter 1991. In November last year the Mid-Year Economic and Fiscal Outlook 2000–01 (MYEFO) had in fact presented even more optimistic forecasts in the 2000–01 Budget revising the 3.75 per cent growth up to 4 per cent.

Along with the forecast errors for GDP were forecast errors for unemployment. In last year’s Budget employment was forecast to grow by 2.25 percent. That was later revised up to 3 per cent and now is estimated as coming in at 2 per cent.

Discussion on the forecasting problems in the 2000 Budget and later, as well as how Treasury’s forecasts have faired relative to the private forecasts had to wait for the following week when the Secretary to the Treasury, Dr Ken Henry, gave a speech to a meeting of business economists. In that speech he drew attention to the fact that all forecasters got it wrong last year and all forecasts should be treated with caution. However, Dr Henry also said "there is much to be gained by opening up the forecasters’ ‘black boxes’."

Before leaving this section it is worth recalling the shock following the news on 7 March 2001 that national income in December 2000 had actually shrunk by 0.6 per cent ("Recession looms" in The Age 8 Mar 2001). That took most observers by surprise and seems to have been associated with a fall in business and consumer confidence. Headlines talked about the possibility of ‘recession’ which, on a common definition, occurs when there are two or more consecutive quarters of negative economic growth.(4) March quarter figures will be released on 6 June when we will know whether or not we have met the two quarter definition of recession. (The present indications are that the main components will have increased sufficiently to give a positive figure for growth in the March 2001 quarter and so avoid the two-negative-quarters definition of recession.) Nevertheless, that episode alerts us to the possibility that significant events, such as the downturn in housing, can have a dramatic announcement effect which creates flow-on deteriorations in confidence which can generate self fulfilling declines in economic activity. The Reserve Bank rates this prospect not necessarily likely but nevertheless a potential risk in the present climate. Another potential risk is the fallout from the collapse of HIH Insurance. The fact that a lot of builders are no longer insured and/or are having difficulty finding alternative insurance may imply a reduction in the capacity to respond to the rebound in demand on the part of the building and construction industry.


Labour market issues have been discussed above. Some private forecasters are suggesting unemployment around 7.5 per cent later in the year.

A bit of arithmetic shows how important the growth of the economy is for unemployment. On average and over the last three years, the labour force has grown by 1.67 per cent per annum. If there were no productivity growth then economic growth would have to be 1.67 per cent just to keep the unemployment rate stable. However, with some productivity growth economic growth has to be higher still. As growth slows down productivity growth tends to also slow down, but it is unusual for productivity growth to fall much below around 1 per cent. The Government uses 1.5 per cent as the implied long-run average productivity growth in its projections. On that basis economic growth has to be 3.2 per cent per annum, or 0.8 per cent a quarter, just to prevent unemployment deteriorating. One year of zero growth would result in unemployment increasing by 3.2 per cent a rapid increase of the sort that followed the recession of the early 1990s. If that arithmetic could be reduced to a quarterly relationship then one quarter of zero growth would result in unemployment increasing by 0.8 per cent. It is that sort of arithmetic that has seen the poor December quarter figure translate into unemployment rising from 6.0 per cent in September 2000 to 6.8 per cent in April 2001 with observers expecting further increases (since the effect on unemployment tends to lag changes in economic growth). Of course the actual relationship between economic growth and employment is unstable in smaller periods because the productivity figures jump around, as indeed does the participation rate (the proportion of people over 15 years of age who are in the labour force). Nevertheless it is worrying that for calendar year 2001 most projections have economic growth well below the 3.2 per cent benchmark, implying the prospect of increasing unemployment by Christmas 2001.

The Fiscal Stance

A major focus in the Budget is the size of the overall balance and whether it happens to be in deficit, surplus or rough balance. For 2001–02 the Treasurer, Hon P Costello MP , was able to announce a cash surplus of deficit of $1.5 billion or 0.2 per cent of forecast GDP. For 2002–03 the figures are projected to be $1.1 billion or 0.1 per cent of GDP. These are down from the estimated surplus of $2.3 billion in 2000–01.

The Budget also estimates these figures on an accruals basis which shows fiscal deficits of $0.8 billion in 2001–02 and $1.5 billion in 2002–03. They are significantly down from the expected 2000–01 outcome of a $5.4 billion surplus at 0.8 per cent of GDP for 2000–01.

The Government introduced accrual accounting in the 1999–2000 Budget and said

The adoption of accrual Budgeting in the 1999–2000 Budget represents international best practice in public sector financial management and reporting. The main advantage of accrual measures (as opposed to cash) is that they provide a more comprehensive indication of the total activity of government and the long term effects of current policy.(5)

However, in the present Budget all the attention is on the cash surplus with the commentary almost completely ignoring the estimated fiscal balance (in accrual terms) being in deficit in 2001–02 and 2002–03.

As the forecasts of deficits may suggest, this Budget is stimulatory. The reduction in the surplus does come in part from cyclical factors. However, the net effect of policy decisions in this Budget is to reduce the Budget balance by $3.7 billion in 2001–02, $4.9 billion in 2002–03 and $6.8 billion in 2003–04.(6) The stimulatory stance of the Budget complements the stance of monetary policy at the moment. The Governor of the Reserve Bank of Australia has said in evidence to a parliamentary standing committee that monetary policy has been returned to "an expansionary setting."

The stimulus in current policy settings would appear to be entirely appropriate to the present economic environment and the uncertainty associated with the world economic climate. Recall that the aftermath of the Asian financial crisis was treated in a similar way by policy makers, led by Alan Greenspan. Policy was expansionary in a (successful) effort to head off and offset potential deteriorations in confidence and spending in the rest of the world. Having said that, there is concern that the stimulus in this Budget is set to last longer than necessary. For example, in its Post-Budget Update Econtech expressed concern that some of the on-going measures in the Budget implied additional spending in 2002-03 which would be "too much, too late."

Returning to the topic of the cash surplus, there has been some comment in the media to the effect that the Reserve Bank dividend is a one-off bit of luck that has saved the Budget surplus. As mentioned above the Reserve Bank dividend is expected to be $2.8 billion in 2001–02. The following table gives actual dividends paid to the Commonwealth by the Reserve Bank in recent years.

< color="#ffffff">Reserve Bank Payments to the Commonwealth Government </>

total payment


$ million













Source: Reserve Bank of Australia, Annual Report 1999–2000.

The above table shows the instability of the Reserve Bank’s dividends. Most of the volatility in Reserve Bank profits and therefore the dividend to the Commonwealth arises from the Reserve Bank’s foreign exchange dealings. The dividends would have been even more volatile were it not for a decision in 1999–00 to delay some of the dividend until 2000–01. For 1999-00 there was actually $3 676 million available for distribution. However, $676 million was held over for the following year. Certainly the table does indicate that a payment of $2.8 billion for 2001–02 is well within recent experience.


Last year’s e-brief mentioned the lack of detail on GST collections in last year’s Budget. The present Budget Papers contain a fuller discussion of the GST and related payments to the States and Territories.(7) Among other things the discussion in the present Budget Papers shows that since the Mid Year Review in November 2000 GST receipts estimates have been revised down by $2.1 billion in 2000–01; $0.5 billion in 2001–02 and upwards by small amounts in subsequent years. The present estimate for 2000–01 is $24 180 million. To date (to March 2001) GST collections were $17 600 million.(8) This is still $6408 million [dave, the figure you originally had was $17 772m. Do you want to change the $6408m figure?] below the current estimate but there are three months of revenue collections to go and collections have tended to be around $6 billion a quarter.

In last year’s Budget e-brief we reported that there is an important debate about whether the GST should or should not be included with other Commonwealth revenue. Briefly, the Australian Bureau of Statistics correctly treats the GST as a Commonwealth tax while the Commonwealth treats it as if it were a State tax. Just how the GST is treated is important.


< color="#FFFFFF">GST Effects on Commonwealth General Government Sector: Cash revenue, Outlays and Surplus</>

Revenue as published in the Budget Papers

Revenue plus GST

Outlays as published in the Budget Papers

Outlays plus GST Payments to States



















































Source: The Treasurer, Hon P Costello, and Minister for Finance and Administration, Hon J Fahey, Budget Strategy and Outlook: 2001–02.

These figures suggest that the apparent decline in either revenues or outlays in the forecast period is just an artefact of the decision to take GST out of the published figures on Commonwealth government outlays and receipts. Ernst & Young made a similar coment in their Budget Brief. The Government has set itself the aim of "no increase in the overall tax burden from its [the Commonwealth's] 1996–97 level" as one of its fiscal objectives. The figure for revenues in the table suggest that the Government had reached that goal by 2000–01. However, the column that gives revenue plus GST shows that the Government is far from achieving the above objective. In the next two columns, figures have been given for government outlays and government outlays plus GST payments to the States. A similar pattern is observed here; outlays do not fall if the GST payments to the States are included.

Productivity and Technology: the "new economy"

This year, Budget Paper No.1, the main source for Budget information, includes an important section or feature article: A More Productive Australia — Policy and Technology. This article canvasses the US experience with the production and deployment of information and communication technology (ITC), draws lessons for the Australian economy and points to some of the recent initiatives the Government has undertaken. The article also moves on from ITC alone to talk about the general benefits from greater government contributions to science and innovation as well as education and training.

Critics have pointed out that in earlier Budgets there have been some severe cuts to industry assistance in some of these areas. Nevertheless, the macroeconomic benefit of ITC (and by implication, other technical areas) in higher productivity are stressed in the article. For example, in the second half of the 1990s growth in labour productivity increased from the long term average of 2.4 per cent to 3.7 per cent annually. That difference, 1.3 per cent, does not sound that high, but it implies that if we could sustain the higher productivity growth living standards will double (approximately) every 20 years rather than every 30 years.

Equally important for the macroeconomic debates in Australia, some would argue that the ‘new economy’ in the US has allowed unemployment to fall to levels of 4 per cent without any serious threat to inflation. Arguably that has meant that the Chair of the Federal Reserve, Alan Greenspan, has been able to allow the US economy to boom without tightening monetary policy to any great extent. A tighter monetary policy than he ran would have killed the boom in the interests of price stability but at the cost of higher unemployment among the inner city poor and other disadvantaged groups. Perhaps importantly for the whole world, Greenspan has been a fan of the ‘new economy.’ [Structural change of the new economy speech, July 2000]

Government Debt and Monetary Policy

A cash surplus has the effect of reducing government net debt. A reduction in net debt can be achieved by buying back old government debt or by purchasing assets. For example, instead of buying back government debt the government could deposit funds in an account with a bank or it could buy shares in BHP. Before examining those alternatives it should be pointed out that the projections of government net debt in the Budget Papers assume the sale of Telstra in 2003–04.

To compensate for government surpluses the Reserve Bank and/or government has to put money back into the economy by buying something. Normally the Reserve Bank, as the government’s banker, would compensate for a surplus by buying second hand government debt. However, there are lots of other possibilities whereby the government or Reserve Bank could make purchases and thereby re-inject liquidity back into the system.

The Reserve Bank has been buying back government debt. However, outstanding government debt is now down to just over 6 per cent of GDP.(9) It is getting hard to buy back government debt and the Reserve Bank recognises that there needs to be a good deal of outstanding government debt for liquidity management purposes. Hence the Reserve Bank has had to look at other ways of injecting liquidity back into the economy. For that reason it has now engaged on a program of buying foreign exchange as a means of injecting liquidity into the Australian economy. (It also has to be said that there would be pressure on the Reserve Bank to purchase only assets backed by genuinely rock solid entities.)

The mechanisms is that the Reserve Bank buys $US in the domestic market by selling $A. This creates liquidity and so compensates for the $A sucked out through the effect of government surpluses. Selling $A itself would put downward pressure on the $A so the Reserve Bank offsets that by buying $A (sells $US) forward to compensate for the initial change in the composition of its currency exposure. The argument seems to be that if the net currency exposure of the Reserve Bank’s currency holdings is unchanged then it will not be putting pressure on the $A, one way or the other. There has been little discussion of this development despite the fact that the Reserve Bank’s outstanding forward foreign exchange commitments had increased from $2.1 billion in April 1998 to $28.3 billion in April 2001.

Opposition responses

It is not the purpose here to discuss the Budget reply by the Leader of the Opposition, Hon K Beazley or "Labor’s Response to the 2001–02 Federal Budget" given by the Shadow Treasurer, Simon Crean. Both speeches contain criticism of the Government and some foreshadowing of the Opposition election campaign.

Some comments by interest groups

This section contains some of the comment made by special interest groups with the sample based on AAP reports on 22, 23 and 24 May.

Mission Australia chairman Patrick McClure, author of the McClure Report, said the Budget fell well short of the funds the welfare sector wanted. Australian Catholic Social Welfare Commission director Toby O'Connor was also disappointed and was also seeking more funding. Council on the Ageing executive director Denys Correll welcomed the measures which addressed employment opportunities for older workers, and the reversal of the 1996 decision to means-test the superannuation assets of people 55 and over. Australian Council of Social Service (ACOSS) president Michael Raper said the Budget missed fundamental targets such as the unemployed. He welcomed the disability package, the package for indigenous Australians, the working credit and the Centrelink package. However, the additional GST compensation for retired people misses unemployed people. Mr Raper said the bonus plus tax breaks should have been extended to all pensioners and referred to the failure to lift and simplify welfare payments. He said the welfare package was inadequate, representing only one quarter of what the sector had been looking for. Open Family Foundation youth worker Les Twentyman said the Budget did nothing for young people who lived on the streets. War Widows Guild of Australia national president June Healy said she was overwhelmed by the Budget's benefits for war widows.

Australian Private Hospitals Association director Michael Roff said the Budget did nothing for the private health sector. Australian Medical Association president Dr Kerryn Phelps said the Budget did not address the problems affecting general practice and predicted patients’ gaps will increase and bulk billing will continue to decline. Royal Australian College of General Practitioners president Paul Hemming said the initiatives relating to the care of chronic conditions such as asthma, diabetes and mental health were especially good. However, he was concerned the Budget did not address the problems in general practice. Rural Doctors' Association national president David Mildenhall said the Budget would fail to attract doctors to rural areas and would continue the decline of bulk billing. West Australian branch of the Australian Medical Association president Simon Towler said the Budget failed to relieve financial burdens placed on sick people and did not address access to health care. He was concerned with cuts in support for cholesterol lowering drugs.

The Australian Vice-Chancellors' Committee chief executive John Mullarvey welcomed the extra student places for regional Australia and the funding to help with some of the costs for equiping universities to cater for the needs of disabled students. However, he called for improved funding for existing places. Australian Education Union president Denis Fitzgerald called it "the worst ever Budget for students in public education" and objected to the money going to private schools. The National Tertiary Education Union president Carolyn Allport was disappointed and angry at the lack of funding to address problems in universities. The National Union of Students (NUS) national president David Henderson saw the Budget as part of a plan to shift the cost of higher education from the community and back on to students themselves.

Australian Chamber of Commerce and Industry chief executive Mark Paterson said on balance the Budget was positive. He welcomed the motor vehicle input tax credit decision but would have liked to see the removal of tariffs on inputs into manufacturing. Business Council of Australia president John Schubert said the Budget covered the essential elements of both economic management and a caring society. Council of Small Business Organisations spokesman Rob Bastian was disappointed there was not more action on tax compliance costs. He said he would be seeking "to establish a fighting fund to more seriously address and promote the issue of compliance costs." The Australian Institute of Company Directors chief executive officer John Hall said the Budget was responsible but wanted cuts to superannuation taxes. He was pleased with the reduced company tax rate and the cut in the financial institutions duty. The Housing Industry Association managing director Ron Silberberg said the Budget was economically responsible and welcomed the extended funding for the Australian Building Codes Board and the full income tax credit on the purchase of new business vehicles as well as the continuation of the revised First Home Owners Grant. Federal Chamber of Automotive Industries chief executive Peter Sturrock also welcomed the tax breaks for business vehicles. He said the move would boost sales by 30,000 to 40,000 vehicles over the next year. Holden also welcomed the move. Tourism Task Force chief executive Christopher Brown said tourism had been slugged in the Budget and opportunities to build on the Olympic Games had been missed. FH Faulding & Co (drug manufacturer) investor relations manager Mark Laurie complained about plans to reduce the wholesalers' margin for drugs distributed under the Pharmaceutical Benefits Scheme and said rural Australia may be hit first. Accounting group Deloitte Touche Tohmatsu partner Duncan Baxter said the Budget had failed to address uncompetitive tax rates on foreign investors. The NSW State Chamber of Commerce chief executive Katie Lahey said the Budget was essentially responsible but said small businesses may feel there was little in the Budget to help compensate them for the increased cost of reporting for the GST. Australian Foundation Investment was pleased the Government acted to redress the discrepancy in tax treatment of capital gains made by listed investment companies as compared with capital gains made by managed funds. The Australian Trucking Association welcomed road funding and the 100 per cent GST tax credit on new vehicles and said "the trucking industry has never received as much attention from the Treasurer."

The Association of Superannuation Funds of Australia chief executive Philipa Smith said the Budget lacked vision and did nothing to encourage savings for retirement. But she welcomed the increase in the tax-free threshold for self-funded retirees and the removal of superannuation savings from the assets test for social security recipients. Association of Independent Retirees president Joan Heard welcomed in particular the increase in the Medicare levy threshold. Aged Services Association of NSW and ACT chief executive Paul Sadler described the $300 grant for pensioners as a bribe. However, he said the Budget ignored the crisis in aged care. Housing for the Aged Action Group spokesman John O'Dea described the Budget as mean and tricky and the $300 handout as a "tokenistic gesture."

The Aboriginal and Torres Strait Islander Commission chairman Geoff Clark welcomed a number of new initiatives but described them as modest in the short term and disappointing for the long term. The National Aboriginal Community Control Health Organisation chief executive officer Craig Ritchie said the Budget promised an incremental improvement in indigenous health today. He welcomed nursing scholarships for Aborigines and potential gains for Aboriginal health services in new Medicare items.

The Australasian Railway Association executive director John Kirk said he was looking to the federal government to commit to the Australia Rail Track Corporation's investment recommendations with the majority of land transport funding going into roads.

Local Government Association spokesman Richard Neves was happy with the extension of the local government trust and help for older people who wanted to work but was disappointed there was no increase in road funding.

The Australian Academy of Science executive secretary Sue Sergeant said the increase for innovation and technology was insufficient. Royal Australian Chemical Institute president Professor John White said the Budget should have encouraged overseas investment in Australian industry and given greater incentives for research and development.

The Australian Conservation Foundation executive director Don Henry said the Budget was insufficient to turn around environmental degradation but he welcomed the commitment to combating salinity. Greenpeace political liaison officer Shane Rattenbury said the government is more interested in giving corporate tax cuts than the environment and more money should have been spent on greenhouse gas emission reduction rather than subsidies for fuel consumption. A spokesman for the NSW Land and Water Conservation Minister Richard Amery government said the $700 million earmarked for salinity and water action plans was not new.

National Farmers' Federation president Ian Donges said the Budget contained positive initiatives for rural Australia and welcomed increased expenditure on rural health, increased expenditure on education, increased resources to the Australian Quarantine and Inspection Service and changes to motor vehicle taxation. He also welcomed the Government’s sound fiscal management which he saw as extremely important for low interest rates and inflation. West Australian Farmers Federation vice president Trevor De Landgrafft said the Budget did not do enough for rural Australia, there was no new funding for road or rail infrastructure but he welcomed increased the quarantine and regional health measures. Queensland Fruit and Vegetable Growers Association assistant general manager, Mark Panitz, welcomed the investment in rural communities and regionally-based industries.

Taxpayers Australia national director Peter Macdonald said there was nothing in the Budget for middle Australia and small business. He said the Government had tried to appease the parts of the electorate damaged by the GST.

ACTU president Sharan Burrow referred to economic factors facing working families with economic growth down, inflation up, unemployment up, the dollar devalued and the GST. She said the cost of fixing the damage caused by the GST had left virtually nothing in the Budget for hospitals, schools and regional areas. However, she welcomed support for aged pensioners but condemned the extension of the work for the dole program to older unemployed people. Ms Burrow said the average working couple would pay almost $100 more a week in tax than retired couples on the same income.

The ABC welcomed the extra funds for new radio, television and new media programs. However, Community and Public Sector Union section secretary Graeme Thomson criticised the Budget for insufficient funding for the ABC and introducing tied funding for the new spending. The Friends of the ABC national spokesman Darce Cassidy condemned the Government for its stop-go funding of the ABC.

The Law Council of Australia president Anne Trimmer was disappointed there was no new funding for legal aid. However, she welcomed support for pro bono services.


1. House of Representatives Standing Committee on Economics, Finance and Public Administration, Reserve Bank of Australia Annual Report 1999–2000, transcript of evidence 11 May 2001, at http://www.aph.gov.au/hansard/reps/commttee/r4757.pdf p. 53.

2. ibid p. 56.

3. The Economist, 2 June 2001.

4. This definition is an attempt to give quantitative meaning to what is really a qualitative concept. Others might prefer to think of recession as referring to an episode of poor economic performance undermines people’s living standards and employment prospects.

5. The Treasurer, Hon P Costello, and Minister for Finance and Administration, Hon J Fahey, Budget Strategy and Outlook: 1999–2000, Budget Paper no 1, p. 1-5.

6. Budget Paper no 1, p. 2-5.

7. ibid, p. 2–10 to 2–11.

8. Hon J Fahey MP, Minister for Finance and Public Administration, Commonwealth Government Monthly Financial Statements for the months of July 2000 to March 2001 see http://www.dofa.gov.au/Publications/monthly_financial_statements.html

9. The Treasurer, Hon P Costello MP, and the Minister for Finance and Public Administration, Hon J Fahey MP, Budget Strategy and Outlook 2001–02, Budget Paper No 1, 22 May 2001.



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