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Tuesday, 16 October 1984
Page: 1747


Senator Dame MARGARET GUILFOYLE —The Opposition brings this matter forward for discussion as a matter of public importance because it believes that the refusal of the Government to disclose its taxation policies before the election is asking for a blank cheque. Its asking for a blank cheque on matters of taxation policy ignores its rhetoric and its record on taxation policy since 1982. The Opposition will be perfectly happy to announce its own policy in detail next week. We believe that, as we are now in an election campaign, the people of Australia ought to have an opportunity to contrast the policies of the Opposition and the Government and to consider the requirements of those policies on each taxpayer in the three years ahead.

It was of interest that at Question Time today the Minister for Industry and Commerce (Senator Button) was able to be very explicit about shipbuilding policy . A number of other policies are canvassed in great detail in dorothy dix type questions that are addressed to Ministers in the Senate day after day. Yet it is not possible to have the Government's policy on taxation.

There is a very old saying: 'No taxation without representation'. No blank cheque ought to be given before this early election to the highest taxing government in Australia's history. We have had a response from the Government that taxation policy is subject to a review at present. This review, which we understand is being conducted through the Economic Planning Advisory Council in consultation with all sections of the community, is hardly the basis of a policy on which to face the electorate.

We have brought forward this matter of public importance because it is important to look at the Government's policy, rhetoric and performance since 1983. A number of quite explicit statements were made prior to the last election , in the policy speech of 16 February 1983. There was the quite unequivocal statement that less than one per cent of Australians will pay higher taxes. We need to contrast that statement with the performance of the Government. If we look at the Budgets that have been brought in by the Government following its election we realise that the Australian people are paying much higher taxes. In fact, one million people have moved into a higher tax bracket as a result of the last Budget. I do not think that we could tell the people who have received their income tax assessments that they will be paying lower taxes or that less than one per cent will pay higher taxes because their assessments are revealing that there is a great change in their tax refunds. Indeed, in some cases they are required to pay tax instead of getting the refund that they thought they would have received. The following quite unequivocal statement was made in respect of the Hawke housing plan in February 1984:

We will retain tax rebates for home loan interest payments.

That is something that ought to be tested against performance too. In an interview reported in the Australian of 23 February 1983 Mr Hawke assured voters that there would be no increases in indirect tax. Yet the performance of the Government shows quite the reverse. That statement made in February 1983 could scarcely be sustained in the light of the indexation of indirect taxes and the other changes that have been made. On 11 February 1983 Mr Hawke said:

Now one thing you will find throughout this campaign is that I am not going to make promises I cannot keep.

That is another promise that he was not able to keep. All of the promises that I have outlined with regard to tax policy have not been kept. They have been ignored or reversed. The Australian Labor Party policy speech of February last year contained the following statement:

There will be no new capital gains tax.

It also contained the further statement:

We will not be bringing in any death duties.

Those statements were made before the last election. Yet the Government is not prepared to make those statements before this election. It is hiding behind a review which has been surveying the position for many months. The Government is not at this stage making such categorical statements with regard to capital gains tax or death duties. I think it is easy to see why the Government is not doing that. As I said, the Government was prepared to make statements of the kind I have just read prior to the last election. It is not unfair to say that the Government has been backing and filling on the issue of capital gains tax ever since it came to office. It is no wonder that there has been considerable concern amongst small businesses and that the predictability and certainty required for investment have been undermined by the way in which the Government is approaching tax policy. Remember, that Mr Hawke said on 16 February 1983:

There will be no new capital gains tax.

This reflected earlier comments made by the Treasurer, Mr Keating, at the July 1982 Federal Labor Conference which led up to the 1983 election. I think it is more than fair to quote the comment made by Mr Keating after the election. In a bit of stage management prior to the election we were told that a capital gains tax would not be introduced. However, after the election, Mr Keating said:

The views I put at Labor Party Conferences were views I put with the aim of getting into Government. The debate has moved on. We are now in Government.

I think that that is the most important statement that ought to be assessed by the Australian electorate as we go into this election. The Labor Party is now in government. It made commitments to get itself into government but the debate has moved on and the tax has moved up.

Since coming into office so many Ministers and members of Cabinet have made statements that are relative to the points that I am making that it is worth saying that the Deputy Prime Minister, Mr Lionel Bowen, the Leader of the Government in the Senate, Senator Button, the Minister for Finance, Mr Dawkins, the Special Minister of State, Mr Young, the Minister for Defence Support, Mr Howe, and the Chairman of the Caucus industry committee, Dr Theophanous, have all called for a capital gains tax. It is no wonder that we say that the Government should come clean in the election campaign as to what its intentions are and what its review is expected to result in for the Australian taxpayer.

The Prime Minister in an interview at the Singapore-Australia Business Council breakfast in February 1984 was asked whether his Government intended to introduce a further capital gains tax, death duties or any other capital transfer tax. His response in that interview was:

I'm not in a position to say that we will make any such decisions in that area.

That was pre-Budget of 1984. The taxes that were referred to-further capital gains taxes, death duties or any other capital transfer taxes-were not included in the present Budget because it is an election Budget. The Budget of 1984 is unashamedly an election Budget. The Government has promised that there will be a review of its taxation policy after it faces the Australian electorate. However, it has certainly given no assurances that those taxes will not be embarked upon after the election. On 26 January 1984 the Prime Minister said:

In the August Budget my Government will aim to do two things: to contain the Budget deficit, and to provide, to the extent we are able, significant income tax reductions to lower and middle income earners.

That objective was not sustained. The majority of Australian taxpayers will receive a tax reduction of $7.60 a week. That, of course, is a reduction in the increase in tax which taxpayers sustained in the Budget, not a real reduction in tax rates or a real reduction in tax that was payable. Again, the Prime Minister in an interview in January 1984 said:

Let me say that if we, as a government, look at the question of taxation in the capital area, it would not be done precipitately, not without full consultation, and most importantly, it wouldn't be done in a way which did not take account of the particular requirements of the rural sector. We are not going to rush into new measures.

The Government is not rushing into new measures but it has rushed into an election. The big question mark of this election is what the Government is going to do in respect of capital gains tax, tax that affects the rural sector and tax that affects individuals. We believe that before the six or seven weeks of the election campaign are exhausted the Government will find again and again that that big question mark will be a big minus as far as the electorate is concerned . People want to know how an election will affect them and their capacity to manage their own affairs and deal with their own responsibilities. They also want to know exactly what proposals will result from the tax review which is being undertaken at present.

The Prime Minister, again at the Singapore-Australian Business Council meeting in February, this year was asked by a journalist:

Is it intended by the Federal Government to introduce third capital gains tax, death duties, or other capital transfer tax and if so, how long would you like to see it after the next Federal election?

The Prime Minister made the throwaway line that he welcomed the implication that he would be making decisions after the next Federal election. But he took no opportunity to assure the Australian electorate that such taxes were not being contemplated.

I referred to a number of Ministers who support the introduction of capital gains taxes. I take this opportunity to refer to the comments of Mr Howe as reported on an Australian Broadcasting Corporation AM program in March of this year.


Senator Button —Howe or Howard?


Senator Dame MARGARET GUILFOYLE — Mr Howe, the Minister for Defence Support.


Senator Button —Howard is your chap, isn't he?


Senator Dame MARGARET GUILFOYLE — Howard is the Deputy Leader of the Opposition. Mr Howe, the Minister for Defence Support, said:

We have to, I think, make up our minds whether we are really on about equity or not . . . We need to look, I believe this year, at the whole question of capital gains and taxes on estate and gift duty. I think those issues are extremely important. If we are going to be able to meet commitments on the other side of the ledger in terms of really improving pensions and benefits, getting to the 25 per cent of average weekly earnings, our target which we could achieve this year with a substantial measure such as the introduction of a capital gains tax or even with the introduction of the assets test.

We have had the introduction of the assets test, and obviously Mr Howe supported that. Mr Howe is still waiting for the introduction of the capital gains tax so that he can fulfil those other objectives that he mentioned. I find it somewhat extraordinary that the Government seems to want to govern by some sort of referral to public demand on such issues as tax policy in the way in which the Prime Minister repeatedly puts them forward. He came into government and, with the prices and incomes accord, he has sought to lock in business, unions and government. He has tried to give the impression that business is locked into the prices and incomes accord, no matter how often business makes it clear that the accord institutionalises unemployment, particularly youth unemployment, and we find the same sort of approach to taxation policy. In the Melbourne Age of 5 June 1984 the Prime Minister was quoted as saying:

We'll ask the business community, we'll ask the trade unions, we'll ask relevant informed academics, we'll ask community organisations to talk to us about the whole structure of tax in this country.

He again commented that it was a post-election tax review. To go into an election with a tax review hanging over the heads of the people without giving some direction as to the general tax priorities that the Government sees for the future is a remarkable approach to a major election policy. We have found, and the people of Australia realise, that, with the growth of money incomes, more and more are moving into higher tax brackets. They are paying higher tax rates on increases in incomes which reflect only inflation or consumer price index adjustments, not increases in real purchasing power. The figures in this respect are quite noteworthy. Four hundred thousand Australians with modest incomes moved into the 46c in the dollar tax bracket last financial year and it is estimated that a further one million Australians will move into higher tax brackets during 1984-85. That can hardly stand up against the promises going into the last election that everybody, except about one per cent, would get lower taxes.

People are moving into a higher tax bracket simply because of CPI adjustments to their wages and about one million of them will be moving into that 46c in the dollar bracket on part of their incomes in this financial year. This can be exemplified by figures such as those I wish to cite. Two years ago a person had to earn 10 per cent more than male average weekly earnings before entering the 46c in the dollar tax bracket. By the end of this financial year someone earning 0.5 per cent less than male average weekly earnings will pay 46c on every extra dollar earned. I can hardly think of a better way in which to exemplify what has happened to tax rates and collections. We talk of male average weekly earnings. We talk of objectives for the purchasing power of average weekly earnings. We pretend that under the prices and incomes accord something magical has happened to the purchasing power of people's incomes and the way in which they are able to deal with their responsibilities. Yet we find that one million more of them are entering a higher tax bracket this financial year.

Our repeated search for the Government's approach to tax policy makes us look at some of the things that have occurred since the Australian Labor Party entered government. The Labor Party has abolished a whole range of tax rebates, thus adding to the average family's tax burden. The special income levy for Medicare has added to the costs of many families. It is quite apparent-and we have had debates on this subject on other occasions-that either the levy should be raised or it should be regarded as a token contribution to health insurance because it does not cover the increased cost of Medicare in the Budget. We estimate that the one per cent levy raises only something over a half of what is required according to the figures in the Budget. We said in an earlier debate that a further 0.7 per cent levy would be needed to cover the extra cost of Medicare in the current Budget. I again make the point that this is an election Budget. It had some deceit in its figures because many measures are simply temporary.


Senator Button —'Deceit' or 'receipt'?


Senator Dame MARGARET GUILFOYLE —Deceit. They are measures to get over the election, and if Labor wins the coming election there will be a massive boost in taxation to finance the deferred and controversial programs. Mr Barry Jones, one of Senator Button's colleagues, on an Australian Broadcasting Corporation World Today program on 24 August said:

One of the greatest advantages of having an early election is that you will have a clear run for three years, right up to the bi-centenary period . . . in that three year Parliament you can raise money perhaps by increasing taxation, or finding new sources of taxation to do things that are expensive, or you would not be game to do, you would not be keen to do, three or four months before an election.

That is why the Government is keen to have a review behind which it can hide to get the election over and which can perhaps cover up some of the comments made by members of the Labor Party. Mr Hand, a member of the House of Representatives , was quoted in the National Times in August of this year as saying:

So of course there has to be some form of capital taxes! We don't run away from that. There just has to be.

When asked whether it would be an issue in the next Parliament, he said:

Oh yes, it's on. No risk about that.

Yet that is not mentioned as part of Labor's policy. The Prime Minister was quoted in August of this year as saying:

We do not believe that taxation reform will be to Australia's advantage if it involves overall increases in taxation as distinct from greater efficiency and equity in the system.

The Labor Government does not believe that higher overall levels of taxation are necessary for substantial reductions in the deficit, for improved equity, or for enhanced efficiency of our economic system.

That comment was made post-Budget by the Prime Minister. In that I think we got a very salutary reminder that it is not the objective of this Government to have lower taxes. The Prime Minister believed that he was making a very remarkable statement when he said: 'We do not believe that it will involve overall increases'. In other words, no decreases are able to be promised. I would have thought that a government which has been the highest taxing government in Australia's history, certainly the highest since Mr Whitlam's leadership, and which has had a 23 per cent rise in total personal income tax receipts this year ought to be going into an election with some promises of tax relief. Instead, the taxation policy of the Government is a review which can allow the Government to hide the objective with regard to new taxes, either capital gains or death duties, or whatever range of taxes--


The ACTING DEPUTY PRESIDENT (Senator Coleman) —Order! The honourable senator's time has expired.