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Tuesday, 16 October 1984
Page: 1751


Senator BUTTON (Minister for Industry and Commerce)(3.38) —Early in her comments on this matter of the taxation policies of the Government Senator Dame Margaret Guilfoyle, referring to a previous period in history, said: 'The debate has moved on'. That was the saddest comment in her speech because, to judge from her speech, the debate has not moved on at all. We have regurgitated in her speech the lowest common denominator of political debate in Australia; that is to say, the Liberal Party of Australia in its traditional role as threat experts . Senator Dame Margaret Guilfoyle referred to Dorothy Dix questions being asked about the economy at Question Time in the Senate. I think we are entitled to a few Dorothy Dix questions. We get precious few questions about the economy from the Opposition. That is not surprising, because our view of the Opposition's economic capacity is the same as that of two-thirds of the Australian people. They would be disastrous economic managers. There are plenty of reasons for saying that. The debate has not moved on because Senator Dame Margaret Guilfoyle sees political debate in terms of threats, not in terms of rational political debate. Let me remind honourable senators of a few things about the Opposition of this country. Seven weeks ago Mr Peacock announced the start of his election campaign. He said: 'Liberal tax policies are different'. Different from what? What are they? They still have not been announced. So how do the people know whether Liberal tax policies are different or not?

Senator Dame Margaret Guilfoyle concentrated on capital gains tax as a threat, as Liberal governments have done in the past years and as this Opposition now seeks to do. Was it not at the much vaunted Thredbo conference of members of the Liberal Party, the so-called think tank, that Professor Russell Mathews advised them about the importance of a capital gains tax? What is Senator Dame Margaret Guilfoyle's view about that? What is any Opposition senator's view about that? On a number of occasions other commentators have dealt with the question of a capital gains tax-for example, the Business Council of Australia, the Economic Planning Advisory Council and Mr Howard, the Deputy Leader of the Opposition in the House of Representatives. However, there was no contribution in this debate towards the importance of any of those issues. I would have thought that in attempting to make a contemporary contribution to the tax debate Senator Dame Margaret Guilfoyle might have referred to some of the views expressed by Mr Tony Berg at the business congress that has just taken place or is taking place. There we get the essence of an important public debate about taxation issues. We do not get it from the Opposition.

I say quite plainly right at the beginning that this Government has said that it will conduct a review of the tax system next year. We have said that on a number of occasions. I remind Senator Dame Margaret Guilfoyle, who apparently finds that reprehensible, of her seven years as a Minister in the Fraser Government-latterly as Minister for Finance. Does she remember when the late Sir Phillip Lynch suggested it might be a good idea to consider the taxation of certain welfare payments and what the Fraser Government did about that? Does she remember when Mr John Howard, the former Treasurer, was circulating publicly papers on a value added tax in Australia at the time of the razor gang? What happened to these matters? Nothing happened. She had seven years in which to do something about reforming the tax system and she did nothing. She now complains about this Government's conduct in its 18 months in office. Of course, we have committed ourselves to a review of the taxation system and it will take place, but it will not result in any overall increase in taxation levels.

It is very difficult to debate tax policy with the Opposition. There is no Opposition policy on taxation. There is confusion and contradiction within the Opposition on the issue of taxation. The Liberal-National record in government, to which I referred briefly, was appalling. I refer honourable senators to the view expressed by the Leader of the Opposition (Mr Peacock), when he said: ' Liberal tax policy is different'. There is not an inkling as to what it is in the shadow Minister's speech, only a suggestion that this Government poses enormous threats perhaps in terms of a capital gains tax or death duties. We still do not have the Opposition's tax policy. It will be brought out after the Parliament has risen so that it cannot be debated. This is typical of the Opposition's incapacity to get its act together on specific issues. For example, only a month or two ago Mr Peacock, the Leader of the Opposition, opposed the introduction of a wine tax tooth and nail, as I think he described it, and Mr Howard, the discredited former Treasurer, Deputy Leader of the Opposition and heir apparent, said he supported a wine tax at the National Press Club on 29 August. Similarly Mr Peacock is adamantly opposed to a capital gains tax and Mr Howard is not adamantly opposed to a capital gains tax. Will the real Senator Dame Margaret Guilfoyle please stand up on that issue?

The Liberal-National Party record in government in honouring campaign promises relating to taxation matters and all other matters was deplorable. It was deplorable on tax indexation, the level of taxation and business taxes. That period in government was the culmination of a period in which this country gradually slipped down the hit parade in terms of relative standards of living. Those in opposition now cannot escape that fact. As well, the Opposition-Senator Dame Margaret Guilfoyle amongst them as a former senior Minister-let billions of dollars slip through its fingers through the growth of the tax avoidance industry to the detriment of every pay as you earn taxpayer in Australia. There was a boom in tax avoidance under the previous Government. The Commissioner of Taxation in his latest report stated:

I assumed office as Commissioner on 14 June 1984. I succeeded Mr W. J. O'Reilly , who went into honoured retirement on reaching the age of 65 years. At that time the boom in the promotion of tax avoidance and evasion schemes of the kind experienced in the late 1970s and early 1980s was a thing of the past.

He continued:

While the boom was on, the whole tax administration system was strained and the Australian Taxation Office was unable to get done all it wished to do.

So the Opposition's pathetic record on taxation speaks for itself. It has no credibility on this issue. This Government has moved to give a tax cut which is significant and genuine.


Senator Chaney —Rubbish.


Senator BUTTON —I hope the honourable senator will say that on the hustings. Is he going to take the tax cut away? The cut in personal income taxes announced in the Budget is $7.40 for an ordinary taxpayer and a significant amount for those on low and middle incomes.


Senator Dame Margaret Guilfoyle —It is $7.60.


Senator BUTTON —Taxpayers with an annual income of between $12,500 and $28,000 will receive a tax benefit of $7.60 a week, as Senator Dame Margaret Guilfoyle points out. I am indebted to her for that comment. It is the only accurate thing she has said this afternoon. For those earning between the tax threshold-that is , $4,595 and $12,500-the tax cut is almost 17 per cent and those earning more than $28,000 also receive a tax cut, but it is steadily reduced as incomes exceed $28,000, to a flat $2.79 a week for incomes above $35,000. The $7.60 tax cut applies to all low and middle income full time workers. This is a larger tax cut than would have been provided to those workers under the tax indexation arrangement which was introduced and then abolished by the previous Government. Under the former Fraser Government's indexation rules, indexation would have provided a tax cut of $2.30 a week for workers earning up to $374 a week and $7. 49 a week for those earning between $406 and $686 a week. That was the former Government's view of progressivity in the taxation system. There would have been a much smaller tax cut for the vast majority of workers. I just make the point that this tax cut has been achieved together with a reduction in the deficit.

Senator Dame Margaret Guilfoyle referred to promises made by the Prime Minister (Mr Hawke) before the election. One promise he also made was that the Fraser Government had to tell the truth about the size of the deficit, which it never did. The fact of the matter is that the deficit is now down to under $8 billion from the $9.6 billion inherited from the administration of Mr Howard. In 1984-85 we are budgeting for a deficit of $6.7 billion. To date, two Budgets have reduced the Budget deficit by about 30 per cent, or almost $3 billion. It is not surprising that the recent Age-Herald poll reveals that 54 per cent of the people have confidence in this Government as economic managers.

The Opposition is simply scaremongering with references to capital gains tax, death duties and the like because it does not have an issue to run with. Do members of the Opposition say that these things should never be on the agenda for consideration by an Australian government? Is that what they say? Senator Chaney will have an opportunity to tell us. He will speak later in the debate. Does he say that in a serious tax debate these things that are raised by the business community, by this Government and by a wide range of commentators should not be in the arena of political debate, because that is what Senator Dame Margaret Guilfoyle's remarks amount to. One expects this sort of behaviour, this threat expert stuff, to continue for the next few weeks. I want to put this Government's position on the record in relation to capital gains taxes, wealth taxes and similar things. All sorts of claims have been made by the Leader of the Opposition and Senator Dame Margaret Guilfoyle about the Government preparing Cabinet submissions on these taxes.


Senator Dame Margaret Guilfoyle —I did not say that.


Senator BUTTON —The implication is there, Senator. No such submissions have been prepared or are being prepared. The Government is not currently considering any of these matters. We are committed to a review of the taxation system and there are no proposals before the Government to introduce these taxes at present. But we do believe that there is scope for a review and reform of the tax system to make it more efficient and more equitable and to give the average Australian a fair go. Senator Dame Margaret Guilfoyle made no reference to those matters in her speech. Perhaps she has a sentimental attachment to the taxation policies and regime of the Fraser Government of which she was part, because she made no reference to the need for tax reform, to the need for a more efficient and equitable system and to giving the average Australian a fairer go. Because of the fundamental importance that the Government attaches to this issue, it will be consulting widely with community groups, as indicated, including through EPAC , rather than announcing policies designed for perceived short term political advantage. Any reform of the tax system will not result in any overall increase in the levels of taxes. The review will be comprehensive. It is pointless to speculate on any particular tax options because the Government has no preconceived ideas on the outcome. I have some preconceived ideas. I think I am entitled to that. I get a vote, like everybody else. I am allowed to think about the tax system and, I would have thought, to express a view about it. I am particularly enjoined, I would think, to express a view about business taxes in Australia because that is my job. But, as I have said on a number of occasions, the Government has not made decisions about these matters and it has no preconceived ideas about them. Certainly the Opposition has none because, as I have said, there was no reference in the speech which has just been made to any of those important issues which have been raised by others in the taxation debate.

As to the need for a comprehensive review, we have some supporters on the Opposition side. At the National Press Club on 29 August this year Mr Howard, in answer to a question as to whether a part of a restructuring of the tax system should include an effective capital gains tax, said:

I think I was asked at the last National Press Club luncheon the same question . . . and I said then that there are no arguments within a total restructuring of the system for what you have said.

In view of that statement, any attempt by the Deputy Leader of the Opposition or anybody else to suggest that a review of the tax system implies in some way a prior commitment to the introduction of particular taxes and the exclusion of others applies more to him than it does to the Government. I repeat: There is not and will not be any official position taken by the Government on tax reform in advance of a review which is necessary and has to be comprehensive and fair.

Despite the fact that there is yet no Opposition tax policy, after 18 months, we are entitled to ask where the money is coming from in respect of a whole range of Opposition promises already made-for perceived political advantage at the election, I suppose. Given some of the commitments already made by this Opposition if it is elected to government, tax policy will be fascinating. Let us look at some of the policies which it has already promised in the area of taxation. It has unequivocally promised to abolish lump sum superannuation tax at a cost of $300m. It has promised to abolish the coal export levy at a cost of $60m. Half of the Opposition is going to abolish the wine tax. Mr Howard, I take it, would not. The cost of that would be $62m. The Opposition has promised to abolish the new oil excise at a cost of $17m. It would extend the investment allowance and increase the rate to 20 per cent at a cost of $600m. It would provide a special tax deduction for manufacturing systems at a cost of about $ 10m. It would abolish the double taxation of dividends at a cost of $400m. It would introduce a 50 per cent premium for deductions in relation to research expenditures at a cost of $90m. Those unequivocal commitments already made by this Opposition, in the absence of any tax policy, amount to $1.8 billion. What is Monday's tax policy going to say? No wonder the Opposition does not want it released before the Parliament rises. It does not stop there.


Senator Chaney —At least we will release ours.


Senator BUTTON —I hope the Opposition will. It was promised some seven weeks ago . But the Opposition does not stop there as there are more commitments. The biggest of these is a change to the taxation system itself. The Deputy Leader of the Opposition has circulated a paper which lends support to a flat rate tax that might cost about $4 billion.


Senator Dame Margaret Guilfoyle —Where is that?


Senator BUTTON —He has circulated a paper which he has endorsed. The Leader of the Opposition has some other ideas. He wants to raise the tax threshold sufficiently to get the 46c rate above the highest possible average weekly earnings measure. That would be cheaper, at a cost of about $2 billion. But that is on top of firm promises totalling $1.8 billion which I have already referred to and which would not give one cent to ordinary taxpayers. The grand total of all these promises adds to a magnificent sum of about $5 billion, double the deficit faced by the Commonwealth.

We have to face the fact that all these pre-election promises are phoney or have not been thought out or that the taxation policy, when it is announced, will indeed be a phoney or perhaps there will be massive new sales taxes or something of that kind. It is fair to ask what the Opposition's new taxes will be and where the money will be coming from. The fact is that this Government has been quite open about the need for a tax review. The tax review which the Government has proposed will be discussed by a wide range of bodies-EPAC, the Business Council of Australia and others. The article to which I referred by Mr Tony Berg and reported in today's Press highlights from one particular point of view the need for tax reform, a need which has been highlighted by others but not by the Liberal Party of Australia.

This Government is not, in terms of any undertaking it gives, about to spring anything on anyone but it will proceed with a full public debate and consultation about the nature of tax change in this community. The Opposition had seven years to do it. It is responsible for some of the worst inequities in the taxation system insofar as business and industry in this country are concerned. It had in those seven years large majorities and the opportunity to take on some of the pressing tasks. No wonder this country went downhill in the period of that regime, because nothing was done. The Opposition comes in here today threatening that somehow this Government is committed to some taxes which the Opposition feels have a sort of spooky quality and which are useful for striking terror in the hearts of little old ladies in white tennis shoes, which used to be an expression commonly used in the Senate. It is a discreditable performance from a discreditable Opposition.


Senator Chaney —This is the most discreditable speech I have ever heard.


Senator BUTTON —Senator Chaney says that my speech is discreditable, but that is because it hurts. It is very unfortunate for him, the Bonnie Prince Charlie of Australian politics, as he sees himself, to be cast in that role.