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Tuesday, 16 October 1984
Page: 1759


Senator RICHARDSON(4.30) —Over the last 18 months I had not seen anything that the Opposition had done that impressed me. That changed today when I looked at the topic of this matter of public importance. It indeed made an impression because we would all have to be impressed with the breathtaking gall and the sheer hide of this Opposition in raising anything to do with tax policy, given its sad and sorry record over those seven miserable years of the Fraser-Howard regime. Senator Watson asked: What does this Government want the people to do? It is not a matter of asking people to give the Government a blank cheque. Rather it is the case that this Government is asking the people of Australia to compare its record over the last two Budgets with the efforts of the Opposition in its long reign from 1975 to 1982, the reign which did so much damage to our economy. We must first compare the rhetoric of the Fraser regime with its actual record. I wish to remind honourable senators opposite of some of that rhetoric. Mr Malcolm Fraser, in his 1975 election campaign speech, said:

We will encourage people's initiative and enterprise, not batter them into the ground with punishing taxes.

We will reduce the tax burden.

Also in the 1975 election campaign he said:

The Government will bring taxes down further-not increase them.

Surprisingly enough-some would say 'staggeringly enough'-in the 1977 election campaign speech, he said:

We have ended the big tax rip-off.

We have reduced taxes, revived incentive and restored fair reward for achievement.

That is fine rhetoric indeed. Let us look at just some of the record. In those seven years of Fraser-Howard Budgets they took a massive $203 billion from the pockets of Australian taxpayers. They took more in seven years than had been collected by way of total tax collections in the previous 75 years of Federation . Total tax collections rose by 150 per cent in those seven years under Fraser- from $16.8 billion in 1975-76 to $41.8 billion in 1982-83. But when one looks at the real record of the Opposition when it occupied the treasury bench, one first has to look at tax cuts and tax indexation, which are the two areas about which we had so much trumpeting and some action. Like so many actions of the Fraser- Howard regime they were actions that always lacked direction. Over the period the ship in which the Australian people were passengers had a rough ride indeed, as we rocked from side to side, never knowing who was in charge and never knowing where we were heading.

Looking at the tax cuts is the first appropriate way in which to look at the Opposition's record. Back in 1977 we were generously given tax cuts, and the Australian people dutifully applauded. But they did not have them for very long because they were taken away-in a 1978 mini-Budget. A temporary-I stress the word 'temporary'-surcharge of 1 1/2 per cent was placed upon personal taxation. Sadly enough, only a year later, in 1979, that temporary surcharge became permanent. As the Australian Labor Party had been predicting, the Liberals broke yet another promise. In the field of tax indexation their performance was even worse; they were even more directionless, contradictory and dishonest. On 27 November 1975, Malcolm Fraser said:

We will fully index personal income tax for inflation over three years.

He also said:

The reforms will mean that for the first time, wage and salary increases due solely to inflation will not lead to heavier taxes.

Again, that is fine rhetoric; something in which we could all find comfort. But of course, yet again, the record did not live up to the rhetoric. Indexation was introduced in 1977. However, in the 1979 Budget it was suspended. Again, that was no shock to the Labor Party; we had predicted it. But in 1980 with another election coming, when things were starting to go wrong, when the ship had really lost direction, on 6 March of that year tax indexation was announced yet again and, in fact, half indexation was introduced in 1981. That was a second try. But then in 1982-I do not know the reason; I have no doubt that neither does Malcolm Fraser nor John Howard-it was abandoned again. Once again, the hopes and the aspirations of the Australian people which had been raised by all this fine rhetoric were dashed by the record. If we go through the period of 1980 and on towards the death of the Fraser Government in March 1983, when its policies were failing on all fronts and when desperation was at its highest, we see that it still had the hide to postulate about reductions in taxation. When things were looking grim in April 1981 Malcolm Fraser said:

For our part we will be looking for every opportunity to cut taxes during the term of this Parliament.

Again, that might have been fine rhetoric but it was not matched by the record. Again in 1981 Malcolm Fraser said:

Our objective is the lowest possible taxation for Australians by restraint on public expenditure.

I do not think there is an Australian now who is not fully aware of that massive Budget blowout, that $9.6 billion projected deficit, that was created by the Fraser Government. The Fraser Government had lost all control over expenditure having, of course, long before that, lost control over revenue. The burden increasingly fell on pay as you earn taxpayers-from 14.7 per cent of total tax at the beginning of its reign to 45.4 per cent of total tax at the end. Interestingly enough, only those taxpayers earning $60,000 a year or more had not had the same rate of increase of personal taxation as the rest of the community. Once again it proved to be a government of the rich, by the rich and for the rich.

If we contrast that horrible, dreadful record with the record of the Hawke Government in the two Budgets that it has had the opportunity to formulate for Australia we see a very different record indeed. The last Budget provided personal income tax cuts which are, of course, substantial for those on low and middle incomes. People who earn between $12,500 and $28,000 a year will be $7.60 a week better off. For those earning less than $12,500 a year, that is, those who are on the tax threshold of $4,600-odd up to $12,500, the reduction is, in fact, a massive 17 per cent. Once again, the Hawke Government has lived up to the high expectations that all of us had for it. An important feature of the new tax scale, that is, the tax scale that will come into effect on 1 November 1984, is that it is more progressive. Those at the lower end of the scale get far more in terms of tax cuts than those at the higher end. That represents a dramatic departure from the Fraser-Howard days. The $7.60 a week applies to virtually all low and middle income full time workers. It is a larger tax cut-I think this has to be underlined-than that which those workers could have received under tax indexation arrangements. Under indexation arrangements workers earning up to $ 374 a week could have expected a tax cut of $2.30. Of course, if one looks at what they have received one will see that it is more than three times greater under the Hawke-Keating tax cuts. The total cost of the tax cut in this Budget is $2.1 billion. Again, that is very significantly more than could have been expected under the tax indexation arrangements. These meaningful tax cuts were achieved without increasing the Budget deficit.

When we ask the people to compare the record of Fraser and John Howard with the record of the Hawke Government, the deficit tells the story. We have managed to reduce it by over 30 per cent in two years-from $9.6 billion down to $6.7 billion. That, I suggest, is one of our great achievements. What is more, when we are re-elected on 1 December-I noted Senator Watson's little slip of the tongue when he said 'when, if the Government is re-elected'; I have no doubt about the 'when'; he was right the first time; he did not need to correct himself-that Budget deficit will be brought down even further. This Government has shown its commitment to using the taxation system to do just that. If one looks at the prescribed payments system as it applies to the building and construction industry, one will see that it found in the first year 55,000 more taxpayers, netting already an extra $50m for this year. We have tried and tried again to do something about tax avoidance. We have made three attempts to implement effective tax avoidance measures but, as always, the Liberal and National parties, rallying to their constituency, have obstructed the Government in getting the legislation through the Senate. What else could we expect given their shocking record of doing anything at all about taxation avoidance during John Howard's reign as Treasurer?

We can contrast their position on taxation with that of the Australian Labor Party and the Hawke Government. The main elements of the Government's approach to tax reform are simple, yet I think they stress equity and the common sense and competence that has been the hallmark we have shown since March of 1983. As my Leader, Senator John Button, said earlier, we believe that there is scope for a review of the taxation system, scope for making it fairer and more equitable. In conducting that review we believe it is of fundamental importance that community groups be consulted. Again, this is far different from the sad record of those dark days under Fraser. Groups such as the Economic Planning Advisory Council will be consulted during that review to make sure that whatever decisions the Government comes up with in the end have been thoroughly discussed in the community.

Our reforms of the tax system-this is the bottom line-cannot and will not mean an increase in the overall tax burden. That burden will be reduced. It seems to have been completely lost on honourable senators opposite that we will be able to increase revenues simply because we have got Australia working again. The country is moving. We have come out of the recession and next year, 1985, far from presenting problems, as some speakers on the other side have tried to suggest, will in fact be the best economic year Australia has experienced since the 1960s. Further, we have stated that the review will be comprehensive and that we will not speculate on any option now. I noted a statement made only a few weeks ago by John Howard at the Press Club, when he also agreed that the Opposition would not rule out the introduction of a capital gains tax. Much has been made of the need for the early introduction of a capital gains tax. In the last few weeks we have heard from John Howard again that the Government will be racing off to introduce a mini-Budget early in the new year. It has to be stated clearly, as the Treasurer (Mr Keating) stated in the House of Representatives last week, that such a proposal is just not on. There is no need for a mini- Budget. There is no need to vary our Budget. It is working. It has public acceptance. It has runs on the board. It is something of which we are justifiably proud. It is interesting to note that the members of the Liberal and National parties barely challenged any revenue and expenditure estimates when the Budget was brought down last August. They know they are correct. This scaremongering about mini-Budgets is just about all they have left.

If a miracle were to happen and the Liberal and National parties were to win the election all we would see would be the destruction of Medicare; the termination of job programs that have given so many young people some hope and some rest from the dole; the introduction of new taxes in a doctrinaire attempt to cut the deficit; and, what is worse, the destruction of the prices and incomes accord, the one real hope for the future of this nation to keep down our inflation level. At the election on 1 December I know the Australian people will look at the record of the Liberals and the Nationals, they will look at the record of the Hawke Government, and they will return the Hawke Government with the biggest majority since Federation.