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Tuesday, 29 November 1960


Mr LUCHETTI (Macquarie) .- Mr. Deputy Speaker,according to the honorable member for Wentworth (Mr. Bury), the problems of inflation in this country can be traced to the motor industry. He regards that industry as the cause of the great problems which face this nation to-day. The honorable member said that if we had kept going as we were going, we should have been bankrupt internationally. I shall deal with that viewpoint later and refer him to the views which he himself expressed when the Budget was being debated and to the views expressed at that time by the Treasurer (Mr. Harold Holt), the Prime Minister (Mr. Menzies) and other spokesmen for the Government. The honorable member said, also, that slowing down of the motor industry was necessary, and he added that this would have other effects. Of course it will have other effects, Mr. Deputy Speaker. It will cause unemployment, for one thing. But the fact that people will lose their jobs has been conveniently glossed over, if not neglected altogether.

Finally, the honorable member for Wentworth adopted the old cry of .the present Commonwealth Government when in difficulties, and took the usual course of blaming the States. He said that if the Stales would do more about hire purchase, all would be welL I remind the House that this Government has an opportunity to implement the recommendations of the Constitutional Review Committee - a joint committee of the Parliament. But the Prime Minister and his Administration have steadfastly refused to do anything to implement the committee's recommenda-lions. Of course, there is another device by which action could be taken - by the convening of a conference with the States in order that uniformity might be obtained throughout Australia with respect to hire purchase. But this national Government has not been prepared to call such a conference.

This Sales Tax (Exemptions and Classifications) Bill must be considered as one of a number of economic measures .publicly announced to the House and the nation by the Treasurer on 15th November, and as part of the Menzies-McEwen Government's financial and economic policy. Its concept is that of neither the Liberal Party of Australia nor the Australian Country Party. As a product of the Liberal PartyAustralian Country Party coalition, this bm will neither help country people nor serve the nation as a whole. The bill is not liberal; it is harsh, oppressive and restrictive.

Only three months elapsed from the presentation of the Budget for 1960-61 until the Treasurer presented the economic statement in Which the sales tax measures that we are now considering were announced. On the very day that the economic statement was read in this chamber, the last words on the Budget were being uttered in the Senate - the Appropriation (Works and Services) Bill was being considered by the Senate. What an extraordinary state of affairs that is! It is indeed a strange situation that whilst a new economic measure is being presented to the House of Representatives, just across Kings Hall the Senate, in debating the Appropriation (Works and Services) Bill, is solemnly measuring up the needs of the nation in the light of circumstances outlined in the Budget.

This bill is a yardstick of the Government's .lack of competence in economic affairs or its political dishonesty., or both. I -ask honorable members to consider the facts. Was the Government so ill-informed that it was unaware of our economic drift? Was it blind to the serious plight of our overseas balances? Three months ago, the Prime Minister and others seemed to be satisfied that all was well. On 25th August, during the Budget debate, the Prime Minister said -

I admit, Mr. Temporary Chairman, that we have an inflationary movement. But we as the Government have a policy which has been stated and has been acted upon with precision.

Where is the precision when a new budget is needed only three months after the presentation of the 1960-61 Budget? Let us look at the views of the Minister for Labour and National Service (Mr. McMahon). He had some choice expressions. We know that he is one of the financial experts of the Government, one of its economic thinkers and an up and coming Minister. What did he say during the Budget debate? He said -

We can well look at a budget as an instrument of social change - as a means of transferring purchasing power, or income, from one section of the community to another. That is illustrated where taxation is imposed upon one section of the people in order to give benefits to another section.

That is a little exercise in the idea of a welfare state. It shows the type of Minister he is. He went on -

So far from refusing to use it as a method of economic control, the primary objective of the Budget was to ensure that it did control the controllable influences of the economy in the interests of the future.

Three months after those wise and bright words from the Minister for Labour and National Service we have this further economic statement introducing savage sales tax proposals and other measures. The Minister continued -

We have dealt with our problems by a combination of the three methods, and I believe we have introduced, technically speaking, a perfect Budget.

A perfect Budget, but it needed to be corrected only three months later! This is the sort of administration that seeks the support and approval of the people. What did the Treasurer have to say on these matters in the course of his Budget speech on 16th August? He said -

The Government has now taken stock of the position again in the light of recent trends and of the prospects ahead, so far as these can be seen.

How far into the future can the Government look if it cannot see economic trends three months ahead? The words of the Treasurer were -

Clearly, a strong up-thrust of activity is still very much under way. Much of this activity - probably most of it - is desirable in every sense of the word.

Yet three months later the document upon which the people were to found their organization for the future is torn to shreds and thrown into the waste paper basket, and these new tax proposals and controls affecting every man, woman and child are introduced. Perhaps the nearest to the mark was the honorable member for Mackellar (Mr. Wentworth), who said -

This is an adroit Budget. It meets our shortterm problems very well.

It was certainly a short term; it lasted for three months. That is the type of economic thinking of this Government. Tt is no wonder that the people cannot organize their businesses or plan their economy to go ahead with the momentum necessary to develop and strengthen the country. This is a government of fits and starts. Three months after introducing its Budget, it decides to do this sort of thing. But this is nothing new, nothing novel, nothing strange. We have had our horror Budgets and our little horror Budgets. We have had economic statements and we have had stops and starts. All these things are characteristic of the Government, and this Bill must be considered as part of the Government's policy. It cannot be divorced from h.

The presentation of the Budget in other days was an historic event. It was the time-honoured tradition that a document would be presented to the Parliament which would measure the nation's economy, estimate the outgoings and the incomings and plan to meet the needs of the people. But let us consider the time-table for this year. The budget was presented to the Parliament on 16th August, 1960. The last of the Budget debate took place in the Senate on 16th November, 1960. The economic statement with these savage tax proposals was presented to this House on 15th November. The Budget has become a meaningless document. No longer can a business executive, a local government or semi-government administration or any person be guided by a Budget presented by this Government. It could be varied tomorrow or the next day and h could be amended in any fashion. The Minister for Labour and National Service was most vocal in upholding the Budget proposals.

He said that the Budget was designed to put Australia's economy back on an even keel. He said that all was well and that it was a perfect Budget.

The Treasurer said that the Government had acted to save the people from being hurt. He declared that there were grave dangers inherent in the situation and that the country could be thrown into a state similar to that of the depression in the 1930's. These words came from the Treasurer of a government which had been in charge of the nation's economy for almost twelve years. The Government has been blessed in the main with favorable season after favorable season and with very high prices for our products on overseas markets. The Government claims that the measures it has now adopted will overcome our problems. The honorable member for Wentworth said that the motor industry was the principal offender. I should like the Government to state clearly how this tax will deal properly with the nation's affairs. How will it overcome our balance of payments problem? Will it stimulate production? Will it help the nation to expand and develop? Will it put new life into our economy? Or will it merely be another tax grab which can only halt, steady and in some instances stop the progress of an economy that ought to be expanding if we are to heed the Prime Minister's fervent plea for an Australia Unlimited? What sort of policy is this Government pursuing at the present time? I submit that if we are to have this sort of behaviour from the Government, if we are to submit to tax grabs coupled with proposals which can only halt the progress of the economy, the Government should submit to Parliament a detailed supplementary Budget showing not only what extra money it proposes to take from the people, but also how that money is to be spent. But both the Menzies-Fadden Administration and later the Menzies-McEwen Administration, have always held views which were not concurred in by either the majority of the people of Australia or by the Opposition. They believed that the government was better able to look after the people's money than were the people themselves. They always argued that the government had a monopoly of brains and ideas.

Is the money that is to be taken from the people to be spent on the construction of better access roads to our areas of rural production? Is it to be spent on great water conservation schemes designed to boost primary production with a view to increasing our export income? There is one way in which it could toe spent with advantage, and it is a way to which I have referred on many occasions in the past. I suggest that the extra money ought to be spent on such things as better roads, more water conservation and irrigation schemes and other things which make for rapid development so that we may earn a greater export income for Australia. As far as it is possible to do so, we ought to be producing in Australia oil and other products essential to our defence so that we shall be in a position to meet demands for oil should this country ever become involved in an international situation. An oil can be produced here! It can be produced from either coal or shale. According to the Treasury Information Bulletin issued in October of this year, the volume of petroleum products imported, and of petrol in particular, increased from 272,500,000 gallons in the September quarter of 1959 to 304,300,000 gallons in the September quarter of 1960, an increase of 1 1 .2 per cent. Again, instead of importing such unnecessary things as frogs' legs in aspic, caterpillars, grasshoppers' legs, canned chicken and the like, we should be more selective and import only those things which are necessary for the development of our economy. If the Government adopted that policy, we would not have the absurd state of affairs we have now. The people want a government that can provide economic stability. This Government cannot do that.

This sales tax proposal is basically wrong and unjust. It disregards entirely the vital principle of capacity to pay. Under it, the poorest person in the community v/ill pay on any given article precisely the same amount of sales tax as will the richest person. The proposed tax is a sectional tax; yet this Government looks upon it as the most desirable way of overcoming our economic ills. But that is not surprising, for it will be remembered that this is the Government which intervened before the Commonwealth Conciliation and Arbitration Commission. This is the Government which put the wages of the worker in a strait- jacket, and which closed its eyes to all the exploiting and profiteering to which the people were being subjected. It mattered nothing to this Government how much profit the motor industry was making, nor was it concerned about the profit being extorted from the people by the oil cartels or by the great iron and steel industry, all of which had a tremendous impact upon every section of our economy. This Government refuses to take any action to limit profits.

As the honorable member for Melbourne Ports (Mr. Crean) has said, sales tax on motor vehicles is a cumbersome tax which, in. addition to providing the Government with increased revenue, depresses the economy in a tortuous way and adds to the burden of one section of the economy only. After freezing the basic wage, the Government introduces this measure. It has a depression complex. Full employment has no place in this Government's thinking. We all know how unjustly sales tax on foodstuffs and other' things affects the majority of the- people, and this sales tax on motor vehicles, the most unjust of all, is to be increased, by 33i per cent. The Government airily says that it proposes to increase sales tax on motor vehicles by 10 per cent, from 30 per cent, to 40 per cent., but the community ought to remember that in actual fact it is being increased by one-third, or 33i per cent.

Let me trace the history of sales tax on passenger vehicles over the years. From 15th November,. 1946.. to 7th September, 1949, under the Chifley Government, sales tax on this type of vehicle was 10 per cent. It was subsequently reduced by the Chifley Administration and, from 8th September, 1949, to 12th October, 1950, was only 8i per cent. Under the Menzies-Fadden Administration, it was increased to 10 per cent., and that rate applied until 26th September. 1951. From 27th September, 1951. to 9th September, 1953, it was increased by 100 per cent, to 20 per cent. During the period from 10th September, 1953. to 14th March, 1956, it was down to 16J per cent. Was there an election at that time? There was. and it is strange that the only time this tax was reduced was on the eve of an election. On 15th March, 1956, it was increased to 30 per cent, and that rate obtained until 15th November, 1960. According to the Prime Minister, that increase was to be only temporary,, but now we have this infamous proposal, to increase this vicious tax to 40 per cent.! Looking back over the years, it would seem that this Government has had some kindly feelings toward the motor industry. According to the Government, it was not the felon, nor was it the villain for, on page 788 of "Hansard" of 14th March, 1956, the Prime Minister is reported as having said -

We are well aware of the benefits which will ultimately flow from this great industry, but we are convinced that proper counter-inflationary action requires that some temporary restraint-

I emphasize " temporary " - should be laid upon it.

After four years, this temporary restraint is to be increased by 33J per cent.! In those circumstances, are we to take the Prime Minister's statement in 1956 as a serious promise, or should we look upon it as something just said in passing by the head of a power-drunk administration which is heedless of the requirements of the people?

After all, it is not only the capitalist who uses a motor car. In Australia, there are many people who have need of motor cars. For instance, the mothers in country areas have need of station wagons to take their children to school. Again, the harried mother who goes shopping has need of a motor car to bring home her parcels. AH those people need motor cars; but under this tax proposal we will find that the snide operator, the wealthy person and the successful person will still be able to buy their cars. They will not be seriously troubled about this legislation. I say to my friends in the Country Party that if ever there was a time when they should speak up for the people whom they represent in this Parliament, they ought to speak up now on behalf of mothers who have to take their children to school and who need a station wagon or a motor car to help them get their children to and from school and to go to the nearest town to do their shopping. Those people are unable to get their vehicles classified in any way other than as private motor vehicles. These sales tax proposals therefore should be condemned by every honorable member.

The sales tax proposals and associated fiscal measures have caused widespread concern. They have caused uncertainty, doubt and dismay in the business world which expects to be able to go forward with reasonable certainty in the future. When we look over these tax proposals we find, in the case of the Holden car, that in 1948 the tax was £58 10s., but to-day, in 1960, it is £296. In a period of twelve years the sales tax on a Holden car, or any car of comparable price, has increased by 406 per cent. Honorable members on this side of the House appreciate the fact that the motor industry has made inordinate and outrageous profits; they are too high by any standard at all. We know that hirepurchase companies have made excessive profits, but that does not give this Administration leave to join with other brigands in adding through taxation to the burden which the people have to bear if they wish to buy a motor vehicle which in this country is an essential amenity. One person in every four in Australia owns a motor vehicle, and when one adds together the sales tax and all the other charges, such as registration and insurance fees, it is becoming most difficult for the average person to obtain a motor vehicle.

As I have pointed out, wealthy persons will be able to get a motor vehicle. There will be no difficulty at all for them. They will be able to afford motor cars; but persons who have been saving day after day and week after week, careful, frugal people, when they find that the sales tax has gone up by an extra £80, £90 or £100, will have second thoughts about purchasing a car. Those people will be denied the right of owning an essential vehicle. They will be the sufferers under this Government's taxation proposals. I put it to the House, therefore, that this Parliament should censure the Government. We ought to condemn it in the strongest language at our command. I condemn the Government, first, because it has failed to take the people of Australia into its confidence. It has failed to deal with the economy on a yeartoyear basis. The Government was not so blind, three months ago, that it was unaware of the economic circumstances facing this country. Despite the feeling of confidence expressed by various members on the Government side of the House, particularly members of the Liberal Party, the Minister for Trade (Mr. McEwen) said that the economy was balanced on a razor's edge. Labour members pointed out the position and directed attention to all these problems, but they went unheeded by the Government which was carried away with confidence. This legislation will not overcome the problem. Therefore the Opposition calls on the House to reject this measure. The sales tax proposals will not arrest inflation. This legislation is sectional, harsh and restrictive. It will fall heavily on people on low incomes and will cause unemployment. The bill should be rejected also because it is a blatant tax grab, inflating Government receipts without any provision being made for national development through increased production.







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