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Thursday, 6 December 1973
Page: 2580


Senator MAUNSELL (Queensland) - I want to state the position of the Australian Country Party in the debate on these 2 taxation Bills. Senator Guilfoyle has traversed the main areas concerned with taxation generally. There is no doubt that if we were really to take apart the Income Tax Assessment Bill (No. 5) 1973 we would be involved in the task here for hours. But I do not propose to take up a great deal of the time of the Senate. However, I do not think that I or my Party should allow this Bill to pass through the Senate without comment on what we believe has been an attack on primary industry in this country. The withdrawal of the special taxation concessions has come about under the pretext of an attack on Pitt Street farmers. Of course, everyone engaged in primary industry has had to suffer as a result. It is inconceivable to me that at this time these concessions should be withdrawn. We all know that, for some years now, the primary industries of this country, particularly those in the arid areas, have suffered from severe drought, and depressed prices during the rural recession. In these years, they have not been able to avail themselves of taxation concessions. Now, because of good seasons and higher world prices, having become taxpayers again these primary producers have the opportunity to take advantage of taxation concessions but, because of this legislation, that opportunity will be denied them and they will be unable to make much needed improvements and to increase production in the grazing and agricultural sectors.

It is interesting to note that the rural debt, which is over $2,000m, has to be paid. This is one of the main reasons why primary producers have been unable to make improvements necessary to increase production. They have not had the income or the funds and, in many cases, they have not been able to obtain money from banks, agents or other sources from which they obtain loan funds. Of course, a great many anomalies arise in the present situation. The richer farmers and graziers in the community who have had access to funds have been able to maintain the standard of their machinery, equipment, fencing and so forth, but the poorer members of the farming community, through lack of access to funds, have not been able to do so. Now that they have the opportunity to look after their equipment and property they are being denied the taxation concessions that have applied for so many years. Therefore, these measures disadvantage the poorer farmers and graziers in the community.

In addition, we saw develop the unfortunate situation in which, because of the rural depression, many of our machinery manufacturing firms had to shut down or reduce production because of lack of sales. Farmers could not afford to buy equipment, such as headers, tractors, and so forth. It will take time to build up this business again. The position is that farmers and graziers want to buy equipment but it is not available. I know that there is a waiting list of about 3 years for certain headers, tractors and other farm machinery. Some primary producers are in an unfortunate position because, although they may have been able to afford to buy this equipment before the Budget was introduced, because of the waiting list they were unable to do so, and they are now being deprived of the taxation concession that has been obtained by their more fortunate fellows. Of course, I find it inconceivable that any government should introduce measures that will restrict production at a time when overseas prices are booming and there is a demand for agricultural products. The world is crying out for more wheat and sugar. Wool is at a premium, and we all know that we cannot supply the demand of the beef markets.

Surely this is a time when any responsible government would want primary industries to increase production, take advantage of the world situation and bring more export income into the country. Such a government would say to producers: 'Go ahead, we will give you the opportunity to develop your properties and increase production. ' However, instead of saying that, the Government has tried to restrict these producers. Let us face it: We cannot produce more land and there is no more land to use. We must try to increase the productivity of land already developed. In this respect, primary industry is different from factories and industrial concerns. A factory can be enlarged and its output increased 10 or 12 times without much additional area being required. From a national point of view surely this is the time when we should be encouraging the production of primary industries. The Government's action in relation to some of these taxation deductions is completely wrong.

Let us consider the case of the arid areas. Although this is the driest continent in the world, much of our export income derives from the production of properties in arid areas. In such areas are to be found a large proportion of our sheep flocks and beef cattle herds. As this country has little natural water available, there is a necessity to provide water so that the land will produce. At considerable expense, earth tanks and earth dams are constructed so that water can be conserved. Many of these tanks and dams do not last 10 years; in some areas they may last only 2 or 3 years before they must be renewed or cleaned out. Therefore, under the Government's proposals, the owners of properties where these tanks and dams are used are at an immediate disadvantage. In the more productive farming areas where irrigation schemes are available farmers can buy water from such schemes and claim the cost in full as a taxation deduction. Moreover, the cost of that water is considerably less than what graziers in remote areas must pay to ensure a water supply for their properties.

Under the taxation schedules as they applied previously a farmer who built water storages could claim a full deduction in the first year, but if he sold his property the value of that storage improvement was included in his income. How it would assist Pitt Street farmers to provide water storages in some of these arid areas, I do not know. I can understand that anyone who pulls out scrub, developing scrub lands into rich agricultural lands, gains a taxation advantage, but I cannot see the advantages to be gained from making water storage improvements in arid areas.

I now turn to the changes made in the schedules relating to depreciation allowances. With regard to internal subdivisional fences, previously one could claim as a depreciation allowance 100 per cent of the cost. Now, that allowance has been reduced to 3 per cent a year of the total cost. There may be some areas in which fences last for 33 years, but in many other areas, because of the type of soil and other conditions that apply, they do not last 10 years. I believe primary producers should have an opportunity to select one of a variety of applications for depreciation to suit particular areas and conditions. They should not be in the unfortunate position that applies now in which the depreciation allowance is only 3 per cent per annum. As I have said already, primary industries have a debt of over $2,000m. Primary producers are struggling to get back on their feet; they are trying to produce more to enhance their financial liquidity. In the process, in many years they operate in adverse conditions. The main point involved is the export income earned as a result of the sale of primary products overseas. Not only in these measures but in many other areas of

Government budgeting- particularly since December 2, while this Government has been in office- primary industry has been singled out for attack. Country people have had their postal charges increased. The subsidies which were given to airlines to permit them to operate in country areas have been taken away. The Government has also increased telephone charges. These are very costly items for people in remote areas. When those people have to conduct business in the capital cities they either have to use the telephone or fly there to conduct the business personally. But the Government has now increased the primary producers costs in this regard. If the Government continues this sort of attack on country people not many people will want to live in the remote areas of Australia.

The cost of living in remote areas is high because of transport costs. These costs rise in proportion to the rate of inflation. People in the wool industry, 95 per cent of whose produce is sold overseas, will be particularly affected by the increased transport costs and they will be put in a position where they cannot pass on their increased costs. I believe that this Government should reconsider the clauses in this Bill that concern taxation deductions for primary producers.

Before I sit down I would like to say that the Australian Country Party will support the Taxation Bill (No. 4) 1973. In fact, this legislation was considered by the previous Government. We realise that the law as it stands allows certain people to take advantage of tax havens. We agree that this practice should be stopped.







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