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Tuesday, 8 November 1983
Page: 2404

Mr CADMAN(5.57) —The House is debating today the Income Tax Assessment Amendment Bill and cognate Bills. They contain some of the Government 's tax policies which have now been implemented in legislation. This is the second group of tax Bills which the House has debated. They appear to be getting worse and worse as we go on. The main provisions of this group of Bills include a decision to tax gradually the contribution that reservists of the Australian defence forces receive for giving their time and voluntary assistance, for which they are paid but which they subsidise heavily through the additional time they are required to serve and through their commitment and dedication to the defence of Australia.

I think it is a great shame that the Government has seen fit to move against these committed people. It intends to tax their pay. Many of them have come to reject absolutely the Government's attitude and its so-called commitment to the defence forces. I have only to point out to the House the personal commitment of the Prime Minister (Mr Hawke) to the Army Reserve scheme. Prior to his election to this Parliament, as president of the Australian Council of Trade Unions, he appeared on television with the then Minister for Defence and supported the concept of the reserve forces, their contribution to Australia and the skills acquired by the complementary nature of their work. After the election, the Prime Minister went so far as to write to the reserve forces of Australia complimenting them on their role and supporting their contribution to Australia' s defence.

Mr Braithwaite —Rather hypocritical.

Mr CADMAN —Hypocritical, indeed. Within a few months the Prime Minister was instrumental in effectively taxing the pay received by reservists when on duty. They are a group of serious- minded and committed Australians. It is a terrible thing that this Government has seen fit to tax people committed to Australia's future, as reservists are. These Bills have not introduced any difference in the zone rebates. This is a commitment which has been broken by the Government. But particularly obnoxious, I believe, is the decision to charge the tax for minors- young individuals, who are not yet working. Instead of being able to earn $1,040 tax-free the kids of Australia will be taxed as soon as they earn $416. This decision is discriminatory against young people who want to work. I do not know whether honourable members opposite are really familiar with their electorates, whether they consider that children and young people earning up to $20 a week are capitalists, or whether they really look at what sort of kid gets out after school and at weekends and works in the retail stores carrying parcels for housewives, mothers and families. I do not know whether they look at what sort of kid gets out and works in the butcher shops making deliveries after school during the week or what sort of kid delivers the local newspapers which honourable members opposite so carefully court in trying to get their names across to the community. Those newspapers are delivered by young people working after school, endeavouring to improve their lot and their opportunity.

We have heard discussions about students who work after school hours for the McDonalds family restaurants. The union movement wants to unionise that group of young people. These are the very sorts of young people on whom Australia will rely in future. Yet this Government has seen fit to say that it will not provide them with a lousy $20 a week that they can earn without tax. It has said: 'We will cut that $20 down to $8. You will not earn more than $8 a week or we will be taxing you'. Let me tell honourable members opposite that the 10-year olds, the 14-year-olds and the 17-year-old students of Australia reject that concept of treatment. They absolutely reject all thought that they should not be self- sufficient, that they should not bring home to their families some contribution to the weekly budget.

I think all honourable members will remember that, some years ago, there was a thought that a newspaper boys' tax should be undertaken by the previous Government. The Press screamed and the Opposition screamed. The Government said: 'Certainly there is a real consideration here. We will not move to introduce a newspaper boys' tax'. The first action of the Hawke Government was to introduce a newspaper boys' tax-an incredible decision. I do not know whether honourable members opposite have moved around their electorates sufficiently to understand the economic pressures on families, to understand how every dollar and every cent in today's economic climate is important to families. I do not think they understand that children are encouraged to find what work is available for them, to go out and actively seek work, whether it be after school or at weekends, to do the sorts of jobs that young people like doing. In farming areas surely it is a matter of young persons having their own patch of ground to grow vegetables or to raise a few lambs. They work it themselves and sell the produce themselves. This money goes into their own bank accounts or savings accounts. These are not big tycoons. These are the kids of Australia seeking to help themselves, seeking to help the family budget, seeking to support their families and seeking a little bit of self-reliance and an understanding of the management of money. What more laudible objectives could families or the kids of Australia have?

Mr Robert Brown —That is not correct. You do not understand it.

Mr CADMAN —I am sure that I understand it. The application of this measure will work against the young people of Australia. What about those students who go out in the Christmas period and seek to supplement their income to carry them through the academic year by building up some amount of money over this period? The way in which this Government treats the young people of Australia is unbelievable. This Government promises that it will increase the tertiary education assistance scheme by a substantial amount. It breaks that promise at the first opportunity and then taxes those who are earning some funds to support themselves.

Another matter that these Bills take up is the indexation of excise. Petrol prices will increase on a regular basis as the cost of living increases and the tax figure will be retained. The Government, by this measure, is seeking to take from fuel users, by a new tax, a tax by stealth. It will be raising this year a total of $1,054m.

Mr Hodgman —How much?

Mr CADMAN —It will be raising $1,054m; a huge slug on the productive sector of Australia. This measure was not introduced by this Government as some sort of conservation measure on fuel. It was not introduced for anything other than revenue gathering purpose. This Government is gathering that revenue very successfully.

I have dealt with some of the measures contained in the legislation that the House is considering. I have dealt with the willingness of this Government to tax those people who are prepared to give their time in contributing to Australia's defence. In that regard the Government is on a hook. Despite its comments on its own policy it has only a few options left open to it. It has the option of increasing reservists' pay sufficiently to compensate for the tax penalty. Honourable members opposite might consider it compenstion. This cannot be done without paying reservists more than the corresponding Defence Force personnel of equivalent rank. That seems to be an option that should not be considered. The Government can back down partially and tax reservists' pay at the basic rate in the dollar. This would eliminate discrimination against reservists but it will impose a heavy penalty upon them just the same because they will be taxed.

Members of the Government may not be aware that in 1974 the Whitlam Government examined these matters. The recommendation that came through, that was accepted by that Government, was that, in all equity, reservists' pay should not be taxed . This matter has been considered. It was considered 10 years ago in detail by a previous Labor government. Its decision was not to tax reservists. Yet this Government has gone ahead and taxed reservists.

I have dealt with the newspaper boys' tax, the discouragement of young people to go out and earn after school, the increase in petrol prices by the implementation of indexed excise charges and the disabling effect that this will have on the productive sector of Australia. This is fine. But I believe that there is more to come. I believe that the Government has measures that it proposes to introduce and will be introducing. Lump sum tax on superannuation is just one of those measures; the assets test is another one. These are the areas we are yet to see. These are the very things that the Government said it would not do, which it is now committed to do and for which it will be introducing legislation in the weeks to come. We are through the second phase of legislation with the passage of these Bills. The third phase is to come. There is even more down the road when we come to think of the prospect of capital gains tax and other measures, to which many members of the Government are committed, which I believe will be introduced.

I think we need to look at the political principle of making promises at an election and then immediately breaking them. A moral principle is one thing but let us look at the political principle. Let us look at the principle that the Government has introduced by making policy announcements and then breaking those policy announcements when it comes to office. I think all Australians were critical of the New York Yacht Club, the very organisation comprised of lawyers that sought to establish a set of rules for a yacht race. Subsequently, whenever there was a strong challenge it wished to change the rules as the challenge came about. We have experienced that as a nation. I do not think a single Australian has any sympathy for the approaches used by the New York Yacht Club in order to keep the Australian challenger out of the event. The process was one of changing the rules after the race had started. It is despicable and deplorable. I believe that the Australian people will completely reject this Government's approach to making promises at an election and then changing the rules after it has come to office.

We need to look at what this Government has done and what it proposes to do. We need to look at the commitments it has made to lump sum tax on superannuation as recently as the National Economic Summit Conference held in this Parliament. Commitments were made by the Prime Minister to the union movement that no taxes would be applied to lump sum payments of superannuation. Commitments were made by Ministers and even the Prime Minister, if one reads his words correctly, that there would be a capital gains tax and they promised that there would be tax cuts after the election. The Government, in its promise of tax cuts went so far as to attach an appendage of tax scales to its policy statement on the cuts that would be made by it when it achieved office.

What is the record of this Government, a government that claimed it would cut taxes and which then proceeded in the opposite direction? It will raise an additional $3,833m from Australians this year. That is the increase, that is the commitment-a massive $3.8m additional tax will be raised by the Government this year. It is a big government, it is a greedy government. It is a government that demands funds from Australians, from people such as reservists, from the kids and students of Australia. It demands funds from those who are retiring and those who are about to retire and it will be demanding funds from those who own property or capital. It will even be demanding additional funds from the workers of Australia due to the recent wage increase awarded by the Australian Conciliation and Arbitration Commission. In fact, about 200,000 middle income earners will shift to a higher tax bracket following the Conciliation and Arbitration Commission's decision to grant an increase to wages of 4.3 per cent during the national wage case. The higher rate of 46c in the dollar applies only to incomes above $19,500. Earnings below that will still be taxed at the lower rate of 30.6c in the dollar. For people earning just below $19,500 a year the decision to increase wages by 4.3 per cent will mean perhaps an extra $2 a week lost in tax.

An estimated 200,000 people will go into a tax bracket where they will be paying 46c in the dollar. These people are very close to earning the average wage. The Government, by denying its promise to the community of not decreasing taxes and not looking at tax indexation or tax cuts of any sort, is gradually grabbing more and more from the Australian people. The 200,000 additional taxpayers who will pay 46c in the dollar will now be deciding whether they will work extra hours, whether the wage increase was really to their advantage and whether they ought to pull back the productivity of Australia by declining to take extra responsibility or work extra hours. The impact of the wage decision, with no corresponding reaction from the Government, will be extremely damaging to the Australian output, Australian productivity and eventually Australian families. But what about the capital gains tax area? I have found it extremely illuminating to read the Bulletin of 27 July 1982. The current Prime Minister was interviewed and his attitude to capital gains tax was sought. Mr Hawke said to the Bulletin that his position is pretty clear in regard to capital gains tax . He said:

I think there has to be an effective capital gains tax and, of course, our party policy is now to try and achieve that by strengthening of section 26A and Triple A.

That was said by Mr Hawke in July 1982, nine months before he became Prime Minister. Senator Button, more recently on 22 October, when asked about his attitude to capital gains tax said:

Of course I will put it to the Government. I've been putting it to the Government and the Opposition for several years now.

The two most senior members of the Government, the Leader of the Government in the Senate and the Prime Minister, both support a capital gains tax. This country does not know what is ahead of it. The Government is seeking to tax those who are young and about to be productive and it is increasing taxes on those who are productive. The Government is taxing those who are about to retire and will be retiring. It is taxing people right across the board who are contributing the most to Australia's future-Australia's golden future if we could only realise it.

The Government has reaffirmed itself as a big spending government, a government that likes to gather big taxes as a high tax government. Not only has it taxed all of the groups that I have outlined, but also legislation is in preparation to tax an even wider range of people such as the young, the elderly and the productive. These people all face the penalties of having an Australian Labor Party Government in office. We have started down a track to increased taxes. Taxes will increase. There has not been any indication that they will be modified in the Government's sortie to gain additional funds for its goals, and socialist objectives, which it wishes to put in operation. The people of Australia are starting to suffer and they will suffer more by this process.