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Thursday, 17 November 1983
Page: 2900


Mr ANDREW(5.25) —I support the Deputy Leader of the Opposition, the honourable member for Bennelong (Mr Howard), and my colleagues in the House in drawing the attention of the House, and the Government in particular, to the dilemma that we face with the bank accounts debits tax legislation. I recognise that currently two Bills are before the House. I want to address my remarks this evening to the Bank Account Debits Tax Legislation Amendment Bill 1983. In the spirit that has been shown in the House during this debate, it is not my intention, nor has it been the intention of the honourable member for Bennelong, I note, to apportion any blame for what have been difficulties with this particular form of legislation. The Opposition recognises that this particular impost-this measure for raising money-has been used by governments of all political persuasions. I stress to the Minister for Housing and Construction and Minister Assisting the Treasurer (Mr Hurford) the importance of the review that is currently taking place.

This has been a very bipartisan debate. In fact, the honourable member for Bennelong has been very generous and kindly in his advice to the Minister. I would like to suggest that the only hazards the Minister faces as a result of hearing the advice of the honourable member for Bennelong is that his already skyrocketing popularity could easily exceed that of the Prime Minister (Mr Hawke ). Were it to do so, of course, it would be founded on a considerably more substantial and compassionate base than is the Prime Minister's. I recommend to the Minister that he particularly heed the advice of the honourable member for Bennelong that we would do well to review all the States that have been involved in the financial debit tax that runs parallel to the bank account debits tax. I suggest that such a review would be very much in the spirit of consensus about which we have heard so much from the Government over the past few months.

I recognise that principally small amounts of money are involved in the bank account debits tax. But, of course, for some people the handling of relatively small sums of money represents a large part of their income. It is those people- the pensioners of our society, the people who are involved in charitable groups, the Boy Scouts Association and the school groups, as acknowledged by both the honourable member for Bennelong and the honourable member for Braddon (Mr Groom) -who are directly affected by this tax. We are not talking about a great deal of money. In fact, the issue before the House is not the amount of the money involved. We are talking about payment of 10c for a cheque of up to $100; 25c for a cheque of up to $500, 50c for a cheque of up to $5,000 and of course, a maximum of $1 for any sum in excess of that. We can suppose only that the Treasury had hoped that these relatively small sums of money would be-if I may use a topical illustration-rather like the rain showers we have had in Canberra over the past week; that a lot of these little drops would make a deluge. While I hesitate to take this illustration too far, might I be forgiven for suggesting that Treasury hoped that these small drops would ultimately have a real impact on Treasury income rather-if honourable members will pardon me-like drips on a stone.

I suggest that the impact of this form of impost-the bank account debits tax- will be to discourage people from using cheque accounts and bank accounts, which are, of course, among the most efficient forms of saving that we have, and certainly among the most efficient forms of money management. The result-which has already been alluded to this evening-will be to force people to turn from cheque accounts to cash accounts and possibly to the plastic money bankcard alternative. I would like to reinforce what has been said by the honourable member for Braddon, which is that the issue that the House really faces when it deals with a Bill such as this and with the question of how it is or is not to raise funds, is why the Government needs these new areas of taxation. The problem that this Government faces, and that was faced by the former Government, is that of funding the tasks that are put before government. Even this week we have looked at the possibility of expanding the Parliament. That possibility involves the people of Australia in greater expenditure. We have to recognise that the people have made more and more demands on government and that the capacity of government to meet the demands of the people has outstripped the capacity of the people to pay.

Honourable members should look at what happened in the year 1981-82, when the consumer price index was running at 12.3 per cent. The actual private sector portion of that CPI movement was 7.7 per cent. This meant that any employer was faced with an increase in revenue of only 7.7 per cent while the wages bill he paid, based on the CPI, was more likely to be running at 12.3 per cent. That sort of pressure resulted in the inevitable shedding of labour and the rising unemployment which is an abhorrence to everyone in the House. The bank account debits tax some have called a bad tax, playing on the initial letters of the first three words of the title of the Bill. If we change this form of taxation or any other form we must first change our attitude to government and to the demands we place on government. We have to recognise that every additional task the Government accepts increases the burden that must inevitably be placed on the taxpayer.

I refer briefly to the emergence of the financial institutions duty, which is related to the bank account debits tax. I speak with some passion about this duty as it has appeared for the first time in South Australia as a result of the Bannon Government's Budget. The Bannon Government has determined that South Australians should pay 4c in every $100 in financial institutions duty. This duty is at a level higher than the level of any duty anywhere in Australia. Sadly, it did not bring with it the stamp duty relief that Bannon had promised prior to the Budget. Effectively, this financial institutions duty puts a taxation on taxation. Let us say that I, as a South Australian, choose to deposit $100. The financial institutions duty will then cost me 4c. Let us say that I later choose to withdraw that $100. If that happens, the bank account debits tax will cost me a further 10c and the stamp duty on that cheque will also be 10c.


Mr Rocher —A tax led recovery.


Mr ANDREW —One might say so, yes. This is even more marked if we look at the impact on company accounts instead of individual accounts. I seek leave to incorporate in Hansard a chart which makes a comparision between the impact of this duty in South Australia and in Victoria.

Leave granted.

The chart read as follows-

VICTORIA-SOUTH AUSTRALIA-CALCULATION BASIS

Examples of customer savings account costs: per quarter

Personal 1-

FID 1.20 1.60 Deposit totalling $4,000

Personal 2-

FID 1.80 2.40 Deposits totalling $6,000

Examples of customer cheque account costs: per quarter

Personal 1-

FID 0.45 0.60 This is on an average small account with

Cheque duty n.a. 1.30 transactions of

11 credits totalling $1500

Total State duty 0.45 1.90 20 debits, comprising-

Bad tax (Commonwealth) 2.60 2.60 16 at $35

4 at $221

Total Government charges 3.05 4.50 (total 13 cheques)

Personal 2-

FID 1.05 1.40 This is based on an average loan account

Cheque duty n.a. 3.00 with transactions of

10 credits totalling $3500

Total State duty 1.05 4.40 40 debits, comprising-

Bad tax (Commonwealth) 5.75 5.75 30 at $35

9 at $221

Total Government charges 6.80 10.15 1 at $500

(total 30 cheques)

Company 1-

FID 11.40 15.20 This is based on a very small average company

Cheque duty n.a. 5.80 account with transactions of

15 credits totalling $38,000

Total State duty 11.40 21.00 70 debits, comprising-

Bad tax (Commonwealth) 15.00 15.00 40 at $35

20 at $221

Total Government charges 26.40 36.00 8 at $1421

2 at $6000

(total 58 cheques)

Company 2-

FID 180.00 240.00 This is based on a small average company

Cheque duty n.a. 100.00 account with transactions of

80 credtits totalling $600,000

Total State duty 180.00 340.00 1000 debits, comprising-

Bad tax (Commonwealth) 242.50 242.50 550 at $35

250 at $221

Total Government charges 422.50 582.50 150 at $1421

50 at $6000

(total 1000 cheques)


Mr ANDREW —I thank the House. Honourable members will see that the chart illustrates that, for a small individual account, 13 cheques being used in South Australia will cost $1.45 more than they would cost in Victoria. For a small company cheque account, the transaction of 1,000 cheques could cost $160 more in South Australia than it would cost in Victoria. Fortunately, the Opposition in South Australia has been able to get total relief from this duty for churches and charitable organisations. That measure is to be welcomed since what was originally proposed was only a limited exemption. The South Australian Opposition has also been able to get relief for the extraordinary situation which occurs where one has a security organisation delivering large sums of cash to a particular company, taking a cheque in lieu of the cash delivered.

In conclusion, I reiterate, as the honourable member for Bennelong has said, that we in the Opposition are not opposed to the proposals before the House. We recognise the imperfections that the Minister is endeavouring to correct. We simply plead with the Minister to hasten the review of this matter and to show his characteristic sensitivity in the review so that the organisations outlined by us-the boy scout groups and the parents and friends groups in schools, to name two-will get what we think is appropriate relief.