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Wednesday, 18 February 1987
Page: 228

Mr CUNNINGHAM(11.24) —I rise to support this taxation legislation and to oppose the amendment moved by the honourable member for Mackellar (Mr Carlton). We have just listened to a speech which has clearly indicated to all those who have listened to it, and which will indicate to all those who read it, that there is every reason why the message that is getting out to Australians, even from someone as demented as the leader in Queensland, is very accurate-the members of the Opposition are losers, they have been losers, and they have no hope of ever winning an election, considering the rhetoric and the sort of material put forward by the supposed Opposition spokesperson on Treasury matters. At times in this debate he even referred to the industrial relations field, with similar rhetoric in relation to that.

The Taxation Laws Amendment Bill (No. 5) and the Income Tax Amendment Bill deal with provisional tax. The issue has been clearly spelt out by the Minister for Community Services and Minister Assisting the Treasurer (Mr Hurford) in his second reading speech. The Opposition spokesman, the honourable member for Mackellar, who is at the table, also spent a few minutes on that issue today. The Bills are part of the taxation measures that this Government has introduced over a period in order to rebuild the economy of Australia, to put it on a path that will see us into the next century. I believe that the reason we are seeing this great push and this massive expenditure by some people in Australia to make a charge-similar to what occurred in 1975-to take over the treasury bench is based on the clear understanding that we are heading into an era of a very stable economy because of the foundations laid down by the Treasurer (Mr Keating) and the Prime Minister (Mr Hawke).

The government that wins the next election will be the government that will be in power for a long, long time. That is clearly understood and that is why we are seeing this massive push for power by a section of the establishment in Australia, the really conservative sector in Australia.

In dealing with provisional taxes I will go to the opposite end of the spectrum when talking about the public. I will not be talking about the need to look after the greedy; I will be talking about the need to look after the needy. Because the increase in the rates for pensioners and the adjustments in the tax scales are taking a while to work their way through, we are finding that some people in the lower income bracket are having to pay provisional tax for the first time. I know this is a separate issue from the one that is involved in the provisional tax measures before the House, which deal with people who have provisional tax liabilities in excess of $2,000. Many people are finding that their small investment income has increased their total income to the extent that they are beyond the tax threshold and are getting a provisional tax bill for the first time. Avenues are available for them through the Department of Social Security-I have been advising constituents in my area of this fact-to make adjustments to their pension or superannuation income so as not to be saddled with a provisional tax bill. It can be amended. For all the work we have done in the taxation areas, this is one area we will need to continue working on through to the next Budget to ensure that the thresholds are adjusted in such a way that those people who have never had to pay provisional tax will not have to do so in the future.

I have a document containing figures which I would like to table at the conclusion of my speech. It is a breakdown of expenditure, by age and social group, that this Government intends to make during the 1986-87 year. I have taken the demographic statistics used by the Department of Immigration and Ethnic Affairs and have developed a paper which shows age groups, from nought to four, five to nine, 10 to 19, 20 to 29, 30 to 65, and 65 and over. I have put them into social groups: Pre-school children, primary school children, secondary school children, young marrieds, families, pensioners and retirees. When one goes through the expenditure of every department in the last Budget one sees some interesting figures: In defence we spent $7,415.3m; in education, $5,204.2m; in housing $1,509.5m; in culture and recreation, $949.6m; in transport and communications, $1,702m; in health, $7,306.5m; in general scientific research, $534.7m; and in social security, $20,760.4m-a very large area of expenditure by the Government. We also spent millions of dollars on industry assistance and development, on labour and unemployment, legislative services, law and order and public safety, foreign affairs, administrative services and, last but not least, payments to other governments, where general revenue assistance alone was $13,125.7m out of a package of $14,328.4m. That is a total outlay by the Government of $74,764m.

The debate in Australia is focusing on how and where the alleged conservatives intend to cut taxes to the tune of $6,000m to $8,000m. I have taken the age groups and the corresponding figures and worked out just where the Government spends its money. In the nought to four age group, the pre-school group, the amount spent on each child by way of education, health, social security, housing, transport, law and order, administrative services and payments to other governments is $3,524.24. So a family who has a child under four is receiving on average that amount of money. If that family has a child between five and nine, that family will receive by way of government expenditure on services such as health, social security, housing and other services, an amount of $4,106.81. If that family also has a child in the 10 to 19 age group-we will see that the education figures differ slightly for each age group-it will receive, through the services I have mentioned, an amount of $3,769.81. For the benefit of the point I am making, I will move to the 30 to 65 age group, to the two heads of the family. The expenditure by the Government on defence, education, housing, et cetera, amounts to, by way of tax returns, $3,748.72 each.

When we put those figures together we find for the male figure in the family a figure of $3,748.72 and for the female, $3,748.72; for the pre-schooler it is $3,524.24; for the child at primary school it is $4,106.81; and for the secondary school child it is $3,769.86. So the value of the tax coming back to the family is around $18,898.35. When we hear about the conservatives running around the country saying what they will do to cut expenditure they have to be able to tell every family just what section of that expenditure that families are receiving they want to cut out.

The tax rate for the average wage earner is 25c in the dollar. People who are earning between $25,000 and $27,000 a year are paying at the moment a flat rate of 25c in the dollar. So conservatives who believe that 25c is the level they want everybody on are not talking about all those families at present who are receiving these expenditures from their taxes; they are talking about those people over and above, the greedy, the ones who they intend to see get cuts which we can ill afford. The question that needs to be asked, particularly of the honourable member for Mackellar, is: Where are the cuts going to be made on the families who are at present paying only 25c in the dollar tax and who are receiving $18,898 in government expenditure? Will it be in the health area? Will it be in the education area, or will it be somewhere else?

Let us look at the areas of government expenditure on the 65 and overs, our elderly people and retirees. When we run down the figures for the people in that age group we find that for every person over 65 years of age the average expenditure from the Budget this year will be $9,203.49. The administration costs on all this, which takes into account salaries and everything else, works out at about 18 per cent.

If every Public Service job in Canberra that is duplicated in the States is abolished-the conservative forces claim that that is where the cuts will be made-the amount of money saved will be minuscule. The Leader of the Opposition (Mr Howard) said on television last night that the best we could possibly do would be to cut expenditure by $400m to $500m. There is complete confusion about the Opposition's taxation policy. Some sectors-I do not know which faction or group one should consider; the conservatives, the wets, the dries or the National Party-are trying to decide which group will come out on top in the taxation battle. If the 25c group comes out on top we know, from the words of the present Leader of the Opposition, that 80 per cent of Australians will be worse off. If the proposal espoused by Sir Joh, as he stomps around the country with his $1,800 an hour Learjet or whatever type of jet he flies around in at everybody else's expense, is foisted on the Australian people by some unfortunate circumstances, 80 per cent of Australians will be worse off. At present, many families are not paying even 25c in the dollar.

I will run through a scale that I have before me. It illustrates the tax paid by a two-income family earning between $20,000 and $36,000 a year. If the head of a family in that group earns $12,000 a year, he pays $1,736.26 tax, or 14.46 per cent-not 25 per cent. If his spouse works to bring the family income up from $12,000 to $20,000 by earning $8,000, the tax payable is $759.46, or 9.49 per cent. How would such a family be with a 25 per cent tax rate?

Mr Carlton —I raise a point of order. The remarks made by the honourable member do not relate to either the Bill or the amendment.

Madam DEPUTY SPEAKER —Order! The honourable member's remarks are within my guidelines of flexibility which I operated on behalf of the honourable member for Mackellar.

Mr Carlton —On a point of order, Madam Deputy Speaker: I moved an amendment to the motion which brought everything I said clearly within the scope of the debate. The honourable member is debating personal tax, which is not included in the scope of the motion or the amendment.

Madam DEPUTY SPEAKER —I will be asking the honourable member for McMillan to come back to the mainstream of the legislation. However, I repeat my point that in one instance I was about to call the honourable member for Mackellar to attention when he was going through anecdotes, but I decided that, for a rounded discussion, it was better to allow him to continue, believing that he would get back to the point, which he did. I ask the honourable member for McMillan to do so as soon as possible also.

Mr CUNNINGHAM —It is quite obvious from the remarks and the objection raised by the honourable member for Mackellar that he does not understand that we are talking about a tax package. He even complained in his amendment about legislation announced on 19 September 1985. From 19 September 1985 to the present allows for a broad-ranging debate. Within the context of a tax debate, whether it is about a provisional tax or, as he claims, the imposition of an excessive tax burden on business-there is no mention of the needy; it is always those at the top level-I claim that my remarks are quite in order.

The tax rates which I have just cited-that is, 14.46 per cent for an income of $12,000 and 9.49 per cent for a family on an income of $20,000-are a long way below 25 per cent. Let us consider a two-income family earning $36,000 a year. If one person earns $21,600, he pays $4,844.09 tax, or 22.42 per cent if we work on a flat rate. If his spouse earns $14,400, the tax payable is $2,414.42 or, on the flat rate tax which Joh and the conservatives are always screaming about, 16.76 per cent. Those are the figures for a two-income family earning $36,000. What would a 25 per cent tax rate do to them? It would increase their tax burden.

Why do the conservatives want to do that? They want to give the money back to those who make big profits on the share markets. We have seen the deals that occur in the share markets. Millions of dollars change hands in deals such as those made by Herald and Weekly Times Ltd and television stations. The Opposition wants such people to continue making capital profits. We have no objection to that. We do not put restrictions in the way of making capital profits. All the Government asks is that those people pay a share of their profits, the same as everybody else in the community does, by way of tax. We know that that is the one issue on which the conservatives are in agreement. They want to give back to those people the opportunity to make profits and pay no tax. Of course, when they have made those profits the Opposition wants them to be in a position to buy more imported vehicles, such as BMWs, Mercedes-Benz, Jaguars and four-wheel drives. Someone else-the farmer, the exporter-has to make up the money to pay for that.

Where is the Opposition's policy on current account deficits, overseas trade balances, and so on? The Opposition wants to encourage financial positions for people who will take money which is legally in the public purse and which is spent on ordinary Australians. The Opposition wants to give that money back to businessmen so they have more money to spend on the very things that are causing our balance of payments problem. I cannot understand the logic of any of the debate that the Opposition is putting up and I do not believe that people around Australia will do so. It is quite obvious that the policies will be rejected.

I return to the flat tax argument and the tax levels. A person on $20,000 a year pays $4,136.09, or a flat rate of 20 per cent. That is still 5 per cent below the proposal suggested by Joh in his Learjet. He wants to tip that jet over again to find out the real figures and see which way he is going. A person earning $36,000 a year pays $11,524, or 32 per cent, tax.

The tax debate in Australia is a serious one. It is one that the Government has addressed. We have produced a White Paper and have brought legislation forward to put into place the tax reform measures that the Government has adopted. We have cut marginal tax rates. The 60c level has gone down to 55c and on 1 July it will move to 49c. The 46c level has been reduced. Eighteen months ago the lower levels were reduced for those about whom I have spoken today. Tax reform is in place. The measures have been put there and they are working.

The big problem in Australia today is the turn-around in our balance of trade which occurred in October or November last year. The honourable member for Mackellar is a great one for saying that the unions should abide by all the rules that were laid down in agreements two years ago. There is not a contract in Australia today of two years duration in any area that has not had to be reassessed in the face of the downturn in commodity prices and our terms of trade developments. It is ridiculous to say that because we agreed to something two years ago we should not have further discussions on it. If we are to have common sense in the industrial relations field, there must be negotiation and discussion. It certainly will not be achieved by giving those who hold the money reins the full power to do what they like and the power to be able to say: `You will go here and you will go there without any discussion'. Those days have gone. They are feudal ideas which are rejected by the Australian people.

I fully support the legislation. I reject the moves by the honourable member for Mackellar in his amendment to condemn the Government for imposing what he calls an excessive tax burden on business. Just wait until 1 July when imputation comes through and we see taxes on business reduced from 78 per cent to 49 per cent, and we will see who has the last laugh at the next election.

Madam DEPUTY SPEAKER (Mrs Darling) —Order! Before I call the honourable member for Curtin I would like to clarify a matter. Does the honourable member for McMillan wish merely to table the data to which he referred or does he wish to incorporate it in Hansard?

Mr Cunningham —Table it.

Madam DEPUTY SPEAKER —There being no objection, he may do so.