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Thursday, 19 February 1987
Page: 317


Mr LAMB(10.23) —It is always difficult to follow the honourable member for Denison (Mr Hodgman) in debate, mainly because after listening to him for 20 minutes one has to scrabble around to find anything to rebut. I will have to straighten out many of the misrepresentations that have been put forward in this chamber today before I can get to the substance of the Taxation Laws Amendment Bill (No. 5) and the Income Tax Amendment Bill which deal with provisional tax. It is even more difficult to have a nationwide debate on tax reform when we have been almost crushed with the inanities that come from the mouth from the south and the mouth from the north. It is almost impossible to get any reason, any sense, out of the confusion that reigns on the benches opposite. For instance, the honourable member for Denison complained about the contents of the provisional tax Bills. One would have thought, if his complaints were substantive, that he would have been pleased that there had been a delay of some 22 months-the gestation period of an elephant, he reminded us. I remind him too: Better an elephant than to have two lame duck leaders on the Opposition coalition benches.

The honourable member talked about a monumental confidence trick. If ever one were looking for evidence of a monumental confidence trick, one would not have to go further back in time than yesterday when the greatest monumental confidence trick ever was exposed in this House by the Treasurer (Mr Keating). He did the sums on the taxation reforms put forward by the current, the temporary, Leader of the Opposition (Mr Howard), which amounted to $14,000m. The expansion of the Budget deficit of this country would cost the community $14 billion. That is what I call a monumental confidence trick.

Before the honourable member leaves the chamber I ask him why he did not say once in his 20 minutes of theatrics where he stood on a consumption tax. With the debate that is raging amongst his ranks, the toing and froing, the coming and going, the lack of policy which the Opposition promised month after month to bring forward and of which we still have not seen the light of day, one would have thought that in the 20 minutes for which the honourable member spoke, he would have had the decency to tell the people on broadcast day-he pointed out that all the people were listening to him-where he stands on consumption tax.


Mr Hodgman —Madam Speaker, I raise a point of order. I was ruled to keep strictly to the Bills. The Bills say nothing about a consumption tax. I would have loved to have spoken on that and on many of the other things that are not in the Bills. It is pretty rough when the Hawke socialist Government--


Madam SPEAKER —Order! The honourable member will please resume his seat. During the debate yesterday I understand that some strictures were placed upon honourable members. I am sure that the honourable member for Denison would agree with me that I gave him some latitude during his 20 minutes.


Mr LAMB —That is an example of how the honourable member cribs yet another minute of diatribe to add to the twenty we heard before.


Mr Hodgman —Madam Speaker, I raise a serious point of order.


Madam SPEAKER —The honourable member for Denison will wait until I call him. He is inclined to bob up too suddenly.


Mr Hodgman —I do not want to hold up this person, but I object because, if I could have, I would have talked about the late lodgment of tax returns, people who say that does not matter and other things, but I was not allowed to do so.


Madam SPEAKER —The honourable member will resume his seat.


Mr LAMB —Any scintilla of credibility, any minuscule evidence of what little the honourable member had, has vanished completely with today's performance. His credibility has gone out the window completely. It is no wonder confusion reigns opposite. Let me get on with the misrepresentations in the honourable member's contribution to this debate-to give it a euphemism. He said that this Government said there would be no capital gains tax. I remind him and the people that no promise was ever broken on that claim. In 1983 we went to the people and we said: `There shall be no capital gains tax.' During the life of that Parliament we held that promise true. We faced the people again, we canvassed this country over one of the longest campaign periods in history-the honourable member will remember it well-over six or seven weeks. We told the people that we would reform the tax system in this country returning equity and fairness. Then we introduced in this country the fairest and mildest capital gains tax in the world. He claimed it was the hardest, yet where else can he give an example of where a capital gains tax is based on an allowance for inflation? It is inflation-proofed. When it comes to the good will of a business there is an allowance before capital gains tax is calculated. So let us not have these sorts of myths peddled for the people to hear during broadcasts such as this.

Let us get down to the honourable member's heart-break, heart-sob stories. I have a lot of time for panel beaters-I am sure that the panel beater in Glenorchy is one of the best-but the honourable member should not come in here and pretend that this Government introduced provisional tax. It did not. All the time the Opposition was in government it did nothing about reforming provisional tax. Later I will give one example of where it made it difficult for pensioners during the time it was in office. I will return to that in a minute. The Opposition should not come in here with sob stories about Glenorchy panel beaters and try to blame us for something that existed while it was in government.

I come to a third misrepresentation. What credibility can the honourable member for Denison have, Mr Deputy Speaker? He made three blatant misrepresentations in one 20-minute speech. He said that casual workers pay provisional tax. We know that casual workers, boundary umpires and drink stewards-they are the examples he gave-are pay as you earn taxpayers. They pay tax at the source of income. This is the point at which I want to return to the Bills before the House rather than spend my time explaining to the people how much misrepresentation the honourable member for Denison puts forth in every one of his speeches. This Bill is part of the package of tax reform Bills introduced by this Government. It was announced-the honourable member did get this correct-over a year ago that the instalment system would be changed, and that that change would have effect from next financial year. It will not come into effect this financial year, so how could the honourable member's Glenorchy panelbeater be involved in paying quarterly provisional tax when it does not come into existence until next year? He has it all wrong. I am not surprised that he has got everything about tax completely wrong. So the system under which those who pay provisional tax in excess of $2,000 will pay in quarterly instalments will not operate until next year.

The benefits of this are quite clear. First of all, this Government, as I have said, has promised to deliver and is delivering greater equity and fairness into the taxation system. People who pay provisional tax are being brought more into line with the PAYE taxpayer who has to pay his tax before he gets his pay cheque, before he goes home and has to spend it on the necessities of life. Those who do not have their taxation taken out at the source have had time-up to nine months-to pay. It is only in the first year that they have had to pay the double taxation; after that they get credits and they pay it annually according to their expected income the following year. So now at least the PAYE taxpayer will not be a second class citizen compared to those who pay provisional tax. This legislation restores equity and fairness to the system.

Let us also look at the macroeconomic effect-something which the honourable member for Denison would know nothing about. We see every year that short term interest rates are forced up at the end of the March-April period as people scramble to find their provisional tax payments. That bunching effect is no good for those who have to borrow as it forces short term interest rates often to over 100 per cent. I can recall the overnight rate on one occasion nearing 200 per cent. This also has an effect on the Government's income liquidity. To return to the analogy of business, if business is to survive it needs cash flow, and that means it needs a continuous flow of income so that it can carry out its purchases. It is the same with government. We need a continuous flow of income into the Treasury so that we can continuously, throughout the year, make our purchases and spend money on infrastructure and on providing pensions and funds for the rest of the Government's Budget measures. If the provision of those funds lies entirely with the PAYE taxpayer, it is not fair. But quarterly instalments of provisional tax will mean that another group of people will be properly contributing to the continuous inflow of cash for government business. The Government thinks that is right, it thinks it is proper, and it thinks it is fair.

The honourable member for Denison then said that this tax is daylight robbery. Those were his words. Yesterday the honourable member for Bradfield (Mr Connolly) said that this provisional tax was a new tax. Nothing could be further from the truth. Provisional tax has been a feature of the Australian taxation system for decades; it was in place for the seven years that the Opposition so disgracefully sat upon the treasury bench. This quarterly payment system is revenue neutral. There is no new tax here at all. All that has happened is that the arrangements for paying the tax have been altered. It is true that $90m will be brought forward into an earlier tax or fiscal year, so the Budget figures will change a little. But on account of that, the taxpayer will benefit as the savings to the Government will be $100m because of the lesser need to issue treasury notes and, of course, because there will be a stabilising influence on short term interest rates. I do not know how the figures will even out, but there will be a saving there. The estimates are that there will be a $100m saving to the taxpayer, the Government, because of the new arrangements. They are the features of the provisional tax Bills in front of us. That is the truth for the people to hear and I suggest that the Australian public put out of their minds completely the misrepresentations that came forth from the mouth of the honourable member for Denison.


Mr Hodgman —Mr Deputy Speaker, I raise a point of order.


Mr LAMB —Are you not the honourable member for Denison?


Mr Hodgman —I have not misrepresented; I have told the truth. I ask that the honourable member be required to withdraw. Mr Deputy Speaker, there must be the same rule for both sides of the chamber. I did not misrepresent and, as you would be aware, sir, it is a very serious reflection on a member for someone to suggest that he has misrepresented and misled the House.


Mr DEPUTY SPEAKER (Mr Leo McLeay) -It might help the House if the honourable member for Streeton withdrew the suggestion that the honourable member for Denison had misled the House. I do not think that is what he was intending to say but if it has come across in that way he might withdraw.


Mr LAMB —Mr Deputy Speaker, not once did I suggest that the honourable member for Denison misled the House. If honourable members look at the record of Hansard tomorrow they will not find the work `misled'; they will find the word `misrepresent'. I suggest, Mr Deputy Speaker, that it is an example of the normal cut and thrust of debate in this chamber, so I will continue.


Mr Hodgman —You will withdraw.


Mr LAMB —I will continue.


Mr DEPUTY SPEAKER —Order! The honourable member for Denison felt that the honourable member for Streeton had suggested that he had misled the House. It should not be difficult for you to withdraw any suggestion such as that and continue with your remarks.


Mr LAMB —Mr Deputy Speaker, it is impossible to withdraw something one did not say. However, should the record show otherwise and support the honourable member for Denison, I withdraw. But to continue in the debate--


Mr Hodgman —It's about time--


Mr DEPUTY SPEAKER —Order! If the honourable member for Denison continues to interject no doubt that will cause some difficulty from the other side. I draw his attention to that and I will deal with him if he continues to interject.


Mr LAMB —Thanks very much, Mr Deputy Speaker. I wish to pause at this stage to congratulate the Government on a move it has made allied to these provisional tax Bills; that is, its decision to increase the amount of earnings that a pensioner on a full pension may earn before having his pension affected. Currently for single pensioners the level is $30. It will increase to $40 on 1 July. For a married couple it will increase from $50 to $70. This means that single pensioners will be able to earn up to $2,000 a year, and a married couple up to $3,500-perhaps from interest earnings-before the pension is affected. The honourable member for Denison referred to this.


Mr Carlton —Mr Deputy Speaker, I raise a point of order. This is a party political announcement in the middle of a tax debate.


Mr DEPUTY SPEAKER —Order! There is no point of order. The honourable member for Mackellar will cease making silly interjections such as that.


Mr Carlton —I am sorry, Mr Deputy Speaker. I raised a point of order because the honourable member was reading out pension arrangements in the middle of a tax debate quite outside the motion before the House. The honourable member is out of order.


Mr DEPUTY SPEAKER —That is not a point of order.


Mr LAMB —The honourable member for Denison also mentioned pensions. The honourable member for Mackellar may be deaf or he may have been absent from the House but to raise a point of order which could refer to his own colleague is a bit beyond the pale. Let me continue: This means that those pensioners who earn in excess of $1,000 are subject to provisional tax. I would have thought that a shadow Treasurer would have known that earnings, other than under pay as you earn arrangements, in excess of $1,000 were subject under his coalition Government, and now under this Government, to provisional tax. I am staggered to find that a shadow Treasurer did not know that and tried to raise a point of order on irrelevancy.

But let me continue, Mr Deputy Speaker. The temporary high interest rates are necessary, as responsible macroeconomic management in this country, because of the external pressures on the dollar. Let us face it: High interest rates are an essential part of our economic climate at this time. We do not like it; no one likes it. But any responsible Treasurer, any government responsible for its fiscal actions, undoubtedly would have interest rates at their present level. But this does mean that some pensioners are earning higher incomes and paying provisional tax. For the first time some pensioners are crossing the threshold of $1,000 and paying provisional tax. This was not the intention of the Government.

I am going to ask the Government, as did the honourable member for Capricornia (Mr Wright) yesterday, to review the provisional tax threshold for pensioners so that some relief might be given to them. I am suggesting that, in concert with the earnings that will now be allowable to pensioners without affecting their pensions, we might set the threshold at $2,000. I think that would be sensible. During the recess, when canvassing the opinions of combined pensioner groups in my electorate on the performance of the Government-which incidentally was very favourable indeed-this matter came up, and I undertook to raise it. I ask the Government to look seriously at a review so that something can be done to relieve the position of those people.

In the couple of minutes left it would be remiss of me if I did not canvass what other speakers have, and refer to the slightly wider debate which, because of the tax package, must include provisional tax. I refer to the suggestions of tax reform including, of all things, a consumption tax. We were told repeatedly by the Opposition that lock, stock and barrel it would remove the fringe benefits tax, it would remove the capital gains tax, it would restore tax deductibility for the business lunch, and so on. I did some mathematics on that, and while members of the Opposition come in here and complain about the provisional tax requirements--


Mr Spender —Mr Deputy Speaker, I raise a point of order. Previous Deputy Speakers ruled that honourable members were out of order when they went beyond the subject matter of the debate. This has nothing whatsoever to do with either the Bill or the amendment before the House. It is a party political statement, as the honourable member well knows.


Mr DEPUTY SPEAKER —Order! The debate is about the Income Tax Amendment Bill. The whole of the tax system could be alluded to when dealing with income tax. I call the honourable member for Streeton.


Mr LAMB —Mr Deputy Speaker, I have been more than fair in keeping to the strictures of this debate. If the honourable member for Denison would sit down, I will finish in the few seconds available to me. He warned the public about this Government.


Mr Hodgman —Mr Deputy Speaker, I raise a point of order. As the Hansard will show, Madam Speaker said that we could not speak on a whole range of matters; we had to stick to the Bill. This man is flouting Madam Speaker's ruling, and he was in the House at that time.


Mr DEPUTY SPEAKER —I was not in the House at that time. I call the honourable member for Streeton.


Mr LAMB —The honourable member for Denison apparently warned the public about this Government. In these last seconds I would like to take the opportunity to warn the public about the false prophets opposite of easy tax cuts. That is where the danger to tax equity and fairness lies, and those opposite will never gain these benches at the next election.


Mr DEPUTY SPEAKER —Order! The honourable member's time has expired.