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Thursday, 30 April 1987
Page: 2265


Mr BLANCHARD(12.45) —I move:

That this House believes that the extent of inequality in the distribution of income and wealth in Australia is unacceptably high and accordingly calls on the Government to-

(1) continue to pursue anti-poverty measures as a major priority of government programs;

(2) eliminate the special advantages available to the rich through strengthening anti-tax avoidance and other measures; and

(3) support the efforts of the community, trade unions and State governments to end poverty and eliminate inequality.

As honourable members will observe, I first gave notice of this motion on 22 February 1985, over two years ago. Since that date the Government, to its credit, has introduced a number of measures which have addressed some of the issues raised. I will refer to these later in my speech.

However, no one can deny that the inequalities to which I referred in my motion of February 1985 still remain today. Worse still, the extent of poverty in Australia today, as measured by the Henderson scale, has not fallen but risen in the interim. The Government cannot ignore its responsibilities to those in need, and I congratulate the Minister for Social Security (Mr Howe) for setting up the social security review.


Mr Porter —It is your policies that have put them under the poverty line.


Mr DEPUTY SPEAKER (Mr Millar) — Order! The honourable member for Barker offends. He is not free to perambulate around the chamber interjecting, and interjections themselves are out of order.


Mr BLANCHARD —Thank you, Mr Deputy Speaker. This country has a great tradition of having a compassionate and caring society. I am sure that I speak for all members of the House when I say: Long may that tradition continue. In the area of social welfare, this country has pioneered many reforms. No one party can claim the credit for all the reforms, but the Australian Labor Party has a long history in promoting many of the social reforms we have today.

Yet, despite the advances made in the social welfare area, there remain gross social and economic inequalities in our society. These gross inequalities need to be closely examined and remedies sought. We find that wealth and power have become concentrated in the hands of fewer and fewer people. This concentration of wealth and power has spawned the political philosophy of the New Right. This is not a new political philosophy, as it has its roots in the theories of Adam Smith and other conservative economic theorists. The self-interest of these powerful people is demonstrated most blatantly when we hear them talk of the need for drastic cut-backs in public spending and welfare benefits, as well as reductions in personal and company tax.

Whilst the New Right and the conservative forces within the Liberal Party are threatening to slash government spending and cut taxes to an extent beyond that of the Government's proposals, we find that between 1968 and 1986 the proportion of total tax coming from the business sector has declined by 47 per cent. In 1970 company tax made up nearly 25 per cent of total tax receipts. Now we find that it is less than 10 per cent. If we look at it another way, company tax as a proportion of gross domestic product has fallen by 42 per cent over the same period.

The John Elliotts of our society are only interested in making a fast buck. They are not really interested in a fair and equitable society-or, if they are, their actions belie their words. They are the bully boys of the business sector. If they do not get what they want from the Government, they threaten to take their business overseas to lower their tax burden. They are not interested in the fact that one in every five children in Australia today are living in poverty and are in receipt of income-tested payments from the Department of Social Security. Can those members, from both sides of the House, who went out to partake of the 81c meal provided by the Campaign for Economic Justice and the Low Income People's Network forget the vivid portrayal of the human problems of poverty in our society. Yes, the John Elliotts of the business community are not interested in those facts, nor are they interested in the fact that 650,000 persons are currently unemployed, some as a result of the take-over battles of the rich and powerful. For many of those people the period of unemployment has lengthened, and this gives rise to adverse psychological effects on the individual. That has been well documented in the last few years. The relationship of unemployment to poverty has been well documented, going back to the 1975 report of the Henderson Commission of Inquiry into Poverty. I quote from the report of that inquiry:

The most important single determinant of low income is whether or not the head of the income unit is working.

The social security review issues paper No. 1-`Income support for families with children'-associated poverty with long term unemployment and other barriers to work force participation, such as sole parenthood. If we look at who become the victims of unemployment and thus poverty we find that the number of victims is disproportionately high among certain groups in the community. These groups are Aboriginals, the young, women and migrants. When this Government came into office in 1983 it inherited a run down economy. The recession of 1982-83, caused by the policies of the present Leader of the Opposition (Mr Howard), led to the numbers of unemployment benefit recipients doubling in less than two years, from 314,000 in June 1981 to 635,000 in June 1983. At the same time, by 1983 social security payments for families and the unemployed fell in real terms by up to one-third.

Before I mention the positive steps that the Government has taken to overcome these difficulties, it must be recognised that this country is facing a difficult economic situation caused by a fall in world prices for our primary products. The world is paying less for our main exports, agriculture products and minerals. The Government is now in the process, in co-operation with the business sector, of reconstructing Australia's economic and social infrastructure. This will make our industries more competitive in overseas markets, a task which should have been carried out by the Fraser Government but which it failed to tackle because it did not have the guts to do so. Without financial and tax reforms and the development of industry plans aimed at reducing the level of tariff protection for industries cocooned against change, the Australian economy would be in a much worse state than it is. In other words, as a result of government initiatives we are in a better position to compete on world markets than we were when the Government took office.

Let us examine the positive record of the Government in the area of job creation. Despite the still too high level of unemployment in this country, the Government has created over 720,000 jobs since it came to office. This happens to be the fastest rate of employment growth of any country in the Western industrialised world over the past three years. Jobs mean economic security and there is still a long way to go before the unemployment statistics reveal full employment. As I have already equated unemployment with poverty, I plead with the Government not to relax its efforts in tackling this serious social problem.

As an anti-poverty measure job creation must remain a major priority of government programs. The Minister for Social Security pointed out in a Press release this month that the Curtin Government system of unemployment benefits has now lasted 43 years with its basic structure still largely unchanged. He went on to say that there are strong arguments that income support for the unemployed should be given a greater labour market orientation. By this he meant that the benefit should be converted from a minimised security net into `a springboard to real participation for the unemployed in the cultural, social and economic affairs of the community'. He has asked Professor Cass to review the unemployment benefit as part of the social security review. I trust that this report will lead to a new chapter for the unemployed by maximising opportunities for them.

It is in the area of tax reform that this Government has gone a long way towards redressing the iniquities of the tax system it inherited. A fair tax system is what the average Australian wants. This Government has arrested the massive erosion of the taxation system that occurred over the past decade, which led to the rich paying less tax and those on average and low incomes paying more in percentage terms. As I indicated earlier, between 1968 and 1986 the proportion of total tax coming from the business sector declined by 47 per cent. The Government's measures have been designed to counteract that trend and revenue derived from the capital gains tax and the fringe benefits tax will assist in broadening the tax base. I urge the Government to continue its efforts to eliminate the special advantages available to the rich through strengthening anti-tax avoidance and other measures.

I wish now, Mr Deputy Speaker, to look at the issue of families who find themselves in poverty. Social security review issues paper No. 1 points out that between 1972-73 and 1981-82 poverty rates for female-headed single parent families increased from 38 per cent to 50 per cent; for male-headed sole parent families the increase was from 16 to 19 per cent; and, for married couples families with three or more children, the increase was from 7 to 19 per cent. Significantly the proportion of children in families below the Henderson poverty line increased from 8 to 19 per cent. The National Institute of Economic and Industry Research shows that there was a significant increase in poverty between 1981-82 and 1985-86. Poverty among married couple families with two or more children rose in excess of 10 per cent. Single people aged 15 to 24 and 25 to 64 recorded rises in poverty of 13.8 and 17 per cent respectively. Married couples with no dependants whose head was aged under 65 years recorded an 11.6 per cent increase. This is a situation that the country and this Government must address.

I now turn to the important issue of universal assistance to families as opposed to income tested assistance. It is clear that there are strong arguments in favour of universal assistance. Firstly, it recognises the increased costs incurred by all families with children; secondly, it has no adverse effects on the work incentives of either parent, as assistance is not withdrawn as income increases; thirdly, it does not create higher marginal tax rates, or contribute to poverty traps; fourthly, it may create less stigma; and, fifthly, it prevents a disproportionate share of the effective tax burden from falling on people with children. Against this is the concern that universal assistance for families increases budgetary costs. This, of course, becomes important in the present climate of economic restraint. There is also the concern that assistance is provided to higher income families who do not need it. Today there is increasing reliance on income testing payments because the country's economic circumstances require careful assessment of priorities in the distribution of government expenditure. But, more importantly, higher levels of assistance can then be given to low income families. There are problems, however, associated with income tested assistance as it can create high effective marginal tax rates and poverty traps. To illustrate this, recipients of the family income supplement commonly face effective marginal tax rates of 75 to 80 per cent. This occurs when they receive an extra dollar of earned income but lose 50c of the FIS payment and pay 25c or 30c in income tax. It is worse for families receiving a range of Commonwealth, State and local government transfers or services. Where these have overlapping income tests, an increase in earned income can actually leave families worse off. This is a disincentive for low income families to work their way out of poverty. Is there not irony in the fact that the Government is reducing the top marginal rate of tax from 60 per cent to 49 per cent by 1 July 1987, yet those on low incomes face much higher marginal rates of tax? In some cases the marginal rate of tax is 100 per cent.

Nevertheless, I welcome the proposals of the Government which are aimed at tackling some of the problems of the poverty traps. The new measures include removal of the separate income tax for rent assistance for pensioners and beneficiaries; the doubling of the amount of extra income per child which can be received before pension begins to be reduced, from $6 to $12; and an increase in the pension-free area to $70 a week for married couples and $40 for single pensioners. Unfortunately, these measures do not address the problem of poverty traps for working people receiving an income tested payment like the family income supplement. This is a matter which the Government should address. While on the subject of the family income supplement, I urge honourable members to advertise this assistance because, whilst the take up of family allowance is 100 per cent, as few as 50 per cent of all families eligible to receive the FIS are receiving it. Some estimates indicate that the take up rate for the family income supplement is only 30 per cent.

I would like to support the call of the honourable member for Jagajaga (Mr Staples) for a wealth inquiry. Whilst hundreds and thousands are living below the poverty line, the evidence is that the rich are getting richer. It is estimated that net wealth in 1984-85 in Australia totalled $501.6 billion. This averages out at $30,000 in wealth per person. An article in Australian Society dated March 1986 indicated that the top 3 per cent of wealth holders own about 30 per cent of the wealth of Australia, and that the top 200,000 adult wealth holders own about $150 billion dollars in wealth. These figures only give a rough idea of the extent of inequality in this country.


Mr DEPUTY SPEAKER —Order! The honourable member's time has expired. Is the motion seconded?


Mr Langmore —I second the motion and reserve my right to speak.