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Wednesday, 9 December 1998
Page: 1704


Mr LAURIE FERGUSON (1:06 PM) —The previous speaker, the honourable member for Longman, as with many of his confreres, cited debates in the Labor Party in the mid-1980s—the fact that people within the party had supported similar but at least varied measures. That kind of ancient history, quite frankly, pales into insignificance compared with more recent quotes. The member for Deakin spoke of people who have had opinions on these matters and described them as `losers' or `retired people'. One person that fits into that category is the former Liberal leader, John Hewson. On 31 May, on Meet the Press , he made two essential points about this tax. When asked, he said that guarantees about keeping the rate at 10 per cent were `impossible'. We all know that is reflected in the pattern overseas regarding such taxes.

A variety of speakers have said that the tax will be the greatest thing since sliced bread because most countries in the Western world have similar measures. These are the same people who say, `We really can't look at what happened overseas regarding increases at a later stage.' It is irrelevant that in 21 out of the 23 nations that they cite there were increases after the initial introduction. They also say it is irrelevant that, in the vast majority of those countries, in the three years after the introduction of similar tax measures there was no growth in the economy. It is also supposedly of no importance that countries that have, compared with most, weathered more recent financial crises better do not have similar taxes. Mr Hewson noted that the government's commitments were totally impossible. He also went on to say:

Oh, 10 per cent to me is definitely too low and I don't think it will be believed by the electorate.

When we consider the variety of parties that opposed this measure at the last election, we find that 60 per cent did not believe it. But the more important point is that the man—they talk about courage and guts over there—who did take this to the electorate and who was rejected very soundly, the man with experience who obviously persuaded John Howard that he should promise in 1996 to never introduce such a tax, has put it on the public record quite clearly that guarantees are impossible and that 10 per cent is a ridiculous level in the long term for this to be maintained.

From the contributions of those opposite one would think that we were on the verge of Lyndon Johnson's Great Society or we were talking about the New Deal. We have heard the rhetoric from those opposite. They have talked about reform, tough decisions, a significant reform package and a tremendous reform package. What they are actually doing is nothing like those reform agendas. They are essentially imposing a tax on the vast majority of Australians, despite promises that they would never do so. Australian taxpayers were asked to fork out $19½ million—that is the latest figure—to finance a campaign in support of this measure. We talk about mandates and the mandate that they did get after that $19½ million of taxpayers' money.

We have a political system in this country which, perhaps more than any other, favours a two-party system. I refer to the situation in the Senate. If the government wanted to get the voice of the electorate, the balance that people chose in the last election, they would not be so determined to make sure that the new senators have no say. The fact of life is that in the last election the vast majority of Australians voted for candidates who opposed these measures.

The member for Cook talked about this tax reform providing `opportunities to save or consume'. This is a great liberating experience as far as he is concerned. Despite the previous speaker's defence of regressive taxation and advocacy of essentially hitting the poorer section of the population harder with income tax changes, the fact of life is that for a large number of Australians this is not a matter of `giving them freedom to save'. They do not have that opportunity; they do not have the income to do that. They essentially have no discretion over how they spend their money.

As we know, in these measures a variety of essential services are hit. We can go through a variety of them. Services being covered here are vital to the survival of poorer members of the community. We have heard of educational fundraising being hit. In this society we are seeing more and more dependence upon the individual school communities as conservative politicians in this country retreat from public expenditure and support of public education. More and more, local communities are asked to foot the bill and increase the inequity within cities with regard to the different levels of schooling that can be funded. They are going to be hit.

We have heard that the worst thing that can happen is that we have a tax system that has seven levels, two of which, of course, were introduced by those opposite. I do not think that it is necessarily regressive or wrong to have different levels. These can be wholesale sales taxes utilised to basically differentiate, to make decisions, to support what is quite worthwhile with regard to the environment, to look at the ways in which we can essentially subsidise what we desire, whether it is solar energy, recycling or the nature of paper.

We can also do what has been anathema to those opposite—try to do something about the defence of Australian industry. As I say, there are various ways in which these wholesale sales taxes are not necessarily a bad thing in so far as they differentiate levels. The agenda over there is of supposed reform. What this is essentially about should be seen in the context of the government's wider policies. This is about ensuring that the tax burden in this country moves to hit the vast majority of people.

The member opposite can dismiss the statistic that the top 20 per cent are getting 52 per cent of the benefit. That is essentially the main thrust of what they are about. An article entitled `The adverse economic consequence of extremely high capital-wealth inequality' by James A. Yunker in the Spring 1997 edition of the Journal of Post Keynesian Economics certainly paraphrases what they really believe. He said:

Those who believe that the present-day capital-wealth distribution should be "left alone" are likely to point to the fact that the CGE model—

the computer general equilibrium model—

applied in this research does not take explicit account of innovation, entrepreneurship, and other such factors. In their view, the extremely unequal distribution of capital wealth plays an essential role in maintaining adequate incentives to innovation and entrepreneurship and serious efforts made to reduce this inequality by means of taxation could have extremely deleterious effects on the dynamic performance of the economy. This scenario is certainly a possibility, but its likelihood is questionable.

What the government is essentially saying is, `We're going to spur industry; we're going to help encourage people by this shift of the tax burden.' Of course, that is accompanied by a thrust of other policies to deregulate the labour market, to ensure that juniors have the lowest possible wages, to ensure that people's employment is more easily terminated, to ensure—as we have seen in the last week or so—that the areas covered by awards in this country are decreasing the whole time, the latest instance being superannuation. They are making sure that we have no essential thrust to protect people in their occupational health concerns. As soon as they came in, they made sure that the collection and collation of statistics in relation to occupational health basically went out the door, to the point where this country now has a work safety record of deaths in the workplace which is worse per capita than that of the United States.

The government is of course making sure that young people are further dependent on their families. Families on very low incomes are being forced to support their children rather than having general society help them with unemployment benefits. For the government to say that this reform is not aimed at moving the tax burden is at strong variance from the overall thrust of their policies.

I heard the Deputy Prime Minister, Mr Fischer, on Meet the Press last weekend tell us his kind of analysis as to what we should do in this country. He said:

The gap between rich and poor is something you do have to be deeply worried about. It's closed up by degrees. You are lifting more people up with a plus five per cent economic growth wave rather than a minus five per cent economic growth wave.

The fact of life is, as he well knows, that there has been decreasing equality in this country. Our cities are increasingly divided between different socioeconomic regions. We are seeing a government that is not focused on real tax reform using the fact that there are, essentially, major problems with the system, as seen in Ross Gittins' article this morning about the growth of subcontracting and independent contractors. Nothing is being done about the very extensive amount of money that is escaping the system because people are distorting that loophole—in my own electorate I had the instance of an employer actually requiring that all the workers become independent contractors in that factory. It was a very large employer who requested that. Rather than tackling those essential problems in the system, half the federal ministry's approach to tax reform in this country is to get themselves into personal trusts. That is the kind of response we have from those opposite—basically to see the possibility of a loophole and to exploit it.

So to come here and say that, because we have a situation where there are major problems with tax reform, the result should be to give everyone in this country a new 10 per cent tax, to not properly compensate people, and to pretend that pensioners will actually in the long term receive four per cent—and we all know that a significant part of that four per cent is legislated already in regard to CPI movements and guarantees of their percentage of average weekly earnings—is total hypocrisy.

This tax is a major attempt to shift the burden in this country. The previous speaker made a very passionate complaint that the wealthy pay too much tax, and the member for Eden-Monaro actually put forward the preposterous claim that the top 20 per cent were going to be hit more by these changes. The fact of life is that, as the Melbourne Institute says, the impacts are five times greater in some cases for those people on low incomes. This is a move in the wrong direction. It is a move the Prime Minister said he would never undertake. In the sad face of political reality, he went back on that very major commitment.