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Wednesday, 24 November 1999
Page: 12505

Mr MURPHY (12:55 PM) —While preparing for the debate on the business taxation legislation which is before the House this afternoon and thinking about the Ralph report, I read an article by Thomas Carlyle, the 19th century British social critic, called `Economics, the Dismal Science'. Although Carlyle was speaking in a different context, his phrasing has had a deep effect upon my thinking. If being a scientist requires agreement on fundamental propositions among practitioners, economics is certainly a dismal science. When 27 standard propositions in economic theory were put to almost 1,000 economists in five OECD countries, they did not agree on even one. Consider this example:

Reducing the role of regulation authorities—

for instance, in air traffic—

would improve the efficiency of the economy. About 33 per cent of economists generally dis agreed, 30 per cent generally agreed and 34 per cent agreed with provisions.

When economists cannot agree on basic propositions in economic theory, we as politicians should be wary of expressing opinions that may or may not match the views of our citizens.

In my electorate of Lowe in Sydney's inner west, the citizens clearly voted no to a GST and the Ralph Review of Business Taxation related to it. However, the Howard government, with the support of the Australian Democrats, has made the GST law and soon the recommendations from the review of business taxation will be law as well. Moreover, the equality of taxation in Australia will more or less depend on the philosophy of the Australian Democrats. In this context, I am reminded of the words of the great Franklin Delano Roosevelt in his inspirational address to the Congress of the United States of America in which he outlined his vision: freedom of speech, freedom of worship, freedom from fear and freedom from want.

In referring to freedom from want, I use this term in the context of promoting a true equality of opportunity for Australian citizens. A fair taxation system will provide for the basic needs of society: for example, education, health, aged care, public transport and safe roads. The essential issue here is the government's role in redistributing income—the wealthy sharing more with those in need.

Charity—voluntarily giving to those in need—is under dire threat from the GST. This has a strong basis in Australia's religious traditions. Using the power of the state to support all citizens in a humane fashion has been historically frowned upon by the ruling Liberal-National Party elites who have always benefited from a huge surplus of labour. The Australian Labor Party grew from an absolute need for fair representation of the downtrodden masses. We have always fought fiercely and long to make equality of living standards a priority outcome of government and to give the power of resilience to every Australian citizen, not just to a select few.

The Howard government, when campaigning for the GST, attempted to legitimise their case by arguing strongly for a greater tax base which would appear to take from the rich to help the needy. They attempted to convince Australians that, by voting for the GST, they would benefit from an expansion of equality and opportunity. For example, they suggested that millionaires in Australia would pay more taxes when they ate daily in restaurants. With the support of the Australian Democrats, millionaires will be paying the GST daily in restaurants, but so will the many thousands of Australia's low income families when they buy their McDonald's hamburgers and Kentucky Fried Chicken on pay night.

Do the Liberals truly believe that the average Australian will continue to allow them to whitewash the workers? Never while we are a strong, united Labor Party in Australia, and never while we are led by Kim Beazley, a man who is truly in touch with the problems of every Australian citizen. Will the Australian Democrats make business taxation revenue neutral? Will the Australian Democrats make the anti-avoidance measures work well? Will the Australian Democrats allow for full, transparent equity?

The Review of Business Taxation, A Tax System Redesigned, which the Ralph committee claims will make it more certain, equitable and durable, truly makes the book Exodus look like a short magazine, not something you can scan on the way to Canberra. I acknowledge the intense work done by the committee persons. We hope that they were not under direction to hide one Christmas pine tree in a forest of Australian eucalyptus. In particular, Mr Ralph is recorded as being the chairman of a liquor producing company, Mr Allert is a chartered accountant and Mr Joss was the managing director of an Australian bank, and the records show that he is not even an Australian citizen.

I could not find any mention of the Reserve Bank of Australia in this report. Don't you feel that it is fortuitous that private banks are trusted more to deliver effective outcomes for the average Australian citizen? However, the modest business people in my electorate of Lowe, in suburbs like Five Dock, Drummoyne, Haberfield, Burwood, Concord, Strathfield and Homebush, do not trust this government. They have expressed constant anxiety over the GST. At the time of the last federal election, the Howard-Fischer coalition partners promoted themselves as sincere and caring for all Australians. Only because of the nature of our representation system, Australians in good faith returned the Howard Liberal-National coalition to government. The latest opinion polls show that the citizens of Lowe are disgusted with the Prime Minister. With a 50 per cent majority, they supported the republic. They do not trust this government's competency to provide equitable taxation outcomes. Voter confidence has deteriorated with every federal health cut. Voter confidence has deteriorated with every aged welfare and community cut. Voter confidence has deteriorated with every public education and employment cut. Australian citizens are slowly but surely bleeding to death with all of these cuts.

We suspect that the latest move to get the business tax changes through parliament before Christmas is only another of the Howard government's sneaky ways. Before the last federal election, the Howard government spent millions of dollars advertising the virtues of the GST. They invested millions of hard-earned taxpayer dollars in manufacturing the consent of the Australian people. Using Australian taxes, they promoted the GST as a great benefit for all. The Howard Liberal-National coalition government, in conjunction with the Australian Democrats, gave birth to the GST law, then used it as a servant for their own means. I believe the Howard government's GST campaign can be compared with the cash for comments inquiry currently being undertaken by the Australian Broadcasting Authority. It seems the Democrats have also adopted a kind of cash for access mode, as reported in the Australian Financial Review on 11 November 1999. Let me remind the House of this article. It reads:

In recent months, the Democrats say, they have established a dialogue with the Australian Bankers' Association (particularly the four major banks), major insurance companies and super funds, the Investment and Financial Services Association, the Property Council, the tourism industry, major accounting firm Ernst & Young and the Pharmacy Guild. But the adoption of the `cash for access' techniques of the major parties has caused some disquiet in the party. The new direction, which is being pursued by Lees and Murray (who particularly eschews lunching and dining), has revived the tensions that surfaced during the deal on the goods and services tax.

Australians voted for the Australian Democrats at the last election in the expectation that the GST would be voted down. The Democrats have betrayed Australian voters and, with the revelations outlined in the Australian Financial Review , it appears they have won Lotto, unlike the rest of us, who are required to just keep on paying and paying and paying. All Labor people should continue to remind electors just how the Democrats conspired to win a prominent place at the table of the big end of town while a growing number of hardworking Australians are forced to do the best they can on the other side of the tracks.

Many voters who supported the GST are now contemplating their decision in view of secret information dripping out of inquiries. We know the Treasurer is contemplating his position, as is his leader and as are the Democrats. Are some rats leaving the sinking ship? Australians are daily discovering the lack of integrity and equity of these tax proposals. Taxes paid by the ordinary worker, empowered only by the sale of his or her labour, are continually compared with taxes paid by the owners of capital, who employ others to increase their own wealth. Of all the changes that capitalism has affected, none was more striking than the manner in which it marshalled and allocated labour. Today nothing has changed. In fact, the Howard government continues to cooperate with the owners of capital at the expense of workers. The Howard government, through its tax policies, is slowly reducing the average income of most Australians. It is allowing more mergers that will leave an ever growing pool of poorly paid people, poorly educated and living in unhealthy communities. This will be in contrast to an elite group whose financial status will allow them access to high technology and educational advantage. They will take their profits in ways that reduce their taxation responsibility, with the support of their peers.

Behind the veil of this government's tax and labour plan is a desire to reduce the living standards of most Australians and their modest businesses. The big end of town will be the winner. It will allow the capital originally developed by labour, for which labour was never properly rewarded, to be exploited on international ventures that will leave future generations of Australians in fear of abject poverty. The proposals set out in the Review of Business Taxation raise an interesting question. Are the tax changes based on the present economic difficulties a product of policy or are they in some way inherent in the economic system? I prefer to think of the Australian system of capitalism as a regime which, however adaptive, is nonetheless always focused on one central necessity, namely, to generate more capital—if you will, more wealth. That is a process which for periods seems to run effortlessly, as we are witnessing. Then the chosen institutions that permit and generate this capital accumulation—in Australia the established oligarchies—seem to lose their effectiveness and the system chokes up and thrashes around for new ways of expanding. Crisis occurs when oligarchies lose their stimulative and guiding capacity. Then there has to be some major restructuring.

The 20th century is littered with examples of different forms of restructuring. For instance, the great crisis over which Keynesian economics initially presided was that of finding an institutional answer to underemployment and underinvestment. When the Great Depression broke out, there was no conception, and certainly no institutional possibility, of using the government as a growth mechanism. The situation of our time is not that crisis; it is rather one of restabilising forward momentum in a period when capital is fleeting. With monetary policy as a tool, capping inflationary tendencies requires a deftness of mind. The minds in the Reserve Bank of Australia seem to be doing an exclusive job, but it seems the minds in the Howard government have provided that special place for the big four. The owners of these oligarchies are certainly enjoying their power. It seems to me that as Australian capital has to seek new institutions, such as the construction of big business out of small business, superior planning of government institutions is required to complement what I would describe as direction-giving that is statist, advocating the sovereignty of the state, or labourist, advocating labour before capital. In which direction is this Howard government taking us? Is it supporting capital before labour?

Further, as capitalism throughout the world reinvents itself, establishing power in various highly developed regions, where we find a strategic nuclei of the commodities that are produced, the distribution of GST taxes collected by government and paid to the states will lead to interesting political outcomes. The truth about the GST cannot be hidden. It is a very regressive tax and it will damage the Liberal and National parties, particularly in country towns. Philosophers like Adam Smith had great insight into the system of capitalism. I quote from Adam Smith's book The Wealth of Nations, article 4, under `Taxes', which it is intended should fall indifferently upon every different species of revenue. He says:

The state, not knowing how to tax, directly and proportionately, the revenue of its subjects, endeavours to tax indirectly by taxing their expense, which, it is supposed, will in most cases be nearly in proportion to their revenue. Their expense is taxed by taxing the consumable commodities on which it is laid out.

The consumable commodities are either necessaries or luxuries. Taxes upon luxuries have no tendency to raise the price of any other commodities except that of the commodities taxed. Taxes upon necessaries, by raising the wages of labour, necessarily tend to raise the price of all manufactures, and consequently to diminish the extent of their sale and consumption.

Taxes upon luxuries are finally paid by the consumers of the commodities taxed without any retribution. They fall indifferently upon every species of revenue, the wages of labour, the profits of stock, and the rent of land.

Taxes upon necessaries, so far as they affect the labouring poor are finally paid, partly by landlords in the diminished rent of their lands, and partly by rich consumers, whether landlords or others, in the advanced price of manufactured goods, and always with considerable overcharge.

The advanced price of such manufactures as are real necessaries of life, and are destined for the consumption of the poor, of coarse woollens, for example, must be compensated to the poor by a further advancement of their wages. The middling and superior ranks of people, if they understand their own interest, ought always to oppose all taxes upon the necessaries of life, as well as all direct taxes upon the wages of labour. The final payment of both the one and the other falls altogether upon themselves, and always with considerable overcharge.

I cannot imagine why the Reserve Bank's participation in this debate is so difficult to find. The tinkering by the Prime Minister and his Treasurer with Australia's taxation system will cause Australians much pain. Finally, Alan Ramsay described Prime Minister Howard's ability to deal with humanitarian issues in last Saturday's Sydney Morning Herald , 20 November 1999, as `a sorry tale of minute vision'. I think that most Australians will agree with his sentiments when they are applied to taxation as well. I certainly do.