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Wednesday, 5 September 1984
Page: 487


Senator GRIMES (Minister for Social Security)(3.36) —The matter of public importance raised this afternoon by my old sparring partner Senator Dame Margaret Guilfoyle is:

The disastrous impact upon Australian families of the Hawke Labor Government's taxation and social security policies.

That is a pretty broad matter of public importance. It is clear from Senator Dame Margaret Guilfoyle's speech that such a matter is put down to enable members of the Opposition to have a general blast at the Government and at the Budget in particular, and I suppose that we shall hear more of that this afternoon. Before I deal with the content of the matter of public importance, it is worth while to point out that it is important to all Australian families to have an economy which is growing and an economy in which people can have confidence that things will get better. People should have confidence to invest. It is important to have an economy in which unemployment is falling and in which more people have jobs. That is exactly what we have now.

It is worth while reminding honourable senators that if one reads the Press of this country and hears the economic commentators, one gets a very different impression of what is going on from that gained from the carping and nagging criticisms of members of the Opposition that we get in this place every week. The reason they have to make speeches like they do is that, first, they have no leg to stand on in criticising the Government and secondly, they have no policies which anyone would see as credible alternatives to the existing Government's policies.

The simple fact of the matter is that inflation has fallen from a high of 11.3 per cent to under 6 per cent in this country. We have had an economic growth rate of 10 per cent, which is the highest of all comparable countries in the world in the last year. As I said in answer to a question from Senator Maguire today, we are paying unemployment benefits to 55,000 fewer people than we were 12 months ago. There are in this country 250,000 people who have jobs but who did not have them when we came to power. The simple fact of the matter is that this economy is immeasurably better than it was when we came to power. We have managed this improvement, to bring down inflation, to increase employment and to increase confidence in the community, and at the same time we have managed to introduce a Budget which, despite what Senator Dame Margaret Guilfoyle says, contains tax cuts and has increased payments to those who are in most need and which reflects a reduction in the deficit. All of us on this side of the House are perfectly happy to defend that sort of record. If matters of public importance such as this one are to be put up every week we shall be happy to answer them and to defend our record-a record that the vast majority of Australians appreciate.

The first subject that the matter of public importance raises is the Government 's taxation policy. All I can suggest about the attacks on this policy by Senator Dame Margaret Guilfoyle and others of the Opposition is that they are completely baseless. In the last year of the Fraser-Howard Government tax revenues represented 25 per cent of gross domestic product. Despite the rapid recovery in revenues this year, tax revenues adjusted for the effects of Medicare will still be only 24 per cent of gross domestic product in 1984-85. It is the former Government, with its former discredited Treasurer, as my colleague Senator Walsh persists in calling him, that remains the highest taxing government in Australia's peacetime history.

The Government in this year's Budget, as is recognised by everyone in the community, with the possible exception of Senator Dame Margaret Guilfoyle and some of her colleagues, has provided a significant reduction in personal income taxes. Within the total tax revenue of the Government PAYE taxes happen to have significantly fallen. Net pay as you earn taxes, adjusting for the Medicare arrangements, are 41.5 per cent of tax collections this year compared with 46 per cent in the last two years of the Fraser Government. Not only is the present Government a lower-taxing Government, but within the total tax take the taxes on salary and wage earners have decreased significantly. We have provided genuine tax cuts of $1.2 billion. For the vast majority of taxpayers there is a reduction of $7.60 per week. The progressivity of the scale-something to which Senator Dame Margaret Guilfoyle apparently objects-has increased and the tax cuts are not affected and are not taken away, as were former Treasurer Howard's, by a large increase in indirect taxation. I remind honourable senators that in 1982 in Mr Howard's Budget there was a full-year revenue effect of over $1.4 billion in indirect taxes. That took back about 60 per cent of the income tax cuts which were provided in the November 1982 Budget. The previous Government frequently introduced what it claimed were tax cuts with one hand and then took them away with the other.

The tax cuts this year will provide tax reductions for a considerable number of Australians. Some 2,250,000 people, about a third of the total number of taxpayers in this country, will have a lower marginal tax rate, namely 25 per cent. As a result of the new rebates and lower tax scales, 85,000 people will cease to be subject to taxation at all. Of course, every year, whatever government is in power, some people will pay increased taxes because they get increased wages, but the simple fact of the matter is-and it cannot be got away from-that every taxpayer will get at least some reduction this year, and the vast majority of them will get a tax cut of about $7.60 a week.

If one is to look at alternatives, and certainly at the alternative government, one must examine the Opposition's record and what it is now saying. I suppose one can only rely on the speeches of the Leader of the Opposition (Mr Peacock) and those of the former Treasurer, the present shadow Treasurer. It is important to realise that, first of all-as my colleague Senator Walsh points out every day at Question Time-it is not easy to get a consistent picture when one listens to those two people. The wine tax is just one example. The Leader of the Opposition says the alternative government will remove the wine tax but the shadow Treasurer says no, it will not. The Opposition has not let us know what its tax policy will be. We do not know what it is about, but we can get some clues from the sorts of speeches we have heard from Mr Peacock and Mr Howard.

We know, for instance, from its behaviour in this place that the Opposition, Senator Harradine and others will continue to avoid taking measures against the tax avoiders in this community-people who are evading taxes and costing the ordinary taxpayer in the community a vast amount of money. We know that Mr Howard is in favour of a broad based indirect tax. We know that he wishes to reform the taxation system in the direction of a broad based indirect tax. We know that if the Opposition comes to government it will put a further burden on taxpayers by increasing tax concessions such as the investment allowance, which could cost taxpayers generally in the community some $600m a year. We know that if the Opposition assumes government it intends to remove the taxation on lump sum super- annuation-a matter to which Senator Dame Margaret Guilfoyle referred in her speech. We know that will cost about $300m a year. We know, if we believe Mr Peacock, that if he gets his way the alternative government would abolish the tax on wine. That would cost about $60m a year. We know that Mr Peacock and his supporters will abolish things like the assets test costing about $50m a year. We know that they claim they will abolish the over-70s means test, which again will cost over $200m a year.

All this will cost the revenue anything up to $2,000m a year. But at the same time the Opposition claims that it will reduce taxes, cut the deficit, and perform economic magic. Nobody believes that, not even the ex-Treasurer, Sir William McMahon, and certainly not the Treasurer of the Liberal Party in Victoria, Mr Elliott, who continues to criticise this sort of nonsense that one hears from the Leader of the Opposition. We know that the Opposition if it reached government would not take action against tax evaders. We know that it will not support the proposals of this Government, and certainly will not on its part put up any proposals to deal with tax evaders. The Opposition would present this country with a series of policies which do not add up and, if carried out, would inevitably mean that it would have to raise taxes-either direct or indirect taxes-itself.

In addition to the general tax cut, in the Budget we have provided a 25 per cent increase in zone rebates, which will greatly benefit tens of thousands of Australians living in remote areas. We have introduced new rebates for unemployment, sickness and special beneficiaries to ensure that they pay no tax on incomes when the sole source of income is in fact the benefits. To make the tax system fairer, we have increased our efforts against tax avoidance and evasion, there is to be a complete overhaul of the tax penalty provisions, and we have increased the number of Tax Office compliance staff by 392, and increased total staff by 705.

The fact that the Opposition brings up taxation as an issue in a debate such as this is symptomatic of its feelings of failure in responding to the Budget two weeks ago. On that occasion the Leader of the Opposition stood up and offered absolutely nothing of substance. We have heard nothing of substance this afternoon, and I dare say that we will get nothing of substance from later speakers. The people of Australia know that this Government has improved the taxation system. They know that we have provided tax cuts for vast numbers of taxpayers, and they also know that no government can make all the changes it would like to make in 18 months of power. What the people know and have confidence in is that at last we have stable, forward-looking policies and a government that is confident to make hard decisions and to wear the flak for those decisions in order to improve the economy.

The second part of Senator Dame Margaret Guilfoyle's matter of public importance refers to our social security policies. I understand that Senator Messner intends to speak and no doubt he has been left the task of criticising us in that area. The whole aim of the Government's social security policies has been to provide increased assistance to Australian families in greatest need. We persist with that aim and have followed it consistently since we got into power. In this year's Budget as well as a $2.50 a week increase in the single rate of pension and a $4.20 a week increase in the married rate, further increased assistance has been provided to pensioners and beneficiaries with children, and in particular to those renting privately. They are the worst off people in this country-the people who were badly neglected by the previous Government.

Let us look at the measures the present Government has introduced for these groups and contrast them with the efforts of the previous Government in this regard. The additional pension benefit and family income supplement for children in low income families will be increased by $2 a week from November 1984, on top of the $2 increase provided last year. This represents a 40 per cent increase in the payments since we gained office. The previous Government increased this payment by only $2.50 in the entire seven years of its office. Supplementary rent assistance paid to pensioners and sickness beneficiaries who rent privately will be increased by $5 a week-a 50 per cent increase from November 1984. The previous Government also increased this payment by $5 during its 7-year term of office. We we have given the same increase in 18 months as the previous Government gave during the whole seven years of its period in office. The mother 's or guardian's allowance paid to sole parents will be increased by $2 a week. The previous Government could manage only a $2 a week increase during the whole seven years of its period in office.

To give an example of the increased levels of assistance provided in this Budget, a widow with one child who rents privately will receive an additional $ 11.50 a week, a 10 per cent increase in assistance. A married invalid pensioner with two children who rents privately will receive an additional $13.20 a week. Is the Opposition seriously trying to imply that these sorts of increases are insignificant or, as the matter of public importance states, that they will have a disastrous impact on these families? To suggest that is humbug. What the Government has done has been to provide significant increases in assistance for the most needy individuals and families in our society. We have exceeded or equalled in 18 months what the previous Government did for these people over seven years. So much for the Opposition's concern for low income families. I point out that we did it during difficult economic circumstances and in a difficult budgetary situation. We recognised that these people, who had been neglected for so long, were the people who needed help the most.

Criticism has been levelled, particularly from one of the honourable senators who are to speak later, that the Budget provided for no increase in family allowances or in the dependent spouse rebate. That is true. What the Government had to do within the constraints of the need to reduce the deficit-an objective which the Opposition claims it agrees with-was to concentrate on assistance for needy families. Let us consider what the result would have been if, instead of increasing the payments we did, we had increased family allowances by the same amount. For each dollar a month-a month and not a week-of increased family allowances the cost would have been in the order of $52.5m in a full year, or $ 40m in 1984-85 if we had increased the allowances from November. To achieve the same $16 a month increase-that is, the $4 a week increase in assistance to low income families provided by increasing family allowances-we would have had to pay out some $840m in a full year, or $640m in 1984-85. After deducting the cost of increases in additional pensions and benefits, family income supplements and the mother's/guardian's allowance, the increase in the deficit that would have resulted from such an increase in family allowances would have been about $760m in a full year, or $520m in 1984-85. Assuming that the Opposition is not so callous as to suggest that an increase in family allowances should not provide the same increase in assistance to low income families as is provided by the measures we put in the Budget, it is proposing an extraordinary increase in the deficit. One is forced to ask whether the Opposition really believes that the deficit should be lower, as every economic commentator and every sane person in this country believes.

If we look at the Fraser Government's record on family allowances we find that, following the statements by the former Prime Minister in 1976 that the increase in family allowances was the greatest social reform this century, the previous Government increased those allowances only once during its seven years of office . During that time the real value of family allowances declined substantially and the real levels of assistance to low income families through additional pensions, benefits and the mother's/guardian's allowance also declined substantially. The previous Government not only did not care about families in general but also in particular totally ignored the needs of low income families. We could not do that. We could not do it last year, we could not do it this year and we will not do it in the future.

The simple fact is that when one is in government and one has to make hard economic decisions, one should not ask the least affluent in the community, those least able to protect themselves, to bear more than their fair share of the burden of one's efforts to achieve economic recovery. It is for that reason that we concentrated on the low income families and the disadvantaged families of this community. We do not apologise for that. The fact that we were able to do that and at the same time provide a significant tax cut for Australian taxpayers and, indirectly through that, maintain the prices and incomes accord means that we have come up with a formula in this Budget which will turn what has been an economic pick-up into sustained economic recovery. That is why we are in government and that is why we will stay in government. That is why we are happy to debate this matter any time the Opposition proposes it.