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Wednesday, 5 September 1984
Page: 494

Senator MAGUIRE(4.25) —This afternoon I wish to speak in opposition to the thrust of the matter of public importance which has been brought forward by Senator Dame Margaret Guilfoyle on behalf of the Opposition. I find the terms of this matter of public importance quite breathtaking to read after seven years of Liberal government in Australia. After all the attacks on living standards of the ordinary Australian family over the last seven years and after the tax cuts we all remember the former Government giving in 1977, which were immediately taken away in 1978, this Opposition has come up with a matter of public importance like this. I find it quite surprising after the rapid and continuing rise in unemployment under the previous Government which had an enormous effect on the living standards of many Australians.

The Opposition, in bringing forward this matter of public importance, is taking actions which smack of hypocrisy. It seems to me that when the Liberal Party of Australia is in opposition it suddenly recognises the family but when it is in government it tends to ignore it. Before I came into this place I remember reading a report which was prepared by the Parliamentary Library during the period of the Fraser Government-a report of 20 pages. Nineteen of those pages refer to the regressive taxation and social security action taken by the Fraser Government. From memory, only one item in those 20 pages referred to anything positive which was done by the Fraser Government which has a progressive effect- the departure tax at airports.

Taxation data which has been made available with the current Budget really nails the lie of this matter of public importance. It really sheets home the tax increases and tax lurks which were available under the previous Government. I instance just one thing which is referred to in the taxation statistics published with this Budget, the dividend rebate introduced by Prime Minister Fraser in 1982 which he said would 'encourage the small investor'. We found out later that it went on the first $1,000 of everybody's dividends, including those of the super-rich. That particular little lurk cost the taxpayer $100m in a full year. The tax figures now available with this year's Budget document just what happened in 1982-83 with that rebate. Taxpayers with incomes of $30,000 or more- obviously fairly well-to-do citizens who represented 5.3 per cent of all taxpayers-obtained over 24 per cent of the total value of that rebate. In respect of that lurk, under the Fraser Government, the average taxation saving to somebody on $100,000 was $126 a year and to somebody on an average income, $7 a year. So honourable senators can see the enormous benefits which were made available to the wealthy by the previous Government.

I do not think I heard Senator Dame Margaret Guilfoyle, in talking on this subject today, refer at all to the very rapid rise in sales tax in the 1981 and 1982 Budgets under the current pretender to the Liberal throne, the Deputy Leader of the Opposition (Mr Howard), who presided over two Budgets which saw a 6.6 per cent increase in total sales tax collections in Australia. That is a very regressive tax which takes more from the lower income families of this country. So let us have no more of this nonsense about Labor governments raising tax burdens and doing inadequate things in the social security area. Let us look at the record of this Government since it has been in office.

Senator Messner —Don't worry; we will.

Senator MAGUIRE —The honourable senator will have plenty of time. He will be in opposition for a long time. In the 12 months to June this year 230,000 extra Australians had jobs. That figure does not include all their dependants who benefited from the extra employment. Clearly, there was an enormous benefit to Australian families as a result of the higher number of people in employment in this country. Unemployment fell by 60,000 in the 12 months to June, not counting the dependants. That also has resulted in very large benefits to Australian families. Senator Grimes referred to the significant reduction in inflation under the present Government, which has also meant a very large benefit to average Australian households. Of course, since this Government has been in office we have had a one per cent reduction in housing loan interest rates, which has been of great benefit to home buying households. I am sure that in the next few months we will see a further reduction in home loan interest rates.

The 1984 Budget provides very significant income tax cuts for personal taxpayers. In a full year the cost will be $2,100m, representing very real tax cuts indeed. One has only to point to the new 25c in the dollar tax rate to demonstrate the tax reform which has occurred in this Budget. Under the previous Government, the Liberal Government, the lowest tax rate was 30c in the dollar. We now have a 25c in the dollar tax bracket. Clearly, that will be of benefit to low income families. I am rather surprised that I did not hear Senator Dame Margaret Guilfoyle refer to that either. For years I have listened to the Liberals talking about the need to provide incentives to lower and middle income earners. Here we are introducing a lower tax rate, but, regrettably, no mention has been made of it.

The tax cuts in the Budget have been structured so that the largest proportionate reductions are available to the lowest income families. The figures show very clearly that people in the lowest tax bracket receive the largest reduction-17 per cent-in the total tax burden. The tax cut on incomes up to $28,000 is $7.60 weekly. On my calculations that is equivalent to about a 4 per cent money wage rise for the Australian work force. I think that is a fairly impressive result in one Budget.

One thing which distinguishes this Government's policies from those of the previous Government is that we have structured the tax changes so that the highest income earners get a lower tax reduction than lower and middle income earners. That can clearly be seen from the tax tables. Under the previous Government, when tax alterations were made to personal income tax the biggest reductions typically went to those at the very top of the income scale.

I should refer to some very important side effects of the new 25c in the dollar tax rate. For example, it means that the dependent spouse rebate, about which we have heard so much this afternoon, will free more and more taxpayers from an income tax liability. On my calculations, earners of incomes of up to $8,700 a year who claim the dependent spouse rebate will no longer be taxed. Last financial year the figure was $8,000. That is a quite significant reduction in tax liability for those lower income families. I also refer to the effect of the 25c in the dollar tax rate in enhancing the value of the $250 pensioner tax rebate, which means that pensioners with other incomes will now be able to go to a much higher income level before they pay tax.

This Budget, in addition to making the alterations in tax rates, provides new tax rebates for people receiving sickness and unemployment benefits. These rebates-$50 for a single beneficiary and $75 for a married couple-should result in most beneficiaries no longer paying income tax. The Budget also provides a very big boost to the living standards of lower income Australian families by increasing the threshold for the Medicare levy. The threshold for that one per cent levy for a married couple will be raised from $11,141 to $11,803. This is a very significant increase meaning that many lower income families will no longer pay income tax.

I was very interested in a claim by Senator Dame Margaret Guilfoyle this afternoon that the Budget provides for a 23 per cent rise in income tax collections. She then went on to link that figure to somebody on average weekly earnings. Of course the 23 per cent figure is in the Budget, but it refers to total tax collections which includes tax collections from a range of non-pay-as- you-earn taxpayers. I simply refer to farmers and people on professional incomes . Farmers are, of course, paying more tax in total this year simply because of the ending of the drought and the fact that they have higher incomes. As a result of the end of the recession in this country a number of non-pay-as-you- earn taxpayers such as professional people will also be paying more tax because they will be receiving far higher incomes. Neither, did I hear any reference to the new prescribed payments tax which is contributing enormously to that particular item in the Budget. So let us have no more of this nonsense regarding pay-as-you-earn taxpayers or those on average weekly earnings paying 23 per cent more tax.

The Minister for Social Security, Senator Grimes, went through a number of initiatives taken in the social security area of the Budget. I was very pleased that the Budget focused the increases social security spending on the neediest members of the community. In total, the discretionary increase in social security spending over and above the normal increases resulting from indexation, from price increases, is some $680m in a full year. When that is added to the reductions in income tax the total cost to revenue is $2,800m in a full year. Clearly, this means very substantial changes in the cash flow of the Government and a very substantial improvement in the circumstances of ordinary Australian families. There are a number of increases in social security benefits. The standard pension rate is increased by $2.50 a week, and by $4.20 a week for a married couple. There have been further increases in unemployment and sickness benefits but, particularly, there has been increased social security spending on families in the greatest need. I refer to sole parent families and households which are renting in the private market. The figures are quite substantial-$2 a week more for each child of a pensioner bringing the figures up to $14 a week; an increase in the mother's or guardian's allowance for sole parents up to $10 a week; and an increase by 50 per cent to $15 a week in the maximum supplementary rental assistance.

Overall it is possible to calculate that since this Government was elected the actual increase in benefit to people renting in the private market who are on the pension and have two children is some $30 a week, or 25 per cent. Clearly, this is a very large increase in benefits available to lower income families. Clearly, there has been no disastrous impact on average families as a result of the Hawke Government policies.

I will look ahead for a moment and refer to some of the forecasts made in the current Budget. For example, it is anticipated that in the course of this financial year another 150,000 people will be employed in Australia. That will mean increased economic welfare not only for them but also for their dependants. As the Minister for Social Security outlined in Question Time today, there will be a reduction in the average number of Australians receiving the unemployment benefit-from 620,000 last financial year to 570,000 this year. Clearly, there will be an improvement in the economic welfare of those Australian income earners and the dependants whom they support. The Budget statement showed a provision also for a slight rise in real average earnings this year. Earnings will increase at a slightly faster rate than prices, which will mean a better economic position for the average Australian.

It is very hard to work out the particular families and income groups in the community about which the Opposition is really talking. Opposition senators cannot be talking about the people who have recently obtained jobs-the 230,000 Australians who have become employed under this Government-because those people have received a tremendous improvement in their economic welfare and circumstances. Opposition senators cannot be talking about the dependants of those people. They cannot be talking about the people who are unemployed, because the Budget has very clearly provided extremely large increases and benefits to that group.

The Opposition cannot be referring to other social security beneficiaries because, clearly, the Budget has provided substantial improvements in benefits and pensions. By November, the standard rate of pension will have gone up by $14 .65 or 19 per cent. Are Opposition senators referring to those heads of families who are in the work force and have jobs but are on low incomes? I referred to the fact that a 25c in the dollar tax rate has been introduced in the Budget. The Liberal Party could not do any better than a 30c in the dollar tax rate. Clearly, the Opposition cannot be talking about income earners in the work force who are at the very bottom of the income scale. That group has benefited from the lifting of the Medicare levels, so Opposition senators surely cannot be talking about them.

The Opposition should come clean and tell us about which families and income groups it is talking. Opposition senators have been very vague in framing the matter of public importance and condemning Labor's taxation and social security policies, but they should come clean on this matter.