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Wednesday, 5 September 1984
Page: 510


Senator JACK EVANS(6.02) —A superficial examination of this Budget would give an impression that this is a Budget to satisfy all Australians . On closer examination one starts to recognise that this is a very superficial Budget. It leaves a great number of Australians dissatisfied and disenchanted. Probably the most significant number are those three million Australians who are on or under the poverty line. Included in that three million are 800,000 destitute children who have been abandoned by this Government with this Budget. Added to those people are, of course, the 634,000 unemployed who have been virtually ignored in this Budget. Also, we can count amongst the groups and individuals ignored those in small businesses and certainly the pensioners, who got no more than the Medicare rebate catch-up, despite the promise by the Australian Labor Party that they would receive 25 per cent of average weekly earnings. I rate as underprivileged as a result of this Budget the farmers, particularly smaller farmers, and the families of Australia. I will demonstrate that in a moment as I just run through some of the effects that the Budget has had.

Let us not paint a blacker than black picture, because obviously there are a number of quite valuable pluses in the Budget. They may have more to do with elections than with economic measures, nevertheless I think we need to recognise that the Government has done its best to satisfy the middle income earners of Australia. Perhaps that is because that is where the recognised swinging voters mostly tend to come from. The Government has also-this is a rather strange thing for a Labor government-very handsomely looked after big business and ensured that the protections of big businsses are maintained, frequently at the expense of small businesses. As one would expect, this Government has looked after the trade union movement right across Australia. Whilst there is a very positive reason for doing that-that is the maintenance of the prices and incomes accord-I think unions and particularly the higher earning trade unionists of Australia, have done far better out of this Budget than they should have expected. Unfortunately, they have done well to the detriment of many people who are much more deserving. Of course, this Budget-as so many Budgets before it have done, irrespective of the colour of the government of the day-has continued to satisfy those enjoying protection in this country.

I do not think that it is a surprise Budget in any sense because the whole world knows that we are going to have an election later this year. So it had to be an appealing Budget to those in the middle income areas who were likely to change their votes if the Government got stuck into them with this Budget. It was no better and no worse a Budget and pre-election strategy than the old fistful of notes campaign that we had waged by the conservative party in government a couple of years ago. I think is is also fair to say that overall the Government has picked a fairly responsible deficit figure, no doubt under extreme pressure from the financial institutions around Australia. They were threatening, if this Government opted for a higher deficit, a deficit which could have enabled it to help the disadvantaged in Australia, to wage a massive campaign against the Government, accusing it of being irresponsible and allowing the deficit to blow out, in their terms.

I believe that the Government has behaved quite responsibly in certain areas. I think it is fair to say that it has kept its promise on personal income taxes. It has kept the promises in terms of a responsible gift, particularly to low middle income earners, which has poured some money back into the economy and which should help to generate the economy and stimulate some spending, although not nearly as much as would have been the case if that money had gone direct to low income earners who pass that money straight into the economy. Nevertheless, the Government has kept its promise and has given the tax rebate which it promised in terms of the prices and incomes accord.

A hazard accompanies this gift of personal income tax. I think all of us have recognised that it is a bit of a three card trick because the personal income tax rates do not change until 1 November. Of course, the next Budget will ensure that there will be further income tax changes-that has been promised to us already-because the whole tax structure will be reviewed by the Government. So nobody will enjoy those benefits that were painted in such glowing terms when this Budget was presented, and nobody will have a full fiscal year's benefit from the tax reductions that have been offered. I hope that people around Australia recognise that even in the current year they will get only a proportion of the tax cut which has been offered to them in the new rates and that depending on how their earnings vary over the year, they could find that in fact they are quite seriously disadvantaged rather than handsomely advantaged as a result of the tax cuts not starting until 1 November.

Regrettably, the means used by the Government to offer personal income tax cuts disadvantaged those at the very lower end of the scale. That happened because the Government wanted to ensure that those on middle incomes received that benefit. As a result, the Government bought their votes. At the very least the Government could have indexed the threshold, but it did not even do that. Many economists have suggested that the Budget would have been much fairer if the Government had increased that threshold substantially and had ensured that those at the very bottom end really benefited from those tax cuts and that those at the top benefited much less. But no, the Government has opted for a new series of tax scales which will ensure that the middle income earners receive the maximum benefit.

The Australian Democrats would have much preferred a progressive tax scale. In fact, we shall be putting to the Government, the Parliament and the people of Australia a new tax scale regime that goes right along a continuum starting from a much higher threshold and with a top marginal rate of 50 per cent. That would ensure that the income tax rates for all Australians are beneficial and would give them the opportunity to spend the money that they earn. It would ensure also that people are taxed in accordance with how they spend that money. In other words, the emphasis would be moved from personal income tax towards a consumption tax.

The Australian Democrats applaud the Government's endeavours to get at tax avoiders. I and Senator Colin Mason supported the Government right down the line in every one of its measures to retrieve evaded bottom of the harbour tax, to get that money back into the system so that those who evaded their tax obligations at the expense of the rest of the taxpayers were brought to justice and made to pay the tax that they had avoided. Regrettably, the whole of the Senate did not support that legislation. I am sorry that honourable senators did not do so. I am sorry for two reasons. First, I believe that an important principle needs to be supported-that is, we should not allow people to avoid their taxes at the expense of the rest of the taxpayers. Secondly, if that legislation had been passed we would have allowed those who were unfairly caught up in the tax net of the Fraser bottom of the harbour legislation to have had access to an appeals tribunal. Under the Fraser legislation that access is denied to those people.

I am pleased and proud to announce that the Australian Democrats' Bill to pick up tax avoiders under the cherry pickers scheme was passed by the Senate and is waiting for support in the House of Representatives. That is another tax avoidance measure which the Australian Democrats strongly supported and the Senate supported. It was instigated by the Australian Democrats. We have proposed also a piece of legislation to prevent tax avoidance schemes which would enable the Treasurer to give prior rulings. That legislation would have the effect of virtually wiping out for all time the tax avoidance industry, but at this stage that legislation has not passed through the Senate.

The unemployed, those on pensions and those at the bottom end of the socio- economic scale have suffered at the hands of the Budget. This Budget virtually ignores the unemployed and, in fact, does little to help those on pensions. It is an interesting fact that the single pension increase is $2.50 a week and the tax cut for a person on $100,000 a year is $2.79 a week. What a gross injustice that is, and how it demonstrates the wooing of the middle and upper income brackets by the Government at the expense of low income earners.

The effect of this Budget on a married couple on a pension with two children is that they are still $20 a week below the poverty line. A single person with one child is still $17 a week below the poverty line. The Government has retained the spouse rebate allowance, although it could have given to families across Australia a 50 per cent increase in family allowances and made that family allowance taxable in the hands of recipients. One would have expected a Labor Government to have gone in that direction. One cannot understand the rationale for a Labor Government retaining a spouse rebate when there is such a desperate need for families bringing up children to receive an increase in family allowance. That action is beyond my comprehension of what a Labor Government is on about, and, I am sure, is beyond the understanding of most people around Australia.

What has happened to the unemployed as a result of the Budget and the Government's dereliction of its duty towards the unemployed? Sadly, the Government is continuing its predecessors' policy of using unemployment as an economic tool. That action becomes obvious when we see what has happened to the unemployed during the last few years of the previous Government and this one. Between 1978 and 1984 the average duration of unemployment has swollen from 24.6 weeks to 44.6 weeks. Between June 1983 and June 1984, the number in the 15-year- old to 24-year-old age group who had been unemployed for longer than one year increased from 25 per cent to 31 per cent.

That is a tragedy for many people, and that tragedy has been ignored in the Budget. That tragedy must be addressed immediately by the Government and the Parliament-not in a couple of years time when the Government can get its act together. We gave the Government a year to come up with a responsible and responsive plan to solve the crisis of unemployment in this country, and the Government has blown that chance in this Budget. All that the Government has done has been to continue to apply band-aids over band-aids over band-aids. The current band-aid is the community employment program. That scheme is a means of getting somebody off the unemployment statistics for a few months and at the end of those few months-this is the tragedy-dumping them disillusioned back onto the unemployment market. There is a limit to the time during which a person can stay on the program.

It is bad enough to be unemployed for a year or two, but it is tragic to raise people's hopes-to put them on the community employment program, to give them the impression that their problems are solved and that they have rejoined the ranks of the employed and, after a few months, dump them back into the ranks of the unemployed. The community employment program is only a band-aid scheme. It does not help very much in giving people skills. It does not give them permanent employment, nor even the prospect of permanent employment. The scheme just takes the unemployed off the unemployment statistics list for a few months. Unless the Government comes up with, at the very least, a supplement to CEP to allow those on the scheme to continue to obtain support in employment from the Government, the Government will have confirmed the worst opinions around Australia. Those people are starting to say: 'This Labor Government will do no more for the unemployed than did the Liberal Government before it.'

I have mentioned that small businesses were being let down badly by this Government, and they have been. It was within the capacity of this Government to start the total abolition of payroll tax right around Australia. This would have provided great encouragement to employers to take on more staff. Payroll tax is a State tax but the States simply cannot afford, under their present economic constraints, to drop payroll tax at this time. It would have been possible under this Budget to give the States the sort of support that was needed to get at the very least those small business which employ up to, say, 50 people off the payroll tax regime. But no, that was not done. It would have been possible for this Government in this Budget to abolish the Division 7 tax, the undistributed profits tax. I have to ask the Minister for Social Security (Senator Grimes), who is sitting at the table: Why was that not done? Do not tell me that this Government is continuing the policy of its predecessor, the Liberal Party of Australia, of protecting big business, which does not have to distribute all of its profits, and hitting small businesses, which do have to distribute their profits or pay a tax. A government of this complexion which is keeping the undistributed profits tax on small businesses is a government which has abandoned small businesses.

I would have hoped that the Government would pick up the message from lots of small businesses around Australia that they are in desperate economic straits in terms of their cash flow. One of the things that is happening at the moment to those small businesses is that they are providing funds for this Government out of their own money in sales tax payments, because most of them do not get their sales tax revenue in for 60, 90 or 120 days. However, this Government insists that they pay that tax out of their own capital within 21 days. I could not believe that a Labor Government would allow that to continue but this one has. It obviously has no interest in small businesses and their cash flow problems. The Government could have provided that provisional tax be paid quarterly; it could have extended income equalisation deposits to small businesses. Instead of this, unbelievable though it may seem, it has taken income equalisation deposits away from all small businesses, including farmers.

Over the last 12 months this Government has shown what it thinks of small businesses around Australia by its approach to sales taxes. It is about to impose a sales tax on wine and in the process it will destroy a burgeoning wine industry across Australia, in particular the small vineyards across Australia which have been building up a potentially wonderful export industry for this country. These people have been developing vineyards and making wines that are already competing very favourably on world markets. However, they need an Australian market to provide them with a base. This Government has just taken away that Australian market. Instead of introducing an excise based on the volume of wine produced, the Government has decided to introduce a sales tax based on the wholesale price of the wine. The effect it will have is simply this : The bulk wine producers, big businesses-one must be in big business to get into bulk wine production-will be rubbing their hands with glee because the increase in sales tax to them will be so minimal that they will hardly notice it . But those who are trying to produce quality wines for export will be hit up to $3 a litre by this new tax. That will simply mean that this market will probably die as will the industry. This affects the small enterprises dotted around Australia which are trying to build up an export market for this country. They have just been hit to leg with this tax.

There is still time for the Government to change its mind. I appeal to the Government to change its mind on this tax and refer the imposition of this tax to the Bureau of Agricultural Economics. I appeal to the Government to get the homework done at this late stage rather than go full speed ahead and carry out the imposition of this tax. Please find out more about it. Find out about the damage it is doing to the industry; find out about what is happening with the imported wines and the support that they are getting from their countries compared with the massive hit that our wine industry has just suffered by the imposition of this sales tax.

I wish to refer briefly to some of the other sales taxes introduced by this Government which are hitting small businesses. They are sales tax on air conditioning ducting, fibreglass pool manufacturers and certain types of hearing aids. Through this Government we have sales taxes on small businesses that were never considered by its predecessors. Not only small businesses in metropolitan areas and bigger towns but small businesses right around the country have suffered from this Budget. Primary industry has been hit very hard with export inspection charges being increased by 211 per cent and with increased charges on apples and pears, canned fruit, cotton, dairy products, dried vine fruits, fishing and grapes-in fact, right across the board.

The Australian Democrats tried to prevent the meat inspection charges from being imposed. I am very sad to have to repeat to the Senate that we failed because the Liberal Party and the National Party of Australia would not give us support to prevent those meat inspection charges from being passed by the Senate . We tried to have the income equalisation deposit system retained but this Government, having withdrawn the legislation once, has reintroduced it with these Budget Bills. There are many groups, such as the environmental groups, the defence groups and the science and technology groups-the Commonwealth Scientific and Industrial Research Organisation budget has been cut in real terms by 8 per cent in this Budget when we should be spending massive amounts on science, technology and education-which have been let down by this Budget. They may even be hit to leg again before very long because before the end of this year there probably will be another petrol price increase as a result of the United States dollar strengthening.

There would seem to be only two alternative governments in this country today- the union controlled conservatives or the big business controlled conservatives- and both of them suffer from the following shortcomings: They are notoriously short term planners, and one cannot get a much shorter term plan than a plan that runs three months to the next election. Both of them lack the ability to see beyond the next Budget at the very most. There is no long term plan associated with this Budget. There is no long term plan associated with any of the Budgets that have been presented in this Parliament for many years.

Both of the alternatives, the union controlled conservatives and the big business controlled conservatives, have expansionist governments, and no matter how they abuse each other in terms of blowing out Budgets and increasing deficits, both of them are willing to mortgage Australia's tomorrows. Both of them, the union controlled conservatives that we have in Government today and the big business controlled conservatives that preceded them, are willing to sacrifice the unemployed and the disadvantaged minorities. Both of them lack vision. They lack the vision to see the future of this country, to see where the opportunities are. What an incredible Budget to bring down in 1984-a Budget which reduces, instead of expands phenomenally the Budget allocation to science and technology. It is unbelievable in 1984 that that could happen. It is unbelievable in 1984 that we are not planning the phasing out of protection of industries in this country. And it is unbelievable that a second Hawke Budget could be brought down still lacking the ability and the willingness to restructure the taxes in this country. The alternatives for Australia between a union controlled conservative government and a big business controlled conservative government leave the people no alternative but to look to the Australian Democrats when the next election comes around.

Debate (on motion by Senator Robertson) adjourned.