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Friday, 7 September 1984
Page: 630


Senator MACKLIN(9.10) —I am disappointed that the Opposition cannot support the amendment. I will rehearse what I think is a reasonable argument. The argument was probably best put by the Attorney-General (Senator Gareth Evans ) in Opposition on 25 February 1982 when he said:

The principled character of the Opposition from the ALP, which I have been at pains to endeavour to explain--

this was said precisely in relation to the Sales Tax (Nos. 1 to 9) Amendment Bills and the Sales Tax (Exemptions and Classifications) Amendment Bill-

built, as it is, around these concepts of survival as distinct from non- survival Bills . . .

Honourable senators will remember that the amounts of money concerned with the Sales Tax Amendment Bills (Nos. 1A to 9A) in the 1982 situation were larger than we are talking about at the moment. I am sure the Government would not see that principle as being breached. Senator Gareth Evans continued:

. . . around these concepts of survival as distinct from non-survival Bills and around the concepts of mandate and merit . . .

In other places he expands the concept of whether or not the Government can claim any mandate from the people. He said:

So far as the question of a mandate is concerned, it has been said by speaker after speaker that, of course, it is the case that the Government can claim no mandate for this from the people.

Using his criteria-the criteria of the spokesperson for the then Opposition, now the Attorney-General-this Government can claim no mandate for this proposition. This proposition was explicitly denied during the election campaign. So not only does the Government have no mandate, it explicitly put to the people the proposition that it would not do this. Senator Gareth Evans went on to the third concept, the concept of mandate, and the last concept, that of merit.

Elsewhere, in explaining what he meant by merit, Senator Gareth Evans was at pains to point out the implications that such a Bill may have for the electorate . He said:

If the Bills in question are manifestly unmeritorious and if they lack any kind of clear, electoral mandate from the people, then we have an obligation, as long as the Senate operates as it does and retains the powers that it has at the moment, to defeat them.

I think that is a clear doctrine. It was spelt out clearly and it has to be one from which this Government cannot resile. At that stage the Government was willing to take the political position it did in relation to another Government' s Bill. I think that Senator Evans spelt out very clearly and precisely how he would expect future sales tax Bills to be dealt with. There is a very clear doctrine that the Government accepts in relation to these Bills.

It is important that the Senate look at these Bills because the essential difference we are looking at is the notion of new policy items. I think it has been accepted for quite a period in the Senate that when one is looking at new policy items they are treated differently from ongoing policy items, particularly in the area of revenue raising. Hence I believe that we have to apply differing criteria to the propositions as to whether or not the item is one of continuing revenue raising to the Government or one of new revenue raising to the Government.

I have put forward elsewhere the proposition that one solution to the problems that the Senate and the House of Representatives experienced in 1975 would be to limit the Senate's powers to new policy items so that any government could be assured of continuing policy items and would always have that revenue base. In other words, any government from year to year would know that it could rely upon the previous revenue raising base because it had been agreed to by the Senate on a previous occasion. This would mean, if adopted, that the Senate would have complete powers of review but the Government would have complete security in revenue raising up to the point of the previous Budget. That is at least one suggestion of how we might work. I believe it important to distinguish in a slightly more detailed fashion than the Opposition parties have done in relation to these Bills.

I wish to mention one other item in relation to this; that is, the distinction that I believe must be drawn quite clearly between the Supply Bills, Appropriation Bills (Nos. 1 and 2) and revenue raising measures. The 1975 crisis occurred in relation to the Appropriation Bills; it did not occur in relation to revenue raising Bills. Indeed, there is a very clear distinction other than that one is handing out and the other is getting money in. The clear distinction is that the Government each year must get a renewed mandate from the Parliament to expend money. Governments are in no bind whatever in raising revenue because once a Bill to raise revenue has passed this Parliament it continues; it does not need a fresh mandate from this chamber each year to continue that type of operation. Hence I believe that in the parliamentary structure quite clear distinctions can be drawn between these various types of Bills and I do not think it useful to talk in general terms about Budgets.

The crucial element of the Budget that we must look at and the one that in fact the Australian Democrats have pledged unequivocally always to support is Appropriation Bills (Nos. 1 and 2). This is extremely important because we will be asked to address other Bills in this Budget package. For example, we will have the assets test Bills. How those Bills will be dealt with, I think, depends again very much on the attitude the Opposition parties take to Bills connected with money matters. I believe it important to try to make more detailed distinctions in relation to these various Bills so that the Senate can exercise its undoubted powers of review in these areas.

The proposition that the Democrats have put forward for a 2.5 per cent tax on wine is an attempt at a phase-in operation. It is a mechanism whereby the industry can adjust to those taxes. I believe it has a good foundation. If one looks at the way in which sales taxes historically have been introduced by governments one sees that they have been introduced at a low rate and then those rates have been raised over the years. That is an extremely important concept because in that way industries are not subject to very sudden fluctuations in decision making from governments. They have a far greater ability to absorb a small rise each financial year than they have to absorb a large rise in one financial year, particularly growing from no tax to a tax of 10 per cent. That is an enormous difference, even if in terms of the total amount of money on an individual product it may be quite small. Nevertheless, to the industry it is an important item that goes to the heart of its arrangements in projecting its own budgetary operations. Government always has a great deal of difficulty in balancing its books. Even with the enormous reserves available to the Federal Government and its great expertise, government still has a great deal of difficulty in working out its own budgetary arrangements for the coming year.

The small businesses at the other end of the scale, whose operations we are affecting by our legislation, do not have those enormous resources or that vast amount of expertise. How much more difficult it must be for those small businesses to project their own budgetary arrangements for their survival. Bearing in mind the number of bankruptcies that has occurred in small businesses over the years-I am referring not only to the period of this Government but to that of the previous Government as well-one must be very much concerned that whatever measures we take here do not ricochet and send further small business to the wall. Not only would there then be a loss from that type of revenue raising operation, but also there would be considerable loss of revenue in income tax and increased expenditure in social security and in other areas. In other words, it makes eminent sense to ensure that revenue raising effects we put in place in this Parliament do not have a diametrically opposed effect on revenue.

I believe that there is a very good case to suggest that this particular imposition will not net government revenue; that the whole effect of the matter in its totality, including the downstream effects, will be much closer to a break-even situation or possibly even result in a loss to the total revenue base of this country. It is beyond me why we should engage in such activities, but this Parliament has done it time and again. I issue a plea to soften that blow on that industry as much as possible if there has to be an imposition of that tax. I suggest the Government follows the type of proposition put forward by Mr Howard-namely that it was inappropriate to take this step at this time and that such taxes should be phased in.