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Friday, 5 October 1984
Page: 1334


Senator MARTIN(3.04) —It has been noteworthy that in the period of the Hawke Government since March last year how commonly commentators have attached the phrases 'liberal' and 'conservative' to it. It is also noteworthy that in the case of a Labor government that is praise, but in the case of a Liberal government that is criticism. I think it may well be a reflection of the fact that people are thankful for having what appears to be a conservative Labor government because things could be so much worse. The purpose of this matter of public importance today is to blow that myth apart.

The Prime Minister (Mr Hawke) and members of the Government do not apply the term 'conservative' to themselves. When the term is used the Prime Minister smiles broadly and nods benignly. He does not say it himself because, in fact, it is not true. This Labor Party in government is no different in substance from other Labor parties in government. The difference is in its style. It has moved more slowly than, for example, the Whitlam Government in implementing its socialist objectives. It has used soothing and reassuring rhetoric on occasions, but in fact its objectives are no different and the effect of its policies is no different. In the short time that the Hawke Government has been in power there has already been a large number of instances that demonstrate the objectives of a socialist government.

Socialism is, of course, inherently hostile to private assets and investment. It believes that the state knows best how to spend the nation's and the individual's wealth. It believes that the state knows best how to direct our life choices. One means of directing them is to limit them. This Government has already, through social welfare policies, medical policies, taxing and expenditure policies and policies in relation to a large number of individual industries, embarked on its basic program. People in Australia are slowly but surely discovering the limitation of their choices and a lessening of their discretion in their own patterns of behaviour and consumption. The difference between a socialist government and a free enterprise government is best summarised in the most basic and important areas of choice. For a truly free society, individuals should have a free choice of consumption and in a number of areas, including medical and educational, this Government moved early to limit the individual's choice.

There is a major difference in the choice of life's goals. Basic to our society for some time has been the right to provide for personal security in old age, middle age or whenever. Also basic has been the choice of disbursement of income . That is the reason that low taxation is a high priority. Socialism likes high tax. It moves rapidly towards high tax, as has the Hawke Government as I shall demonstrate in a few minutes. Lowering the freedom of choice of the individual means that fewer choices have to be made available and gives the Government greater powers and rights in relation to the way in which citizens will live. This socialist Government limits choice in essentials and thereby brings about an increased dependency on government.

We had a debate in the Senate earlier this week on the subject of the assets test and associated matters. Government senators yawn and the Minister for Social Security, Senator Grimes, takes another valium whenever this subject comes up. But it is basic. There is nothing more basic in affecting people's life styles throughout their lives than how one affects their choices at the end of their working years. This Government's tax on lump sum superannuation has had a number of effects, not all of them immediately apparent in quantifiable terms, but all of them immediate in their effect on Australians. Low incentives to investment in superannuation result in a disincentive to long term investment in those assets which would give security. The money which would otherwise be invested by individuals in what were previously good investment proposals will now go during people's lifetimes either in increased tax or increased consumption. The long term effect of this on the economy as a whole will be to reduce a very significant private investment source and to increase the dependency of individuals on the Government in the twilight of their years because they have been persuaded that it is in their best interest to minimise their assets. They have lost the incentive to provide for independence in their retirement years.

One of the obnoxious things about the assets test is the assumption that it makes about wealth. Wealth is a word that is bandied about freely by this Government and its spokesmen. Wealth is, of course, something that glitters in everyone's mind's eye. Wealth means wealthy. To this Government in its socialist objectives, wealth means assets of any kind. If one has anything, one has wealth , which is the broadest possible meaning it could be given. Specifically through the Government's assets test those who have retired and who are pensioners will suffer a reduction in their assets if they fall within the net of the test. If these people do not want to dismantle their farms and what are really quite modest assets that they may have had for most of their lives they must take loans from the Government to enable them to keep an income and these will, in effect, become a death duty. Gift duties have also been reintroduced but only for aged pensioners. The incentive will be to divest oneself of any assets one might have above the minimum before one reaches retirement age. That reduces choice and is a dangerous path, as anyone involved with the elderly should know because of the evidence of exploitation of the elderly which has been given in recent years in research that has been undertaken by those involved in these areas at universities and elsewhere.

Returning to the wealth tax, I refer to the words used by Senator Grimes in the Labor Essays of 1983. He said:

To be consistent, those who argue for a pensions assets test should also argue for the personal income tax to be supplemented by a substantial tax on personal assets-in other words, a wealth tax.

There is it-assets of equal wealth. That is Senator Grimes's view, the socialist view. To be consistent with this obnoxious assets test that is what a good socialist government should do. I believe this one will do it.

One of the most startling Government documents I have come across in recent times was a speech by the Minister for Health, the Hon. Neal Blewett, at the Pan Pacific Surgical Congress in Sydney on, I think, 20 March 1984. The Government introduced a compulsory medical insurance system through a tax, a levy, and Dr Blewett, in his speech, is quite clear about this Medicare levy. He said:

Medicare does also have an income redistribution aspect in that because the additional cost of its introduction are funded by a 1 per cent tax levy the rich will pay more than the poor.

It embraces the concepts of universality of cover with payment related to income which the Government believes are both essential to a fair health insurance system. However, it also retains fee for service medical practice and the professional independence that this permits, as the basic system of remuneration.

I do not have time this afternoon to elaborate on that last comment but many others involved in the health debate will. The genuine long term prospects of fee for service are not very good.

By introducing this Medicare system the Government did two things: It reduced the real choice of the health insurance options of Australians and it introduced , as Dr Blewett said, an income redistribution mechanism basic to socialism. The strength of the previous system-I do not say it did not have its weaknesses; I personally always preferred the Queensland system-was that people had real choice. For a reasonable sum of money they could insure themselves for private treatment by doctors and in hospitals. Now, because of this extra tax slug, this redistributive mechanism, people have in effect less choice. A very much smaller proportion of the community can afford both forms of insurance.

I note very quickly this basic and tired socialist rhetoric of dividing the population into the rich and the poor. Anyone who pays more than the poor is therefore rich. That is a fallacy in Australian society. Most people are on moderate, middle incomes; they are paying more than the poor but they are not rich. The true element of choice has been removed. Dr Blewett has other plans. He has plans for directing and determining the availability of specialists in our medical system. He continued in his speech:

I believe that some economic pressure is desirable in medical practice and that Governments must have more say in all aspects of medical manpower supply . . .

If Government is expected to act to reduce the intake of medical undergraduates to prevent undesirable situations being created in general practice, there is also a need for Government participation in determining specalist numbers.

I suggest there are two reasons for limiting the number of undergraduates. The first concerns supply but the other is that medical students are extremely expensive to train and the view has been taken that it would be irresponsible to encourage larger numbers of students than the market can bear into a lengthy medical training program which is highly expensive. The method of selection and training of specialists is something quite different and does not involve those elements. It has been that sort of manipulation of medical manpower in the United Kingdom that has led to shortages of suitable people, the pressure of a heavy work load on doctors and without doubt a downgrading of what was previously an excellent medical system. Even more astonishing is the substance of the remainder of Dr Blewett's speech. I quote from it:

Because doctors operate at the micro level they do not see the costs that their decision generates. Governments operate at the macro level where cost decisions are the daily staple of political life . . . One can expound on the need for professional independence, but in a world of finite resources with cost constraint on all Governments-that individual decision on open heart surgery is inextricably linked to a decision on the provision of additional intensive care facilities for premature births.

That is true. The conclusion drawn is startling:

Nearly every single cost question in the health has these kinds of political ramifications.

Then there are the political questions with ethical ramifications, or rather ethical questions with political ramifications. These challenges mostly face the provider. Those questions relate to whether to undertake open heart surgery for a person in their 60's with other health problems whose life expectancy is probably not much more than another 10 years. An operation may guarantee that 10 years, but without it there would be an expectation of only another 5 years, or less.

. . . .

However, it is facile to suggest that these considerations are independent of outside constraints. The availability of operating time and of intensive care beds will contribute to the evolving attitude to performing these procedures. The general theory of medical intervention that 'more is better', will serve to increase the incidence of these expensive procedures, so long as Governments or private enterpreneurs extend the facilities that enable them to be performed.

Therefore, I believe a system whereby Governments decide the overall availability of services and technology in the health system is desirable . . .

These sorts of decisions cannot be left to the medical profession because it is the concentrated group that loses most from cost control policies. Those who stand to gain are diffuse, in the sense that only Government can represent the interests of the general public and taxpayers as a whole.

I remind the Senate that those comments and conclusions are drawn in this context set by Dr Blewett: Does one perform surgery on someone in his or her 60s to provide a life expectancy of possibly another 10 years--


Senator Grimes —You prefer the American system, do you, where only the wealthy can have it?


Senator MARTIN —The honourable senator should be specific about what the Australian system is in that case. Dr Blewett said:

. . . only Government can represent the interests of the general public and taxpayers as a whole.

I wonder who represents the interests of the 60-year-old needing open heart surgery. The thrust of his speech at that stage was that the private provision of hospitals and specialised medical facilities should be limited. I am not arguing for an open-ended Government budget but Dr Blewett argues, and this Government's policies implement, a line of reduction of the significance of the private sector, and particularly the private hospital sector. The Government's intention is intervention and control in the most personal and obnoxious manner.

Basic also to socialism is an increase in the role of the public sector in a transfer from the private sector. The Australian Labor Party believes that it knows better than we do, or companies do, about what should happen with the country's wealth. Nobody denies that taxes have to be paid and that community facilities must be provided but the pattern of Labor in Government in relation to tax and intervention in industry is highly significant and certainly not at all conservative. Mr Deputy President, I seek leave to incorporate in Hansard a table from the Budget documents, at page 355, which shows total Commonwealth Budget outlays in each year since 1974-75 and the proportion of gross domestic product represented by such outlays.

Leave granted.

The table read as follows-

Increase on

Budget

Previous

Outlays

Year

as a

Budget

Proportion

Outlays Nominal Real(a) of GDP

$m % % % 1974-75 17,820 46.0 19.6 28.8 1975-76 21,831 22.5 5.2 29.9 1976-77 24 ,093 10.4 -0.8 28.9 1977-78 26,717 10.9 2.5 29.5 1978-79 28,991 8.5 1.6 28.2 1979-80 31,637 9.1 -0.5 27.3 1980-81 36,098 14.1 3.4 27.3 1981-82 41,305 14.4 2.6 27.7 1982-83 48,935 18.5 6.5 29.9 1983-84 56,570 15.6 7.7 30.5 1984-85(e) 63,948 13.0 6.1 31.1

(a) Increase in outlays deflated by increase in the implicit price deflator for non-farm GDP.

(e) Budget estimates.


Senator MARTIN —In brief summary, the table shows that Budget outlays as a proportion of gross domestic product have risen by 1.2 per cent-the highest rise in recent time-under the Hawke Government. I seek leave also to have incorporated in Hansard tables from the Budget receipts document, at page 364, detailing the composition of Commonwealth Budget receipts for the period 1974-75 to 1983-84.

Leave granted.

The tables read as follows-

Increase on

Budget previous Real Proportion

receipts year increase (a) of GDP

$m % % % 1974-75 15,274 28.4 5.2 24.7 1975-76 18,264 19.6 2.7 25.0 1976-77 21, 374 17.0 5.2 25.6 1977-78 23,405 9.5 1.2 25.9 1978-79 25,534 9.1 2.2 24.9 1979 -80 29,603 15.9 5.7 25.6 1980-81 34,988 18.2 7.2 26.5 1981-82 40,758 16.5 4.5 27.3 1982-83 44,462 9.1 -1.9 27.2 1983-84 48,610 9.3 1.9 26.2 1984-85 (e) 57, 203 17.7 10.5 27.9

(a) Increase in receipts divided by the increase in the implicit price deflator for non-farm GDP.

(e) Budget estimate.

MAJOR CATEGORIES OF BUDGET RECEIPTS AS PROPORTION OF TOTAL BUDGET RECEIPTS

Oil and

Income Tax

LPG Other

Excise Excise Customs Sales Other

Individuals Companies Duty Duty Duty Tax Receipts

% % % % % % % 1974-75 50.5 15.4 . . 11.3 5.5 7.6 9.7 1975-76 50.5 13.8 1.4 11. 3 5.7 7.7 9.5 1976-77 51.7 13.2 1.6 10.0 6.0 7.7 9.8 1977-78 51.8 13.2 2.0 9.6 5.3 7.5 10.5 1978-79 50.1 11.9 4.8 10.3 5.7 6.9 10.3 1979-80 50.8 11.5 7.7 9.1 5.5 6.3 9.1 1980-81 50.1 13.4 8.9 7.8 5.4 6.0 8.4 1981-82 52.1 12.4 7.8 6.9 5. 3 7.0 8.5 1982-83 51.7 10.7 7.8 7.5 4.7 7.8 9.7 1983-84 50.8 9.0 7.5 8.4 4.9 8 .6 10.7 1984-85 (e) 53.1 9.4 6.5 7.6 4.9 8.2 10.3

(e) Budget estimate.


Senator MARTIN —Those tables show that Budget receipts estimated for 1984-85 as a proportion of gross domestic product will rise to 27.9 per cent, an increase of 1.7 per cent on last year. The following comment is contained in this document:

In 1984-85, the ratio--

that is, the proportion of gross domestic product expressed as a ratio--

is expected to increase to 27.9 per cent-the highest ratio in the post-World War II period.

That illustrates the rate of increase of taxation under this Government. I seek also to have incorporated in Hansard a table of average annual growth rates of the Budget sector for 1972-73 to 1984-85.

Leave granted.

The table read as follows-

AVERAGE ANNUAL GROWTH OF BUDGET SECTOR 1972-73-1984-85 (estimated)

Revenue (Personal

Total Budget

Outlays

Income Tax)(c)

Receipts

Deficit*

Year

Real(a) Nominal Real(a) Nominal Real(b) Nominal Real(b) Nominal

$m $m $m $m $m $m $m $m Whitlam Government (3 budgets)-

1972-73 (Last McMahon Budget) 23,159 10,190 9,314 4,089 21,626 9,494 1,585 696 1975-76 (Last Whitlam Budget) 30,792 21,831 13,002 9,219 25,803 18,294 5,031 3 ,567 Average Annual Growth Rate-%pa 10.0 28.9 11.7 31.1 6.1 24.4 +47.0 +72.4

Fraser Government (7 budgets)-

1975-76 (Last Whitlam Budget) 30,792 21,831 13,002 9,219 25,803 18,294 5,031 3 ,567 1982-83 (Last Fraser Budget) 35,771 48,935 16,789 22,967 32,501 44,462 3, 270 4,473 Average Annual Growth Rate-%pa 2.2 12.2 3.7 13.9 3.4 13.5 -6.0 +3.3

Hawke Government (2 budgets)-

1982-83 (Last Fraser Budget) 35,771 48,935 16,789 22,967 32,501 44,462 3,270 4 ,473 1984-85 (estimate) 40,903 63,948 19,437 30,388 36,589 57,203 4,314 6,745 Average Annual Growth Rate-%pa 6.9 14.3 7.6 15.0 6.1 13.4 +14.9 +22.8

(a) Constant 1979-80 prices as per Budget Paper No. 1.

(b) Constant 1979-80 prices using Implicit Price Deflator for Gross Non-Farm Product and a 6.5% increase in 1984-85 as per Budget Paper No. 1.

(c) Note in both Whitlam and Hawke Governments revenue from personal income tax rose at a much higher rate than total budget receipts, showing that individuals bore a disproportionate share of the increase under both governments.

* Average size of Deficit as % of GDP for: 3 Whitlam budgets-3.17%, 7 Fraser budgets-2.3%, 2 Hawke budgets-3.8%.


Senator MARTIN —Briefly, the table shows that under the Whitlam Government revenue from personal income tax increased over three Budgets by 11.7 per cent; over seven Budgets of the Fraser Government it increased by 3.7 per cent; and over two Budgets of the Hawke Government it has increased by 7.6 per cent-more than twice the increase under the Fraser Government. This is a high tax government. It is also a high intervention government in industry. I conclude by quoting from a report on Australia by the stockbrokers Rowe and Pitman of London . Under the heading 'What should investors do?', the report states:

Under a Federal Labor government, look out for the companies whose projects are in states which are marginal politically and then go in for some sophisticated political analysis as to whether this will in fact favour the project or not.

Try to find those projects which have reasonably good profit returns but also employ much labour. Don't necessarily invest in the companies which may appear to be potentially the most profitable.

If the employment-generating projects are not very rewarding, don't invest.

And perhaps that's the best solution of all.


The DEPUTY PRESIDENT —Order! The honourable senator's time has expired.