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Monday, 8 October 1984
Page: 1411


Senator MacGIBBON(6.20) —When I came into this chamber some while ago to speak on the Taxation Laws Amendment Bill 1984, the Income Tax Assessment Amendment Bill (No. 4) 1984 and the Income Tax (International Agreements) Bill 1984 I had no knowledge that we were going to an election and that the announcement had been made. We had a series of comments on this matter from leaders of the various parties. I could not quite follow what Senator Mason was saying, but I have a strong belief that he seriously misrepresented my position. But Senator Mason is nearly always incomprehensible. Until I see the Hansard I cannot be sure what he has said. I will have to correct it at a later date.

I am surprised that Australian Labor Party politicians really are not what they used to be. They just do not make them the way that they once did. They are really a limp wristed bunch of school teachers, social science workers and people like that. They obviously cannot last for more than 18 months before they are worn out and we have to have an election. Once upon a time a Labor politician could last three years between elections but it looks like those days have gone.

There is no need at all for this election to be held. It is eight or nine months before we need one for half the Senate and it is 19 or 20 months before we need one for the House of Representatives. As Senator Harradine has said, it is a very serious matter to place this country in a position where there can be no sittings of the Federal Parliament for a period of up to five months. I certainly do not trust members of a Labor Ministry, from what I have seen of them, with their hands in the till, running this country, doing by regulation rather than by legislation all the sneaky things that they have done in the past .

Senator Chaney referred to the matter of the broken promises. Of course, we had that great paragon of virtue, the Prime Minister (Mr Hawke), with his hand on his heart saying that he would run for three years when he was running for office only 18 months ago. But that is all gone. There is no reason for this election to be held prematurely because the majority of this Government is unchallenged; the ability of this Government to govern is unchallenged. There is absolutely no reason for this early election. The only disability from which this Government suffers is its own incompetence.

What are the reasons for this early election? First of all, what are the economic reasons? This Government took advantage of the breaking of the drought and the pay pause that we brought in. For the rest, its economic performance has just been to spend other people's money. As the Syntec group said in today's newspapers, in its report on the economic state of Australia, because of the incompetence of the Labor Party on the Treasury bench the forecast for next year is quite horrendous. What is another reason for this Government going to an early election? It is frightened of the attack it is suffering from the Opposition on organised crime because it is soft on it. It has the President of the Australian Labor Party standing over the Chief Stipendiary Magistrate in New South Wales and the Attorney-General (Senator Gareth Evans) in this chamber at Question Time today defended the Premier's right to intimidate one of his senior officers. This Government is running away from the standards of conduct that it has set. Take, for example, the Special Minister of State, Mr Young, and his teddy bear.

In brief, the Australian Labor Party has taken counsel of its fears. The Prime Minister has taken counsel of his fears. A man of enormous accuracy and honesty in what he says and who breaks every promise he makes. He is a man of great courage. We remember when the flash bulb in the camera broke at the Lakeside conference a few months ago and Mr Hawke swore and nearly jumped out of his chair. We are happy to take this Government on whenever the election is held. It will pay the price for its incompetence.

Moving to the Taxation Laws Amendment Bill, in the five minutes I spoke on it last time, I was reviewing the general income tax situation in Australia. I spoke of the need for reform, the need for the incorporation of simplicity, and of fairness and incentive in this Australian tax legislation, which is a very complex piece of legislation. I talked about just a few of the Australian Labor Party's failures in relation to income tax. I pointed to its new tax scales and the way in which it introduced a scale of five points instead of three. This gives the population of Australia the opportunity to pay more tax and to pay it sooner. This Government has introduced a scale where a person pays 25c in the dollar on $4,596 of income, thereby lowering the point at which people pay their income tax. The Government lowered the point at the top end, the 60c in the dollar scale, from $35,789 to $35,001.

On that matter of increasing the tax scales, I would like to quote from a paper by Professor Arndt, a recently retired Professor of Economics at the Australian National University. In the opening part of his paper he said:

The fundamental case is that progressive income tax, once widely viewed in western countries as the fairest and most efficient policy instrument for raising government revenue, has become a farce and a menace.

One reason of long standing has been the ever-growing burden laid upon the tax by the expansion of the public sector in the welfare state. As the proportion of national income claimed by government has risen from 5-10 per cent in the nineteenth century to 25-40 per cent today, the apparent need to adapt the tax burden ever more finely to the differential 'capacity to pay' of taxpayers in different circumstances has grown with it. . .

That paper by Professor Arndt was written in 1981. In 1984 we had the anomaly of Medicare foisted upon us. Leaving aside the other shortcomings of the Medicare scheme, it is grossly unfair from a financing point of view. There simply is no equity in it. It costs more to be sick under Medicare if both the husband and the wife work and it costs more for the rich. I would be very interested to hear the Minister for Social Security, Senator Grimes, or any of the other Ministers in this place put forward the epidemiological studies for the Australian community which prove that working husbands and wives or rich or high income people are sicker and, therefore, are a greater drain on the health services of this country than any other section of the community.

The Labor Party seems to have forgotten the great response with which the Australian community received the introduction of three tax scales by the Liberal-National Party Government some years ago. There are other problems with the Australian Labor Party's tax position. One of the things that is hurting in the community at present is the loss of tax refunds. Tax refunds are a very cherished part of the Australian taxation system. In effect, they are a method of enforced saving. Very many wage earners in Australia look forward to getting a tax refund cheque every year. They look forward not to blowing it on something irresponsible and frivolous but as a means of buying something essential for around the house, particularly if they are family people. Now they cannot look forward to that any more because it has disappeared under Labor. The rebates for health care and housing have all disappeared. More importantly, from a political point of view, my office-I am sure that most other senators are in the same position-is now getting an increased number of complaints from people who say: ' We did not get our tax refund, we got a bill instead. We have been slugged for $ 50, $80 or $100 extra tax payment by the Commissioner of Taxation. It has never happened to us before because we have been on pay as you earn'. That is happening because the Labor Party is ripping off more and more in taxation off the people of Australia with every passing year.

We have lost the tax concession on dividends. The ability to invest in Australian industry and business is a right of the Australian people. If they are going to exercise that right they should have some incentive. They should not be taxed twice on the income they receive from companies they choose to support instead of putting the money into building societies. But what does the Labor Party do? It cries about the multinationals dominating Australian industry . But when any Australian buys a share in an Australian company he gets in the position where he has to pay tax twice. He pays company tax and, when the dividend is rebated to him by the company, he has to pay personal income tax on it. The Liberal-National Party recognised the basic unfairness of that situation . We gave people a concession on the first $1,000 of dividends that they received.

We are dealing here with the biggest taxing, the biggest borrowing and the biggest spending Government since 1945. People realise that it is a big taxing Government. They realise that it is a big spending Government. They do not realise that it is a big borrowing Government. It is selling us into debt for the future with the extent of its borrowings. This year alone the interest on the deficit takes $5.6 billion of taxpayers' funds to finance. We are paying more in interest on the money the Labor Party has borrowed to keep us going than we are spending on education. We are spending almost as much on that interest payment as we are on defence. That interest payment is money lost. A large part of it goes out of Australia. If there is one thing the Labor Budget does, it proves how easy it is to spend other people's money.

Sitting suspended from 6.30 to 8 p.m.


Senator MacGIBBON —Before the dinner suspension I was talking about some of the manifestations of Labor mismanagement in the Budget and I had reached the point of discussing the deficit, saying that we had this enormous interest payment of $5.6 billion this year. I would like to tackle the big lie that has been told about the Fraser deficit. In the election campaign only last year Labor said that there was a deficit of $9.6 billion.


Senator Robert Ray —In the campaign?


Senator MacGIBBON —My apologies; it was after the campaign when the Government was preparing its massive blow-out in its Budget in the middle of the year. It has since been disproved. Budget Paper No. 1, page 367, shows that the deficit for 1982-83 was $4.4 billion, nowhere near the $9.6 billion that the Labor Party brought in as a subterfuge for its $7.9 billion blow-out last year and the $6.7 billion estimated deficit for this financial year, a deficit that every Australian taxpayer will have to pay for. I might observe in passing that that $ 6.7 billion estimated deficit this year is a very rubbery estimate. It will blow out and there is certain to be a mini-Budget in the new year if the Labor Party is still around. In that new Budget it will have to raise new taxes.

That leads to the matter of tax reform which I raised in the earlier part of my speech, a matter that has been raised by both the Prime Minister and the Treasurer (Mr Keating). Regrettably, there have been no details at all from either of those gentlemen or any other member of the Labor Party as to what is involved in their new tax reform, but the Australian public is entitled to know what they are proposing and the public is entitled to know before we go to the polls for that premature half-life election on 1 December. One thing we can be sure of is that the tax reform involves the creation and imposition of new taxes . The Prime Minister in his policy speech said that most Australians will pay less tax, and one of the luminaries of the Labor Party-I cannot remember now whether it was the Prime Minister or the Treasurer-said that 90 per cent of all Australians would pay less tax. After 18 months of Labor administration we know that everyone pays more tax and not less tax; and the certainty in life is that while Labor stays on the treasury benches we will pay more and more tax. The Government, since it came to office, has taken $7 billion more in taxes than it should have and, in a magnanimous gesture, trading on the ingenuous nature of the Australian community, it will pay back $1 billion of that in November in the form of tax cuts. It really is 1984 if one thinks that $1 billion return for a $ 7 billion increase is fair and equitable.

Where is the Labor Party going to get the money from to pay for its increased deficits all the time? It will get it from a range of new taxes on assets and capital, and the assets test for pensioners is the forerunner of a new family of taxes. There are two purposes for that assets test for pensioners. One of them is not the declared one of saving money on pensions. No one, not even the Labor Party, would pay $55m to set up a scheme for a minimal return of $15m this year. The real purpose of the assets test on pensioners is to progressively get all retired people to list their assets, to have all the information on a big computer and then introduce death duties in the future. The second purpose is to prepare the way for a general assets test on the community. I can just hear Senator Grimes saying that, it we are to tax the poor, the old and the helpless with an assets test, it is only fair that the fit and the productive share in it as well. I can remember the time in about March-April last year when Senator Grimes was first in this Ministry and was very anti the assets test. If he has any difficulty in explanation, I am quite happy to talk to Senator Messner and give Senator Grimes his eleventh chance, in the form of a matter of public importance debate, to explain to this chamber just what is involved with his assets test for pensioners.


Senator Robert Ray —Not that speech again.


Senator MacGIBBON —Senator Grimes has difficulty explaining his point of view, and I am very patient.

It does not matter what the Labor Party calls its new taxes, whether they are a wealth tax, an assets tax or a capital gains tax; they are punitive and destructive of the private sector and they are punitive and destructive of the means of gaining higher employment in Australia. There are two major defects to these schemes. The first is that any form of capital gains tax or wealth tax will not be inflation proof. Secondly, they will not be compensated for by any meaningful reduction in other taxes. The present level of taxation in Australia is already crippling. We are one of the most highly taxed countries in the world . A person on average weekly earnings is now paying 46c in the dollar tax and, at the top end of the scale, where a large number of people now are through inflation, they are paying 60c in the dollar to the Government. They are working hard for that privilege to pay 60c in the dollar, and in return for that they get 40c for optional extras like buying a house, feeding their children and buying a few clothes to put on their backs.

Another point about a capital gains tax or wealth tax is that it will not be inflation proof. Everything goes up in value as inflation takes its stride and no one is better off as a consequence. I might observe in passing that we did not have inflation in this country until the Labor Government in 1972-75 with the Whitlam mania spent us into the position we are in, and 12 years later we are still trying to recover from it. To put on a capital gains tax without compensation for inflation is a most iniquitous thing to do. The Labor Party has not seen fit to index income tax. It has not seen fit to introduce any trading stock valuation in the way in which most other countries in the Western world do . It is happy to profit by inflation at the expense of the productive section of the community.


Senator Tate —Did you introduce it?


Senator MacGIBBON —Make no mistake about this, Senator Tate: Business needs profits and if it does not have profits it cannot have working capital, it cannot grow and it cannot employ more people. With the prospect of these new taxes, under Labor we can look forward to a decline in the business health of this country.

Turning to the specific points of this legislation, the Opposition supports the increase in penalties for breaches of the tax law. Some of those penalties have not been increased since 1936 and the tenfold increase in some of them is quite justified on those grounds. Our criticisms are twofold: First of all, we have a general philosophic one insofar as the discretionary power of the Commissioner of Taxation is increased in this legislation. The tax commissioner does need some discretionary power, but basically that power needs to be defined and as restricted as possible. Otherwise it is not fair or efficient from a business point of view because business deals in certainties in respect of legislation. The second objection we have to this legislation is a major one and it involves the reversal of proof in clause 297. The explanatory notes say:

To ensure that persons responsible for breaches by companies of the taxation laws are appropriately dealt with, a person who is concerned in, or takes part in, the management of a company will be deemed to have committed any taxation offence committed by the company.

We support the statement by the Law Council that this provides a staggering and unprecedented reversal of the onus of proof imposing an improper and unnecessary burden and a change in the fundamental rights of every Australian. At best, for the Government to legislate in this way is naive and simplistic. At its worst, it is a denial of our system of justice. There may be a case, as Senator Dame Margaret Guilfoyle said, for this to be done in certain circumstances, but it has to be done with care and a great deal of thought.

On a more positive side with respect to this Bill, the Opposition supports the proposals on the transfer of losses within a company group and we are pleased that the Government has reversed its former position on this matter. We support the increase in depreciation allowances on non-residential income-producing buildings to 4 per cent. It is a modest but helpful move, particularly for the tourist industry. We are against the dependent spouse rebate for de factos. There is no point at all in enshrining in legislation and financially encouraging disincentives to the family unit. There is a very big difference between social security payments, by which one helps someone in need, and the income tax law where one recognises something in a legal way.

There are many other points in this 230-page Bill but time does not permit me to go into them. I recognise that the Government wishes to get this legislation through as rapidly as possible and since there are many others on the speakers list I close at this point.