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Monday, 8 October 1984
Page: 1425


Senator TOWNLEY(9.14) —I wish to speak for just a few moments on the Taxation Laws Amendment Bill 1984 because of some things that were said earlier, particularly by Senator Jack Evans, representing the Australian Democrats. He came into this chamber and spoke as though he had the God-given right to determine which way the tax rules of this country should go. I like he, am a member of the Senate Standing Committee on Finance and Government Operations. That is one of the committees that has in fact encouraged the Australian Taxation Office to take action that it otherwise may not have taken to try to recover taxation that it thought was being evaded. I felt that it was a little extravagant for the Australian Democrats to make the kind of claim that it did. We are in an election period, so perhaps we will hear a lot of extravagant claims over the next few weeks.

I ask the question: What kind of taxes will we see presented in the next Parliament? Today I asked the question: Has the Commissioner of Taxation been asked to work out whether the Australian Taxation Office's computers can be organised to tax the assets of everybody in this country? It was not put quite that way, but that was effectively the question I asked. I got a very brief reply, in fact the briefest reply I think I ever heard, from the Minister for Resources and Energy, Senator Walsh, who is at the table. He said: 'No, that is not a fact'. I have information that such questions have been asked of the Taxation Office. In any event, can we really rely on the Australian Labor Party- no matter what it says its taxation attitude will be-to stick to what it says now when it gets back into government?


Senator Childs —We are not like the Liberals.


Senator TOWNLEY —I know, the ALP is much worse than the Liberals. The Liberals were bad enough.


Senator Childs —You take 1977 as an example. Tell us about '77 and '78.


Senator TOWNLEY —If the honourable senator would like to make a speech, why does he not do it in a few moments? I am sure the Senate will accommodate him. If necessary, I will stay here later tonight to hear the honourable senator speak at length. I will even move for an extension of time if he runs out of time. The tax situation with the Labor Party is a bad one; it has to be a bad one. I think some of it is a matter of a learning curve. I looked at what happened when the Liberal Party of Australia came into government in 1975. Certain spendings went on. Then I believe the people in the Liberal Party realised the problem that was being created by the interest payable on the national debt, which had gone up from of the order of 2.3 per cent to something like 5.5 per cent. The interest on the national debt this year is projected to be 8.8 per cent. That shows a nasty incline. It shows a trend. I studied a little bit of mathematics in my time-it is called an exponential curve, an exponential increase. That kind of increase is not a good one. It means that we are heading for trouble.

I am worried about what will happen in the next Parliament. I believe that the Labor Party is in a learning curve. It does not entirely realise the damage it is doing to this country with the massive deficits of the last two years. Members of the Labor Party should not try to tell me that they can blame the previous Liberal Government because that is not entirely true. Anybody with a bit of intelligence and a bit of thought can sit down for 10 minutes and work out almost what the deficit will be in the next year unless some action is taken . Certain payments have to be made unless the Government makes drastic alterations to its payments to pensioners, veterans and people of that kind.

It worries me that this country is heading for the same kind of situation as that in which France has found itself. A socialist government moved in and made all sorts of payments to its pensioners, unemployed and so on, and it increased taxes to do it. What happened then? It found that not only was its popularity going down the plughole, but also the whole country was becoming a mess. The value of the franc went down. The value of our dollar is going down and I believe it will go down even further. It was worth about $1.10 or $1.12 to a United States dollar when the Labor Party came to power and now it is worth 83c or 84c. I have been told by people whom I respect in areas of finance that it could go a lot lower than it is now if we continue spending like a drunken sailor. If this country continues spending in this way we could well find ourselves rated a Third World country. I first mentioned the national debt of this country a couple of years ago when it was drawn to my attention that even under the Liberal Party the interest on our national debt was increasing, but in no way was it increasing at the rate by which it is increasing now. I tabled in this Parliament some figures which were not prepared by me. They were prepared by the people in the Parliamentary Library. I have a great deal of admiration for the accuracy of documents prepared by the staff of the Parliamentary Library . The figures that they gave me, which I am having updated at the moment-I am just waiting on a reply; I believe that someone else has asked for them to be updated on my behalf-show that we are more in debt per head of population than a lot of those countries in South America such as Argentina--


Senator Jessop —Brazil.


Senator TOWNLEY —Brazil, as Senator Jessop mentions, and Chile. Mexico and Poland are two other countries. An article in the Weekend Australian showed the relationship between our national debt and that of some of the other countries that are deeply in debt. I think the ones that were mentioned were France and New Zealand. There were some others. I am sorry that I cannot bring them all to mind as I do not have that article with me. Our national debt situation was not as bad as the situation in those two countries I have mentioned. Ireland was another of those countries. I ask the Minister for Resources and Energy (Senator Walsh) whether he questions the figures prepared by the Parliamentary Library.

A month or so ago I asked a question relating to this national debt situation. Our defence is in a terrible mess. ANZUS is in a heck of a situation with the radicals in New Zealand taking the attitude that they have taken. I believe that our next most important mess is our debt mess. A government has a responsibility , firstly, to defend a country. If it does not do that it should not be in government. The next most important thing is to make sure that its economy is stable so that one is not likely to get a situation where there could be a revolution in a country. I believe that there are certain forces within the Government-I will not say within the country-who would like to see a revolution in this country. That is the way in which they get those things in which they believe. We have those two situations: A government should be defending a country and it should make sure that its economy is right. I ask the Minister whether he believes that the figures from the Parliamentary Library that I have tabled on a couple of occasions in this Senate, relating to the national debt of this country compared with the situation in the countries I have just mentioned and others, are right. As I have said, the figures very often are right. I find it very difficult to point to where they are wrong.

Senator Jack Evans spoke about several things. He tried to give the impression that the Democrats had saved the day with regard to payroll tax and sales tax by extending the amount of time that people have to pay these taxes. This is something that I brought up in this place years ago. The thing that has to be looked at in regard to taxation is something Senator Jessop mentioned a few days ago. Any country that starts taxing its people at the same rates that Australia is, which are now not sufficient even to cover its deficit, is heading for trouble. This Government has to do one of two things: It has to increase taxation dramatically to cover the deficit, unless it is prepared to jeopardise the future of the young people and the families of this country, or it has to extract every pound of flesh it can from the older people--


Senator Childs —The tax avoiders are the people you are letting off.


Senator TOWNLEY —Come on. He has had stacks of opportunity to talk about tax avoiders. There is practically no money there. The Government will get no money there. What is the honourable senator talking about?


Senator Childs —Because you are protecting them.


Senator TOWNLEY —I am not protecting them. I have been trying to stick to the matter before us.


Senator Childs —Face the facts.


Senator TOWNLEY —The facts are that if this Government is trying to raise the kind of money that the Australian Labor Party needs to cover the deficit in this country, it will not get it by chasing a few people.


Senator Childs —Five hundred million dollars; that is enough.


Senator TOWNLEY —The honourable senator should wait just a minute. He should give me a go. There are a few rude people in this place who ask questions. When I start to answer them they interject again. They do not want to hear the answers. That may be what is happening right now. Is that the case? Does the honourable senator want to interject again?


Senator Childs —No, I just want you to explain about the $500m; that is all.


Senator TOWNLEY —Thank you very much. Let me answer the question then. Over the last few years this country has had a deficit of $19,000m. This Government will not get that out of tax avoiders. It will not get that kind of money except by pushing the little bloke out there working his guts out to try to make a few dollars to support his family. The honourable senator should not talk about tax avoiders. Chasing tax avoiders will not bring in that kind of money. If this Government does not look for that kind of money it will have a situation where the young people of this country and their families will be in debt and paying through the nose for the rest of their lives for the debt that this Labor socialist Government and Mr Hawke are creating.


Senator Jessop —They are already being taxed twice on Medicare.


Senator TOWNLEY —Let me talk to the honourable senator about Medicare. I did a bit of a survey on the things that were worrying people in this country. For some reason, I do not know why-it may be the haircut that the honourable senator spoke about-they like certain things. I will not make any bald statements tonight.


Senator Childs —Don't talk about haircuts.


Senator TOWNLEY —I agree that I cannot talk about haircuts. But because of my haircut I pay a lot of attention to others. I have noted that somebody else is paying a lot of attention to his haircut. He is a little bloke who happens to be the Prime Minister of this country.


Senator Jessop —A very overrated Prime Minister.


Senator TOWNLEY —Senator Jessop says that he is very overrated. I will not use those words because I want to get back to the basis of the legislation before us . As I have said, I believe that any country that is in the situation that we are in is heading for trouble. Any country that has any marginal tax rate of over 50 per cent I believe is heading down a path that leads to disincentive.


Senator Childs —You would let the millionaires off, wouldn't you? You wouldn't expect them to pay their fair share?


Senator TOWNLEY —As I said a moment ago, if the honourable senator wants to make a speech I would be only too prepared to sit and listen to him, if necessary, until midnight. Although it would be a tremendous strain on my ears and most probably would make me go deaf I am prepared to do it. If he wants to make a speech he should go for his life but in the meantime, rather than making me deaf , let me make myself deaf. In a couple of countries there are governments that realise the importance of creating incentives. I want to name two countries that are quite different. The first of these countries is Hong Kong where there is a flat tax rate of about 15 per cent; it may be one or 2 per cent either way. That country is doing very well, thank you very much. In spite of the situation where , in a few years time, the communists will have control of that country, because of the tax incentives and for other reasons the situation in Hong Kong is quite excellent. Another country with a flat rate tax which is quite different from Hong Kong but which is more akin to Australia in some ways is Switzerland. Now in the United States there is recognition that a flat rate tax creates incentive . I know that it is not official Liberal Party policy at this stage, but with a tax rate of less than 50 per cent, and it is very important that it be less than 50 per cent-


Senator Tate —Why?


Senator TOWNLEY —Because with a tax rate of 60 per cent such as we have at the top end of people's incomes and with a provisional tax system for every extra $1 ,000 earned a person pays $600 in income tax and $600 in provisional tax. If that person has a small business he has to put in extra money for extra stock to get that extra income and, therefore, in any year in which he may make an extra $1,000 he may well have to find $1,500 to keep the business and his tax situation running. That creates the situation in which people just do not bother trying to make more than a certain amount of money. I believe that a flat tax rate in many ways would be very beneficial for this country. I have just pointed to two countries which have that situation, and they are both doing very well.


Senator Childs —We do not want the Hong Kong standard.


Senator TOWNLEY —I would not mind the Swiss or United States standards. Switzerland has a flat tax rate and the United States is looking at it. I agree with what Senator Jessop said last week. The rate should not really be a maximum of 50 per cent; it should be less than that. The figures which we have had taken out show that a rate of around 40 per cent would be quite possible, provided there was the increase in business that has been shown to occur in other countries. The Australian Democrats made a big deal about helping everyone. It has always been my attitude that a splinter party which gets in as the Democrats have-in some ways they have done some reasonable things, as has Senator Harradine-


Senator Childs —You were a splinter party of one. What are you talking about?


Senator TOWNLEY —Is the honourable senator talking about Senator Harradine? He is not here to defend himself. If the honourable senator is talking about Senator Harradine he should wait until he is here. I have always believed that any small party should to a large extent support the government. Government members, particularly those in the House of Representatives, are elected to do certain things but that does not mean that they have open slather for everything . If we believe that, we must believe that the Senate should be disbanded; and maybe that is what is really behind all the interjections during my speech tonight.

The Australian tax situation, I believe, is a disaster. Unfortunately, by the time this Government realises the mess it is heading this country into, the tremendous deficit problems that will be imposed upon it will leave the young people of this country always in debt. Their futures will be made all the more difficult because of what we are doing here today. This tax system is a disaster and I hope that, whichever government is returned at the end of this year, it recognises the situation and takes action to stop the deficit funding of this country. I believe that Senator Missen put paid to many of the Democrats claims when he said they are a bit like Mr Hawke used to be when he was--


Senator Jessop —President of the ACTU.


Senator TOWNLEY —How did the honourable senator know I was going to say that? We always heard of him at the last minute. In the same way the Democrats seem to explode from their telephone box of a party room, a bit like Superman, I suppose , zoom into the Senate and pretend that they have saved the day. I do not believe the people of Australia, particularly the people of Tasmania which, if I may put in a plug for the Gray Liberal Government, at the moment is now the low taxation State of Australia, will be fooled by the way the Democrats sit on the fence and at the last minute go the way they feel is politically expeditious. That is the word that should be used. We have heard some very bad English today, particularly from the Minister for Education and Youth Affairs (Senator Ryan), and I would hate to add to that.

I believe that the people of Tasmania particularly will recognise that, if the Labor Party is returned, the Senate will be a very important part in the defence of the smaller States of this country. If the Labor Party is returned we will have death duties again and capital gains taxes. Initially, they will not admittedly be taxes on the house that someone owns, but if a bit more of the drunken sailor spending that I spoke about a moment ago goes on the Government will have to impose every tax it can think of. It will certainly impose the tax I mentioned in a question today-an assets tax. Why on earth would it go to the trouble and the political damage it is going to by affecting the grey power group of this country by imposing an assets test, an assets tax effectively, on pensioners if it were not going to extend it to the rest of the community? Of course, it will then have to impose a gift duty, a transfer tax or whatever we want to call it. This Government should be very well warned that the people of this country are still very much affected by the hip pocket nerve and, therefore , it should take due note of the likely anger that will be wrought in the community if it goes ahead with some of these taxes.