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Wednesday, 20 March 1985
Page: 483

Senator CHANEY —Does the Leader of the Government in the Senate still maintain the view which he has put on several occasions since assuming office, namely, that a capital gains tax should be part of the Australian taxation system? Further, I note his view, reported in October of last year, that the absence of such a tax has led to the diversion of resources away from industry. Does he agree that a capital gains tax would adversely affect entrepreneurial activity in Australia?

Senator BUTTON —Like my colleague Senator Walsh, I have--

Senator Archer —You have no view.

Senator BUTTON —Of course I have views and so has Senator Walsh, but they are not concluded views on any particular matter. I have over a period expressed the view that Australia should have a more adequate capital gains tax than it currently has. Nothing that has transpired in the recent public debate on taxation issues has dissuaded me from that view.

Let me say that the purpose and context of the current taxation review and the discussion about taxation matters have been stated by the Government, right from the beginning, and I state it again now, as a review designed to produce greater fairness and equity in the taxation system. The need for greater fairness and equity in the taxation system arises particularly because of the failure of the Fraser Government to address that issue in its seven years of government in Australia. Let me make the point that in those seven years the aggregate wealth accumulated by the top 5 per cent of the community increased very significantly. The burden on pay as you earn taxpayers increased very significantly. The only growth industry in that period of Fraser government was the tax avoidance industry. Those are three things which any government which is concerned about this country and its overall economic welfare has to address in the context of a taxation review. They were not addressed in those seven dark years of running away from hard issues; that is a fact. Senator Chaney may snigger like a schoolgirl but the fact of the matter is that those issues--

The PRESIDENT —Order! I suggest that the Minister withdraw that remark.

Senator BUTTON —I apologise to Senator Chaney.

The PRESIDENT —Order! As well as the Minister apologising, I suggest that he withdraw that remark.

Senator BUTTON —I withdraw it. Senator Chaney may snigger. I take it that I withdrew the offensive part of my remarks. Those issues were not addressed in those seven years; they have to be addressed now. I just make the point to Senator Chaney, who is probably an exponent of that view well described by J. K. Galbraith, that in a taxation system the conservative view is that the rich have to have greater incentives, namely, in terms of greater wealth, in order to perform well and the poor have to have lesser incentives in order to be motivated in a society such as this. That view, espoused by prominent conservatives in the United States of America and elsewhere, is not a view which finds favour with this Government. The issues which will have to be considered in the context of the Government's review of the taxation system will have to take account of those facts.

I do not retreat from the fact that over many years I have advocated a capital gains tax or an improvement in the taxation of capital regime in Australia. I will do that again. I am not saying that my view will, of necessity, prevail, but I will advance it because I do not retreat from that position. I will advance it because of the views which I have expressed and which were quoted by Senator Chaney in the course of his question. If he feels that the presence of a capital gains tax would in some ways, be a disincentive to business initiative in this country, I ask him to look at the capital tax regimes in the various countries which had the highest growth rates in the world throughout the 1970s and, by contrast, to look at those countries which did not, in fact, have capital tax regimes which were equitable and to compare the growth rates of those countries throughout the 1970s. There may be in the view of the Opposition something very peculiar about Australians which would reverse that pattern of events in this country. I am not sure whether that is correct. That is a matter which I, in an objective approach to the issues which we confront in the course of a taxation review, would take into account.

Senator CHANEY —I ask a supplementary question. I ignore the schoolboyish sneering of the answer.

The PRESIDENT —Order! I hope the honourable senator will.

Senator CHANEY —I remind the Minister that I did not ask about what incentives the rich required. My question was directed to what incentive investors required. I ask him again: Does he believe that a capital gains tax would adversely affect entrepreneurial activity in Australia?

Senator BUTTON —The answer to that question is no. Let me say that in the past 10 years in this country entrepreneurial activity has been nothing which this country could boast about. If I might say so, the absence of a capital gains tax did not spur entrepreneurial activity in this country. Senator Peter Rae attempts to interject. He may carry on as much as he likes. The fact of the matter is that I do not think one can address those issues fairly in the context of Question Time, but let me say that the answer is no.