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Wednesday, 20 March 1985
Page: 500


Senator HILL(3.59) —The Senate is debating, in part, the urgent need for fundamental reform of the Australian taxation system. The Government has debased the process of tax reform by the political circus it is orchestrating under the guise of a tax summit. That is why the Liberal Party and the National Party are not going to be involved in it. I call it a political circus; I know one commentator referred to it as a jamboree. I say that as someone who has been vitally interested in the subject of tax reform all my professional life. In this chamber I have spoken on many and varied issues of tax reform, questions of the tax mix, expenditure taxation, double taxation of dividends, aspects of business taxation, and I hope in a constructive and purposeful way. What I have always sought to do in any of those speeches is to reach conclusions and to advocate specific change.

The resource material is plentiful. One can refer to the reports of the Asprey Taxation Review Committee, the Mathews Committee of Inquiry into Inflation and Taxation, the Campbell Committee of Inquiry into the Australian Financial System and the Martin Review of the Australian Financial System. There is a mountain of academic literature. The options are clear: What is needed by government are decisions. The material is on the table. As I said, it is necessary that decisions be made and that those decisions be implemented. I am pleased to say that at the last election the Opposition parties did that. They put a comprehensive tax package to the Australian people. We showed that it is possible to digest the material available and formulate a policy in accordance with our political, philosophical goals. For example, we wanted our policy to be fair and equitable, we wanted it to encourage economic growth and we wanted it to strengthen the family unit. We came clean; we put it to the Australian people, and our policy attracted a considerable public interest and brought about considerable comment. That comment will enable us to now refine the policy further.

The Australian Labor Party of course was unable to agree on a policy, presumably because of the foreseen faction blowout. We had the shameful indictment of the Government that it was unable at the election to put its taxation policy to the Australian people. Instead the Prime Minister (Mr Hawke) said: 'We do not know the direction in which we are going to head, but you must trust me'. That is very difficult to say to somebody who found under the previous Government that the taxation on his lump sum superannuation had been increased from 5 per cent to 30 per cent. It is history now that on a talkback segment in Perth Mr Hawke was given his way out. 'Eureka', he cried at the suggestion, 'a tax summit. I will ask the Australian public what to do'. He clearly failed to appreciate though that the Australian people once fooled would not be fooled again. I am referring to the big business, big unions, big government National Economic Summit Conference. The Australian people at that Summit hardly got a look in despite all the rhetoric to the contrary. He failed to realise that even the more sophisticated participants now know what Hawke summits are all about. They experienced a Summit where the Government chose the participants, the Government appointed the committee heads, the Government prepared discussion and option papers, the Government drafted the final communique before the Summit had even commenced and the Government provided the hospitality at the Lodge. Surprise, surprise, the Government got what it wanted. This is how this Government seeks the expression of the Australian people. This is how it reaches its so-called consensus. Of course, it is a total sham, but it serves a political purpose.

I now look briefly at the latest jokefest, the tax summit. Mr Hawke said he needed somebody to represent the Australian people at his summit. So during the campaign he wrote a 'Dear Eric' letter to Mr Risstrom of the Australian Taxpayers Association. 'Dear Eric, I have undertaken to the Australian people that they will be directly represented as taxpayers at the National Tax Summit. Mr Risstrom, you are being invited to represent the Australian people'. I do not know of any Australian who was asked whether he wanted to be represented by Mr Risstrom. No doubt Mr Risstrom, duly flattered-Mr Hawke's summits are a lot about flattery-accepted, but Mr Risstrom is no fool. Mr Hawke stated:

I would expect your paper--

referring to a paper he invited him to give to the Economic Planning Advisory Council--

to give considerable weight to the most fair ways of alleviating the tax burden for ordinary Australian taxpayers.

In other words, Mr Hawke was passing to him the responsibility of finding a formula for reducing taxation for ordinary Australians. That was to be Mr Risstrom's responsibility; no small passing of responsibility in that single sentence. Mr Risstrom of course was sufficiently astute to say that he did not feel so constrained by Mr Hawke's implied instructions. In his reply which appeared in the Age of 29 November 1984 he stated:

If the ordinary taxpayer is 96 per cent of people, to honour that sentence of Mr Hawke's totally, you might have to confiscate everything from the other four per cent.

Of course, the task he had been given was impossible. Mr Risstrom's first mistake was to dare to question Mr Hawke. Then of course he had the audacity to suggest that it was unreasonable that he be required to put in his submission by 15 March. That was his second mistake. To make matters worse, he questioned the Hawke-Keating switch to a major retail tax. 'Enough is enough', cried Mr Hawke. He was not going to have the representative of the Australian taxpayers speak to him in that way. His response was reported in the Weekend Australian of 16-17 March as follows:

Mr Hawke said that between now and the summit Mr Risstrom's views would be exposed to 'pretty rigorous analysis by experts'.

'I mean, to this point Mr Risstrom has expressed his views, as we want him to express them, but he hasn't been subject to rigorous analysis,' Mr Hawke said.

I just have a bit of a feeling that when subject to that rigorous analysis and cross-examination some of the rather easy observations of Mr Risstrom might not stand up quite so well.'

I think it is reasonable to assume that the Australian people are not going to get far at the summit. As a matter of interest, I think we could have told Mr Risstrom that back in November. Let us contrast that position with that of the Australian Council of Trade Unions. As far back as November Mr Hawke admitted that the ACTU would have a veto over any changes in indirect taxes. In the Age of 1 November 1984, in an article headed 'ACTU to have tax veto: PM', it is stated:

Mr Hawke said that before any increases in indirect taxes, 'it will be necessary to get an agreement with and from the trade unions to ensure that that does not add to the inflationary process'.

So the Australian people, through Mr Risstrom, will not have any veto, but the ACTU, as one of the selected Hawke groups, is to be treated differently. Mr Risstrom was told that he had to get his submission in by 15 March. It is interesting to see that Mr Dolan, the ACTU President, who also says that the time constraints have been tough, nevertheless said that the ACTU should be able to get its act in order by July. For a final and considered word from Mr Dolan, I refer to the Australian Financial Review of 18 March 1985, which quotes Mr Dolan as saying that the tax summit 'could become a bit bloody useless'.

The most fascinating role being played out in this farce must be that of the Australian Labor Party factions. It appears that each faction in the Labor Caucus will have its fixed and public position. We will have the position of the New South Wales Right, the Keating faction. I understand that that is for a retail sales tax and some capital gains tax. But of course the capital gains tax is necessary to enable a deal to be done with the unions over a transfer to the retail sales tax. Mr Hawke's Victorian Labor Unity faction, we understand, will be looking at death duties or at a capital transfer tax which would affect inheritances and gifts. The Left is not so keen on indirect taxes but wants capital taxes, wealth taxes and death duties. The Centre Left, Mr Hayden's faction, is looking for indirect taxes-although we are told that it is a little bit wishy-washy about them-and certainly capital taxes and death duties. South Australians would have been interested to note the views expressed at an ALP meeting last weekend by Premier Bannon, who I understand is a member of the Centre Left faction. He was reported last Monday in the Australian under the heading 'Bannon votes for capital transfer tax' as saying: 'It would be a sorry day if the Federal Government backed away from the question of capital transfer taxes'. Mr Bannon said that his Government would press the Federal Government to investigate the introduction of capital transfer taxes. I mention in passing that Mr Bannon is the only State Premier on the Economic Planning Advisory Council, a body which is to be much involved in this process.

What will happen? Perhaps I can put a few of these questions to my friend Senator Maguire, who will follow me in this debate. We understand that the Government is to put out a White Paper. I presume that that will then be the Government's position. Will Ministers who are members of the various factions be bound to that position? Will the Caucus brawl to find by compromise the lowest common denominator of the factions' positions take place before or after the summit? How can the summit find consensus when the Labor Party takes to it so many fixed positions? How can the summit find consensus when certain groups are given a power of veto from the start? Perhaps the most important question is being avoided and that is covered by another part of the motion that we are debating today. It was put cryptically by Des Keegan in the Australian of 9 March 1985 when he said:

A groundswell of cynicism about the taxation summit is gathering on the realisation this jamboree will not even discuss spending cuts. Back door wealth redistribution will dominate the closed sessions.

In some recent papers Professor Officer said:

I believe the debate about a restructuring of our tax system is misplaced. The real problem is the level of government expenditure and the increasing direct control of resources by governments who are inevitably much less efficient in utilising these resources than the private sector.

. . . .

The economy and society would be better served if the debate about taxation was shifted to a debate about government expenditure.

Of course that is put in the context of an Australian government-the Hawke Government-which has the highest level of spending of any peacetime Australian government. In 1983-84 there were increases in expenditure of 7.7 per cent. In 1984-85 increases in expenditure were estimated at another 6.1 per cent. So it goes on. I simply ask the Senate to compare these figures with the Fraser Government's performance of an average of about 2 per cent. That is why so many Australians are really afraid of Hawke's tax reform and why they are really afraid of this summit. They know that the end result of it all will be a tax reform that will mean they will pay increased taxation.

After that miserable picture it is refreshing to be able to return to the position of the coalition; a position that we put to the Australian people at the last election; and position that included a firm commitment not to allow any increase in the overall taxation burden and, in due time, to look to reducing it; a firm commitment to reduce the heavy reliance on personal taxation; a firm commitment that families with children will receive priority for personal tax relief and a firm commitment not to introduce a capital gains tax, a tax on assets, et cetera. My Party and the National Party of Australia were able to look at the options and reach firm conclusions.

In conclusion, Michelle Grattan said in the Age on 4 March 1985:

The Prime Minister's commitment to 'summiteering' has become a bit of a joke.

I regret that the Prime Minister, through this exercise, is treating the tax reformers in Australia, those who are seriously interested in this subject and, in fact, the whole of the Australian public, as a bit of a joke.