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Tuesday, 26 March 1985
Page: 792

Senator WALSH (Minister for Finance)(3.25) —It is a bit of a mystery to me why this motion has come up at all, although it is possible that it has been raised because of the gross distortions and works of fiction disguised as news reporting which have appeared in the Murdoch Press over the last week. I will give some specifics of that later. Essentially, Senator Chaney is proposing that the taxation system ought to contain a principle of horizontal equity and that the social welfare system, which he called the fairness system, of child allowances and family allowances should also take account of horizontal equity.

Two things arise from that proposal. First, it is not disputed that horizontal equity is a factor which must be taken into consideration. It could be argued, however, that horizontal equity is not so sacrosanct that it must at all times and in all circumstances be allowed to crowd out any other equity consideration. More importantly, given that Senator Chaney has moved this motion, is the fact that the Fraser Government, I think when Senator Chaney was the responsible Minister, means tested family allowances, only it called them family income supplements.

Senator Chaney —It was assistance to low income earners, that is, a welfare proposal.

Senator WALSH —It paid those family income supplements to low income families, so the principle of means testing family allowances was not only endorsed by the last conservative Government but actually enacted by it. I believe it did so when Senator Chaney was the responsible Minister. He wants to call family allowances something else and say that they are a form of special assistance to low income families and so on. Is he asserting that the present standard family allowance rate or that which prevailed when he was the responsible Minister is or was beyond all doubt the appropriate family rate? Is he claiming that the increments in the present rate for each additional child are perfectly correct and that there is no case to be put for their being more or less? Senator Chaney shakes his head. He is not arguing any of those things. He is not arguing that by some quasi arbitrary process a figure has been arrived at which is beyond dispute, beyond contradiction, beyond criticism. So I am afraid that my confusion has not been cleared up at all.

Of course the principle of horizontal equity should be taken into account. That is the principle that some allowance should be made in recognition to the fact that some people have equal cash flows or equal taxable incomes, but have unequal obligations or responsibilities. We agree with that; nobody has ever suggested otherwise. The motion may have been stimulated, as I said earlier, by some works of fiction described as news reporting from the Murdoch Press in the last week. I will expand on that in some detail. There were a number of false or misleading statements in the Australian and the Daily Telegraph of last Friday, and also in the Sunday Telegraph of last Sunday. I will give details of those in the order in which they appeared. In Friday's Australian it was said that the Government was considering this:

. . . sweeping changes to the dependant spouse rebate which could see up to one million families lose the benefit in the August Budget.

The fact is that that could only be correct if the rebate were abolished for five-sixths of the present recipients. As far as I know, there has been no suggestion from anybody that that should happen. Another quote from the Australian reads:

Under the proposal being examined by the Expenditure Review Committee-or razor gang-the Government is considering withdrawing the rebate from high-income families.

Honourable senators should remember that that statement was made in the context of the Australian purporting to be reporting on an answer by me to a question from Senator Maguire. The fact is that the Expenditure Review Committee is not examining any such proposal and, of course, I did not say that it was. The Australian also stated:

It is understood the proposal could save about $300 million in 1985-86.

When answering Senator Maguire's question I stated that the whole scheme-that is, the dependent spouse rebate-cost about $900m. The figure of $300m appears to be a completely fictional figure which has been plucked out of the air by whoever wrote the story. In any case, if the assumption made in the first quotation about the one million families was correct, the saving would have to be somewhere near $900m. So, skilful writers of fiction though Murdoch journalists may be, they are innumerate. It should be noted that in my answer to the Senate I clearly stated:

Should the Government make such a change-I am not suggesting that it will do so . . .

That is a quotation from Hansard which, of course, did not appear in the Australian since the quotation relates to reality and fact rather than fiction. The Murdoch Press prefers the latter. I would have thought that that statement would have made it obvious that no decision of this kind has been taken by the Government and that I had been discussing the issue in a detached way in attempting to give an honest and serious answer to an important question. The Murdoch Press's reporting of the matter will not encourage me or any other politician to do so again.

The two newspapers-the Telegraph and the Australian-treated the story in a grossly unprofessional manner. There was no basis in fact nor any conclusion which could have been drawn from my statement for the claims made under the guise of being a news report. The last issue of the Sunday Telegraph, which is out of the same stable, ran a story which likewise had no basis in fact. it may be instructive for me to give a somewhat detailed account of what I know about how it happened. The cousin or sister publications, the Australian and the Daily Telegraph, ran their stories on Friday and the Sydney Daily Mirror and Adelaide News ran similar stories on Friday. They are all from the same stable. (Quorum formed)

Last Friday, after the various Murdoch newspapers in Sydney and Adelaide had published their creative stories about the dependent spouse rebate, my office received calls from Murdoch journalists seeking comments on whether the family allowance was being considered for means testing. They were told very firmly that no comments could or would be made about that matter. Both journalists stated that they had been instructed by their editors to get a story on means testing the family allowances. One of them even went on virtually to threaten members of my staff that a story would be written whether or not I was prepared to provide any information or comment. Even so, I was still surprised to find thoughts and intentions attributed to me all over page 1 of the Sunday Telegraph. No doubt out of a proper sense of modesty, there was no by-line on the story. It appears that whoever wrote the article-I cannot be certain that the journalists who came to my office and sought comment from me on Friday actually wrote it-had simply made it up. Some illustrative figures which I had used in my examination of the spouse rebate had simply been transferred wholesale to family allowances.

I have gone into this matter in some detail in order to demonstrate, firstly, that the creative writing of the Murdoch Press may have misled the Opposition to some extent and therefore helps to explain Senator Chaney's peculiar action in raising this matter of urgency today. However, Senator Chaney said some other things upon which I wish to comment. In a way it makes it even more surprising that the Opposition should have raised the matter that, apparently, it has not determined its views on the very subject which Senator Chaney has raised. On 10 March, Mr Peacock spoke on the Sunday program about the dependent spouse rebate. There was a question cum assertion from Robert Haupt that Mr Peacock had in the past advocated means testing the dependent spouse rebate. He was asked where he stands now. Mr Peacock stated:

Yes. In fact we see some merit here.

That is, some merit in means testing the dependent spouse rebate. He said that on 10 March. He went on to say:

. . . I'm not surprised, in fact a number of us indicated not only when we were in Government but also in the first year that we were in Opposition that we would favour an examination in this arena.

It is true that that was in the past tense. In government and in the first year in Opposition, Mr Peacock did not resile from that position. Moreover, on 10 March he said: 'We see some merit in means testing the dependent spouse rebate'. I can only assume that at that time Mr Peacock was expressing his own views and that yet again he was subsequently rolled by the Sydney faction of the Liberal Party of Australia. The Liberal Party had one policy which was enunciated on Sunday, 10 March by its nominal leader and it now has some other policy, presumably because the Sydney faction of the Liberal Party has, once again, rolled Mr Peacock. Perhaps the confusion is such that the Liberal Party cannot tell the difference between Mr Peacock's 10 March policy and the policy which it had advocated at one time in the past-that is, income splitting, which by definition cancels the dependent spouse rebate out of existence and with which I presume Senator Chaney was aligning himself today. I can say one thing for anybody who is concerned about equity. The income splitting proposal is not an effective means of enhancing equity; indeed, it is quite the opposite.

Senator Harradine is attempting to interject. His is a case which is highly relevant to the point I am about to make. I am not sure precisely what Senator Harradine's salary is, including tax free allowances and travelling allowances, but it would be in the vicinity of $60,000. A wholly taxable salary equivalent would be in the vicinity of $80,000 or $90,000. Senator Harradine is listed to speak on this matter of urgency. He has a number of children, both his own and those of a step family, if that is the correct term to use. I therefore presume that he receives a very considerable family allowance. I do not know what the figure is, but I invite Senator Harradine to tell the Senate what it is. It is likely to be of the order of $100 to $125 a week tax free. I am not suggesting that people with a number of children should not get assistance for having dependants, but it raises the question as to whether anyone on Senator Harradine's salary should receive additional tax free payments of that magnitude.

Senator Harradine —Well, of course, I do not get them.

Senator WALSH —I invite you to tell us what they are. You are certainly entitled to some payments.

Senator Harradine —I do not receive a cracker, not a brass razoo.

Senator Ryan —His wife gets it.

Senator WALSH —Perhaps Senator Harradine will tell us how much his wife receives in family allowances if he wishes to push the issue off the agenda in that way. According to the very conventional Christian view of marriage which Senator Harradine advocates and believes in, the couple are inseparable and indissoluble anyway. He believes that a married couple are a legal and almost a physical unit as well-

Senator Harradine —Why does the Government not tax them as a family unit rather than the individual?

Senator WALSH —There is something to be said for that, but the point I am making is that I believe, this Government believes and apparently the Opposition believes that the principle of horizontal equity in taxation and other policies should be taken into account. It can be argued legitimately that that principle is not so sacrosanct that at all times and under all circumstances it should crowd out every other consideration. I suggest that Senator Harradine's case is one in point. In Senator Harradine's family unit his taxable equivalent income is of the order of $90,000-

Senator Harradine —It is not. What are you talking about?

Senator WALSH —I said that the fully taxable income equivalent is of that order.

Senator Harradine —It is not; it is $36,000 and you know it.

Senator WALSH —Perhaps it is $80,000. Obviously I have touched a sensitive nerve because Senator Harradine was about to sermonise and pontificate in his usual way about the morality of this question, yet he does not want to have investigated whether someone on his salary, or a family unit with his family unit income, should receive in addition family allowances of the order of those that I have suggested-moreover, tax free. Anyway, Senator Harradine has obviously taken the point and I invite him to provide the precise details as to what is received by his family unit, by way of both salary and family allowances. I am not having a shot at Senator Harradine. I am drawing attention to a very real issue and the equity consequences involved-whether people on Senator Harradine's salary, even though they have many dependent children, should be entitled to other payments of that magnitude in addition to salary when there are people living in poverty.

The figures of the number of people in poverty vary according to the estimate one chooses to use. For example, the Brotherhood of St Laurence-a body which has an emotional commitment to welfare issues and therefore, perhaps, in its judgments it is somewhat swayed by those commitments, so perhaps the figure it has produced is somewhat exaggerated-suggests that about 500,000 children are being reared in poverty. A great number of those, it claims, are suffering actual malnutrition. If that is accepted as being an approximation of reality it raises very serious questions as to whether people-family units, if you like-with the income that Senator Harradine's family unit has, even though it has a large number of children, should also receive tax free family allowances of the order of $100 to $125 a week.

The Government certainly will not oppose this motion. I do not expect there will be a division because I do not think anyone will oppose it, but I am still mystified as to why it was moved.