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Tuesday, 26 March 1985
Page: 797


Senator Dame MARGARET GUILFOYLE(4.00) —The Opposition has brought forward this matter of urgency for discussion today. Information has been given by Senator Chaney, and by Senator Haines on behalf of the Democrats. I think it is fair to say that the matter has been brought forward in the climate of a great deal of discussion, not only in the pre-Budget context, as is usual, but also in the context of matters that will arise at the tax summit to be held in July. Senator Chaney introduced the matter by saying that there were confusing signs in the electorate with regard to statements that have been made by members of the Government.

I noted that Senator Walsh is outraged or disturbed at the way in which he has been reported by one section of the Press. I would say to Senator Walsh that, if he checks the Hansard very carefully, he will find that what he has said today has already provided the headlines for tomorrow's Press-not just the Murdoch Press, but all members of the Press-with some of the kites he has flown in this debate. He has described the way in which he was misquoted on statements he made earlier. In the Senate on 21 March, in answer to a question from Senator Maguire, he said:

In other words, one-sixth of the highest taxpayers received one-third of the rebate. It could certainly be argued, I believe, that that provides a prima facie case for means testing. The argument commonly cited against means testing such a rebate is derived from the principle of horizontal equity in taxation matters, but whether horizontal equity ought to take priority at all times over all other equity considerations is something which could perhaps be questioned.

He made a similar comment again today, when he said: 'It can be legitimately argued that horizontal equity should not crowd out other considerations'. Therefore, I think he places very firmly one attitude he has expressed on these matters as a member of the Government. He described the matters before us as being treated as works of fiction by the Murdoch Press, and he says that no decisions have been made by the Government. That is probably an accurate statement. We know that we are in a pre-Budget context and no decisions have been made, but it is usually wise for members of the Government not to make statements in the way Senator Walsh does in the pre-Budget context. If they make such statements, they should expect to be quoted. As a Minister, I found that if anyone talked of something being reviewed, one could expect a headline that it was going to be cut. 'Review' meant 'cut', particularly with regard to welfare matters. When one makes statements expressing one's own views, and a number of Ministers have made statements on those matters, one can expect to be quoted. There is intense public interest in a matter such as a universal family allowance scheme.

The statements made by Senator Walsh today ignore the fact that the family allowance scheme is universal. It was introduced as a child endowment payment and it was changed by the Fraser Government in 1976 to a universal family allowance, which gave recognition to the additional costs of dependent children in a family. We do not argue that the payments are perfect or that there is no way in which family allowances could be changed, but I think there is a fairly substantial view in the Australian community that the universality of the family allowance scheme ought to be protected. It gives recognition to the fact that people on the same income level have different responsibilities with regard to the care of dependants in their families.

The whole matter of taxation and social security policy needs to recognise the dependants within the family unit. It was in that spirit that the matter was brought forward by Senator Chaney on behalf of the Opposition. It is timely, in the weeks before the tax summit when issues are being raised and submissions are being received by the Government, that the Senate should look at whether there is to be recognition of dependency and whether families, which may have the same level of income but very different family responsibilities, need to be considered at the time any changes are being made arising from policies that come from the tax summit.

Senator Walsh again talked about something which the Leader of the Opposition (Mr Peacock) was reported as having said on 10 March on a television program. Clearly, the Opposition policies on the spouse rebate and tax were set out in the taxation policy of the Opposition parties which was released prior to the last election. I will say more about that later. A restatement on a daily basis by Senator Walsh of something was reported that from the Leader of the Opposition on 10 March ignores completely the public document which has been released by the Opposition and which is the Opposition's policy on these matters at present.

An interesting speech was made by Senator Walsh on 22 March to the Commonwealth and State women's advisers on the matter of equity, taxation and government expenditure. I was interested to see the figures he cited, which were, to my recollection, figures I had as Minister for Finance, with regard to levels of tax and the rates of tax which people actually pay, contrary to the beliefs they may hold about what they do pay. Page 2 of that speech-again it gives rise to the sorts of headlines he receives from the Press-stated:

Nevertheless, it is the view of the Government-and this view has been formalised-if you like-by our commitment to the 'trilogy'-that there are some existing programs on which public funds are spent; their continuation cannot be justified; they are programs which ought to be eliminated or reduced. Some significant expenditure cuts must be made if we are to meet the 'trilogy' commitments.

That is a very public statement. If Ministers of the Government go about making the sorts of statements Senator Walsh makes with regard to horizontal equity and things he believes ought to be means tested, they can expect between now and the summit, or now and the Budget, to receive the sort of Press that has undoubtedly disturbed him.

One matter that ought to be commented on is the tax mix and the statements made by all parties prior to the summit. The coalition parties in our released policy have stated that we believe not only that the current overall burden of taxation is too high, but also that the taxation system is in need of reform. We outlined our own policies and made the comment that we believe Australia has an excessive and growing reliance on personal income tax. Labor's Budget figures show that relative to gross domestic product Labor's tax measures will increase personal income taxes to an historically high level in this financial year. Labor is raising significantly more than half-a record 53.1 per cent-of its total receipts from this type of tax in this financial year. It is in that context that people welcome open discussion about the way in which our tax system is to take shape in the future. The growing reliance on personal tax has a number of undesirable consequences. My own Party and the coalition believe that that ought to be reversed.

Because of inflation and the way in which more and more people are moving into higher tax brackets people are paying higher tax rates on increased incomes. This means that their real purchasing power or economic well-being is suffering from the inflation creep and the way in which they move into the higher tax brackets. In particular, this affects people who are on a little above average weekly earnings who have family responsibilities and who often have a dependent spouse. In that context, when we are looking at changes to the tax system, we must recognise that the great majority of people who earn a little above average weekly earnings and who have family responsibilities will be looking to the Government and the result of the tax summit to alleviate some of their burden.

The rising share of income tax in particular has hit families particularly hard. I think it is fair to say that a basic characteristic of an equitable tax system is that those with a lesser capacity to pay should face a lower tax bill. I do not think anyone could argue with that. Senator Haines and Senator Chaney have given statistics from the Australian Institute of Family Studies that show the real cost of children, quite apart from any hidden costs. The provision of family allowances to all children-that is, a universal family allowance-is one of the ways in which recognition has been given throughout the years to that responsibility that is accepted. The dependent spouse rebate has been a recognition of the dependency of a spouse in a family unit.

It is probably timely to note our own policy on that matter. We believe that where changes can be made in that direction primarily they should benefit families with dependent children. It could not be argued that the family allowance, since its inception in 1976, has maintained its level of support, but it is very costly to do that. I think successive governments would always see it as something that would be increased from time to time, however much people might wish to see it increased on a regular basis. To have a fairer tax system would mean that we should be making a significant step towards income tax justice and income tax relief, especially for families with children.

There are real social changes that affect many Australian families. Again, some of those statistics have been given by earlier speakers. I do not speak particularly of those who are in a family breakdown situation, but rather those families who are accepting their own responsibilities, trying to meet their commitments and give opportunities to their children. Changes have been made in families in Australia where many Australian mothers have entered a career. It is an important aspect of their lives. It is important because it brings in an income and it is important also because they see a career as a significant element in their individual lives and seek their own fulfilment and potential through their career as well as accepting their family responsibilities. That is why in the tax policy of the Opposition we brought forward a proposal to introduce income splitting and give relief to families in two ways: Firstly, through the introduction progressively of income splitting; and, secondly, through the progressive introduction of tax rebates for child care expenses. That policy is a public document and is there for anyone to look at and to see the way in which the policy would be introduced and progressively dealt with to provide greater equity and recognition of the responsibilities of people with children or those who have some dependants in their family.

We are receiving, as are most others, numerous submissions. I was interested in a submission by the Australian Family Association to the national tax summit. That Association believes that the tax summit should:

endorse family income splitting for tax purposes, in the interests of both tax equity and economic efficiency;

oppose the imposition of a consumption tax, which will severely hit families, especially single income families, while at the same time not touching foreign investors or the savings of the affluent.

The Association went on to outline its support for the proposals and noted the present situation whereby only wage and salary earners are denied access to income splitting. It felt that that was grossly unfair. I am sure that in the coming weeks and months we will all receive submissions from all the associations that have an interest in these matters. It was for that reason that Senator Chaney and the Opposition wished to put before the Senate, for an expression of its view today, the proposal that where changes are being considered-either in the Budget context or in the tax summit context-to matters of social security or matters of taxation, recognition be given to the responsibility that is accepted for dependants in the family unit and that this recognition be expressed in the policies that may be adopted as a result of the changes that are decided upon by the Government.