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Thursday, 18 April 1985
Page: 1188

Senator PETER RAE(10.06) —The Senate is debating cognately, with extraordinary haste, the Taxation (Unpaid Company Tax) Assessment Amendment Bill 1985 and the Dividend Recoupment Tax Bill 1985. These Bills were dealt with yesterday in the House of Representatives. A bit over half an hour ago I was informed that-apparently because the Government is devoid of anything to do and is incapable of having a program of business which would enable the Senate to proceed in an orderly manner with some reasonable notice being given of the anticipated order of business-these Bills would be brought on immediately this morning. It is a measure of the absolute and utter confusion which is reigning in this country and is the reason why the Australian dollar has yet again plunged to unheard of depths that the Government is so incapable of managing its affairs that it has nothing else to bring on except some legislation that was dealt with yesterday in the House of Representatives.

We have two Bills, debate on which, as the shadow Treasurer and former very successful Treasurer of the former Government, Mr Howard, said in the House of Representatives, is a further edition of Blue Hills. This is a Blue Hills debate on Bills which impose what the Government knows is a totally unacceptable aspect of retrospectivity which this Opposition will not wear under any circumstances. We have a fundamental objection to the concept of the retrospective imposition of a penalty on people who took certain action at a time when they believed that the action which they took place was lawful and which they had every reason to believe was lawful-action which was taken at a time when they had no reason to believe that the Government intended to act in a way which would make their action unlawful.

However, the Bills have one small difference from the previous proposals and that is that the Bills include additional features reinstating the provision which was removed by the former Government which authorises the Commissioner of Taxation to report to Parliament the names of those who fail to pay recoupment tax, and an amendment which does have some appeal to the Opposition-an amendment which would allow a successful appellant against an assessment of unpaid company tax to receive interest on any amount refunded. One of the taxation matters of very considerable concern is the huge delay that exists in relation to taxation appeals. We understand that over 50,000 appeals are waiting to be heard and that some 600 were heard last year. That is a measure of the backlog that exists under the present taxation system, which is just falling down around the ears of this Government.

The problem for individuals, including companies and shareholders, is that if ultimately they are successful in an appeal when eventually it comes on and are entitled to receive a reduction in tax which has been held to have been wrongly assessed, they are not at the moment entitled to interest on the amount involved. At a time when interest rates are the highest this country has known since the Great Depression-another measure of the economic incompetence of the present Government, and the confusion which the factionalism of that Government has created in economic management, giving this country the highest interest rates it has had in the past 50 years-the matter of the amount of interest paid to a successful appellant is most important.

The Opposition extends an invitation to the Government. If the Government presents to us a piece of legislation, including a provision to allow a successful appellant against an asessment of unpaid company tax to receive interest on that amount, the Opposition will support the Bill. If the Government does not wish to take that course, the Opposition will introduce legislation in the form of a private member's Bill to provide for such a course. Because of the provisions of the Constitution and the difficulties that exist, it is not possible for the Opposition to take any other course at the moment than to extend that request to the Government. If the Government does not wish to take up that request, we will take some steps ourselves to ensure that that opportunity is given.

There is an element in this legislation of a rerun of the continuing saga of Blue Hills. For all the reasons outlined on many occasions in debates in 1983 and 1984, such legislation has been rightly and properly rejected by the Senate and the Opposition proposes to vote against it again. It will vote against it because it is unacceptable. It puts punitive imposts on people retrospectively-people who had no reason to believe that those imposts would be made retrospectively. I do not think there is any great advantage in going through all the reasons which have been repeatedly outlined in the debates, as they are clear. It is a simple issue: Does the Government believe in justice in a fair society, or does it not? Does it believe that in a system where people can act with some reasonable belief that what they do is lawful at the time that action should not at a later stage be made unlawful so that those people will be penalised?

One faces an extraordinary situation with the present Government. The Prime Minister (Mr Hawke) throughout the most recent election campaign found himself faced by an opposition which had a clear and firm taxation policy. It came forward with a taxation policy that was developed to benefit individuals suffering the present high personal rates of taxation. Under the present system the amounts paid by individual taxpayers are the highest ever known. The present average weekly wage earner is now in the high tax bracket. The person who would have expected to be only a moderate taxpayer has become one of the major taxpayers in this country. It has become urgent that steps be taken to make the system fairer for families and individuals. The Opposition came forward with a policy involving income splitting between joint income earners without families. It also put forward a policy to provide for some rebate on child care. Both were important measures which were aimed at benefiting individuals and encouraging family life in Australia to the relief of hard-pressed individuals in the community who have had to suffer part of the major problem of high taxation imposed by the highest taxing, biggest spending Government in our history.

The Opposition also said that it would redress the balance by giving genuine, real personal income tax cuts and substitute a broad-based indirect tax to provide the necessary revenue. Facing that position and without a taxation policy, the Prime Minister (Mr Hawke) found himself in considerable difficulty. A tax summit was suggested to him on a radio program while he was in Perth, Western Australia. Senator Knowles is present and can confirm that Perth is a very pleasant place to be. It was obviously the pleasant nature of the situation in Perth which overwhelmed the Prime Minister's better judgment because what he did was agree to a suggestion made to him by a radio interviewer that he ought to have a taxation summit; so flash, flash, bright idea-we have a taxation policy. That is what the Prime Minister did during the election campaign. He took up the suggestion of a radio interviewer who said: 'Why don't you have a tax summit?' The Prime Minister said: 'Yes, we will have a tax summit'. What has happened since then is that the left wing, the right wing, the Centre Left and all the other factions of the Australian Labor Party--

Senator Grimes —And me.

Senator PETER RAE —And the independents, the other people and my colleague Senator Grimes. So that we all know in which faction honourable senators opposite are to be found, I quote from the Weekend Australian of 24-25 November 1984, which gives the latest list that I have available to me. That list places Senator Grimes in the independents group. There is the Right, the Victorian Labor Unity, the Centre Right, the Centre Left, the left wing, the Victorian independents, the general independents and Senator Grimes. At the moment it is very difficult to tell whose taxation policy is likely to succeed because members of the Left have had meetings in which they say: 'Our taxation policy is going to be this'. Perhaps the simplest way in which I can describe the taxation policy of the Left is to say that it is to slug a very small percentage of the population with a very punitive tax which will raise relatively little by way of revenue, but will give members of the Left some degree of satisfaction that they have punished the more successful sections of the community. It is a nasty attitude of retribution against the successful, rather than a policy for the collection of revenue for the general needs of the nation.

We find headlines which say: 'The Left set to fight Hawke and Keating on indirect taxes'. We find that the Left, which has had several meetings to develop a policy, has now apparently got a policy which is in complete contradiction to the policy announced, insofar as one was announced at all, by those who were thought at one stage to be in control of the country-the Prime Minister and Mr Keating. At one time Mr Keating was supposedly a very successful Treasurer but he can now only be regarded as the man who has presided over the exchange rate crisis. That crisis has left Australia with a vote of international no confidence-a vote requiring intervention by the Government in the market place to prop up the Australian dollar by pushing up interest rates in Australia at the expense of home buyers, at the expense of business and at the expense of creating inflation in this country. All the people of this country will suffer from the incompetence of the present Government and a lack of confidence both nationally and internationally caused by the factionalism and the loss of authority of the Prime Minister and the Treasurer (Mr Keating).

We find that the Treasurer has been out of the country for some weeks, apparently finding the climate in Paris much more conducive to his well-being than the climate in Canberra where the left wing of the Australian Labor Party has been meeting to develop a taxation policy. Amongst other things, this policy would involve the expansion of direct income tax to include all forms of income including capital gains-except on the family home. This policy would also impose a limit on the level of superannuation expenses and those involved in earning a living. The policy also propose raising the existing $4,595 tax free threshold but phasing it out completely for high income earners. This is another impost on high income earners and, of course, means a loss of incentive to those who might work a little harder or who might try to be a little more successful in seeking some reward for their endeavours.

The proposed taxation policy also involves the removal as a taxation deduction of the so called business perks such as restaurant meals and travel expenses. One wonders what will happen at the Lodge and whether the Prime Minister will be keen to have his $100,000 or so entertainment expenses included in his income for taxation purposes. The difficulty of defining a perk and the difficulty of defining what is a real--

Senator Robert Ray —What has this got to do with these Bills?

Senator PETER RAE —It has a lot to do with these Bills. These Bills are about taxation and about the general tax revenue. These Bills are about the forthcoming taxation summit. Amongst other things, the Bills are about the left wing's proposals for taxation.

Senator Robert Ray —Talk about the Bills for a change.

Senator PETER RAE —I will further come back to the Bills as they are part of the proposals of factions within a government which is so divided and over which the Prime Minister has so lost control. While the Prime Minister is continually pleading with the various factions in the Labor Party not to make statements, not to hold separate conferences an please to hold their tongues and not to express their differences in newspapers all over the country, we read articles such as the one in the Sun of Thursday, 21 March which stated:

A Left-wing Cabinet Minister last night defied orders to Labor MPs from the Prime Minister, Mr Hawke, to end public comment on taxes and strongly attacked proposals to introduce indirect taxes.

That is one example of the sort of breach taking place. I am glad to see that Senator Richardson is now in the chamber because he will have the opportunity to deny the dreadful stories spread around about a further falling out among the Government factions and that he is opposed to the Prime Minister in relation to taxation measures and other measures.

Senator Robert Ray —Tell us about how well you got on with your Prime Minister. Tell us about Fraser and how you liked him.

Senator PETER RAE —Mr Fraser is no longer a member of parliament and is not relevant to this taxation measure. I continue with my comment on the left wing's taxation policy which, of course, is not what the right wing or the Centre Left propose in their taxation policies. I will read from the Australian of Monday, 15 April 1985. If these statements are wrong no doubt some members of the Labor Party who attended that left wing Caucus meeting will be able to tell us their policy in relation to this fiasco which is still being called a taxation summit. It was reported that amongst other things the left wing proposed that there would be:

Phasing-out of high indirect taxes on basic consumer goods.

This is in direct opposition to the sort of thing the Treasurer and the Prime Minister, Mr Hawke, have been talking about. The article continued:

Increasing the number of income tax thresholds for low-income earners to reduce the absolute rate of tax on low and middle incomes.

Introduction of an annual wealth tax with a high exemption level and a progressive rate structure.

The wealth tax proposal has been debated in this country for a very long time. I would be interested to know from my namesake and interjector Senator Robert Ray whether he is proposing to speak during this debate in order to tell us about his proposals in relation to a wealth tax or a capital gains tax.

Senator Robert Ray —It is not relevant to these Bills, and you know it.

Senator PETER RAE —It is relevant to the whole question of taxation and these Bills are part of the total taxation measures of the Government. The article continued:

Introduction of an integrated capital transfer tax in the form of a progressive inheritance tax and gift duty.

Again, that is an attack on capital and those people who are successful in this country. Such a tax is a disincentive for those who might otherwise be able to bring together some capital which generates employment and growth and rewards the entrepreneur.

The Left also proposes that there should be no reduction in company tax rates-in other words, there should be no incentive to companies to go out and take some steps--

Senator Robert Ray —When did you last reduce company tax rates when you were in government?

Senator PETER RAE —We did something about cutting out the double taxation rate in relation to company tax. We removed double taxation on dividends of up to $1,000. This was a positive encouragement to the small investor to participate in the ownership of shares of companies that own a quite significant section of the Australian economy. This Government, or at least its left wing has cut out that incentive and removed the opportunity for people to become small shareholders. It has put an imposition on those who would otherwise be able to share in the ownership of large parts of the productive sector of the country. It has imposed a very high rate of taxation on the income which the small investor receives from shares. So we have a situation in which company tax is paid first of all and then the dividend in the hands of the small shareholder is taxed again at a personal income tax rate. The Government is giving no relief to the small investor. It is giving the small investor no incentive to participate.

The left wing proposes an increase in pensions and welfare benefits to 25 per cent of average weekly earnings in line with Labor Party policy.

Senator Robert Ray —You were going to get back to the Bill.

Senator PETER RAE —This is all to do with the Bill because it is all part of the question of taxation. This is one of the matters that will be discussed at the tax summit, if it goes ahead, which appears to be less and less likely because the Prime Minister, as he showed during the famous interview with Maximilian Walsh on ABC National, is becoming more and more cautious and less and less enthusiastic about a tax summit. In fact, when he was in Canada he let slip that he was not going to put his reputation-what is left of his shattered reputation-at risk by going ahead with trying to get taxation reform. He repeated that during the interview with Maximilian Walsh.

Whilst there has been tremendous trumpeting about holding a tax summit, the Government is utterly divided and the Prime Minister, as he said, has no intention of committing political suicide over the issue of taxation reform, however important taxation reform may be for the country and however much it may be taking up the time of the left wing faction of the Labor Party in having private meetings to determine the taxation policy which it can put to the taxation summit, if in fact that summit takes place.

The Government is simply trying to rely upon the same punitive measures which were rejected by this Parliament in 1983 and 1984 and will, I trust, be rejected again in 1985 because they are inherently unfair, punitive and illiberal in every sense of the word. They are measures which would impose a liability upon people who at the time acted in a lawful way. The measures would impose that liability retrospectively and without any warning.

Senator Grimes —Let us hear about the tax dodgers who will have to pay tax now.

Senator PETER RAE —Perhaps Senator Grimes does not know what the Left is doing. It might be helpful if he listened to what I have to say because he is an independent and not a member of the Left. The Left has been trumpeting around its taxation policy and I would like to help Senator Grimes know what is going on within his own Party. Therefore, if I tell him a little more about the reports--

Senator Robert Ray —Tell us about your tax policy.

Senator PETER RAE —I have, but I will do so again. Our tax policy is the one on which we went to the last election. We will reduce personal income tax. We will introduce income tax splitting. We will benefit the family through the tax rebate. We will introduce broad-based indirect taxation to enable there to be relief of personal taxation which has become unduly and unreasonably high. That is a reasonable approach. Unlike members of the Government we have a tax policy which is clear, with which we are prepared to go to an election, which very nearly brought us back to government and which at the next election will ensure that we are brought back to government. It is a policy unlike that of the present Government which has been so heavily criticised, even by the person who was appointed by the Prime Minister to be the representative of Australian taxpayers generally at the tax summit; that is, Mr Eric Risstrom. Mr Risstrom says that the main proposal being put by the Government for the taxation summit is one with which he does not agree. In fact, he does not agree with the general idea of a taxation summit.

Senator Dame Margaret Guilfoyle — There will be no consensus then, will there?

Senator PETER RAE — There will not be, but there is obviously no consensus within the Government at the moment because, as I have been saying, the Left is set to fight Hawke and Keating on indirect taxes. The left wing has produced its own policy. I am not sure who will be speaking today for the left wing amongst the Government speakers, but I look forward to hearing the different policies being put by the different factions, so that we can all know what the different policies are, and so that we can have what might be regarded as a trial run, not only of their caucus debate but of the taxation summit. I should like to know whether the different factions will put separate submissions to the taxation summit? Will they be individually and separately represented? Senator Dame Margaret Guilfoyle laughs. I do not think it is a laughing matter.

Senator Messner — Senator Richardson will tell us all about it.

Senator PETER RAE — I have already invited Senator Richardson to do so. I hope that he will, because we want to ensure that the Australian people can get a better idea than they have been able to get so far about what this Government's policy is about, except about the imposition of unpaid company tax assessment and dividend recoupments through Bills, which have already been rejected by the Senate on two occasions and which contain only one reasonable proposition, which, as I have indicated already, is one which the Opposition would support if it were introduced separately. I have invited the Minister to consider the introduction of a separate Bill which would permit the provision of interest being paid to a successful appellant in relation to an appeal where unpaid company tax is ordered to be refunded. It would enable interest to be paid on that amount. As I have already indicated, if the Government does not wish to take up our proposal that it introduce such legislation, we will introduce it as a private member's Bill and hope that the Government would support it.

The Government has the difficulty of trying to determine what its taxation policy on anything other than retrospectivity might be. I suppose that the reason it has introduced these Bills in such a hurry, why they have come with such indecent haste into the chamber, is that the Government wants to be seen to be doing something about taxation. The only matter on which the Government has an agreed taxation policy is these tired, worn out Bills which have been trundled through the Houses of Parliament several times already and which constitute part of the saga of Blue Hills. Last Monday's Australian, in a report headed 'Left's tax stand sets stage for clash with Prime Minister', stated:

The Left claimed the Right's approach would be 'a major electoral liability which could well lead to loss of government and a further extension of inequality under a conservative government.

Apparently that is the view being expressed by the left wing. I should be interested to know whether Senator Richardson now agrees with that statement and who will be speaking on behalf of the factions to confirm or otherwise these claims made in numerous and voluminous Press reports. These reports show that this Government has no taxation policy or cohesiveness. They also show the dramatic loss in confidence in the management of the Australian economy through the continually falling value of the Australian dollar at a time when the economy should be enjoying the benefits of the wage pause, of the breaking of the drought and of the economic recovery which has been enjoyed by other parts of the world. A government with any real capacity would have taken advantage for Australia from those measures for which it was not responsible and which fortuitously came within its first two years of government. Far from the Australian dollar being depressed as a result of lack of confidence because of the failure of the Government to have coherent taxation policy or any other economic management policy it would, in fact, be valued at an appropriate rate. The factionalism that is dividing and rending this Government asunder has destroyed the authority of the Prime Minister, has destroyed the confidence of the people of Australia in the authority of the Prime Minister and, through the loss of the authority of the Prime Minister, the loss of authority and confidence in the Government.

The ACTING DEPUTY PRESIDENT (Senator Sibraa) —Order! The honourable senator's time has expired.