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Friday, 19 April 1985
Page: 1240


Senator BROWNHILL(10.50) —The only virtue in having this piece of legislation dragged out for what I believe is the fifth time is to give new senators such as myself a chance to have a say on the Government's appalling tax record. I believe this current legislation is identical to the Taxation (Unpaid Company Tax) Assessment Bill 1983 (No. 2), which was introduced on 23 August 1983. Before I talk further on the record of that Bill, I would like to make a couple of points about the implications of this legislation. The Deputy Leader of the Opposition (Mr Howard) in the other place earlier this week rightly called this legislation the Blue Hills of Canberra, and it is blue times for all of us under this Government today.

This legislation is dealing with more than just a legal document. Retrospectivity in legislation can only breed insecurity, and insecurity is relative to one's confidence in the law. If one loses confidence in the law and the legal process, one is heading for a complete breakdown in society. When one enters into a contract, one does so with confidence that the rules in the contract and the expected products of the arrangements are firm. When one starts to doubt those rules, one develops insecurity and instability, both socially and economically. One cannot have rules in a game that change when the game is over. If that happens people lose faith in the game itself. This insecurity bleeds over into other aspects of this legislation; namely, the involvement of personnel in companies who would be affected if this legislation were to be passed. This brings into doubt the whole question of the meaning of 'proprietary limited'. If this legislation were passed and approved the effects, social, economic and legal, would be enormous.

All these arguments have been spelt out time and again, but still the Government feels the needs to bring on this legislation. I really do not understand why this Government is wasting our time, and the taxpayers' money, in bringing this on knowing full well it will simply be rejected once again. I wonder how much money has been spent in staging what can only be called a farce. Is this Government so devoid of ideas that it must drag up old chestnuts like the Taxation (Unpaid Company Tax) Assessment Amendment Bill time and again? To me, it is just another example of how this Government has become skilled at wasting money. It is another example of the Government's attitude to taxation reform.

The Opposition believes that there is a strong need for an overhaul of the taxation system in Australia today but it is being clouded by the debate about the so-called summit. The Opposition's policies on this matter are clear. They have been spelled out clearly to the electorate. Unlike the Government, the Opposition has concrete proposals for taxation reform. We believe there is an excessive and growing reliance on personal income tax. We believe that the tax base should be broadened and a greater reliance placed on indirect taxation. The Opposition has made firm commitments to the electorate on tax reform, as I have said. On the other hand, the Government has made no such commitment-not even before or during the election campaign. The Government still has no answers, and this is starting to show in the economy.

One has only to pick up newspapers to see how the economy is off the rails. The Government is trying all the time to talk up business activity, but with little effect. Today's Australian reports a top executive of a retail sales chain as saying:

. . . retail sales had been patchy in the past couple of months and there was an apparent weakness in consumer confidence.

Another gentleman from another company is reported as saying:

A division of one firm had 30 per cent of its orders on hold in March because customers could not meet credit requirements.

Another top executive is reported as saying:

. . . interest rates were high during the tax rundown period.

And they will get higher. Another gentleman, from the Australian Mutual Provident Society, did not see any significant evidence of major investment projects on the drawing boards.

One can go on and on quoting top business people in the community who are losing confidence in this Government. 'Big tax shortfall threatens Budget', according to yesterday's Australian Financial Review. 'Interest rates on move up', according to the Australian-and the Treasurer (Mr Keating) promised us they would fall. 'Australian dollar falling' says every newspaper. What answers has this Government to these problems? Ministers keep delving back into the past to try to find solutions, but problems will not be solved by looking to the past. They will be solved only at the time, now and in the future. The Prime Minister (Mr Hawke) has been on national television to assure us that the economy is in good shape and in safe hands. I wish he were right. The next day the dollar slumped again. The Government appears to have no answers to the tax problems facing Australia. Everything is being put into the tax summit basket. I am sure hundreds of thousands of Australians are beginning to think that this tax summit will be put into the too hard basket.

The Government, to avoid doing anything new, continuously reintroduces unacceptable legislation that has been rejected time and again. When will the Government stop its obsessive passion with retrospective legislation, with trying to ginger up the already declared dead issue of tax avoidance, and get on with the real work of tax reform? This Government appears to be incapable of coming to grips with the delicate subject of tax reform. If the various factions of the Australian Labor Party could agree among themselves how it should be done that would be a worthwhile excercise. The Treasurer is prepared to acknowledge a need for changes to indirect taxation, while the left factions are almost paranoid about the redistribution of wealth, about bringing retrospective legislation before Parliament. First, we have to create wealth. An editorial in the Australian last month said that few issues would be more important to the nation this year than tax reform. It continued:

The tax summit will have to grapple with reforming the Australian tax system in such a way to benefit the majority of Australians. Various trade unions, the ACTU and now the centre left faction of the ALP have all made contributions to the debate.

The worrying aspect of these contributions is their concentration on wealth redistribution and the apparent lack of concern for wealth creation. For it is very clear that the way you cut up the cake has a profound influence on the overall size of the cake.

Again, I am saying that we should look to the future, not to the past, in terms of legislation that affects the taxation system. Obviously taxation plays a major part in affecting personal incentive.

It is interesting to note how that incentive has been eroded over the years. In 1954-55, 30 years ago, income tax was 35 per cent of Commonwealth budget revenue; today it is 53 per cent. More striking, however, has been the increase in the marginal income tax rate for taxpayers on average weekly earnings, and how over the years the income tax burden has moved to the middle income earner. In 1954-55 the average marginal tax rate was 19 per cent. In the intervening years this has more than doubled to 46 per cent. Thirty years ago a man on average weekly earnings had to earn 18 times his weekly wage to move into the top income tax bracket; now he has to earn less than twice his weekly wage. So now in Australia we have a new definition of wealthy. Imagine what this has done to incentive-incentive for the individual and incentive for business. Without that incentive, both for the individual and the corporation, we have no growth, no turn-round in our economy, and no confidence in a government which tries to bring in retrospective laws on taxation. It is time that this Government stopped wasting our time on legislation it knows will not pass this chamber and started working on real tax reform. The Government knows the Opposition's policy on tax reform. We want reform. We believe an overhaul of the tax system is overdue. We believe there is too much emphasis on personal income tax. There has to be a shift in emphasis to encourage incentive, growth and expansion. When is this Labor Government going to start getting its act together? If its various factions cannot agree on a policy now, how is the summit some months away going to do it for them? The people elected this Government to govern, not to waste its time on summits or old, tired legislation. The cost of government is already outrageously high. At least let us try to give the electors some value for their money.