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Wednesday, 19 November 1986
Page: 2496

Senator VIGOR(3.50) —I believe that the Government should take some note of the Senate as well as the Senate taking some note of the Government. During the debate on the fringe benefits tax legislation all of the so-called unexpected effects of the fringe benefits tax were fully canvassed within this Senate. If the Government had listened and had modified the tax suitably we would not be having this type of problem. That does not mean that having got this far the Australian Democrats should support the Opposition's motion which suggests that we should be abolishing the fringe benefits tax. Per se the fringe benefits tax is equitable. It is a sensible tax only as long as we have an income tax. We should have justice within the income tax system and the fringe benefits tax is one of the ways in which we can achieve justice within an income tax system in the same way as a capital gains tax is a way in which we can achieve justice within an income tax system.

I personally would prefer the burden of taxation to be otherwise distributed than with such an emphasis on income tax; I would prefer to see a tax system based on consumption rather than one based on production. Any country which taxes production in the way in which this country does is probably not going to do anything but move itself closer to becoming a banana republic. We are not encouraging people to take risks through our total income tax system. We are not encouraging or stimulating private enterprise.

During the debate on the fringe benefits tax the Australian Democrats suggested that the fringe benefits tax should be raised from employees, not from employers. We would have supported such a move. We argued strongly for this at the time and when we voted for the tax package we said that we would much prefer the fringe benefits tax to be charged to those people who were getting the benefits. However, this was not acceptable to the Australian Labor Party and to the unions, so we have the current hotch potch or mess. There is one thing on which we agree with the Opposition and that is that the fringe benefits tax is a mess as it is currently implemented.

The Government was elected on a platform of tax reform, of consensus between employers and employees and on a program of cutbacks in bureaucracy and regulations. For 12 months or so it tried to keep to this program. The Government made the accord, which was one step forward. It held the National Taxation Summit at which it put forward what could be called a sensible and dynamic tax package-admittedly a watered down version. At least the Government had option C but it gave it up within two or three days. It did not persevere with Option C. Instead it proposed a whole extra patchwork of additions on the taxation system. This is when the whole process started to go backwards. The Government has since been trying to seal loopholes and rorts and in the process has created a number more.

The bureaucracy seems to be flourishing, even more than during the Whitlam era when it grew at large rates. The Government has retreated further by selling its integrity to financiers and the publicity merchants in the multi-media networks in order to shore itself up with the voters. The fringe benefits tax is very much a fringe issue. As Senator Chaney has said, this is the fifth time the Opposition has brought it up. I believe it has done it more often than that because it seems to slip it into almost any debate that happens. It has succeeded in stirring up quite a lot of interest within the community in this area but a lot of that interest is totally misinformed. Bank employees are not the people who are suffering from the fringe benefits tax.

Senator Watson —Not the bank employees?

Senator VIGOR —The bank employees are not suffering. It is the employers who are actually paying it. The Opposition should be insisting-an example is the Commonwealth Bank of Australia-that those banks which are currently trying to cash out the benefits should be re- negotiating a new package in which the employees can now get better terms. They actually have a chance to tell the banks to cash out the benefits in a sensible and reasonable way. There is nothing in the arbitration and conciliation process which stops them from doing that, despite all the noises that Senator Watson and his colleagues may make.

I am not going to defend the Government's position but I am certainly not going to support the type of drivel that we are getting from the Opposition when it says that all employees will be worse off because of the fringe benefits tax. The tax falls on employers. I do agree that Mr Ellis, a car dealer, may be worse off if he organised his employment program so that he paid vast amounts to his employees in fringe benefits. In that circumstance I believe it is reasonable that the taxpayer should retrieve tax on the money. Mr Ellis has had the benefit of that extra low taxation rate for quite a long time. Frankly, a lot of complete and utter rubbish is being talked about this tax. The country is currently in dire straits; we need to solve trade problems. Five times matters of public importance and urgency motions, which we cannot support, have been put forward.

The issue is not taxation; it is trade. If the Labor Government really wants to solve the taxation problem it has to grasp the nettle and try to deal with some of the real rorts that are in the system. Fringe benefits are the fringe issues. The main tax evasion issues which are facing us currently are off-shore tax evasion, tax havens and transfer pricing by which large industrial organisations are twisting their way out of major amounts of tax. The major rorts are in the area of negative gearing by which large takeover merchants are actually financing their operations at the taxpayer's expense. Indeed, if the Opposition were willing to take up those types of issues we would support it on an urgency motion and tell the Government what it needs to do.

The real issue is that the country is currently going down the gurgler simply because the Government is not grasping the real opportunities of trying to boost business. It is not offering a stable environment for business. We are ending up with more rather than fewer senseless regulations. (Quorum formed) As I was saying, the real issues which are currently before us and which we have to face are the issues of a worsening trade balance. We are currently not facing any of the real tax issues. The real tax issues, as I said, are in the area of transfer pricing. We can probably retrieve about $1.2 billion from people who are distorting their trade figures. We can probably retrieve about half a billion dollars from the area of negative gearing and maybe a lot more. We can retrieve $40m if we are willing to make the advertising of tobacco non-deductible. These are all issues on which we, the Australian Democrats, have offered to support the Government.

The Government has failed in these areas. It has lacked the imagination to take up these opportunities. It is no wonder that the country is in a mess when the Government is not prepared to take up any reasonable new measures so that there can be equity in the tax system. The Opposition simply repeats itself and shouts about fringe issues, like the fringe benefits tax.

Senator Jessop —What about the motor industry in South Australia? It is suffering very badly.

Senator VIGOR —The motor industry in South Australia is an industry that we consulted when we considered changing the fringe benefits tax. While the Opposition was flat-footed in opposing the tax, we actually modified it so that it became fair and reasonable. We wish we could have removed its application to remote areas. If it comes back to us, we will probably do that, because benefits in remote areas are not fringe benefits; they readjust the problems between the cities and the country.

The major problem that we have is a parliament which does not have the strength to face the Executive. Labor members and the Labor Caucus are not willing to call the Executive to account. We have a parliament in which the Liberals are completely lacking in ideas and in ability to present an alternative program to the people of Australia, and to save us from the fate towards which this Government is moving us-that is, the fate of becoming a third rate banana republic. I believe that we must face this issue fairly and squarely and stop wasting the time of the Senate with motions of this type when we have so much legislation to debate and when people are complaining about it.

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