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Monday, 1 December 1986
Page: 3064


Senator MAGUIRE(4.20) —Today is day one of the Hawke Government's personal income tax reductions. Today is day one of the major reforms in personal income tax. Today is a milestone in taxation reform. Today, the Government has reduced the tax burden on low and middle income earners. Today we have a proposition before the Senate from Senator Messner claiming delay and devaluation in regard to the tax cuts and claiming that the Government has cheated and denied Australians real tax reductions. That is the sort of proposition that has been put this afternoon in the Senate of the national Parliament by Senator Messner.

His claim about the Government delaying the tax cuts is astounding. I will go on to that in a moment. I will repeat what I have said here on many occasions: The integrated tax reform measures being introduced by this Government are part of a tax reform package. The Government is collecting some $1,500m in extra revenue through the package, but it is paying out to the community some $4,500m. The package is based on a group of nine taxation principles, one of which provides that there will be no overall lift in the taxation level. Another provides, most importantly, for greater fairness in the taxation system, for greater fairness to taxpayers and for greater fairness to families. The taxation package has been financed substantially by three important taxation measures: The introduction of the fringe benefits tax, a tax on income in non-cash form which will raise something like $700m a year towards paying for the tax package; the introduction of the capital gains tax-a Government milestone-which was supported, of course, very strongly at the National Taxation Summit and will make an important contribution to financing the tax package; and the crackdown on the major abuse permitted under the Liberals, the so-called free lunch. By cracking down and denying tax deductibility for business lunches, the Government will save some $300m per annum which will be a vital contribution to the financing of this tax reform package. The revenue from all those measures is financing the Government's major tax cuts which we have introduced today. The revenue from those three major measures, the disallowance of the free lunch, the capital gains tax and the tax on non-cash remuneration, is vital in financing this Government's milestone tax reform package and the personal income tax cuts which begin for Australian pay as you earn taxpayers today.

Mr Acting Deputy President, you will be aware, as you have been in this place a long time, that in the last 12 months on every occasion that legislation has come before the Senate to crack down on the free lunch, to introduce the capital gains tax or to tax non-cash remuneration, the Opposition has voted to oppose it, to deny the Government the revenue from these important measures. That revenue is essential to the financing of these very important personal tax reductions which apply from today. On every occasion the Opposition has voted to oppose the fringe benefits tax, the capital gains tax and the crack down on the free lunch. That is the record of this Opposition. It tried to sabotage this Government's personal income tax reductions by opposing the measures designed to raise revenue to finance those personal income tax reductions. It did this week after week, month after month, over the last year.

The Opposition comes in here this afternoon and claims that we are somehow delaying the tax reductions. The word `delay' appears in the motion. Yet on every occasion when we brought in legislation to give effect to those tax cuts, to find revenue to finance them, the Opposition voted against the legislation. So much for delays as claimed by Senator Messner this afternoon. The Liberals are in a hypocritical position on tax reform. It is in a grossly inconsistent position. On every occasion they have tried to deny this Government the revenue it needed for these personal income tax reductions. The Liberals are also saying that the tax cuts are of little value. That is one of the claims they are now making. They are trying to tell the millions of employees in this country, that when they get their pay slips they will have no reductions in tax. (Quorum formed) Obviously the Opposition cannot take a few home truths this afternoon and is trying to stir Government speakers.

The Liberals are now saying, after repeatedly trying to deny us the legislation to finance these tax cuts, that the tax cuts are of little value. That is their position. They are trying to tell the millions of employees of this country that when they get their pay slips at the end of this week they will not show reductions in their income tax. They will be able to see the reductions in tax on their pay slips. Government taxes will be reduced and their disposable income will rise. The Liberals have a very short term position on this. Clearly, the tax cuts will come through and the wage and salary earners of this country will begin to see them on Friday. That the Liberals can come in here and talk about taxation and make all sorts of claims against the Government is astounding. The fact is that when the present Leader of the Opposition, Mr Howard, was Treasurer of this country from 1978 to 1982 the share of Australia's gross domestic product in relation to taxation rose significantly. (Quorum formed)

I point out that this matter of public importance this afternoon was moved by the Opposition. Obviously, it is not prepared to have the Government answer this matter of public importance and hear a few home truths about it because it cannot take a few truths about this matter. For the last five years of the Liberal Party's period in government, from 1978 to 1982, the present Leader of the Opposition, Mr Howard, was the Treasurer. In the period that he was Treasurer the share of Australia's gross domestic product taken by taxation rose by 1.7 percentage points. At the end of Mr Howard's period as Treasurer it was 1.7 per centage points higher than at the beginning.

This afternoon Senator Messner, in speaking to the motion he moved, referred to real tax reductions. Let us look at the Opposition's record in government in the 1970s on real tax reductions. Let us look at Mr Fraser's 1975 policy speech. I can remember his policy speech. He said: `We will end inflationary taxation. We will end tax by stealth'. I remember hearing that. He said: `We will deliver tax indexation'. He was referring to the adjustment of the income tax brackets for inflation, but how long did that last? It did not last very long. In fact, it lasted effectively until the 1977 election. Senator Watson claimed that the Liberals had never advertised tax reductions before, but we can all remember the fistful of dollars at the 1977 election and then the 1 1/2 per cent surcharge on personal income tax introduced in February 1978 immediately after the election. That is what the record was under the Fraser Government. The tax rates were loaded up right after the success of the Liberal Party in that election.

Mr Howard brought down his first Budget in 1978. This afternoon Senator Messner moved a motion concerning real tax reductions, or at least that is what his motion referred to, and I am answering that. In 1978 Mr Howard, the present Leader of the Opposition, the then Liberal Treasurer of Australia in his first Budget scrapped full tax indexation. He was the butcher of tax indexation. When he became Treasurer this country had full tax indexation-that is, the adjustment of tax brackets for inflation-but when he left office as Treasurer we did not have it. That was his record. Senator Messner talked about the need for tax indexation. At the beginning of Mr Howard's period as Treasurer Australia had it, but at the end of his period as Treasurer it had been thrown out the window. Honourable senators on the opposite side of the House should not lecture us on taxation or real tax cuts because their record on the subject is appalling. In fact, the most shameful record in Australia's recent history was that of the Liberal Party of Australia when in the 1977 election campaign it put to air that shabby fistful of dollars advertisement.

In this particular package we are collecting only $1.5 billion in extra revenue, but we are putting back into the community $4.5 billion. That is the record of this particular tax package. There is $4.5 billion going back into the community because we have cracked down on the free lunch, the lurks and the rorts that were favoured by the Liberals and their supporters. We have scrapped the free lunch and we have got rid of the abuse, that great area of privilege in the community, and we are delivering very substantial reductions in personal income tax.

I ask members of the Opposition present today whether they will promise to have real tax cuts when they are in office. Will they deliver personal income tax indexation when they are in office? I want to know those answers. I am prepared to cut short my time this afternoon on this debate to allow them time to tell the Australian people whether they will introduce personal income tax reductions through tax indexation at the next elections. I want to hear from them and the Australian people want to hear from them. The reason that they are in opposition is that they have no credibility on taxation. Their record speaks for itself-record tax rises and a 1.7 percentage point increase in the share of gross domestic product going to taxation under Mr Howard. That was his record after five years as the Treasurer of Australia.


The DEPUTY PRESIDENT —Order! The honourable senator's time has expired.