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Wednesday, 25 February 1987
Page: 605

Senator AULICH(3.24) —Mr Deputy President--

Senator Walters —They haven't got a Minister again.

Senator AULICH —I rise to speak and yet I get an interjection before I have mentioned anything other than your title, Mr Deputy President. It is very interesting, is it not? Today, we are debating a motion moved by the Opposition which criticises the Government for its policies on housing and interest rates. It is strange that those who do not have a policy in that area and who failed to deliver during their seven years in government should be determined to initiate this public debate today. It would be more productive for them if they sorted out their own policies and dealt with the divine windbag from the north who is blowing a hole in all their policies-let alone in their housing and taxation policies-before they ventured into this chamber to try to get a debate which would be of use to the public at large. After all, the public is entitled to consider what options are around in terms of both delivery and future policy. Certainly we have not seen the delivery, and we have yet to see the policy. It would have been more appropriate for the issue to have been raised at a later date but, as it has been raised today, we as a Government are quite happy to answer and refute the sorts of charges that have been made by Senator Archer.

Actions speak louder than words, even in this benighted chamber. For the sake of the record, I will remind the Senate of the massive improvements in housing and economic management that the Government has been able to bring about in the four short years that it has been in office-improvements that have been made in the face of harsh economic realities bearing down on this country. The housing industry has been lifted out of the doldrums in which it was placed when the Fraser Government was in office, enabling many more Australians to purchase their own homes than was possible in the Fraser years.

Let us consider housing starts. Only 105,000 commencements occurred in 1982-83, the last year of the Fraser Government, By 1984-85, we had increased that to 152,700, a 45 per cent increase on the previous year-the highest increase since the Whitlam years of 1973-74. Since then, the figures have been 136,000 in 1985-86, a predicted 122,000 in 1986-87, and a predicted 130,000 in 1987-88.

Senator Archer —Rubbish!

Senator AULICH —The Opposition can say: `Rubbish!' It can talk about the future as if it has some control over it. It does have one impact in the sense that it is constantly trying to talk down the Australian economy, business confidence and consumer confidence. Sometimes that sort of talking down has an effect. It is a negative, carping approach which does no good for this country and no good for confidence in all sorts of areas, particularly the retail industry. However, the Opposition continues with it because, basically, it is negative. Its members do not really care about being back in government. Their behaviour over the past three or four weeks shows that many of them are intent on staying on the Opposition benches.

I turn to employment in the housing and construction industry. In August 1986, the figure stood at 491,000, which means that 70,000 more people were employed in that industry over the figure that prevailed when we first came to office. A total of 70,000 more people were employed in the industry than was the case during the benighted Fraser years. A comparison with the Fraser Government is again relevant when we look at home lending. In the last three years of the Fraser Government we saw 735,000 home loans by major lenders. In three years of Labor, we saw the figure jump 179,000 over the figure for the Fraser period; that is, 179,000 extra Australian families were given a chance to own their own homes-people who would not have had that chance under the Fraser Government.

In April 1986, we established a housing package intended to maintain the high level of activity in that area. As many people know, the package included maintaining a ceiling of 13 1/2 per cent on existing loans, providing protection for 900,000 existing home buyers who were clients of banks. The Government provided $145m as a supplement to those banks to keep interest rates down. In return, the banks agreed to lend $6 billion for housing in 1986-87 and to promote the concept of low start loans, a system of lending which provides for heavier repayments to be made later in a person's life rather than at an earlier stage when personal commitments, such as children and lower salaries, make high repayments more difficult. The result is that the $6 billion target will be met. In fact, it will be about $8 billion. Fifteen per cent of all those loans have been granted on a low start basis. A further result that savings bank deposits increased by around 13 per cent in the year ended December 1986. Again, that is a reflection of the increasing confidence that Australians have had over the past three years.

Let us consider public housing. In 1984 we renegotiated the Commonwealth-State Housing Agreement to broaden the range of people who could qualify for assistance to make the purchase of public housing easier, especially as we based those repayments on the applicant's income. We increased total spending in that area to $1,278m in 1986-87, up 130 per cent on funding to public housing supplied by the Liberals in 1982-83-not a bad change in that area. No credit has been given for that by the current Opposition spokesman on housing, Senator Archer. I have not heard him mention one word about that increased public spending. It was certainly not mentioned when his fellow Tasmanian Kevin Newman was in charge of this area.

Let us consider the first home owners scheme, which we introduced in October 1983. The basic formula was about $6,000 for a deposit subsidy, interest subsidy or a mixture of both. Since then over $1 billion has been committed, with 220,000 successful applicants, people who did not need a savings record as was the case under previous Liberal governments. This was one of the major success stories of the Hawke Government. Again, this was not once mentioned by the Opposition spokesman on housing. Why? Because it would kill him to give credit where credit is due. It would kill him to think about the people out there who have been given a chance by this Government over the last three or four years to buy their own homes or to get into public housing.

So, in a difficult economic situation, the Government has revived the housing industry and pulled it out of the doldrums that existed under the Fraser Government, opening the housing door to many more Australians than was the case previously. All of this has been achieved, as I have said, in difficult economic circumstances, at a time when necessary major restructuring of the Australian economy is being organised by this Government. It has not been easy.

We are facing a different world in terms of housing than the world which faced our parents and the home owners or home buyers of the 1960s. It is sheer hypocrisy for the Liberal Party and the National Party to pretend that we are living in that world. We are not living in that cocooned, insulated world. We are living in a world where economic realities are facing us every day as a result of the Australian dollar-for example, measuring our performance as a nation against other nations. Housing is no longer insulated from the total economic activity of this country. Housing loans are no longer being favoured vis-a-vis other types of loans, with the exception, as I have said, of the ceiling of 13 1/2 per cent.

It was easy in those days for people to go out and borrow at low interest rates. It was easy for people to own their own homes in that period simply because housing was a favoured area of the Australian economy and because people in those days were quite happy to have low returns on their savings bank accounts, on the spare cash they had to invest. For example, I recall 4 per cent being a most suitable return for most people on an investment in the late 1950s and early 1960s. Those days are gone. It is foolish and hypocritical of the Opposition to attempt to bring them back because, as I said, we are now in a world of international monetary connection rather than being something that just sits out on a limb at the end of the Pacific.

In light of the fact that we are in this different economic situation where harder decisions have to be taken about the economy, the Government's activities ought to be commended. I remind honourable senators, and in this case the shadow spokesman for housing, that unit trusts, for example-one area of arm's length investment-have been growing at about 30 per cent per annum and are now worth about $10 billion in unlisted trusts alone. It is hypocritical to talk about people expecting low interest loans for their houses if they, ordinary investors, are quite happy to go into unlisted trusts, unit trusts or other forms of arm's length management and investment accounts to seek high interest rates. Somewhere along the line we have to take tit for tat. One pays higher interest rates if one, and every other Australian citizen, is looking for higher returns on one's investment. It is these unit trusts and other arm's length management accounts that the Opposition has been promoting as a way of life and a way of investment in this community. So I am surprised that the Opposition is calling for a return to the 1960s at the very time it is encouraging people to maximise their investment returns in other areas. The two just do not fit. We live in one world or the other. We cannot have our feet straddling both the 1950s and the 1980s.

Let us consider the interest rate question raised by the Opposition. At the outset it must be said that this criticism of the Government is coming from a group of people who had seven years in government, who had the chance to make the tough decision about restructuring the Australian economy so that we would be competitive in the 1990s. What did they do? They were dishonest. They allowed, and even encouraged, Australians to go on believing that we could be insulated behind barriers as if the rest of the world owed us a living. When oil, coal and iron ore prices were up, when Bass Strait oil was flowing and the world markets were much better we had the revenue to decrease our international debts. What did we do? What did Mr Howard, the Treasurer, and Mr Fraser do about restructuring Australia's secondary industry during that period of greater returns on our resource commodities? The answer is nothing. What did Mr Howard and the Liberals do about the current account deficit, which had reached 6 per cent of gross domestic product in 1981-82? The answer again is nothing.

What did they do about wages, which were out of control and which were damaging our competitiveness, and about the industrial relations problems we had at the time which were damaging our reliability? They did nothing. What did they do about inflation, which reached 11 per cent? They did nothing. What did they do about the three quarters of a million people who were unemployed in this country during that period? The answer is nothing. What did they do about floating the Australian dollar, a measure which they knew they had to take to ensure that Australia's financial situation was more responsible to international markets? They did nothing. The Treasurer, Mr Howard, kept the dollar at a false level which was so overvalued it damaged the secondary industries and farmers who relied on overseas markets. Senator Archer knows very well that that was the major problem facing the Fraser Government in that period, yet it did nothing. I did not hear his voice being raised in criticism at the time.

The previous Government's record of management, in short, was appalling. It was cynical, geared as it was to winning elections. There was one thing that Malcolm Fraser could do well: He could win election after election. He had a great record of winning elections, but a terrible record of turning this country around to a position of competitiveness with comparative countries, particularly those in the Organisation for Economic Co-operation and Development, and particularly in terms of preparing us to face the 1990s. The children, the young people whom Senator Archer talks about, were let down during that period of cynical manipulation of the Australian economy, that period of cowardice in the face of some of the decisions that should have been made.

Let us consider some of those decisions as we are talking about tax and interest rates. Everyone knows that the double tax on dividends that had operated since 1936 was a major handicap to private enterprise, particularly to small companies. What did Mr Howard do about it at the time? He literally did nothing. I believe that he tried to move it in Cabinet at one stage but backed off when again he was told that the Treasury could not afford it-advice from his own officers. Who did it? This Government did it. Who is being respected in the business community for removing double taxation on dividends? This Government is being respected, not the Opposition, which now sits so humbly on the other side of this chamber.

I refer now to the consumption tax, about which John Howard has made so many promises recently-or at least he did until the divine windbag from the north, Sir Joh Bjelke-Petersen, scattered his policies all over the place. Who tried it? We did. Again, Mr Howard and his spokesman in this chamber speak of the need to reduce marginal tax rates. He had the opportunity. He had seven years in government. He had revenues from Bass Strait oil. He had revenues from taxation on all the resources development that was occurring in this country. He had revenue from the high market prices that were being fetched for raw materials leaving this country. What did he do about it? He did nothing. We were the ones who had the courage to forsake the revenue and to cut personal income tax rates, moving them back ultimately to the 49 per cent or so that I think is an appropriate level. So Mr Howard goes from first having no courage to cut even one cent off the marginal tax rates to now calling for a rate of 30-odd per cent.

Where is the honesty in a person who, when he had seven years in government, did nothing about removing the burden on ordinary pay as you earn taxpayers and who then suddenly takes a revolutionary, radical, and tough position when in opposition? I cannot have much respect for that sort of person; even Joh Bjelke-Petersen has no respect for that sort of person and the community at large has no respect for that sort of person.

What about the Howard tax policy, as opposed to the Sinclair tax policy or the Bjelke-Petersen tax policy? We have already costed the options. The Opposition agrees that our costings are basically accurate. The conclusion we have come to, depending on whether or not we account for the future introduction of a consumption tax, leaves us with a deficit of approximately $14 billion. That $14 billion is based upon the resurrection of a number of tax rorts which this Government put out of operation after many years of their operating to distort the Australian economy and investment to the point where people were more concerned about minimising and evading their income tax and company tax than about ensuring that their companies were investing profitably and positively for the future.

That distortion is now coming home to roost. It is stinging those people in the business community who have based their personal life styles and company activities upon the sorts of rorts that were allowed to stay in the tax system for so many years. Many honourable senators opposite agree with me; they are nodding their heads because they know that a tax on the rorts and ramps should have occurred a long time ago when the Opposition was in government. One would hope that if ever the Opposition gets the opportunity to get back into government-it may be a long time, so we will give Opposition senators the chance to think about it-the Opposition will take the opportunity to maintain the attack that we are making on these people who have rorted the system for so many years.

I want to look at some of those areas of rorts and ramps that the Opposition wants to bring back for the sake of those people who have been pushing within the Opposition parties. I mention the cost of some of them, just for the record. Firstly, the fringe benefits tax and substantiation: For those people in the real world who have been confused about some of the noise made about the fringe benefit tax, much of it is really a tax on those people who believe that they can drive a Mercedes or Jaguar at the taxpayers' expense; take their wives out to dinner three times a week and charge it to the operating costs of the company at the taxpayers' expense; send their children to private schools and charge it to the company; or have holidays overseas and charge them to the company-ultimately at the expense of the ordinary taxpayers in the community. That is what the fringe benefits tax is all about. It is a tax to attempt to ensure that benefits paid to people are paid in the form of a decent salary, rather than the rorts which were becoming part of the system. The tax deductibility of entertainment expenses was in the same boat, as is the capital gains tax. That applies to people who did not want to make a return on their capital investments at a reasonable level which would suit their shareholders and themselves, but who wanted to sit on an asset and let it grow into a major capital gain which they disposed of at a later date without paying tax on it. That was one of the few rorts that remained anywhere in the Western world in relation to capital gains. It was still in the system when we came to government.

Negative gearing was a system where by doctors, lawyers, Indian chiefs and thieves put their money into farms, which drove up the price of land in a particular area, and then wrote off the income from their businesses against a farm which did not even need to be productive. The basis of that whole rort was to make a loss. If the Opposition still supports the bringing in of these rorts and ramps, as it has indicated in the past week or so, God help it when it has to face the electorate at large.

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