Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Wednesday, 25 February 1987
Page: 613

Senator CHILDS(4.13) —I welcome the opportunity to discuss the Government's performance on the economy. Today the Opposition has offered us another pathetic challenge; this time a matter of urgency relating to housing, home ownership, interest rates and taxation. It is symptomatic of the chaos and confusion in the teetering ranks of the Opposition that it has the temerity to criticise the Government. Firstly, let me address the program of the Government. Since April last year its program has been typified by the very successful home ownership assistance package. Last year we pegged, and will continue to peg, the 13 1/2 per cent rate for those who took out loans before April last year in order to protect the nearly 1 1/2 million people associated with those 900,000 loans. We deregulated new loans with the result that many of the savings banks and building societies are continuing to provide loans at 15 1/2 per cent.

The success of this package is reflected by the fact that there has been a great growth in savings bank deposits. In March last year they were running at only 2 per cent; in December last year it was increasing to the annual rate of 13.2 per cent. Prior to the package, savings bank lending was running at about $3,500m per year; after the package, in the three months to November last year, lending for savings banks was running at $9,000m per year. With regard to lending for all significant lenders, the December figures show that lending for housing was running at an annual rate of $13,000m. We are also continuing with the first home owners scheme, another successful initiative of this Government. Unlike the situation under the previous Government's deposit assistance scheme, loan applicants do not need a savings history, and an interest subsidy in a lump sum is paid out under this Government. The current rate of approvals is running between 700 and 800 per month. We are also pressing the banks to offer low start loans under the guidelines of the package. These loans are particularly important to first home owners. The Minister for Housing and Construction, Mr West, has pointed out the figures. With a 15 1/2 per cent interest loan of $50,000, repayments are $676 per month. In contrast, payments of $522 a month on a Commonwealth Savings Bank low start loan have the effect of making the starting rate of the loan about 9 1/2 per cent. This is another initiative of this Government.

Unlike the Opposition, we intend to hold public housing policies in place. We have offered $1.3 billion to the States for 1986-87, which will result in some 18,000 additions to public housing stocks. We can compare this with the 8,500 additions in the last year of the former Government, the Fraser Government. Unfortunately, there has been a deadly silence from the Opposition about housing in the Fraser years. The figures we have on the board are very significant. We have increased employment in the housing and construction industry by 100,000 over the last three years of this Government. That is the evidence of the progress in housing made by the Hawke Labor Government.

What is significant, of course, in the contributions of Senator Archer and Senator Jessop is that they have not dealt with the housing experience in the Fraser Government. They were both supporters of that Government. When the previous Government left office there were 105,000 starts a year. This compares with a figure now of 118,000 starts a year. The Opposition says that it will throw out the tied grants from the Commonwealth-State Housing Agreement, the mortgage and rental relief schemes and the crisis accommodation program. When the Opposition was in power, after the Whitlam Government, it cut spending on public housing to $264m-40 per cent lower than the funding in the years of the Whitlam Government. It is worth while to recall what the Liberal and National parties did last time they were in office. In contrast, this Government has increased the funding by 42 per cent in real terms since we came to power.

Supporters of the Opposition should be very worried today because we have had two senior front bench members of the Opposition speaking and they have not said what an Opposition housing or economic program is. They berated this Government but offered no alternatives on the vital question of taxation policy which is linked to the development of housing. I understand why Opposition members cannot say anything, because there is absolute confusion in their ranks as to what they might do. The Treasurer, Mr Keating, has already done some arithmetic. He has examined the Opposition's program. It is worth while having a look at what those opposite will actually do because people are entitled to know what an Opposition economic framework would be if they were to be successful. The first action that they would take in government would be to honour the promises they have made to return to members of the elite group in society they have represented over the years some of the money they had prior to this Government tightening up taxation. It would first return $900m from the fringe benefits tax and substantiation. It would give back $320m from tax deductibility of entertainment expenses and, of course, $25m from the capital gains tax. Although the capital gains tax was deplored by Senator Jessop, the lack of a capital gains tax distorted the development of our economy in the period of the Fraser Government and even before that. In addition, $10m would be restored by negative gearing for property investments. This gives a total of $1,345m that the Opposition has pledged from a repeal of this Government's reforms.

All these measures that this Government brought in to bring equity into the taxation system will be jettisoned by the Liberal Party. There would then be less money for housing, and particularly for public sector housing. Contrary to what Senator Jessop said, such a significant loss to public revenue would mean a reduction in public sector housing. Of course, the Opposition has already made a long list of promises to its supporters. It would give $2,850m from income splitting. I do not know whether that is operative at the moment, because from day to day rumours rush through the Opposition ranks about what is in and what is out of its economic policy.

Senator Jessop —You do not give details until the election is over.

Senator CHILDS —An amount of $115m is promised from the repeal of the wine sales tax. Senator Jessop interjects that we will not know until the election is on. But the reality is that the people facing the problem of getting a home at the moment ought to know how realistic the Liberal and National parties' promises on housing are. The Opposition parties say that they will repeal the lump sum superannuation to save $85m. They will also introduce child care tax rebates of $115m-to favour the wealthy people in society. We know that at the end of this term the Labor Government will have doubled the number of child care places in this country. But the Opposition parties want to favour the elite, and so make this promise. All the money for housing must be found somewhere, and it makes a hypocrisy of the Opposition's suggestion that this Government is involved in high taxation.

The Opposition will rebate petrol used by farmers and will restore income equalisation deposits and tax averaging, resulting in savings of $145m and $25m respectively. It will reinstitute the immediate write-off on conserving or conveying water, with a saving of $55m. It will abolish the sales tax on oils and lubricants, resulting in a saving of $70m, and remove the excise on brandy, saving $40m-giving a total of $3,840m. Of course, the promises do not stop there. In a statement in August last year Mr Howard made additional promises that have not yet been repudiated, and of course they include the repeal of the assets test, saving $160m.

We then move to the Opposition's industrial relations policy. Once again it has two bob each way. On the one hand, it says that there will be a 12 months wage freeze, with the tremendous effect that that will have, probably taking $500m from wage earners. On the other hand, and in addition to that, it will also get rid of the Prices Surveillance Authority. So the Opposition will use the potential home buyers, in a way, by preventing them from being able to bring some pressure to bear upon rising prices. This is particularly important, because another sinister aspect of the Opposition's industrial relations policy is to force wage and salary earners to negotiate at plant level to try to get increases. There is a real threat of the law of the jungle with the industrial relations policy, and it is in sharp contrast to the stability of the Hawke Government's industrial relations policy, through the prices and incomes accord, which of course Senator Archer disparaged but which has been the basis of the economic recovery in this country over the last three years.

Most sinister of all is the Opposition's tax policy, yet to be fully announced but based on newspaper reports, on partial announcements, and on the document which fell off a truck and which conveys thoughts of Senator Messner, the shadow Minister for finance and taxation matters. That is where the big money is going to come from because there is to be a rearrangement of the tax scales involving over $6 1/2 billion, a reduction in company tax of over $2 billion and, of course, the introduction of an 8 per cent broadly based consumption tax. It is the flat tax and the consumption tax promises of the Opposition that are particularly difficult for anybody concerned about home ownership, because what the Opposition has not told people is that the consumption tax will affect everything in the home-household furniture, curtains, blinds, electrical appliances, bed linen and household utensils. The last household survey carried out by the Australian Bureau of Statistics, in 1984, showed that the average Australian spent $27.69 a week in this area. A consumption tax would add $115 a year to that bill. This shows that the Opposition does speak with a forked tongue because, without declaring what it does, it evokes sympathy for people who are facing difficulties at the moment-and we do not deny those difficulties-yet what it has in store for people who are struggling to buy a home will be far worse.

I conclude by referring to what Senator Messner said about a flat tax. He said that 80 per cent of taxpayers earn below $27,000 and therefore would pay more tax. He warns his Liberal colleagues that the simplistic slogan of the National Party of Australia for a flat tax would have a devastating effect on anybody trying to buy a home, because 80 per cent of the people would be disadvantaged by the Liberal Party's flat tax proposals. Or are they those of the National Party leader from Queensland? Perhaps we will find out in a moment whether Senator Collard is going to support his Queensland Premier, his Leader, Mr Sinclair, or somebody else. We do not know what the Opposition will do.

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