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Thursday, 26 February 1987
Page: 700

Senator McKIERNAN —My question is directed to the Minister representing the Treasurer. I refer to a report in this morning's Age newspaper that the President of the National Farmers Federation, Ian McLachlan, has called on the Government to cut outlays by $10 billion in 1987-88 and has made demands for a flat tax, the repeal of the fringe benefits tax and capital gains tax, and the reintroduction of deductibility for entertainment expenses. I ask the Minister: What would be the effect of these measures on farmers if they were implemented? If the result would not be to the average farmer's advantage, would Mr McLachlan be advocating those measures for the benefit of the nation?

Senator WALSH —In response to the second part of the question: What would be the effect of Mr McLachlan's--

Senator Chaney —On a point of order, Mr President: It is not for the Minister to deal with the motives of other people or what the effects of their actions might be. He can answer as to his own portfolio and not in the terms asked of him in the latter part of the question.

The PRESIDENT —I have no power to direct a Minister on how to answer a question. However, I ask the Minister to answer only that part of the question that deals directly with the portfolio that he represents.

Senator WALSH —Certainly, Mr President. The second part of the question asked: What would be the effect of the measures advocated by Mr McLachlan on farmers, if they were implemented? The effects would be from somewhat damaging to quite devastating in many cases. For example, it is well known that not too many cockies had the free boozy tax deductible lunch, which is one of the things on Mr McLachlan's wish list. Because land prices do not rise in real terms over a long period, farmers would not be affected by the capital gains tax, unless they had other assets-assets other than their farms. Fewer than 15 per cent of farmers would be liable to any fringe benefits tax at all. The great majority of those would be liable to a very limited amount of fringe benefits tax. If all of those things were done, revenue would fall short by more than $1 billion which would of course, in the absence of other measures, require offsetting taxes, raised somewhere else, which farmers probably would have to pay.

Any flat tax proposal-it depends on the rate at which it is levied-which raises as much revenue as the present income tax rate scale does would require everybody on less than about $27,000 to pay more tax than they do now. Flat tax equals more tax for 85 per cent of the people and more than 85 per cent of farmers. That is one of the other policies which Mr McLachlan advocates. There is an alternative; that is, to massively cut government expenditure. Mr McLachlan has suggested that $10 billion would be an appropriate amount. I believe that he has nominated education and health as two areas where there could be a massive cut in government expenditure.

It is a fact, even though some of the published figures are not particularly reliable, that farm incomes are extremely low by historical standards, and are significantly lower-even after all the appropriate adjustments are made-than average weekly earnings. Proposals to cut massive amounts off health expenditure-say we abolish Medicare and move back to private insurance-would inevitably cause people on lower incomes, and that includes the majority of farmers these days, to pay more for health services than they pay now. Likewise, if there were to be a massive withdrawal of public funding from education and some sort of private purchase of education services right across the board that would impact adversely on lower income groups. It happens to be, at this stage and for the near future, that the average farmer and the great majority of farmers are likely to be in that low income category.

Mr McLachlan, who is an absentee rural land- lord, apparently has got well out of touch with the people he purports to represent. It might also be suggested that he is not running those campaigns for farmers; he is running them for himself. Mr McLachlan, as President of the NFF, has abused that position and has used the farmers he purports to represent as pawns in his political campaign, in his extraparliamentary challenge for the Liberal Party leadership. If that challenge fails, he will have the consolation prize-if he manages to get his policies accepted-of a massive income redistribution in favour of the rich; that is, people like him and his fellow Elders-IXL directors, and big landholders-members of the ruling class who were born with a gold spoon in their mouths and had somebody put it back in every time it fell out. That is the class that McLachlan comes from, and that is the class that he represents. He certainly does not represent the typical or the great majority of farmers for whom he purports to speak. The arrogance that he displays is typical of the arrogance of the self-ordained ruling class.