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Wednesday, 18 March 1987
Page: 869


Senator BROWNHILL(11.56) —I take this opportunity, in debating the Taxation Laws Amendment Bill (No. 5) 1986 and the Income Tax Amendment Bill 1986, to highlight the very desperate position rural Australians are in because of the taxation and other policies this Government has enacted since it has been in power. We all know that tax revenue in real terms has increased at an annual rate of some 4.9 per cent in the four Hawke Government years and that tax receipts as a percentage of gross domestic product increased to a record of 25 per cent in 1984-85. They have risen even more since then. We all know that this Labor Government is the biggest taxing government in Australia's peacetime history. Senator Short has made these points very clearly already. Even with the so-called tax cuts this Government has told the people it is going to give them, it will still require an additional $15-a-week cut, on top of the latest cuts, to reduce the income tax burden of a single income family to the level which applied in March 1983. It will require an additional $8 tax cut to put a single person back in the same league park he was in in 1983.

I believe that this legislation is just another fiddle at the edges of reform. This particular fiddle is typical of the others. It is not thought through and no consideration has been given to its implications. Provisional tax is always a touchy subject for any business because, let us face it, none of us likes to pay tax. However, tax is one of life's necessary evils. Farmers, like other self-employed people, are liable for provisional tax in the years when they actually make an income, although this is happening less and less in the present economic climate. Making the payments quarterly will have a very adverse effect on some primary producers. Many will be required to make payments of the tax in advance of earning their income. Senator Short has already made the point about others in the community who will have to pay tax on income that has not even been earned.

Farming is a very seasonal occupation, with expenditure very heavy for many months of the year and no income for several. Then, if the crop is successful or the wool clip gets sold, a cheque arrives in the mail-often representing the total yearly income of that particular property. So, unlike many other businesses, where cash flow is constant, cash flow in farming is particularly irregular. It is also particularly difficult to estimate income as a farmer. So many variables are outside the control of the farmer. There is the weather, there are the prices farmers will receive for their produce and there is also Government intervention. We do not know when this Government will intervene next in our lives. Irrespective of a businessman's skills, it is impossible for him to know what the price of beef at the saleyards will be even a week ahead, much less three months ahead. Most farmers usually do not earn any money from July to January. Previously they paid provisional tax in March, after income had started to come in. Now they will be expected to pay earlier and in quarters when there is no income whatsoever. The interest rate on the money they will have to borrow to pay their tax is something like 20.25 per cent. So, farmers will be slugged one way by this Government with the quarterly provisional tax requirements and another way with the high interest rates which have been foisted upon them by this Government.

There is also the question of late and inaccurate payment and estimates of the tax. Because the estimates will now need to be done four times a year, the opportunity for error is increased and the possibility of late payment is also increased. Whilst it can be argued that penalties will only be proportional-if one is late once one pays only a quarter of the penalty which might have applied if one were late under the old rules-the fact remains that someone who has never been late before because it was a once a year job may now incur penalties because the estimates and payments of the tax have to be made so much more frequently. There will also be additional charges for accounting, which probably has not been mentioned so far in this debate.

These changes to the provisional tax payments will raise something like an additional $90m during the financial year. This comes at a time when interest rates, as I have already said, are 20.25 per cent and we do not know where they are going. In fact, we were told in this chamber the other day that they may not fall until the middle of next year. So, there will be no help on interest rates until that time-if then. Many businesses will be forced to borrow at these high rates in order to pay their provisional taxes. This all comes from a Government which claims to have the best interests of the taxpayer at heart. All it is doing is helping to prop up a bankrupt Government, a Government that has a domestic deficit blow-out, a Government that is not taking much interest in what is happening in rural communities. The Government does not really care from whom it is going to extract the extra income which it needs to keep its Budget deficit under control.

The Opposition is very aware of the appalling state of taxation in Australia at present. We know that we cannot afford to make any mistakes in developing the right mix. We know that Australia can no longer afford-if ever it could-the luxury of policy-making on the run, as this Government has done, particularly in the area of tax reform. We also know that Australians will not be fooled by a pea and thimble trick, that they want real tax relief, that they want a fairer and more equitable taxation system and that they are not getting it from this Government. Australians know that fiddles at the edges, such as the Taxation Laws Amendment Bill (No. 5), are just another shuffle. They know that this measure will help no one except the revenue collectors, that it will ease no burdens for the businessman and that, along with other taxes such as the fringe benefits tax and the capital gains tax, it simply means that we will pay the Government more and more. All these additional taxes are knocking incentive out of an already slugged export income producing sector-the farming sector of this community.

Let us consider the cost to the community of the fringe benefits tax. It costs probably some three times more than it is estimated to cost the community. I do not think anyone yet has even considered the full cost of the fringe benefits tax-its cost in terms of accountants and time, quarterly returns, assessment costs and the cost of the bureaucracy that is needed to administer the tax. The rural community is hurting very badly at the moment. Its ability to pay more is no longer an option. In recent weeks the city media have at last started to highlight the real tragedies involved in agriculture. Repossession of farm machinery is no longer unusual; it is becoming a daily occurrence right across Australia. Farmers are being evicted from their homes and farms, banks are foreclosing and farmers are committing suicide. It is happening all over Australia and it is happening at this very minute. The Government knows it, but it chooses to ignore it. I do not really know whether it thinks that the rural sector is not likely ever to vote for it in big numbers again, so the farmers are not worth helping, but I assure the Government that the rural community is not happy with what the Hawke Labor Government is doing to it.

I do know that the farmers of Australia provide our much needed export dollars. They have played a major part in the development of this country and they will continue to do so, whether or not we are able to revitalise our manufacturing industries. The average indebtedness in the grain sector has been estimated at $250,000. I was told the other day by the Rural Assistance Board in New South Wales that probably that figure is now closer to $280,000. World commodity prices are falling and the debt is not likely to be reduced in the short term, especially with interest rates as they are, slugging those people who are producing a standard of living for all Australians.

For all farmers the largest component of their debt is interest rates, but other costs have also contributed. The cost of farm labour has risen by some 50 per cent since 1980, government charges have risen by over 80 per cent, inputs such as fertilisers have risen by nearly 50 per cent, freight charges have risen by something like 53 per cent and electricity charges have risen by 66 per cent. Those costs have hit the efficient and inefficient farmer equally. The size of the cost spiral is such that even the best, most financially well geared producers have suffered a major setback. These quarterly provisional tax requirements will slug them once again.

The Government appears to have ignored all the calls for help that have come from the rural community. Senator Walsh has even suggested that there are not enough farmers to worry about. But to allow thousands of grain producers to go out of business is economic suicide. To allow them and other farmers, through high interest rates, to work themselves deeper and deeper into debt is to commit Australia to a financial morass from which we may never recover. The rural sector cannot wait until 14 May in the forlorn hope that the Government will provide some relief. They need that relief now and they must get it now. The ability to provide relief is in the hands of the Federal Government; only the Government can redress the balance in the economy. Farmers and farmer organisations have called on the Government to review rural adjustment arrangements. Even the Minister for Primary Industry (Mr Kerin) is aware of the problem and acknowledges that something needs to be done and to be done immediately. But still all we get from this vampire-like Government is fiddly attempts to extract more and more blood from a very anaemic private sector, and now by way of the quarterly provisional tax instalments.

This tax legislation is virtually irrelevant to the rural sector. Farmers have been slugged so much by this Government that yet another impost will just add to the pile. Nearly two years ago the farmers of Australia rallied and called on the Government for help. Nearly two years on they are still waiting for that help. For many the waiting became too much and they chose either to walk off their farms or to take other more drastic action. I am not sure what more farmers have to do to make this Government wake up to the appalling mess it has created. I am not sure how many small businesses have to close and how many more workers have to get thrown on the unemployment heap before we get some action. What I do know is that Australians need more action from the Government, more than just fiddly legislation such as the Taxation Laws Amendment Bill (No. 5), to solve their problems. They need incentives, not disincentives like this legislation.