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Thursday, 30 April 1987
Page: 2105

Senator KNOWLES(5.31) —The motion that we are debating today is, I think, one that is particularly important. I am very disappointed that the Government has completely disregarded the thrust behind this, along with the Australian Democrats, of course, who do not consider that the economy is important enough even to talk about the real tragedies that are happening in Australia today but purely and simply launch into another vitriolic attack on the Liberal Party. If they had some of their own policies to talk about it might not be so bad.

This country is confronted with real, identifiable problems. Retail sales, for example, continue to stagnate with no real increases after taking into account the levels of inflation over the last year. Motor vehicle registrations for new car sales during the first eight months of the 1986-87 financial year continued to decline by an average of 22 per cent. Just imagine the effect on company profits, on staffing levels, on staffing incomes and on those associated with any form of maintenance of new motor vehicles. It stretches across such a broad spectrum that it is unthinkable. This Government has many things to answer for.

Many of the problems in the motor vehicle industry are directly related to high interest rates, the fringe benefits tax, the falling dollar and economic policies generally. This Government's record is nothing short of a disaster. It is the biggest taxing government in peacetime history, it is the biggest spending government in peacetime history and it has brought about the lowest value of the Australian dollar ever, which is down 30 per cent since it took office, in what would, under normal circumstances, be only four short years but which, unfortunately, has been four long years. It has presided over the highest interest rates ever, the largest stock of foreign debt ever, the highest current account deficit ever and the worst relative inflation rate ever. The list goes on. It is a very sad and sorry story. This Government has the distinction of being the first government to lose Australia's AAA credit rating, and history shows us that any other country that has lost a AAA credit rating has never got it back. It was a very sad day for Australia when, in September last year, Moody's Investor Services Inc. reduced our credit rating, as it was a sad day in December when Standard and Poors did the same.

Let us look at what has happened under this Government to dwelling approvals. In the first eight months of this financial year they have also continued to decline-a decline which in that time has averaged out to 19 per cent. That, of course, can be directly attributed to the exorbitant level of interest rates, the introduction of a capital gains tax, the abolition of negative gearing and the increased and ever-increasing cost of materials and so forth. As I say, we can also mention interest rates on housing loans, which are now at an absurd level by comparison to when this disastrous Government took office. The great Australian dream of owning one's own home is getting further and further away from so many. Of course, there are so many who have already, in their hopes, achieved that great Australian dream by purchasing their own home and who are now confronted with the problem of not being able to afford the repayments on the mortgage. That in itself is a tragedy of enormous magnitude in a country such as Australia.

The effect that all this is having on businesses throughout Australia is spreading to the levels of unemployment. The current unemployment rate is 8.2 per cent, which I might add is higher than that of all but five of the full 86 months of the former coalition Government. This Government is wonderful at regurgitating what it inherited when it took office. It would be wonderful if we could return to the situation that existed when it took office. If we could, unemployment would not be so high, interest rates would not be so high, the inflation rate would not be so high and the standard of living for families would not be so bad.

When we look at the business sector we see that this Government is responsible for the imposition of a crushing burden on both large and small businesses-as I mentioned before, the highest real interest rates in Australian history. Let us be quite clear what causes this. There are two major reasons, which are the direct result of the policies of a government that claims somehow to be the friend of business. The first is a deliberate policy of raising interest rates at home in order to attract foreign capital and to protect the value of the dollar. We have not had a free float of the dollar in accord with market principles, but a dirty float manipulated by this Government, which forces up interest rates and destroys business profitability. The second and even more basic reason why business suffers from interest rates and from anti-business taxes is the refusal of this Government to cut its spending. There can be no tax reform for businesses, small or large, or for anyone else for that matter, when expenditure is not reduced and indeed continues to rise. This is the big difference between a Liberal Party government and an Australian Labor Party government.

We stand committed to zero real growth in expenditure as a prime tool in cutting taxes and interest rates and restoring business profitability. Had our policies been followed in the four years of the Hawke Government, $20 billion would have been saved. But, no, the Government has not followed them. I might add that that $20 billion would not have had to be paid directly by business in taxation or indirectly through interest rates. The ALP's record speaks for itself. In the three years to 1986-87, expenditure by government, other than that financed by fees and charges, rose 9.8 per cent per year. That is bad enough, but there has been a hidden increase in government spending financed from those revenue sources, linked directly to Budget outlays. Air navigation charges offset against civil aviation expenditure are a prime example, and this kind of expenditure has been rising at an annual rate of 29 per cent under this Labor Government.

What makes this highly relevant to this debate is the fact that it is not only an increase in spending that is cumulatively destructive, but it is financed by greater imposition on the business sector that further damages its profitability. But, as we all know, we are faced with a government that considers profit to be a dirty word, and therefore we cannot make profits and at the same time be respectable. I believe that profits are healthy. I believe that everyone has to be given the incentive to make profits. If we want employment levels to increase in this country, businesses simply must be able to make more profits. We have seen so many situations for so long where small business operators particularly have been forced into bankruptcy. As my colleague Senator Watson said earlier, we have the highest levels of bankruptcy ever in this country, and they are forever increasing. It is very sad to see the small business sector suffering and the proprietors of small businesses suffering. It is not uncommon-and we all know it not to be uncommon-for small business proprietors actually to take home less money on a weekly basis than some of their staff. We have to look seriously at whether these people can afford to continue in that way in their personal lives-let alone the viability of their companies-when living standards are continuing to decrease. We should help them and make them survive by lowering interest rates, getting back to a position of incentive. Increased government charges that have affected business inputs in particular can be as damaging as the shirt front attacks that businesses have had over the last 12 months in particular, a la the fringe benefits tax, the capital gains tax, and the rise to 49 per cent in corporate tax.

The spending of this Government that causes the destruction of business profitability cannot all be excused as basic, popular and/or necessary. Some of it is causing further direct damage to the business community. What else are we to make of that Hawke ALP Government quango, the National Occupational Health and Safety Commission? It costs the taxpayer a mere $18m. There are no draft guidelines for safe manual handling. That will be a massive imposition on business and could send many smaller businesses to the wall. It is absolutely ridiculous to limit the manual lifting weight to 16 kilos, with no unaided lifting from 16 to 34 kilos, and only mechanical lifting above 34 kilos. This will so add to labour costs and to prices, therefore pricing businesses out of business. But this is the Government's quango that is recommending these inane and insane recommendations. It is a recommendation from a body that was set up by this Government. That says it all. How many ordinary citizens, especially women, have to carry more than 16 kilos unaided? It is just absurd. This quango that consumes tax revenue and diminishes business profitability will be axed under a Liberal government along with several other bodies which were established not for the public good but for the ideological satisfaction of the supporters of this Government. A Liberal government will have only three options: Axe, tax, or print money. Australians will demand that the first of these options be followed, as the other two are the failed devices of this Labor Government.

This Government talks about its rapport with the business sector and ignores the fact that the real rate of return on investment has declined from 18 per cent in 1970 to 9 per cent today. This is the statistic that matters, not the figures showing raw fluctuations in profitability. Actions, I believe, always speak louder than words. It is the fringe benefits tax that has devastated the car industry and has added to business costs right down the line. The capital gains tax is a time bomb that will kill the incentive of smaller businesses. It is so complex that its own masters are at a loss to understand it. I am proud to stand here as a Liberal and pledge yet again that these taxes will go under a future Liberal government. Massive overseas borrowings do nothing for interest rates, and therefore nothing in the long term for business profitability.

The Liberal leader got it right in one hit when he said that Australia needed more overseas equity and less overseas borrowing. But what is the Hawke Government doing to encourage this? It maintains the Foreign Investment Review Board that still constitutes a bureaucratic check on investment, so much so that an ALP member of the Western Australia parliament, Mr Stephens, called for its abolition last year. Mr Stephens had better hope for a Liberal government in Canberra because it is the only Party with the courage to do that. Neither will we continue with the interaction of foreign tax credit systems with the new dividend imputation laws which can only discourage equity investment.

There is not much point in this Government pointing to its one genuine tax reform, the abolition of double taxation on some dividends, if this is to result in further reduced returns from business investment. The average wage earner who I, as a Liberal would hope would be encouraged into direct investment by a proper imputation scheme, may find little incentive when Australian enterprises are paying among the highest corporate taxes in the Western world and when overseas equity is taxed out of our market place. Sometimes, it appears that we would be better off under declared enemies of business than the phoney allies of business such as the Prime Minister (Mr Hawke) and the Treasurer (Mr Keating). It is time that we all examined what the Government does rather than what it says because the two do not correlate.

The Liberal Party knows that business profitability can only be restored in a four-point program, none of which has been effectively tackled by this Hawke Labor government. We will not only restructure taxes on business and on families, but also we will cut them. We have given that commitment time and again, yet this Government keeps on saying: `Where is your tax policy'? I thought that it was meant to be the Government. Why does it not run the country? Why does it not have its own tax policies and implement them? Why? Because it is bereft of any ideas. It has nowhere to go. It knows that it is strangling this country to death by taxes. Let it worry about its own tax policy. Let it worry about where it is going. Why does it need our tax policy? It may be very well to think that it is hilarious, Mr Acting Deputy President, but you, as a member of this Government, should be considering where this Government is taking this country instead of its saying: `It is all too hard. Let's get the Opposition's tax policy and try to implement it'. We will release out tax policy when we are good and ready. We have already committed ourselves to lowering the tax base and the tax bite generally, and we will deliver that. We will control those government charges and indirect taxes that force up the cost of business inputs that cause special damage to our export industries.

Fuel excise is up from 6c to 20c a litre under this Government. That speaks for itself. Finally, we will enforce the rule of law, the basic civil law, in industrial relations. The Labor Party is not merely inadequate in this field but down right destructive. Its actions, or lack of them, play a part in reduced investment and productivity. We must always consider what is happening to the business sector because it is that sector that provides the economic viability of this country. It provides employment. It provides the future for this country. But no, at the moment housing rents are rising. In fact, people are lucky if they can get a house to rent. In my State of Western Australia housing rental properties are down to under 1 per cent. In many suburbs the number has risen in the last 12 months up to between 30 and 50 per cent. That is just exorbitant, thanks to this Government's policy. Not only are businesses affected but also families are being affected. We cannot afford to have people in a situation such as that of a young gentleman I spoke to the other day. He was earning $284 a week with a dependent spouse and one and three-quarter children. I might add that the $284 is a gross amount, not a net amount. How would anyone on the Government benches like to be earning that amount and trying to survive? But that is what this Government is doing with its new taxes on businesses. It is pushing costs right through the ceiling with its capital gains tax and the abolition of negative gearing. It is making properties impossible to rent.

Australia's gross foreign debt-let us not forget about that because it has tripled under this Government-is currently increasing at a rate of around $1,300 per second. To pay off that foreign debt would cost every man, woman and child $6,000. Where has every man, woman and child of Australia got $6,000 to pay off the debt that this country is running up on their behalf? The interest bill alone on our foreign debt is almost $10 a week for every man, woman and child. Senator Vigor seems to be indicating that that is not so.

Senator Vigor —It is mainly in the private sector.

Senator KNOWLES —To pay it off and amortise it over the whole community, Senator, would cost every man, woman and child $6,000. The interest on it is almost $10 a week.

Senator Short —It is $40 a week for an average family of four.

Senator KNOWLES —Exactly, Senator. People are battling to pay their grocery bills, let alone the bills that the government is running up on their behalf. The current situation is absolutely and utterly absurd. The Government must be prepared to start reversing the trends. Prime interest rates have also gone through the roof. The Government is pushing business beyond the brink of being broke; it is pushing it right into the bankruptcy courts. The effect this has had on trading viability has been enormous and, of course, self-evident. As I have said often, the effect that it is having on employment is an absolute shame. This Government deserves to be condemned for the way it is leading this country down an economically disastrous path.

The DEPUTY PRESIDENT —Order! The time for consideration of General Business has now expired.