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Wednesday, 6 May 1987
Page: 2406


Senator HAINES (Leader of the Australian Democrats)(3.49) —Senator Short, on behalf of the Liberal Party of Australia-although I am not quite sure whether it is also on behalf of the National Party of Australia-has introduced the following as a matter of public importance today:

The policy failures of the Hawke Government which have caused a decline in living standards and necessitated the introduction of a stringent mini-Budget.

I am a little surprised at the Liberal Party complaining about or even condemning the Government for introducing a mini-Budget in May after spending half of last year demanding that the Government do just such a thing in order to satisfy concerns that have been raised by business and industry in the community.


Senator Short —They should have got it right the first time, then we would not have needed a mini-Budget.


Senator HAINES —The honourable senator may well be right. The problem is that nobody in the community has any capacity to work out whether the Liberal Party is likely to get it right or whether the Liberal Party's policies are going to be any better, because so far the Liberal Party has not issued us with any and apparently is not planning to do so until closer to the time of the election. I wonder what sort of prescience the honourable senator has in order to be able to assess just when the publication time is going to be under those circumstances. While speaking of things that were extraordinary, I must say I found it a little odd too that Senator Short, for whom I have a very high regard, as he knows, should introduce a matter of public importance that talks about the decline in living standards and then spend most of his time talking about so-called problems facing the wealthy in this country. He canvassed, in particular--


Senator Short —I talked mainly about the average Australian family and how it was being savaged.


Senator HAINES —The honourable senator's definition of the average Australian family in that case should include the families of the John Elliotts, the Andrew Hays and so on of this world.


Senator Childs —He is the other Treasurer.


Senator HAINES —The other Liberal Party Treasurer, the other Liberal spokesman on Treasury matters-yes, indeed. Senator Short canvassed at some length what he called-I quote pretty exactly what he said-the huge increase in taxes which the Government had imposed specifically on business in Australia, but he made little mention, I repeat, of the plight of ordinary Australians and their families, unless he classifies people such as John Elliott, Andrew Hay and their families as being ordinary Australians families. He mentioned the difficulties that business and well-off individuals have faced as a consequence of the imposition of things such as wine taxes and lump sum superannuation taxes, without mentioning that his Senate colleagues, in fairness, I cannot remember whether Senator Short was here for all of this in 1984--


Senator Short —No.


Senator HAINES —In that case the honourable senator is excused from the opprobrium I am about to heap on the rest of his colleagues because they were the ones who were responsible for permitting the Government to introduce the original 10 per cent tax on wine, for not supporting us in attempting to amend the lump sum superannuation taxation legislation introduced by the Government that year and, of course, for supporting similar measures in last year's Budget-measures which doubled the tax on wine and imposed other measures which certainly did affect the living standards of Australians and which I will come to in a moment.

Senator Short talked about high interest rates impeding the growth and development of business and industry as well as harming average Australian families. That was one occasion when he did mention average Australian families and talked about their problems in acquiring loans for housing and so on. I certainly agree with him there, but he did not touch upon one of the biggest problems to arise in Australia recently and one of the main reasons for interest rates being as high as they are. It certainly is a matter of government policy and is to be condemned. Indeed, I have condemned it a number of times in this chamber in the last 12 months or so. That is the fact that demand for loans exceeds supply, and that of course pushes up market interest rates. That demand is exceeding supply at least partly because so many sectors of business are investing off-shore. Some of those businesses have tax free or tax concessional status. I refer to some of the larger superannuation and life funds which are investing large amounts of money off-shore, still retaining tax free or tax concessional status and reducing the supply that we have for domestic lending.

We also have to acknowledge that the Government is keeping interest rates at a reasonably high level deliberately because, although the rate is to some extent set by the market, the Government can affect interest rates and it has affected interest rates by keeping them reasonably high in order to dampen domestic demand for imported goods and, therefore, to increase the level of overseas investment. So the cause of high interest rates is multifarious. I think that Senator Short could have spent a little more time on attacking the Government in some of those areas. I suggest that there is some justification in the charge by some members of the Liberal Party that their Party has lost its soul, it has lost compassion and it has lost touch with the many Australians who need help far more than do the John Elliotts of this world or the other sorts of people to whom Senator Short, whether he intended to or not and whether he realised it or not, seemed to spend most of his time referring in the 20 minutes that he had on this issue.

Those Australians whom John Howard would like to speak for, and whom John Elliott apparently does speak for, have been getting wealthier, not poorer, under the policies of the Hawke Labor Government. According to the latest estimates, there are over 30,000 millionaires in Australia. I am certainly not going to complain about that if it produces better conditions for Australia as a whole and if indeed the mythical trickle-down effect actually did operate, but it does not. The top one per cent of Australians in terms of wealth are now worth over $230 billion. The top 10 per cent own 60 per cent of all wealth in Australia, whilst at the same time we have two million Australians living below the poverty line. Included in that number is something like 800,000 children.

While some Liberal spokesmen have said in recent days that poverty is a relative thing-it certainly is-and that we do not have the sort of poverty that exists in Third World countries, I would have thought that a country which sets itself as being relatively well-developed would deplore the fact that 800,000 children within its boundaries are living below the established poverty line. Yet we all know the view of the people who are trying to hijack the Liberal Party-people such as Andrew Hay-who say that there is no poverty in Australia and in saying that are forcing some senior spokespeople within the parliamentary wing of the Liberal Party to adopt that sort of attitude, to dismiss the very real problems of the two million people living in poverty and to concentrate on those small businesses that would like to be big businesses and those big businesses that already are.

John Elliott, for example, thinks wealthy individuals and big corporations are being taxed too highly despite the fact that by the use of various tax avoidance devices-perfectly legal, I hasten to point out but, nevertheless, remaining there because of Labor party policies that support these wealthy individuals and corporations-these companies have an effective tax rate which is below that of the average pay as you earn taxpayer. It is all very well for John Elliott to say that he is taking his bat and ball and going away from home because he does not like the fact that the top rate for business is going from 46 per cent to 49 per cent when America has a top rate of 33 per cent and the United Kingdom 35 per cent. The information that is to hand indicates that his company pays nothing like 46c, much less 49c in the dollar. After he has been able to use the legitimate tax avoidance measures that are still available under this Labor Government his tax payment comes down to a little under 11c in the dollar.

There are plenty of other companies such as his. In fact, John Spalvins was crowing to Australian Business magazine two or so years ago that he was able to keep his company's tax payable down to less than 1c in the dollar. That has been lifted considerably, thanks to some steps that this Government has taken to make the taxation system more equitable. But to listen to somebody who flies around the world in a jet plane with gold plated seat-belt buckles complain that he is paying too much company tax and he is going to go away is positively ludicrous.

I said earlier that it is ironic that the Howard Liberal Party should be concerned at falling living standards when it is, after all, directly responsible for some of them. I mentioned the lump sum superannuation taxation, the wine taxes and so on that were supported by Liberal and National Party senators in this place not only in 1984 but again last year. The Government cut the indexation of superannuation pensions and delayed the payment of pension increases in its last round of budgetary cuts. I did not notice the Liberal Party senators voting against those measures. I was on radio a week or so ago following Mr Charles Blunt, a National Party member in another place, who said that he, his Party and the Opposition generally, did not see it as their role to protect the population from the unfair, unfortunate legislation that is introduced by the Government they elected. I find that a most extraordinary attitude to take when, after all, members of parliament are, I would have thought, put here to look at legislation on its merits.

As part of the May mini-Budget review, the Government has been looking at other areas within the welfare budget which could be cut, including a cut in the Medicare rebate which would, of course, most disadvantage the needy. We have heard claims from the Liberal Party that the cuts do not go far enough. So, faced with its enthusiasm for cuts, we would be seeing a far more disadvantaged sector of the com- munity than we currently see. The Australian Chamber of Commerce-a strong supporter of the Liberal Party and behind its calls for cuts additional to those the Government is planning to make-has called for cuts amounting to a minimum of $4 billion in government expenditure. I might add that there is no mention from that quarter of the Government's raising additional revenue by, for example, cutting out some of the taxpayer subsidised, non-productive negatively geared takeovers and share raids that have become the flavour of the month in the last little while in Australia.

John Elliott, another strong supporter of the economic dries in the Liberal Party, is reported to have called for cuts to government expenditure by, for example, closing down the Department of Veterans' Affairs. That is a clear indication, I would have thought, of the depth of his regard for Australia's ex-service men and women. John Howard, currently the Leader of the Liberal Party in Federal Parliament, in keeping with his approach that the best policy is one that contains the fewest details, has called for expenditure cuts of several billions of dollars above what the Government is prepared to make without being able to specify where those cuts will be coming from.

What about those Australians who have suffered a decline in living standards? What have been the causes? I think there are three main causes and they have been touched on by previous speakers. They are higher interest rates, falling real wages, and a decline in government services. Between 1982-83 and 1985-86 real earnings fell by between 1.5 per cent and 4 per cent, depending on which statistical database is being used. It is estimated that real earnings will fall by another 3 per cent this financial year and by a further 1.5 per cent in 1987-88. When this decline in real earnings is added to increases in average tax rates, increases in interest rates, and price increases in various council rates, charges and consumer purchases above those shown in the consumer price index, it is clear that household living standards measured in terms of purchasing power have fallen more than the figures indicate.

A further indication of the decline in living standards is the proportion of the population living below the poverty line. This is estimated to have doubled from 9 per cent to 18 per cent since the Henderson Commission of Inquiry into Poverty was conducted in the early 1970s, the rise being largely due to an increasing proportion of the population obtaining their entire income from pensions and benefits, and social security payments generally which have not kept pace with any increase in average earnings or with inflation. We are seeing in this country a very big rise in the difference between those who have and those who do not have.


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