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Thursday, 25 July 1946

Mr GULLETT (Henty) (12:33 PM) . - Like other honorable members of the Opposition, I protest against the gross inadequacy of the reduction of taxes indicated in this Financial Statement, and also at the lack of realization on the part of the Government, so far as can he judged from the statement, of the need for substantial tax reductions in order to promote a healthy state of industry. If any remarks of mine produce reactions from the Government benches, any honor-' able member who may desire to answer my comments should pay attention to what I have to say. We have heard to-night a carefully prepared and wellconsidered speech by the Leader of the Australian Country party (Mr. Fadden). It was a constructive criticism of this Financial Statement. The Minister for Post-war Reconstruction (Mr. Dedman), who replied on behalf of the Government, furnished a variety of information. He told us about the cost of sending telegrams to the United States of America. He dealt with the long week-ends of the idle rich, and with their golf clubs. He told us how much food could be purchased in this country for 4s. and on all these subjects he quoted himself ad. nauseum. The number of subjects on which the Minister is. able to quote himself is remarkable, but all he had to say in reply to the Leader of the Australian Country party was in the nature of abuse. His remarks were offensive, personal and destructive. He did not devote five minutes to an attempt to answer the right honorable gentleman's comments.

If we consider the Government's much, vaunted reduction of income tax, we hud that of a total expenditure of £450,000,000 the tax reduction amounts to about £17j500,000. By what process has this reduction been arrived at? Is- it, for instance, by a drastic reduction of governmental expenditure, such as by reducing the cost of unnecessarily large and swollen government departments? The Department of Information, for instance, grew enormously during the war period, and it is still being expanded? Has the Government shown a conscientious desire to curtail expenditure .by reducing the Unnecessary trips abroad by government supporters, which afford the country not one atom pf benefit? Has there been the slightest suggestion by any member of the Ministry that the . Government realizes how necessary it is to reduce taxes materially, if we are to have a healthy and prosperous state of affairs in Australia? Honorable members will agree that there has not been the slightest evidence of any of. these things. Because of buoyant conditions in this country, and the large number of men who have recently become taxpayers, the Government says that, having received revenue to the amount of £17,500,000 more than it expected to get, taxes will be reduced by that amount. It ls merely handing back to the people revenue which it did not expect to receive. This Labour Administration professes on every possible occasion its allegiance to the Labour cause. Most of us are heartily sick of the unction with which the Labour interests, and particularly the term " worker ", are boomed into the microphone by Government supporters.

Let us look at the Financial. Statement before us and see what the Government intends to do for the workers. The fact is that 87 per cent, of the taxpayers are in receipt 'of a wage not exceeding £8 a week. In other words, 87 per cent. of the taxpayers fall within the low income groups. We must consider that when we discuss taxation rates generally. "Taxation affects the low income groups more heavily than the wealthy section. The low income groups, directly and indirectly, contribute £100,000,000 in tax, and therefore they contribute a substantial proportion of the total tax. On the small incomes of the people whose interests the Government claims to have at heart, the reduction of income tax will be 12£ per cent. This means that if a man with a wife and two children receives a. wage of £6 a week, his tax reduction will amount to £3 8s. a year, or ls. '3d. a week. Australia has the distinction of taxing lower incomes to a greater degree than almost any other country. In the United States of America, 20 per cent, of the wageearners do not pay income tax at all. In Canada, a married man can receive up to 24 dollars, or about £8 a week, without paying tax at all. In other words, the low income wage-earner enjoys a large measure of exemption in those two countries, but in Australia he is taxed when ho receives an income over £2 a week. We even tax ex-servicemen receiving a sustenance allowance of £3 5s. a week to enable them to get vocational training. If that is consideration for people in' the low income groups and for the worker, I cannot recognize it as such. I overlook the ' result of indirect taxation in respect of cigarettes, matches, football and cinema tickets and other items which affect the lower income groups more than any, other section, because these items form, a higher proportion of their budgets.

I desire to say a word on taxation on unearned income. The idea that unearned income affects only the " bloated capitalists " is carefully fostered by members of the Labour party as a whole. ' We have to bear in mind that unearned income affects our national life vitally in two other ways - from the point of view of both the investor and the" elderly and retired person who lives on a small sum which has been invested. The investor, and particularly the rentier, has only to be mentioned to whip the Minister for Post-war Recon.struction almost into ' fury. -But there must be investors, if there is to be employment, and there must be satisfied ininvestors. No one will invest unless he sees a return for his money. The position is the same whether an investor has £100, £1,000 or £10,000. This is a fact which the Government refuses to recognize. There is another class of investors - the retired elderly person who, by his thrift and energy in his working life, and by his own private enterprise, has provided a small income to maintain him when his working life is over. The income of small investors of this type should be taxed as earned income. They paid tax on it when they earned it during their working life. They invested it and now that it returns them a competency in their old age it should not again be taxed. The following letter on this subject was sent to me by one of my constituents : -

I- am one of a large number of retired business men and farmers in Sandringham who are living on their savings and saving the Government thousands of pounds in pensions. We are taxed at the property rate calculated on ' our gross incomes as if we were wealthy b&tenoirs of the Labour party. Personally, I, with my wife, am trying to live on an income under the basic wage.

I .believe that the need for relieving the . hardship imposed on these people is so pressing that it must commend itself' at least to some Government supporters.

Mr Menzies - The view of the Australian Labour party is that it is ia. crime to be thrifty.

Mr GULLETT - Yes. At the moment property is taxed at the rate of ls. 7d. in the £i on an income of £300 a year, rising to 5s. 7d. in the £1 on an income of £1,000 a year with an additional .2d. for each £1 in excess of £1,000. That means on a property income of £500 a year a taxpayer pays £177 lis., or nearly two-fifths of his income from that source. It is wrong morally to tax people who, having been thrifty during their working lives, are able to keep themselves in their declining years. Such a tax discourages thrift and encourages people to become dependent upon the country.

I propose now to deal with the property qualification in relation to' the oldage pension. It is proposed- to liberalize the provisions of the invalid and old-age pensions legislation in such a way as to enable a much, greater number of people to qualify for the pension. The following letter was sent to me by a 'former fireman who is now in receipt of a superannuation pension: -

The fireman on retiring receives, a superannuation pension which was provided by his own energy. When I retired 21 years back I received £2 8s. 3d. superannuation. At that time the old-age pension was 17s. Cd., now it is £1 12s. Od. All retired men are in the same position. I receive £2 8s. 3d., including support for my wife. If we were on the old-age pension we would get £3 5s. and pay no tax.

That is an obvious injustice,- because this man will not now qualify for the old-age pension.

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