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Wednesday, 24 October 1956

Mr WILSON (Sturt) .- The bill now before the House does not provide for any increases of income tax, nor does it propose any substantial reductions of tax. It does, however, recognize the importance of saving, and the concession that is to be given in respect of insurance premiums is a recognition of the fact that relatively small annual contributions to insurance can provide substantial capital sums which, in the long run, provide loan funds for the construction of schools, hospitals and other public works. The honorable member for Melbourne Ports (Mr. Crean) took rather a superficial view of this allowance. He pointed out that the advantage would go to those on high incomes rather than to those on low incomes. He entirely overlooked the fact that if, for example, £10,000,000 were put into insurance as a result of this amendment, and that £10,000,000 found its way into government loans, as it obviously would, the budget would be relieved, in one year, of an amount of £10,000,000.

As honorable members know, and as the Treasurer (Sir Arthur Fadden) has pointed out, in this financial year the Commonwealth proposes to pay for practically the whole of its public works from revenue. Approximately £100,000,000, which will be expended by the Commonwealth on public works, otherwise could be used for tax relief. Similarly, the surplus, which it is estimated will be approximately £108,000,000, to be reserved to fulfil loan commitments of the States, also could be used for tax remissions if the Government were sure that it would receive all the loan moneys that it required for its own purposes, as well as for the capital works of the States. Therefore, in addition to providing an inducement to saving by means of a small tax concession, we are making available millions of pounds of additional loan moneys and, at the same time, relieving the budget of a like amount. Therefore, simply to dismiss this proposal for increased allowances in respect of life assurance premiums and superannuation payments, by saying that the benefit will go to those on the higher incomes, is to miss entirely the real point. If we are to provide relief for those on the lower incomes and to make a general reduction in the rate of tax, obviously, under present conditions, we must have more savings. The proposal embodied in this bill will grant relief to future budgets quite out of proportion to the very small amount of revenue that the Government will lose by the introduction of this additional benefit.

When we look at this proposed relief in respect of life assurance and superannuation payments, it is clear that not only those on large incomes will benefit from it. Benefit also will accrue to those people who, for many years, have been contributing substantially to superannuation funds, many of whom have taken out life assurance premiums and who now find that their commitments in those respects exceed £200 a year. This proposal, particularly in relation to the more elderly members of the community, will enable people to provide insurance for their children. I suggest that for every £1 of concession that the Government gives under this proposal, it will get back £10 because of the increased amounts which will go into loan funds from savings. I believe that this is the kind of incentive that the Government should give. It should say to the people, " If you are prepared to provide for your old age and also to provide for your children, we, the Government, will encourage you to do so. We shall give you a concession in your income tax returns in respect of the amount that you pay for superannuation or life assurance".

Similarly, I am delighted that contributions to medical benefits funds and hospital funds are to be made an allowable deduction, regardless of the deduction for life assurance and superannuation. It shows that the Government is prepared to help those who help themselves. If a person insures against the vicissitudes of ill health, and against having to undergo hospital treatment, the amounts paid to medical and hospital benefits funds will, regardless of any other deductions, be allowable deductions for taxation purposes.

Mr Duthie - How many persons will this provision assist?

Mr WILSON - It will assist every wise man who insures himself against the liability of incurring hospital and medical expenses.

Mr Crean - If he pays more than £300. He has the concession already if he pays less.

Mr WILSON - There are many who, for several reasons, do not receive much benefit from this provision. At present, many other items are included in the same classification. This bill proposes that we say to people, " If you are prepared to insure yourself against the expense of sickness and hospital treatment, the amount you pay in insurance premiums, regardless of any other payments, will be an allowable deduction for taxation purposes ". To the extent that this will encourage people to insure themselves in this way, for every £1 of benefit which the Government gives it will receive back £10, because insured persons do not become a charge upon the State in the event of sickness or having to undergo hospital treatment. We appreciate the difficulties that the States now face in providing hospital services, and the losses that these services entail. Therefore, any move that will have the effect of helping people to pay their own medical expenses and hospital bills will help the Government, and the taxpayers generally.

In the provisions of this bill there is recognition of the need to develop Australia. To those persons who are prepared to develop isolated parts of the country we say, "We are prepared to help you by allowing a special deduction for taxation purposes ". Once again, this demonstrates the Government's true Liberal principle of helping persons who are prepared to help in the development of this country. In the increased allowance for educational expenses, there is recognition of the importance of the family and of education in the community. We all appreciate the great difficulty now faced by parents in meeting education expenses for their children. At present, there is an allowable deduction of £75 for each child undergoing full-time education. It is now proposed that we increase that allowance to £100. This will be a most valuable reform, and will relieve a very deserving section of the community of portion of the tax burden. I refer to those parents who are making sacrifices to enable their children to have the best possible education.

There is evident in the provisions of the bill a recognition of the value of charity. lt will be a sad day if people ever believe that charity has lost its value, and that the Government must do everything. I believe that the charitable instincts of the British people should be encouraged in every possible way.

Sitting suspended from 6 to 8 p.m.

Mr WILSON - Before the suspension of the sitting, I pointed out that this bill not only provides worthwhile benefits for the taxpayers but also aids the development of Australia. I pointed out that the concessions for life insurance premiums and superannuation payments would encourage thrift and saving. The Treasurer, in his budget speech, estimated that the direct loss of revenue as a result of the allowable deductions for insurance premiums and payments to hospital and medical benefit funds would amount in a full year to £540,0J0. If we assume, for the sake of argument, that the average rate of tax for those who will receive the benefit of this concession is 5s. in the £1, we can assume that at least £2,000,000 a year will be saved as a result of this concession. So, by granting a concession which will result in a loss of revenue of £540,000, we may assume that in the long run the budget will receive the benefit of savings of £2.030,00 a year. As we know, at the present time the Government is unable to make substantial tax reductions because surplus revenues must be retained to make up shortages in loan funds. This concession should go a long way towards assisting loan raisings and increasing savings.

I believe the pattern of this bill should be used in many other directions to encourage thrift and saving. At the present time, the Government is financing out of general revenue any deficiencies in a loan programme totalling £203,000,000. This is necessary because people are not saving sufficient to meet our loan commitments. Therefore, every means should be used to encourage saving, particularly subscriptions to government loans, which will be used to finance the construction of schools, hospitals and things of that nature. In that way, we will help reach a state of affairs where substantial tax reductions can be made.

It is perfectly obvious that no government can reduce the rate of income tax while all surplus revenues are used to meet shortages in loan raisings. Therefore, if we are to tackle this problem in the right manner, we must tackle the problem of savings and adopt such means as are necessary to obtain the savings that are needed for the development of this country. Inducements such as those in this bill, which encourage savings by giving taxation concessions, provide a sound means to meet the situation. I believe that, if other inducements of this nature are offered, in many cases £10 will be received for every £1 allowed in concessions.

Another valuable concession in this bill is that provided for isolated areas. It will not cost a great amount of money, but, as it assists the development of those isolated areas, the Government will ultimately get back far more than it loses by giving this concession.

I come now to the allowance for education. Education is very costly at the present time and families have the greatest difficulty in paying taxation as well as meeting the cost of schooling and ull that goes with it. Although some revenue will be lost to the Government as a result of this valuable concession, in the long run the Government will get the money back many times over. If it were not for concessions of this nature, many families would be unable to provide adequate education for their children, and unless the children receive a proper education, we will not obtain the maximum production of which we are capable.

Several other concessions, which are not particularly costly to the budget, are granted by this bill. They will remove anomalies and assist production in many ways. For example, gifts made to certain scientific bodies are, for the first time, to be allowable deductions for taxation purposes. As I said earlier. I believe that the charitable instincts of the people should be encouraged in every way. particularly when donations are made for the support of scientific research organizations whose work will help to increase the production and wealth of this country.

Although this bill is limited in its operation, it is a very valuable one. It removes a number of anomalies at present existing in our taxation laws. It aids development and encourages thrift, an-l deserves the support of every member of this House.

Mr. MAKIN(Bonython) 18.8].- This bill relates to the assessment of income tax and social services contributions. I have listened carefully to several of the speeches of the honorable member for Sturt (Mr. Wilson) on social service matters. He never misses an opportunity to state his view on social services, particularly in relation to contributory schemes. Two matters are inherent in his submission. First, he wants to inaugurate a social service benefits scheme with universal and uniform payments. Secondly, whatever broadening is to be made shall essentially add to the income of those who are reasonably well circumstanced. Not one penny is provided in his scheme for the relief of the pensioner in necessitous circumstances. It is ingenious, but it is not equitable. Social services are a means of distributing the wealth of the community among all with some measure of equitability. To achieve this objective, income tax is paid on a graduated scale. Those who have been blessed with good fortune pay at higher rates than do those who have been less fortunate. So. the nation's wealth is shared among all with advantage to the less fortunate members of the community. That is the principle underlying the social services scheme. The honorable member for Sturt would seek to destroy that principle and progressively relieve the wealthier sections -of the people of their undoubted responsibility to make provision by way of social services contributions to meet the needs of those less fortunate than themselves.

Mr Wilson - Why does the honorable member not state his own views, instead of mis-stating mine?

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