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Thursday, 23 March 1961

Mr FORBES (Barker) .- The Leader of the Opposition (Mr. Calwell) in the closing stages of his speech indicated clearly why his party intends to move this amendment, and why his party has taken the attitude it has taken on this particular matter, because he said that, although the Opposition might not get support in this Parliament, it would get support outside. Earlier he said, " I have had a lot of letters written to me protesting about it". Of course he has! So has every one of us. This is the explanation of the expectation of support outside. The fact that a few letters have been written, the fact that there have been a few critical editorials in the newspapers, is apparently enough in itself for the Opposition to move an amendment of this sort which asks for something that the Opposition knows is completely opposed to all precedent and all sound principles of government. But because the Opposition is so hungry for office, so hungry for votes, it is prepared to take this stand. There has to be only one letter in a newspaper, one leading article in a newspaper, one criticism expressed by one person and amplified in a newspaper, and the Opposition is right in, giving encouragement in the hope that this might mean another vote for it. It does so irrespective of the merits of the issue and the principles involved.

It was very difficult to know what the Leader of the Opposition, who opened this matter, was arguing, because he spent most of his time trying to bait the Australian Country Party. So seriously did he regard the matter that he spent a great deal of his time baiting my respected friends of the Australian Country Party who were sitting there paying attention to what he was saying.

In the course of his speech the Leader of the Opposition made some extraordinary statements. I have been very interested to hear honorable gentlemen opposite moaning about the profits of the motor manufacturing companies. One of the things that the Leader of the Opposition said was that this measure had reduced by onequarter the income of the motor vehicle manufacturers. Yet I have heard during mv time in this Parliament repeated complaints from members of the Opposition about the huge, inordinate profits of General MotorsHolden's Limited. This has been their cry: " This is a company which has been making huge profits. Let us pull it down. When we get into office we will fix it." Yet for political purposes this afternoon honorable gentlemen opposite have been weeping crocodile tears because a measure taken by the Government might reduce the profits of that car manufacturing company - and no doubt of other car manufacturing companies. What an extraordinary statement to come from a party which has so consistently abused that company.

The Leader of the Opposition made another extraordinary statement. He said that a Labour government would not do the things that this Government has done in relation to credit restrictions. He stated also that when the last Labour Government was in office it did not restrict bank credit. I have no doubt that the Treasurer (Mr. Harold Holt) will have the details on that, but my recollection is that it was a Labour government which, in the first place, introduced the mechanism that made it possible to restrict credit in this country. I refer to the Banking Act of 1945. That act set up the special accounts system which is the mechanism by which the Reserve Bank can restrict credit. What is more, during its term of office the Labour Government made good use of that system and credit restrictions were never lifted. The Labour Party wanted to take the matter further and to nationalize the banks, thereby giving itself complete and absolute control not only over the level of bank credit but also over its disposal. Yet the Leader of the Opposition comes into this House and, to reinforce his argument, states that the Labour Party does not believe in using bank credit in this way!

He mentioned instances in which the Government had remitted sales tax owing to it. Perhaps honorable gentlemen felt as I did, that he was using this argument not so much to justify his point, because the cases were completely different from the one now in question, as to pursue the Vendetta which the Labour Party has been waging for years against the private enterprise airlines in Australia. When Labour was iti office it failed to run the private airlines out of business and since then it has done everything iri its power to discredit them.

The Leader of the Opposition has said that because the Government repealed the 10 per cent. increase in sales tax three months after it was imposed, this indicated, by definition, that the Government was mistaken in imposing the tax in the first place. Quite clearly, that was the position that the Leader of the the Opposition took up. Let us consider his statement. What does it imply? It would be difficult to get away from the suggestion that the Leader of the Opposition is claiming that taxation should not be used to achieve economic objectives. In effect, that is what he has said. There is a widespread, perhaps justifiable, misconception about this matter in the mind of the community as a whole. Although the Australian community these days expects the Commonwealth Government to accept responsibility for maintaining an adequate level of stability in the economy and does not hesitate to criticize the Government when there is inflation and unemployment, large numbers of people, to whom I believe the Opposition is pandering by its attitude to this bill, still believe that governments impose taxes solely to raise revenue for government purposes. It has not yet filtered through to many people in

Australia that it is necessary fdr the Government, if it is to fulfil its' obligations to the people and to maintain stability in the economy, to use the weapon of taxation, not only to raise revenue for government purposes but also to achieve the Government's economic objectives. I should have thought that the Labour Party would be the first to admit that.

Although the" Leader of the Opposition claims that Labour governments never used sales tax for this purpose - I suppose I must believe him because I do not know anything to the contrary - they certainly and frequently Used other forms of taxation to achieve economic objectives. What about the land tax which Was introduced 50 years ago by a Labour government with the specific economic objective of breaking up large holdings Of land in Australia and, in effect, reducing farmers to peasants? The Party pursued that objective When it was in office. In other words, it used taxation for a social and economic objective. When this Government came into office it immediately repealed the land tax because we do not share the Labour Party's aspirations. However, the Leader of the Opposition has said that as soon as the Labour Party returns to power it will re-impose the land tax because it intends to pursue its objective of turning Australian landowners into peasants. This is the party that came into the Parliament this morning and, to influence a by-election in New South Wales, represented itself as the friend of the primary producer. However, that is incidental. The point I am trying to make is that the Labour Party frequently and as a matter of principle has used taxation in one form or another to achieve a particular economic or social objective. In other words, it has used taxation for some reason other than to raise revenue.

Another example of the Labour Party's attitude is to be found in the speeches of Opposition members who always claim that we should increase income tax on the higher incomes. They make this claim not because they want more money for government purposes, but because they are pursuing a particular social and economic objective in which they believe. In this instance the objective is to take money from the wealthier people in the community and to re-distribute it in one way or another among those who have less. It would not be appropriate in this debate to argue the merits of that principle, but I have given as illustration of how the Labour Party has Used, and will use, taxation for some reason other than to obtain revenue.

The Labour Party has claimed that by repealing this tax three months after it was imposed the Government has admitted that a mistake was made in imposing it in the first place. The only conclusion that can be drawn from that is that the Labour Party believes that the taxation weapon should not be used to achieve an economic objective. I will be interested to hear what the honorable member for Melbourne Ports (Mr. Crean), who will follow me in this debate, has to say about this matter, because the Government has clearly stated that it increased the sales tax on motor cars to achieve an economic objective. After a careful review df the economy, the Government came to the conclusion that in the circumstances , then existing in Australia the motor vehicle industry was using more than its fair share of the available resources. I Was able to see that at first hand because 1 represent a great rural constituency. For months and months the primary producers iri my electorate had been unable to obtain fencing wire, fencing posts and other steel products. One of the reasons why they had not been able to obtain those products was that the motor vehicle industry was drawing to itself too much of the steel available in Australia. Can anybody say that the Australian motor vehicle industry is more important than the primary industries? That is the implication in much of the criticism.

Reference has been made to the scarce labour resources which were being used by the motor industry. This argument has been reiterated by the Treasurer (Mr. Harold Holt) time and time again. No member of this House and no member of the Australian community should be in any doubt as to why the Government increased the sales tax on motor vehicles on 15th November last. The Government did that to reduce the level of activity iri the motor Vehicle industry-a purely economic objective. If it is accepted that the increased sales tax was imposed to achieve a purely economic objective, following ofl from that we come to this question: Did the Government achieve its economic objective by imposing this increased tax? Quite obviously it did. The Leader of the Opposition said that the Government had achieved its objective in that it had brought about an immediate and substantial reduction in sales of motor vehicles and a redistribution of labour from the motor vehicle industry to equally important industries which previously had not been able to obtain labour.

So there is no doubt that the Government imposed this increased sales tax to achieve an economic objective and there is no doubt whatsoever that it achieved that economic objective. Having done so, does the Opposition suggest that the Government should have continued the increased sales tax beyond the achievement of the economic objective? To me, that is the implication in what members of the Opposition are saying. Three months after the imposition of the increase, the Government looked at the position and decided that the objective had been achieved, that is, an immediate and substantial drop in sales of motor vehicles. Consequently, the Government decided to remove the increased sales tax, being confident at that time that the general credit squeeze, which always works slowly, had caught up with the situation and would maintain sales of motor vehicles at a desirable level.

Mr Reynolds - Does that mean that the credit squeeze is a permanent fixture from now on?

Mr FORBES - No, not by any means, because the economic circumstances of the country vary. For one thing, the Government has recently announced measures designed to increase the output of steel in Australia. As a result of those measures it is possible, indeed it is almost certain, that supply and demand in Australia will once more be in balance. Unlike the Australian Labour Party, we believe that when supply catches up to demand it is no longer necessary to have this sort of restriction. In my view, it is an entirely temporary and transitory measure. But if you pursued the Australian Labour Party's philosophy of controlling everything and making no attempt whatsoever to increase the total supply of resources which go into produc tion, then you would maintain credit restrictions permanently.

Because I believe that these days the Australian community demands that the Government accept some responsibility for stability and for the level of economic activity, and because the taxation weapon is one of the few really effective methods available to the Government to achieve those objectives, I believe that the Government was right in increasing the sales tax on motor vehicles in view of the economic circumstances that existed at that time and in view of the responsibility placed on the Government by the Australian people. For the same reasons I believe that the Government was equally justified in lifting the increased sales tax when it did so, three months later, because the economic objective which it set out to achieve had in fact been achieved. Therefore, I support the bill.

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