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Thursday, 23 March 1961

Mr FOX (Henty) .- When making his speech to-night the honorable member for Grayndler (Mr. Daly), in an endeavour to ridicule the honorable member for McPherson (Mr. Barnes), said that last November the honorable member for McPherson had supported the Government's increase in sales tax on motor cars to 40 per cent., then chided him with being happy to support this measure to repeal that increase and, finally, charged him with inconsistency. Actually, what the honorable member for McPherson did last November was to support a temporary increase in sales tax, and to-night he was quite happy to see it being removed. On the other hand, the honorable member for Grayndler opposed the temporary increase in the rate of sales tax last November - for which there was every justification - and to-night, although he concluded by saying he supported the Government's proposal to repeal the increase, probably because he was not game to do otherwise, he spent most of his time grumbling during a debate which is taking place only because the rate of sales tax is being reduced. He also tried to prove that this Government was not a low taxation government, by comparing the rate of taxation per head of population during the regime of the Chifley Government with the rate of per capita taxation applying to-day. He conveniently forgot to point out that whenever it has had the opportunity to do so the Labour Party has gone out of its way to remind the people that the Menzies £1 is worth only 6s. 8d. to-day. If 6s. 8d. is all the Menzies £1 is worth then, presumably, we should be paying to-day three times the rate of taxation we paid under the Chifley Government. Actually, we are not paying even double the amount we paid then. But the honorable member conveniently forgot that. As a matter of fact, the present basic wage has more than doubled during this Government's term of office while the rate of taxation has not even doubled.

I wish to deal now with the honorable member for Barton (Mr. Reynolds). He quoted figures which indicated that sales of motor cars in November amounted to something over 31,000 and that by January of this year they had fallen to 16,000. What he said was true, and his figures were accurate, but he conveniently omitted to quote other figures which I propose to mention. When honorable members hear them they will appreciate how convenient it was for the honorable member for Barton to ignore them. I have before me figures supplied by the Commonwealth Bureau of Census and Statistics on 14th March of this year. Unfortunately, they do not go back to November, 1959, but they do commence at December, 1959, and they are very interesting. They show that in December, 1959, the number of vehicles sold was 28,275, and that by January, 1960, the number dropped to 18,272. So in that month sales of motor vehicles dropped by 10,000. By December, 1960, sales had increased to 22,368, but by January of this year they dropped to 16,254 - a drop of only 6,000. Before those honorable members opposite who are seeking to interject anticipate my argument, let me state it in another way. Between December, 1959, and January, 1960, there was a drop of 10,000 in the sales of motor vehicles. This drop of 10,000 from a total of 28,000 in the month represented a fall of 36 per cent. In the period between December, 1960, and January, 1961, sales fell by 6,000 from 22,368 to 16,254 - a drop of 30 per cent. I quote these figures to illustrate that figures can be made to show exactly what one wants them to prove. The honorable member for Barton omitted to mention them because to have quoted them would have been to do a disservice to the case he was attempting to make.

The purpose of this bill is to reduce to 30 per cent, the rate of sales tax on motor cars which was temporarily increased to 40 per cent, last November, and to reduce to 161 per cent, the rate of sales tax on motor cycles which had been temporarily increased to 25 per cent, at the same time. To appreciate properly the reasons for the introduction of this bill it is necessary to appreciate the reasons for the temporary imposition of the increased rates of sales tax on the two items I have mentioned. The step taken by the Government last November was part of its anti-inflationary policy. It would be outside the scope of this debate for me to traverse all the reasons given at that time by the Treasurer (Mr. Harold Holt) for the introduction of these anti-inflationary measures, but it is relevant, and I believe advisable, to reiterate the aspect of the inflationary pressure which was at that time being exerted by the motor industry, and which caused the Treasurer to say -

If restraint has to be imposed it should be concentrated on those areas where demand on resources has increased most.

I want to mention a few of these demands which were made at that time by the motor industry, and in doing so I propose to quote from a statement which was issued by the Treasurer, in which he said that the value of retail sales on new and used motor vehicles, parts and petrol in 1959-60 was, at £858,000,000, more than 15 per cent, greater than in 1958-59. The Treasurer also said that registrations of new passenger vehicles for the four months ended October, 1960, were 26 per cent, higher than for the same period in 1959 and 49 per cent, higher than for the same period in 1958.

The third thing which the Treasurer said was that registrations of new motor vehicles, including commercial vehicles, reached an annual rate of 338,000 in the first four months of 1960-61.

Fourthly, the Treasurer said that more than £212,000,000 was channelled by hirepurchase companies into the financing of retail sales of motor vehicles in 1959-60. and this was more than £35,000,000 greater than the amount for the previous year. Finally, he said that imports of petroleum products and other items which were clearly attributable to the motor industry and motor transportation were running at an annual rate of £200,000,000 in the September quarter of 1960 compared with a rate of £152,000,000 in the September quarter of 1959. He pointed out further that imports of motor vehicles and spare parts increased by almost 50 per cent, in the September quarter of 1960 as compared with the September quarter of 1959. As a matter of fact, the November, 1960, registrations of motor vehicles reached nearly 32,000, which was an all-time record.

The Government appreciates the value of the motor industry to Australia, and, during its term of office, it has done everything possible to foster it and to help it become one of the greatest industries in Austraia to-day. To support that assertion, let me say that one of the first acts undertaken by this Government upon its being returned to office in 1949 was to abolish petrol rationing which had been introduced, for very good reasons, by the Chifley Government during the war years, and which that Government had continued in operation for more than four years after the war ended. When the present Prime Minister, in his policy speech, said that he would abolish petrol rationing, the Labour Party said that it could not be done. Once again it was proved that people who say that things cannot he done are continually being interrupted by other people who are actually doing them.

During this Government's term of office, six oil refineries have been established in Australia. That is another way in which the Government has set out to help the automobile industry. As evidence of the progress made by the motor industry under the policy of this Government, I point out that the consumption of motor spirit, which was at the rate of 461,000,000 gallons a year in 1949, had increased to 1,141,000,000 gallons in 1959. Employment in the production of motor cars and accessories increased from nearly 30,000 in 1948-49 to nearly 55,000 in 1958-59. All of that advancement has taken place under the administration of the Menzies Government. No one can truthfully say, therefore, that the Government does not appreciate the value of the motor industry to the Australia economy. To the honorable member for Kingsford-Smith (Mr. Curtin) who is trying to interject, I simply say that it is sometimes better to remain silent and be thought a fool than to open your mouth and prove that you are one.

At a time when the terms of trade have moved against Australia to a far greater extent than they have moved against any other country, the motor industry was adding to our import bill at a steadily increasing rate, and it was also adversely affecting the value of our exports in that steel, which, could have been exported, was being absorbed by the motor industry. It also was creating an unprecedented demand and competition for the services of skilled men, almost to the exclusion of some other manufacturing industries. As I mentioned earlier, it was responsible for the channelling of an excessive amount of finance into the hire-purchase companies for the purchase of motor vehicles. Some action obviously had to be taken if the inflationary trend were to be arrested.

An increase in the rate of sales tax was one of the measures introduced by the Government to reduce the demand for motor cars and motor cycles. As honorable members know, the Government increased the rate of tax on motor cars from 30 per cent, to 40 per cent, and on motor cycles from 16i per cent, to 25 per cent.

Mr Curtin - Shocking!

Mr FOX - The honorable member says, " Shocking ", but he should wait to hear what I have to say. He will not be quite so happy shortly. The Government never at any time intended to do any permanent harm to the motor industry. The Treasurer in his speech on 15th November last, said -

I am, of course, well aware that the present rate of sales tax on cars and station wagons is regarded as relatively high. The Government would not now be proposing this increase were it not convinced that some lowering of activity in this field is necessary in the general interest. It holds itself ready to review the sales tax rate when it feels the situation of the industry and the state of the economy looked at together appear to warrant some adjustment.

Nothing could have been stated more clearly. The Treasurer gave an assurance that the Government* held itself ready to review the tax. The words " to be ready " mean, to my way of thinking, to be able to do something immediately or at any time. The Treasurer proved his good faith and honored his undertaking by reducing the rate of tax to 30 per cent, on 22nd February. Obviously, had he said at the time, " This rate of 40 per cent, will apply only until 22nd February, 1st March, 30th June, or some other time within the next eight or nine months ", the motor industry would have been at a stand-still. Nobody would have wanted to purchase a motor car which was subject to the 40 per cent, rate of tax. Neither is it sensible to believe that if people thought that the additional rate of sales tax, imposed as a temporary measure, would be refunded to them when the tax was reduced, the measure would have had any effect whatever in reducing the volume of car sales.

I have heard it said, " If the rate of sales tax had remained at 40 per cent, for one year I would not have minded." I say that people who went ahead and bought cars after the Treasurer had made it quite clear that the Government held itself ready to review the tax, virtually were backing their own judgment against the assurance given by the Treasurer, and I do not think they are entitled to complain when the Treasurer, after three months, removed what was stated to be a temporary tax. Another person said to me, " I would not have minded if the Government had reduced the tax to 30 per cent, at Budget time, as an election sop ". I said to him, " I should imagine that that would be the very thing that the Treasurer was trying to avoid ".

Members of the Opposition have stated that the increase from 30 per cent, to 40 per cent, was a savage one. The honorable member for Barton (Mr. Reynolds) chided the Government to-night for having previously increased the rate of sales tax on motor vehicles from 161 per cent, to 30 per cent. He has conveniently forgotten that a New Zealand government of his own political persuasion in 1958 increased sales tax on motor cars from 20 per cent, to 40 per cent. That Government doubled the rate of tax, and to-day, the New Zealand rate is 33i per cent. At the same time, the New Zealand Labour Government introduced other severe economic measures.

The honorable member for Melbourne Ports (Mr. Crean) said this afternoon that the removal of the additional tax after three months was the Government's admission of a mistake and evidence of its ineptitude and stupidity. I say that it is evidence of the Government's flexibility of mind. Surely one cannot support a line of thought which holds that because a policy is right to-day it is necessarily going to be right in three months' time. Changing circumstances require changing ideas. A government which is not prepared to adapt its policy to the needs of the day has reached stagnation point.

A person suggested to me that the Government should have given two weeks' notice of its intention to reduce the rate of sales tax, as it was not fair to people who had purchased cars the day before the tax was reduced. I think that a little reflection would convince that person that even if two weeks' notice had been given it still would have been unfair to people who purchased motor cars on the day previous to the no:ice being given. As the Treasurer stated in his second-reading speech, whenever sales tax is increased some people gain an advantage, and when rates are reduced some people are put at a disadvantage. I cannot see how that state of affairs can ever be changed while people have to pay taxes, in any case, I have never heard of any one, who had purchased a car on the day prior to an increase of sales tax, forwarding a cheque to the Taxation Commissioner because he thought he was not morally entitled to the lower rate of tax. I have pleasure in supporting the bill, Mr. Deputy Speaker.

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