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Thursday, 27 April 1961

Mr UREN - He spoke about all classes. He did not confine his remarks to any one section of the community. The Government has increased the amount of insurance premiums deductible from gross income to £400 a year. This costs the taxpayers - you and me - £44,000,000 a year in tax rebates. That amount is made up of £35,000,000 which is allowed as a deduction from the income of private taxpayers and £9,000,000 deductible from the income of companies. Those figures have been provided by the Treasurer (Mr. Harold Holt).

The proposal of the honorable member for Mackellar would allow certain individuals to claim up to £500 a year as deductible from gross income. Already, certain individuals may deduct £400. This new savings proposal would enable them to add £500 to that amount, making a total of £900 a year deductible from taxable income. The great mass of the workers - the 70 per cent, who receive up to £1,000 a year - pay tax at the rate, of about 3s. in the £1, so that under the honorable member's proposal their tax liability would be reduced by 900 by 3s. But a man in the top income bracket pays tax at the rate of 13s. 4d. in the £1. If he is committed to insurance premiums of £400 a year, the. taxpayers pay £266 of that amount for him. As the Treasurer has said, it is costing the taxpayers of Australia up to £44,000,000 a year to subsidize insurance companies.

The honorable member for Mackellar may have good intentions but it would only be a very small section of teenagers, possibly some of the children of the silvertails in his electorate, who might be able to save £500 a year. I doubt whether, among the working class element of the electorate of Reid which I represent, one child could save £500 a year. So I will not have a bar of the amendment forecast by the honorable member for Mackellar. He has not got his feet on the ground. He represents a section of the community which we know the Menzies Government represents. On this side of the House, we are concerned about the welfare of the great mass of the people. We are not concerned about the sectional interests that Government supporters represent.

At long last, the Government has decided to bring down this legislation. It first announced the proposal in a great scramble on 15th November, 1960. At that time the Treasurer said that the Government would direct 30 per cent, of the investments of insurance companies and private provident funds into government loans. Since that time the Government has mellowed a little because of the great pressure that has been put on it and has decided to make certain taxation concessions to insurance companies and provident funds which invest at least 30 per cent, of their money in government loans.

Mr Cleaver - Do you agree that there is no compulsion about the scheme?

Mr UREN - I think that this is a very good precedent for a future socialist government. I have no objection to this principle of tax education. Our present Constitution is out-moded and suffers from limitations, but the Taxation Branch has fairly wide powers. A socialist government would certainly use proposals such as this to divert money from the private sector to the public sector in the best interests of the people of Australia.

The private insurance companies of this country are not concerned about the development of the nation. Their capital flows always to those investments from which they can make most profit. They are not interested in the development of the country but only in the profits they can make. Under the Menzies-Holt Administration the insurance companies have, little by little, diverted money from government securities not into essential private development but into non-essential private development. It is because of this trend that the Government has brought down this legislation. At first the Government intended giving a definite direction, but now it is content with giving merely a nudge.

During the present Government's term of office insurance companies have increased their assets by £562,000,000. At December, 1959, their assets stood at £1,120,000,000, an increase of over 100 per cent. During the same time they increased their investments in government undertakings by only £81,000,000; and a mere £4,000,000 of that £81,000,000 has been invested in Commonwealth undertakings. The figures I am quoting are those of the Federal Treasurer (Mr. Harold Holt). At the present time private insurance companies and private superannuation funds are investing £281,000,000 of £1,120,000,000 in government and semi-government undertakings. When the Chifley Government was in power in 1949 the assets of these organizations amounted to £560,000,000 and their investment in government and semi-governmental undertakings amounted to £200,000,000. Although these organizations have increased their assets by 100 per cent., by £562,000,000 to £1,120,000,000, they have increased their investments in government and semi-government undertakings by- only £81,006,000. The reason for this is lack of guidance by the Government. During the Chifley Administration correct guidance was given.

This Government allowed the position to reach such a stage that in November last a scramble occurred and it was forced to take panic action. The Government has altered its policy since then. It has been a case of on, off again and on again. First of all the Government increased sales tax on motor vehicles from 30 per cent, to 40 per cent, and then reduced it again to 30 per cent. The Government is not sure what it should do about debentures and registered notes. Its policy on that matter is still a big question mark, although the Government is supposed to have control over the development of the nation.

I desire to quote some figures supplied by the Reserve Bank of Australia. In 1948, whereas the amount of money invested by life assurance offices in government and semi-government securities was £211,000,000, the total holdings of Commonwealth Government securities amounted to £2,351,000,000. Between 1948 and 1959, the amount invested by life assurance offices in government and semi-government securities increased from £211,000,000 to only £218,000,000, but the total holdings of Commonwealth Government securities in the same type of security increased to £3,590,000,000. That is an increase of about £1,200,000,000 of the total holdings of Commonwealth Government securities and an increase of only £7,000,000 in the case of life assurance offices. That demonstrates the lack of encouragement given to life assurance offices by this Government. In 1947 when the Chifley Government was in office, according to Dr. Harold Bell, an economist of the Australian Mutual Provident Society, insurance companies' assets were worth £357,000,000. Investments in government and semigovernment securities amounted to £256,000,000 or 71.9 per cent, of their assets. That was the position under the Chifley administration when correct guidance was given.- The present Government has allowed private insurance companies to become giants in the financial field. They hold a large proportion of the wealth of this country. The Government has allowed them to divert this wealth not only into nonessential industries hut .also into ..what have become known as fringe institutions.

The Commonwealth Bureau of Census and Statistics gives details of new capital raisings by public companies in Australia. Whereas in 1960, companies listed on stock exchanges raised £193,000,000 in debentures, registered notes and deposits but only £48,000,000 in share capital, in 1955 companies listed on the stock exchanges raised £59,000,000 in share capital but only £27,000,000 in debentures, registered notes and deposits. The reason for the increase in debenture stock is that by raising money in that way companies can evade taxation. They can evade 8s. in the £1 in company tax. This again was the reason for the panic legislation of 15th November last; and the Government is not yet sure what it is going to do about the matter.

The Opposition supports the Government in its proposal to direct investment. Although the Government has taken too long to take this action what it has done is a step in the right direction. The problem that exists in Australia is common to other countries. I direct the attention of honorable members to an article in " New Statesman ", of 24th March, 1961. It is headed "A Four-Year Plan for Britain" and is written by the Right Honorable Harold Wilson, M.P. He, of course, will be the future Chancellor of the Exchequer in Great Britain on the Labour Party's return to power in that country. Britain is facing the same problem as Australia. Under the capitalist system money is flowing into nonessential industries where it can earn the greatest profit; it is not being invested in the interests of the community. In the article 1 have mentioned Mr. Harold Wilson referred to investment in new industrial buildings, plant and machinery in 1959 and revealed that Britain was diverting 15.5 per cent, of the gross national product into these industries. In West Germany, it was 23 per cent., in the United States of America 17 to 20 per cent, and in the Soviet Union 30 per cent. According to my own figures, in Australia it was 17 to 18 per cent. We can see, therefore, what is done under the socialist system of the Soviet Union. My friends on the opposite side of the House may smile, but this is something that we should consider. The Soviet Union is diverting 30 per cent, of its gross national product into essential industries, and this must be compared with 18 per cent, in Australia and 15.5 per cent, in Great Britain. Only a fool would refuse to take notice of these facts. We know already of the scientific advances in the Soviet Union.

In citing Mr. Wilson, I should point out that he obtained his information from a speech made to members of the American Chamber of Manufactures by Mr. Allan Dulles, the Director of the Central Intelligence Agency of the United States of America. His intelligence on Cuba was not very good, but I will accept him as an authority on the matter 1 am discussing. Mr. Wilson also gave some figures on education, and honorable members opposite should take some notice of them. The Soviet Union is spending 10 per cent, of its national income on education; Great Britain 4 per cent, and Australia only 2 per cent. Each year, there are 130,000 science and engineering graduates in the Soviet Union, but only 13,000 in Great Britain and 1,500 in Australia. On a population basis the Soviet Union has 1h science and engineering graduates to every graduate in those faculties in the United Kingdom. Similarly, in Australia there is only one graduate for every 4i graduates in the Soviet Union.

This position cannot be ignored. Clearly, we must divert some of our money into essential industries and into education. These matters must receive the highest priority, and this is where the capitalist system fails. As a socialist party, the Labour Party is the only party that is willing to undertake the development that is needed in Australia. Although this matter has been raised time and time again, the Government ignores the challenge. We know that the Government allows luxury home units to be built although sufficient homes are not available for the people.

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