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Thursday, 15 October 1964

Mr COLLARD (Kalgoorlie) .- I wish to take the opportunity of this debate to draw the attention of the Treasurer (Mr. Harold Holt) once again to certain aspects of provisions of the Income Tax and Social Services Contribution Assessment Act which should be amended to provide justice and fair play to quite a large number of people in the north, north west and outback areas of Australia. These are matters that I have raised in this chamber previously, both by way of debate and in questions, and although the Treasurer has not been able to put forward any logical reasons why my submissions should not be agreed to and the Act amended accordingly, he has never taken any action whatever to correct the anomalies. Therefore, I feel that it is my duty, as the representative of many of those people, to raise the issue in this chamber once again.

The anomalies occur in the zone allowance provisions of the Act, which have application to a large part of Western Australia, South Australia and Queensland, to the whole of the Northern Territory, to about half of Tasmania, to a small part of New South Wales and to most of the islands of the Commonwealth. I am not in a position to say to what extent the anomalies affect people in other States, but I do know that a large number of people in Western Australia are being treated quite unfairly because of the definition that has been placed on the word "resident" in relation to people living in these zones. The section of the Act to which I am referring is 79a., which provides for a taxation allowance to people residing for a certain period of time in certain areas or zones. The allowance is made according to section 79a. - in recognition of the disadvantages to which they are subject because of the uncongenial climatic conditions, isolation and high cost of living . . .

This applies to two zones, zone A and zone B, and the allowance in zone A is considerably greater than the allowance in zone B, purely because of the different conditions that apply.

In Western Australia the whole of the area above the 26th parallel is in zone A, and certain areas below the 26th parallel are in zone B. As has become quite obvious, in some instances zone A should be extended south to meet the objectives set out in section 79a and also zone B should in some instances extend further, but this is another matter which I hope to have time to raise later. To anyone who does not realise what occurs, the allowances could appear to be quite reasonable, but unfortunately - and this is where the anomalies occur - quite a number of people who really should qualify to claim the allowance under this section are not able to do so. The anomalies arise from sub-section (4.), which could be termed the definitions clause. That subsection sets out very clearly that to be classed as a resident of one of the zones and so qualify for the allowance the taxpayer must reside in the zone for a period of more than one half of the year of income. I want to stress that. It does not say that residence roust be for more than one half of one year; it refers to more than one half of the income year. There is quite a difference.

As the income year in relation to income tax is from 1st July of one year to 30th June of the next, it is necessary for a person, in order to qualify as a resident of one of those zones, to live in the zone for somewhat more than six months between those two dates, lt is not sufficient, for instance, to reside in the area from, say, 1st June until 23rd December of the same year because, although the actual residence would be more than six months, it would not be solely within the income year. As a matter of fact, it is not sufficient to live in the zone from the middle of January to 23rd December of the same year, because although it would be a total residence of almost 12 months, there would still not be a period of residence of more than half of the year of income. So where the anomalies and injustices can and do occur can be readily seen. For instance, one married man with a wife and child could qualify for a taxation allowance of £387 in a little over six month's, whereas another man with a wife and one child, living and working in the same place, and quite likely on the same job, could be there for almost 12 months and still receive no zone allowance. Surely this is a completely ridiculous position.

It has been said - no doubt correctly - that the purpose of the concession is to encourage people to go out into those areas and to remain there for some time. If one person can qualify in six or seven months for the zone allowance, surely another person living and working under the same conditions in the same area for a similar or longer period should receive at least equal recognition. In many cases it is not the fault of the taxpayer that he or she does not remain in the area long enough to qualify for the zone allowance. Often the fault is due to the nature of the employment or the wishes of the employer. This is the case particularly in respect of government employees. For instance, a school teacher transferred to a zone area would not normally commence duties until late in January or early in February and, upon transfer out of the area, normally would cease duty about the middle of December. As a result and due solely to the nature of his employment he could have a full school year of residence in the area and not qualify for an allowance. On the other hand, he could have three full school years of residence in the area and qualify for a zone allowance in respect of only two years of income. This situation could apply to persons such as employees of the Postmaster-General's Department, banks and other government departments.

I am sure that all honorable members on this side of the House and many honorable members opposite will agree that to allow such a position to continue is completely wrong and grossly unfair. I am sure they will agree also that the situation should be corrected as soon as possible. But what is the attitude of the Treasurer to this matter? Recently I asked a question on notice about this matter. In reply the Treasurer said, in part -

Consideration has been given on a number of occasions to amending this requirement to meet particular anomalies-

He admits that anomalies exist - but to the present no alternative has been found which would not either produce further anomalies or open the way to exploitation of the allowance by persons visiting zone areas for brief periods for holiday and similar purposes. The question will, however, continue to be examined.

So the Treasurer agrees that anomalies exist. He then states that those anomalies have received consideration and he suggests that there are difficulties in the way of removing the anomalies because of the possibility of exploitation. Would anybody in this Parliament who has any knowledge of the north and other outback areas seriously suggest that anyone would take a holiday in those parts for more than six months merely to qualify for a zone allowance? If there are people prepared to do this there is nothing to stop them exploiting the present provisions of the legislation. It would be as easy for them to holiday in a zone area for more than six months of an income year as it would be to spend more than six months there in some other period. If it is feared that the position could be exploited in some way, surely the Government could legislate to make such exploitation impossible. It seems that the Treasurer has no honest desire to rectify the anomalies that exist. If I am wrong I ask him to give the matter proper examination and consideration because in my view and I would think in the view of most honorable members there are no serious difficulties involved in removing these anomalies.

The next matter to which I refer concerns the boundaries of zone A and zone B. It is obvious that the zones should be extended. For instance, there are areas which a few years ago may have been considered to be properly allocated but which today are completely out of the picture. A review is needed to meet the requirements of section 79a so far as isolation, high cost of living and climatic conditions are concerned. On 1 3th March 1962 I asked the Treasurer a question about Geraldton being included in zone B. The Treasurer replied -

Hie information obtained, which I have had occasion to consider in the last few days, indicates that Geraldton is not less favourably placed than many other localities outside the zone areas. You will appreciate that the Government could not justifiably introduce legislation for the purpose of including Geraldton in zone B without first taking into consideration the claims of these other parts of Australia. As you know, the Government has only recently announced a reduction in income tax. At the present time, therefore, I do not feel justified in recommending action that would cause a further considerable loss of revenue as a result of a general revision of the zone boundaries.

I accepted that answer as a fair proposition, but when income tax was increased this year I thought it was fair to suggest that the time was opportune again to examine the matter. So on 1st October this year I asked the Treasurer a question. I referred to the Treasurer's reply about the reduction of income tax in 1962 and I asked -

Does it then follow that the obstacle he referred to in 1962 has now been removed as a result of the Government's recent announcement to increase taxation, and, if so, will he now arrange for a general revision of the zone boundaries to be made? If not, why not?

The Treasurer replied -

Mr. Speaker,the honorable gentleman raises what is, in effect, a budgetary item and he would appreciate that it is not the practice to deal with budgetary items by way of an answer to a question. The House is still discussing the Estimates relating to the Budget I introduced into the House in August and it is not contemplated that there will be other budgetary proposals, at least in the visible future.

So my question was not really answered. In his reply to my question in 1962 the Treasurer said that he was not prepared to do anything which would lead to a considerable loss of revenue. This can only mean that he is quite aware that any inquiry into zone boundaries would show that they should be extended. This in turn means that there are people in some areas who should be receiving a concession or a greater concession, as the case may be.

The Government's action this year in discontinuing the 5 per cent, income tax rebate will further aggravate the position in zone areas and in areas which should be included in one of the zones and will result also in additional revenue accruing to the Government at the rate of about £35 million a year. If the time was not opportune to revise zone areas when taxes were reduced and if it is still not opportune to revise them when taxes are increased to the tune of £35 million a year, I would like the Treasurer to say which stage of tax movement - up, down or sideways - he considers appropriate for a revision of zone boundaries. In conclusion I ask whether the Government has any intention of correcting the anomalies that are so obvious as far as zone allowances are concerned. Will the Treasurer say when a move in this direction will be made and when we may see the anomalies removed?

Progress reported.

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