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Thursday, 25 November 1965

Mr BARNARD (Bass) .- I have listened with much interest this afternoon to the comments of the honorable member for Sturt (Mr. Wilson) and the honorable member for Swan (Mr. Cleaver). The honorable member for Sturt dealt almost exclusively with superannuation and the effect this Bill will have on some types of superannuation payments in this country. 1 have no doubt there is much substance in what he said, but I do not regard myself as an expert on taxation matters nor on the way this Bill will affect superannuation payments and whether some injustice is incorporated in it. No doubt it would be better if the position were stated clearly by people with knowledge of these matters. I refer to people outside the Parliament who would be able to comment on the effects of this legislation on the type of superannuation payments referred to by the honorable member for Sturt.

The honorable member for Swan made a very constructive contribution to this debate and I listened to it with interest. He referred to the great need for a review committee to consider taxation measures. He said the committee should comprise people from outside the Parliament who were engaged in various professions and who would be able to contribute to the work of such a committee. He may be right in his assertion and it may be that a committee should comprise persons from outside the Parliament, but I think that if the Parliament should ever consider establishing a committee of review there are sufficient honorable members with a knowledge of taxation matters to form such a committee. I instance the honorable member for Melbourne Ports (Mr. Crean) who has for a long period in this Parliament dealt with taxation matters. I am sure that all members opposite, whether they agree with our policy or not, appreciate that whenever he speaks on these matters there is usually much substance in his statements.

This legislation has been debated by a limited number of speakers. Government supporters have confined themselves primarily to the machinery of the legislation and to its effect on superannuation payments. There is a great need to overhaul our taxation legislation and a need to establish a committee for this purpose. Yesterday afternoon the honorable member for Melbourne Ports pointed out anomalies in the legislation. However, no Government supporter has discussed taxation as it affects the majority of people. They have not discussed the rates of taxation now to be applied or the deductions available to those who claim taxation concessions. I join with the honorable member for Kalgoorlie (Mr. Collard) who commented on the question of zone allowances. I do not want to deal exclusively with the matters he mentioned. He was concerned with the amount a person could claim as a deduction under the zone A allowance or under the zone B allowance, but I am concerned with extending zone B. However, before discussing this in detail I should make one or two general comments.

According to the Treasurer almost £900 million will be raised this financial year from income taxation on individuals and about £400 million from company taxation. Together these amounts total almost £1,300 million and therefore represent the biggest part of taxation that will be raised from revenue this financial year. Total taxation is raised from three main sources - from taxes levied on individuals, from taxes levied on companies and from sales tax. I know that honorable members do not have an opportunity at this stage to refer to sales tax, because the legislation now before us has nothing to do with that tax. There is a great deal I should like to say about sales tax. Its incidence has increased greatly during this Government's period of office. But I will confine myself to remarks about taxes levied on individuals.

As the honorable member for Melbourne. Ports pointed out last night the tax levied on individuals has increased considerably during the term of office of this Government. The legislation that we now have before us provides for a fiat rate increase of 2i per cent, in income tax during the current financial year. This Government has been responsible during its term of office for a number of flat rate increases of income tax. It has provided also for a number of flat rate decreases. A short time ago the Government granted a flat rate rebate of 5 per cent, of income tax. That rebate has since been removed and in this financial year the Government proposes to increase the amount of tax paid by individuals by a flat 2.i per cent. As a result of this increase revenue will benefit by an additional £17f million.

During this Government's term of office we have seen a great deal of inflation. If the basis on which taxation is levied is considered by the Government to be equitable, one would expect the Government to consider factors such as price increases, inflation and other matters which affect wage and salary earners. Income tax is levied on a progressive basis. The Opposition has always contended that individual taxation, which provides the greater proportion of revenue available each year to the Government, should be levied on the basis of an individual's ability to pay. Unfortunately this principle has not always been followed by the Government. The present scale of taxation was introduced by the Government in 1954. It is still applied in 1965. Having regard to the inflation that has taken place in this country in recent years one must agree that the £1 in 1965 is worth considerably less than it was worth in 1954 when the Government decided upon a basis for levying personal taxation. There has been no alteration of the scale since 1954. This means that the wage or salary earner must today be substantially worse off than he was in 1954. This matter has not been considered by honorable members on the Government side who have taken part in the debate, but they must have some understanding of the situation as it affects wage and salary earners.

There has been a decline in living conditions in Australia. Honorable members on this side of the chamber, including the honorable member for Melbourne Ports, who led for the Opposition in the debate, have suggested that the scale according to which taxation is levied should be revised. If the value of the £1 was taken into consideration in 1954 when the existing scale was fixed, that scale would not be equitable today, having regard to the decline in the purchasing power of money in the last 10 years. The taxpayer most severely affected in these circumstances is the man in the lower income group. In a very constructive speech the honorable member for Melbourne Ports yesterday pointed out how those people in the lower income group had been seriously affected by the decline in the purchasing power of money and by the refusal of this Government to provide a greater measure of relief in its taxation legislation. The honorable member pointed out that the basic wage was about £1 5 1 5s. a week. A single man earning the basic wage would pay £1 9s. a week in tax. If he had a wife his tax would be reduced to £1 a week. In other words, he would have a saving of 9s. a week if he was able to claim a deduction in respect of a wife. If the wage earner had a wife and one child he would pay, on a wage of £15 15s. a week, 15s. a week. If he had a wife and two children his tax would be reduced to lis. 6d. a week.

Those figures highlight the Government's failure to recognise the burdens on the family man in this country. The Government's tax scale is not in keeping with the principle of levying taxes according to one's ability to pay. Surely the Government does not think that a saving of 9s. a week in tax sufficiently offsets the expense involved in maintaining a wife. The comparison is even worse when one considers the amount of tax paid by a taxpayer with a wife and two children and the amount paid by a single taxpayer. A careful analysis of these figures will show that they compare most unfavorably with the figures that applied when Labour was last in office. During the term of office of the Chifley Government a person earning only the basic wage did not pay any tax. I know that honorable members opposite may argue that in giving these figures I have not taken into consideration the fact that other deductions may be available to the taxpayer; but the fact remains that the Government has failed to pay due regard to the expenses incurred by a taxpayer who accepts family responsibilities.

I commenced my speech by saying that there were only one or two matters I wished to refer to. One of them is the matter of zone allowances, with which the honorable member for Kalgoorlie dealt very extensively this afternoon. He pointed out that in 1945, as a result of legislation introduced by the Labour government of that time, certain taxation concessions were extended to taxpayers living in certain areas of Australia which .were defined and designated as zone A and zone B. I have no doubt that these allowances were introduced to encourage people to live in isolated areas. From time to time since the legislation was introduced representations have been made to the Government by honorable members on both sides of the House for an extension of the areas in both zone A and zone B. I pointed out during another debate some years ago that the Government was most unjust in failing to include the Bass Strait islands, King Island and the islands of the Furneaux Group, in zone B.

I have already pointed out that the zone areas were set out by a Labour government in 1945. 1 think the deductions then allowed for income tax purposes amounted to £20 for zone B and £120 for zone A. In 1956 the amounts were increased to £30 and £180 respectively and, if I can rely on my memory, the area covered by zone A was increased. I think it was in that year also that representations were made to have the islands I have mentioned included in zone B for tax purposes. 1 believe that a case has been made out, not only by honorable members in this Parliament but also by residents of both these islands who appeared before a COm.mitte appointed by this Government in 1952 to consider the representations of the residents of these islands to have the islands included in zone B for tax purposes. So far as I am aware, no information has ever been given to this Parliament or the people concerned as to the decision arrived at by the Committee. I take the opportunity this afternoon of restating the case on behalf of these people and requesting the Government to consider again including these islands in zone B.

I am sure that the geographical situation of the islands is well known to honorable members. They may not, however, appreciate the climatic conditions, although I am sure they understand the great disadvantages for people living in these remote and isolated areas. All the commodities that they require have to be brought from the mainland or from Tasmania and all the goods they produce have to be sent to other parts of the country. Freight rates are very high and for this reason alone I believe these people have a valid case for having their islands included in zone B.

It is not within my province to question the decision that was originally made to define the areas of zones A and B. I must, however, remind the House that included in zone B in Queensland are the cities of Townsville, Mackay and Cairns. I am not suggesting that when the Government gave effect to this legislation there was not a very good reason for the inclusion of those towns in zone B. No doubt areas adjacent to the towns would also be included and the Government would have felt it was necessary to provide an incentive for people to live in those localities. But I submit that if it was felt advisable in 1945 to include such areas in zone B then obviously there should be a reconsideration today of the representations that have been made over a long period to have King Island and the islands of the Furneaux Group included in zone B for tax purposes. I see no reason at all why the Government should not give earnest consideration to this matter.

Honorable members should appreciate the conditions under which the people of these islands have to live. Even if their amenities are considered adequate, there is always the great disadvantage of freight charges. In the case of Flinders Island anyone who wishes to leave the island or return to it must travel by air and must meet the high costs involved. All commodities brought to Flinders Island are brought either by air or by sea, so that transport costs generally are much higher than they are in other places. It is on this basis that the people of the islands have time after time requested the Government to include the islands in zone B.

I have already said that this matter has been raised in the House on a number of occasions. Honorable members have suggested the inclusion in zone B or zone A of various areas other than the islands to which I have referred. I believe this is one of the questions that might be considered by a committee of the kind referred to by the honorable member for Swan this afternoon. There is a need to revise the areas defined by a previous government and amended only once since then, to my knowledge, by this Parliament. I do not want to deal in detail with the areas that have been placed in the two zones; I merely ask that the Government consider the representations that have been made and the points I have put forward this afternoon in favour of a reconsideration of claims to have these islands included in zone B. I have referred to the parts of Queensland that are in zone B, and if the Government believes that people in those areas should have a tax concession then I see no reason why it should not extend a similar concession to the people of King Island and the islands of the Furneaux Group.

The honorable member for Braddon (Mr. Davies) has referred in this House on a number of occasions to the problems of the people of King Island. I merely point out that this Government has invested a considerable amount of money in both King Island and Flinders Island in war service land settlement development and that therefore it must have some knowledge of the costs in which people living in these areas are involved in their daily living. The honorable member for Braddon has from time to time highlighted the difficulties of those who have war service land settlement properties on King Island. No doubt in many cases their difficulties are due to high freight costs. Indeed, this Government has already provided a subsidy to help reduce the effect of freight costs between King Island and the mainland of Australia. That shows that the Government has already acknowledged that additional costs have to be borne by the people who reside on these islands.

I suggest that the Government consider seriously the submissions that have been made on a number of occasions for concessions which I believe ought to be granted as a matter of justice to the people who reside in these areas. The Government should seriously consider including King Island and the Furneaux Group in zone B for taxation purposes.

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