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Tuesday, 16 November 1976


Mr FRY (Fraser) - I am pleased to support the Pay-roll Tax (Territories) Assessment Amendment Bill. It was good to hear the honourable member for Canberra (Mr Haslem) describing the sort of city he would like Canberra to be- a modern swinging city with good quality homes, all mod cons, all the facilities we have come to associate with a modern city set in a very attractive rural environment. He was describing Canberra at it was in the years of the Labor Government. That is precisely the sort of city it was but that is not the sort of city it is today. He said he had been speaking to builders and public servants who had said that they were very happy with what is going on here. He and I must talk to different builders and different public servants because that is not the message I get. I find that people generally are very disillusioned with the Government, even people who voted for it. They have got the message that life was not meant to be easy for people in Canberra under this Government. It was not meant to be easy for the honourable member for Canberra either. I have a lot of sympathy for him. This Bill is a little bit of consolation for him. It is the only positive thing that I can recall this Government doing to aid the business people of Canberra, particularly the small business people. They have taken a terrible battering under this Government.

I refer to such things as the very savage ceilings put on the Public Service and the cutbacks in the budget of the National Capital Development Commission. These things have reflected on business in Canberra in one way or another. The profits of business people are down and in most cases their turnovers are down. People just do not have the money to spend. There have been very drastic increases in rents for government houses. There have been increases in interest rates on existing government housing loans. All these things have eaten into the spending money of the ordinary people and this is reflected in very poor returns to many business people, particularly people with small businesses.

While the Opposition welcomes this Bill it has great limitations. It will apply to a very small group of businesses. There are quite a few unsatisfactory features of the Bill. One thing that I would like to draw to the attention of the House is the fact that in some States there are special dispensations in the case of payroll tax to encourage particular forms of industry or to encourage decentralisation in particular areas. I believe that the Victorian Government makes such concessions but there is no such concession in Canberra. Therefore in that respect, while the legislation brings businesses into line with the States they are disadvantaged in regard to the States in some cases. If some special dispensation is given to encourage particular businesses to decentralise and go to Queanbeyan the equivalent business in the Australian Capital Territory certainly would be at a disadvantage.

The other unsatisfactory aspect of payroll tax generally is that it tends to discriminate against labour intensive industries as against capital intensive industries and in that way there is a direct disincentive to employ people. This is so particularly in the case of marginal businesses so far as this legislation is concerned. If a businessman is in the situation that he becomes eligible for payroll tax if he employs another person there is a strong incentive for him not to do so. A businessman may even put somebody off so as to become eligible for exemption from payroll tax. Another unsatisfactory aspect of payroll tax in a national sense is that generally it tends to favour imports. It represents an added impost to the local manufacturer who is trying to compete with imported goods which may come from countries with very low labour costs.

While we acknowledge the benefits of this Bill to the small businessman we also must be aware of its limitations. In Canberra the general payroll tax exemption is for people with payrolls of less than $48,000 a year which is less than $1,000 a week. The application of this exemption would only cover people with four or five employees. Anybody with more employees would have to pay some tax. The general exemption for payment of no payroll tax would apply only to very small businesses. Certainly it would be a great help to small retail businesses. The partial exemption on payrolls up to $120,000 a year, which is something like $2,400 a week, applies only to businesses with up to 12 or 15 employees. Above that there is no exemption. Of course, the large majority of businesses in Canberra would be in that category. While we welcome the Payroll Tax (Territories) Assessment Amendment Bill we must realise that its limitations are very grave. I could not get figures on to just how many enterprises the exemption would apply. But on those figures it would be a fairly small number and certainly it would be a small amount in terms of the total turnover of business enterprises in Canberra.

While this Bill gives some consolation, it certainly does not offset the terrible battering which businesses in Canberra have taken at the hands of this Government. While I appreciate the efforts which have been made on paper to try to attract people to Canberra and to try to flog off leases to get people to start businesses, in the current attitude I am afraid that in cold, practical terms it will take much more than advertisements in the newspaper to get people to come to Canberra and to set up in business. The trend is, of course, to get out of Canberra because of the very serious effects which the cuts in government spending are having on Canberra. These cuts have been much more serious than they have been in capital cities and other parts of Australia. The effect of government cuts has been very serious here. The honourable member for Canberra talked about the building industry being happy. I do not know to whom he has been talking but where we had a situation with practically no unemployment, we now have something like 3000 unemployed in Canberra. This is unheard of here. Certainly that is not many compared with other States and other areas but in Canberra's unemployment figures it is a very serious situation. We have to acknowledge that.

While the Minister has taken certain action to try to encourage people we have not really seen anything on the ground. This is in contradiction to what the honourable member for Canberra said about getting people to come in and buy business leases. Recent information I have is that the department has found the sale of business leases very sluggish indeed. The National Capital Development Commission has confirmed this in recent information given to the Joint Parliamentary Committee on the Australian Capital Territory. Obviously the honourable member for Canberra and I look at Canberra through vastly different glasses when we talk about it in the House. Things must be very different on the other side of the lake. I am afraid that the picture which the honourable member for Canberra is painting is nothing like the picture I get on my side of the lake. I really do not think there is that much difference but time will tell, of course, at future elections.

The other unsatisfactory feature of payroll tax is that it is a State revenue and it goes into the State coffers. I am sure the honourable member for Canberra will agree with me when I say that revenue taken from the business people in Canberra through payroll tax does not go into the coffers of the Department of the Capital Territory. It goes to the Department of the Treasury and the people of Canberra never see it again. That is another aspect to the myth that we do not pay our way. Of course, people who are familiar with the figures know that we do pay our way. We more than pay our way in terms of personal tax and company tax. We do not get any direct return for it.

Payroll tax is another example of the way in which the people of Canberra and business people pay. The revenue does not go into the accounts of the Department of the Capital Territory. It is grabbed by the Taxation Office people and it goes to the Treasury. If allowance were made for all these things it would be seen that Canberra pays its way. If we got the per capita subvention which the small States like Tasmania, South Australia or Western Australia get, our accounts would look much sounder. If the money from payroll tax came back into the revenue of Canberra that revenue would look much healthier. I welcome the Bill. It is a small blessing and it is something to offset the terrible battering which business in Canberra has taken. For that reason we support the Bill.







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