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Thursday, 5 December 1974
Page: 3213

Senator WRIEDT (Tasmania) (Minister for Agriculture) - In reply- In view of the circumstances I will have to confine my remarks and be as succinct as possible. I shall isolate perhaps two or three points that were made during the course of the debate and which appear to me to be of some concern. A question was raised by Senator Carrick concerning the definition of a private car under the legislation and he invited me to comment on it. 'Car' is defined in the legislation as including a station waggon, panel van or utility truck and any other vehicle that is designed to carry at least one passenger if it does not have a carrying capacity in excess of one tonne. Under the legislation 'private use' means essentially non-business use, that is, use not directly associated with employment or the rendering of services, and includes travel between home and work except where the Commissioner of Taxation is satisfied that for the efficient performance of an employee's duties it is necessary for a car to be kept at or near his residence.

Senator Carrickalso made reference, as I think did one or two other honourable senators, to housing loan interest deductions. It has been estimated that 1.4 million taxpayers will benefit under the housing loan interest deduction scheme for which provision is made in the Income Tax Assessment Bill. The scheme will have a full year cost to revenue of $ 120m and arrangements have been made for the reduction to be reflected in weekly tax instalment deductions if the employee so wishes. Two examples of the effect of this deduction on interest rates show the following figures: In the case of a net annual income of $6,240- that is $120 a week- as a result of the interest deduction for housing loan interest the effective rate of interest on the loan will be reduced to 8.4 per cent in the first year of the loan. That is a reduction of 2.35 per cent. The reduction in his weekly tax instalment deductions will be nearly $7. On a net annual income of $7,280-that is $ 140 a week-the effective rate of interest on the loan will be reduced to 8.28 per cent in the first year of the loan. That is a reduction of 2.47 per cent. The reduction in the weekly tax instalment deductions will be nearly $8. That is, the weekly take home pay will be increased by $8 as a result of this deduction.

Senator Carrickalso indicated in his amendment to the Income Tax Assessment Bill that the Bill takes no account of those persons unable to purchase a home. As this matter is referred to in the context of housing loan interest rates the suggestion is that the interest deductibility scheme should be extended to rent payers. It was decided by the Government that the question of extending the housing loan interest deduction scheme to cover a notional interest component of rent should be referred to the Treasurer (Mr Crean) for advice on particability and cost. Information was provided to the Government committee by the Treasurer on this proposed extension and apparently the proposal was dropped.

The other matter concerning mining, which is another important aspect to which some time should be devoted, involves section 23A of the principal Act which frees from tax 20 per cent of the net income dervied from mining prescribed metals and minerals. This provision has been in the law since the Second World War and its original justification was to assist mining companies called on to accelerate their production of scarce materials at a time when heavy tax rates applied because of war-time conditions. There is no good reason for a concession of this nature to continue under present conditions. Many of the metals and minerals prescribed are no longer in short supply, for example, copper, bauxite, nickel, uranium and the beach sand minerals, and the concession discriminates unfairly in favour of companies mining eligible minerals against those mining minerals not listed for the exemption. Further, the nature of the exemption ensures that the greatest benefits from the concession go to the most successful companies mining the richer deposits and which do not need any incentives to produce, whereas the less profitable companies receive little or no benefits from the provisions in that section of the Act.

I refer briefly to the matter of education expenses. It should be borne in mind that the Budget proposal to reduce the maximum amount claimable for each student for education expenses has been thoroughly examined by the Government. The amount has been reduced from $400 to $150 mainly because the Government's programs involve substantial increases in direct expenditure on education. The actual annual increase in expenditure on education in 1973-74 was 94 per cent and the estimated increase in 1974-75 is 78 per cent. In these circumstances there is no longer a case for providing substantial indirect assistance through the taxation system which is not based on needs or any other criteria of relevance to the Government's own educational programs. However, the Government does appreciate the difficulties faced by people living in remote areas and has accepted responsibility for improving educational opportunities for children whose families live in isolated areas far removed from normal school facilities. One of this Government's first initiatives was to introduce the isolated children's scheme of financial assistance. My colleague, the Minister for Education (Mr Beazley), is responsible for the administration of this scheme and as he announced in a statement tabled in the House of Representatives on 24 September 1974, the rates of allowance and means test are to be adjusted as from the begining of 1975.

I believe it is not in the interests of the Senate that the amendments which have been moved should be carried. The Government has given a good deal of consideration to the matters which have been placed before the Parliament. I must say on behalf of the Government that we will oppose the amendments which have been moved. We believe that it would be in the interest of the community as a whole if the motion goes through in its original form.

Question put:

That the words proposed to be added (Senator Carrick's amendment) be added.

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