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Open letter to Simon Crean



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P A R L I A M E N T OF AUSTRALI A

HOUS E OF R E P R E S E N T A T I V E S

BRUCE LLOYD, M.H.R. DEPUTY LEADER OF THE NATIONAL PARTY OF AUSTRALIA SHADOW MINISTER FOR PRIMARY INDUSTRY MEMBER FOR MURRAY

OPEN LETTER TO SIMON CREAN

5 March 1992

Dear Simon

Regarding your comments today during question time you said that the National Party did not have an input into the Coalition's package an d that farmers would not benefit from it at ail. You are wrong.

The National Party has played a major part in formulating the Coalition package, part o f which is the abolition o f fuel excise. Farmer

organisations, particularly the National Farmers! Federation, have also been strong advocates.

But don't take m y word. Have a look a t the enclosed analysis and remarks b y farmer organisations.

Yours sincerely

BRUCE LLOYD

COMr,iONV/EAi..TH ]

PARLIAMENTARY LiBRARY j M iCAH i

PARLIAMENT HOUSE CANBERRA A.C.T. 2600 TELEPHONE (06) 277 4193, 277 4074 FACSIMILE (06) 277 2053

HOW FARMERS WILL BE AFFECTED - 1

COALITION'S "FIGHTBACK!" KEATING'S "ONE NATION" . Complete overhaul of the tax system to slash personal Income tax by about 30 per cent, that is, by $13 billion.

. Low income earners such as farmers will not receive a cent from Labors tax cuts.

. Raise the tax-free threshold from $5400 to $7000, resulting in another 320,000 low income earners paying no tax.

. The tax-free threshold will not be changed by Labor, meaning 320,000 people will still be disadvantaged.

. 95 per cent of taxpayers will pay personal income tax at a marginal rate of 30 cents or less.

. Only 75 per cent of taxpayers will pay personal income tax at a marginal tax rate of 30 cents or less.

. Guarantee the return of revenue from tax bracket creep to taxpayers. DO NOTHING Abolish Wholesale Sales Tax, Labors hidden consumption tax which raised $9.4 billion in

1990-91. The NFF estimates it adds $170 million to farm costs.

Lower WST on non-luxury cars from 20 per cent to 15 per cent, reducing the cost of the average family sedan by about $800 (total cost $185 million), but not utes and trucks.

Abolish fuel excise, which currently pumps $6.6 billion a year into Government coffers. The NFF estimates excise is paid on almost half of all fuel used on the farm at the current

rate of 26 cents a litre. Petrol for private motorists will be 19 cents per litre cheaper when fuel excise is abolished.

DO NOTHING

. Introduce a Goods and Services Tax to take the indirect tax burden off producers and tax goods and services at the correct point in the production cycle, that is, on consumption.

DO NOTHING

. GST paid on farm inputs (fertiliser, agents' fees, fencing etc) will be rebated fully.

. GST will not be charged on exports Labor taxes exports to the tune of $1.7 billion annually

Return Income Equalisation Deposits (lEDs) as an effective scheme for farmers to put income aside as insurance against seasonal downward fluctuations in income.

Promised to review lEDs yet again. Will this mean more inadequate fiddling at the edges?

. Farmers will be given full relief from Capital Gains Tax when they sell one farm to buy another, provided the sale price is not more I than $5 million.

DO NOTHING

| . CGT on the sale of a farm by retirees aged I over 60 will be abolished when those gains I are under 10 times average annual earnings. DO NOTHING

HOW FARMERS WILL BE AFFECTED - 2

COALITION'S "FIGHTBACK!" Overhaul Australia's anti-dumping and countervailing procedures to ensure local producers are not disadvantaged by the unfair trading practices of other nations dumping products on the domestic market.

. Maximum total investigation time of 155 days (185 in exceptional circumstances)

. a sunset period of five years for duties, with reviews to be held before the expiry of such measures

. provisional duties imposed after 60 days if a provisional investigation indicates dumping or subsidising has occurred

. ensure the material injury test does not require the virtual decimation of the local industry before remedial action is taken______

The Coalition will restore confidence in the wheat industry by underwriting the wheat crop at 95% of the price per tonne estimate issued by the Australian Wheat Board on October 1._______________________________

There will be a realistic and uniform assets test used to determine eligibility for all pensions and benefits.

The Coalition will remove the assets test for the Assistance for Isolated Children Allowance and replace it with an income test only.

There will be no assets test (income test only) for the old aged pension for retirees living on the family farm under certain circumstances.

Household Support will be reinstated as a grant or payment to farmers in short term financial difficulty as it offers a better welfare net than unemployment benefits.

Families in extreme financial hardship will not face an assets test for Austudy, family allowance or any other welfare benefits. An income test only will apply.________________

Remote area allowances and zone rebates on income tax will rise by at least 25 per cent.

KEATING'S "ONE NATION" Labor continues to fiddle at the edges of the anti-dumping and countervailing system, making small changes which fail to offer equity to industries hit by dumped and subsidised imports.

. Labor's recently revised maximum investigation time is 255 days

. Labor has finally adopted the Coalition's policy on a five year sunset period

. Labor recently improved its preliminary investigation phase to allow provisional duties to be put in place after 125 days

. most industries now feel there is no point applying for duties unless they have lost 20 per cent of their domestic market share

Labor only guarantees 85 per cent (phasing down to 80 per cent) of total borrowings by the AWB, not the price per tonne of wheat received by farmers.

Labor has conflicting assets tests for the whole range of pensions and benefits, including the aged pension, family allowance, family allowance supplement and Austudy.

Labor increased the Isolated Children's Boarding Allowance to match Coalition policy, but will retain the assets test for the Assistance for Isolated Children Allowance.

Retain the assets test on the aged pension at a cut-off level of $187,500 for single pensioners and $284,500 for married couples.

Labor will keep using the inappropriate 'Dole for Farmers' scheme, forcing applicants to go through a complicated three-tiered process involving banks, the Rural Adjustment Scheme and Department of Social Security, or receive Household Support as a loan.

DO NOTHING

DO NOTHING

WHAT THE FARMER ORGANISATIONS SAY - 1

COALITION'S "FIGHTBACK!" LABOR'S "ONE NATION" NATIONAL FARMERS' FEDERATION:

- T h e Coalition's economic package will be of enormous benefit to farm businesses and farm families'

- T h e Liberal and National Parties have delivered on many key farm sector policies'

- "We estimate farm transport costs would be reduced by about 16 per cent."

- The overall economy will benefit substantially from microeconomic reform measures proposed by the Coalition.'

- The package is a much needed contribution to national debate and firm evidence of the vision and commitment to economic reform of the Liberal and National Parties.'

- The abolition of wholesale sales tax would save the farm sector $170 million a year."

NATIONAL FARMERS' FEDERATION

- The Government's own analysis has shown that the existing ramshackle indirect tax system disadvantages all Australian exports.'

- The current indirect tax regime places Australian exporters at a five per cent disadvantage against our international competitors."

- There may be no stimulus to the economic from the statement.'

- 'Markets obviously are concerned at projections for growth, inflation and productivity and have noted that future tax cuts are unfunded.*

■Unless the bond rate falls, the statement will be a damp squib* - in response to the 0.8% increase in the bond rate (adding $1.6 billion to long term business costs) since the statement was first flagged in January.

VICTORIAN FARMERS FEDERATION:

- 'It is the best policy initiative for farmers to come out of Parliament in decades and is a major win for the farm lobby.'

- T h e reduction in fuel prices will have a substantial flow-on effect in the economy, particularly outside the metropolitan areas."

- T h e changes proposed as part of the health policy remove many of the current inequities faced by farm families."

- T h e VFF compliments the Coalition on the compensation package for social security from which many farmers benefit at the present time.'

VICTORIAN FARMERS FEDERATION:

- *With a week to assess Mr Keating's package, farmers and business are not inspired by the economic plan.*

- The ambitious goals of increased productivity are not likely to pay for the $16 billion Government expenditure over the next four years.'

- ‘Farmers believe the big spending package will blow out debt and inevitably for interest rates up.'

- "For Paul Keating to offer wage increases tied to the OECD CPI is a sell-out. The first time in a decade that Australia's CPI is lower than the OECD average, the Government changes the rules."

WHAT THE FARMER ORGANISATIONS SAY - 2

COALITION'S "FIGHTBACK!" LABOR'S "ONE NATION" WOOL COUNCIL OF AUSTRALIA:

- "Implementation of this package would provide the necessary incentive for Australia to overcome its current economic problems."

- "The abolition of Federal excise on fuel will benefit all Australians, particularly those living in remote and regional areas of Australia*

- "The Coalition's GST package provides a substantial benefit to export industries."

UNITED GRAZIERS ASSOCIATION (OLD):

- The Federal Governments "One Nation" plan...fails to provide substantial relief to primary industry and promotes a high risk strategy that may not be achievable in the longer term."

- T h e statement directly avoided taking the hard decisions to put in place meaningful structural adjustment."

NSW FARMERS ASSOCIATION:

- "This is the first genuine, positive attempt by any political party to put together a package that substantially helps business...and so creates jobs."

- "Lower fuel costs mean that all families in regional Australia will now pay a smaller transport component in the cost of everything they buy."

NSW FARMERS ASSOCIATION:

- The Federal Government's economic package has missed the main event, by failing to give business the confidence it requires to build."

- "If this is the Government's response to the Opposition's Fightback! package, it is obvious they have been knocked out in the first round."

PASTORAUSTS & GRAZIERS ASSOCIATION:

- "The greatest danger posed by the GST is that it will prove to be so well received that the Government will delay the next election for as long as possible, hoping for a miracle to boost its re-election prospects."

GRAINS COUNCIL OF AUSTRALIA:

- The statement did little to restore confidence in a grains industry so severely undermined by the volatility of subsidy corrupted international grains markets."