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Tuesday, 8 November 1983
Page: 2397


Mr SINCLAIR(5.17) —This package of legislation embraces a wide range of measures, most of which start to implement that increase in personal liability which is inevitable following the election of a Labor Government. We all know that prior to the election a number of undertakings were given which suggested that there would be an immediate change, that things would be all for the better, that taxes would be reduced and individuals would be better off. Of course, the product of the first Labor Budget was an increase on average of $15 in tax liability for those on average weekly earnings and a number of fundamental tax changes. These have come in a series of packages and the legislation before us tonight embraces a number of those that affect the more sensitive areas; they affect every member of our community.

One aspect that concerns me most and to which I would first like to draw the attention of the House is the change in arrangements as they affect members of the reserve forces. Most members of this place, and certainly many in the community, will be aware that for a significant time the reserves have been promoted not simply because they are a way by which at a time of defence threat we can augment the numbers of Australia's Defence Force but because in a nation like Australia, spread around a very large territory with relatively sparse population centres and with extraordinary difficulty in communication, it is essential that we have a reserve backup to supplement the permanent members of the Australian Defence Force. Indeed, in those conflicts in which Australia has been involved, reserves have been an absolutely essential part of ensuring the capability of the Australian Defence Force. Many reserve officers have risen to a position of significant seniority, indeed even to be in command, in the Australian Defence Force.

In this package of legislation we have the implementation of a phased reduction of the tax exemption on reserve personnel pay. It is necessary that people in the community realise the nature of the reserves before they consider the implications of this change. First, the reserves are not in anyway intended to complement in full detail each of the categories of the Australian permanent forces. Rather, they are intended to provide, in a broad range, a group of select individuals who, through training and service obligation, are able to provide the elements of training should there be a need for a defence build-up. For that reason it is absolutely essential that in the reserves we have people with competence and a wide range of skills in the civilian community. It is important that we find people, for example, with technical trades. It is essential that there are people who, in their day to day lives, exercise responsibility right across the field of human endeavour and commercial employment.

If we are to retain those people and encourage them to join the reserves the first essential is to give them a meaningful incentive. The Prime Minister (Mr Hawke) in a light-hearted vein has suggested that people join the reserves all because of patriotism. Indeed, let no one be mistaken-the level of patriotism of members of the reserves is very high indeed. All of us realise that there are many competitive attractions in our society. There are many leisure activities that individuals can pursue in their spare time. Indeed, the product of reduced working hours has been that many people find it possible to pursue in their leisure time activities that perhaps were denied their forebears and elder brothers.

In recent years we have sought to encourage recruitment into the reserves. The coalition Government saw the reserves as a very vital element of the whole of the Australian Defence Force. The Army reserves were given particular emphasis. Indeed, we set upon a recruitment program designed to augment their numbers, to provide additional training hours and to try to ensure that the level of training and equipment was such that the members of the reserves would not only get that fulfilment of the commitment which led them to recruit in the first place but would also fit very adequately within the Reserve forces.

Indeed, most people will remember that one of the more beneficial changes in the structure of the Australian Defence Force which came out of the Vietnam commitment was the integration of the reserves into the Australian Defence Force . No longer did we have one group of people who were involved in the full time Services and another in the militia. Everybody belonged to the same service. Part of the product of the changes we introduced was the encouragement of people to recruit. We gave members of the reserves with greater community skills, these people, through the elimination of the taxation liability on their pay, a genuine financial incentive to maintain that service obligation as well as whatever other things they may have done in their spare time. We made the service in the reserves such that whenever the reserves were called on they performed a very excellent job.

I mention, for example, that when I visited Kangaroo 83 I was fascinated to find that the Royal Australian Air Force officer who took us around the airfield at Roebourne was a Trans Australia Airlines pilot who was serving his training obligation in that rather hot, isolated and not particularly attractive part of Australia as a member of the Reserve Air Force. Another of the assessors working with the Air Force was a Qantas Airways Ltd first officer who had been a former F111 pilot in the Royal Australian Air Force and who had resigned, joined Qantas and was fulfilling his reserve obligation as one of the assessors with the RAAF team. The point of those two instances is that those people are on high salaries . The same applies to an electrician, a carpenter, a plumber, a motor mechanic or a diesel mechanic. Any of those people in the work force are the sorts of people we want to be members of the Australian reserves. Yet the legislation before the House will phase out that tax concession.

Of course, it follows a reduction in the number of training hours not, as the Minister for Defence (Mr Scholes) has said, from 38.5 days to 36 days to about 27 days per year which seems to be the average at the moment. So we are reducing the training time. In the changes that came out of the Budget we are certainly reducing the services available from permanent cadres to the reserves. The elimination of the school cadet corp has seen a greater obligation being placed on the reserves. Apparently, henceforth, some type of additional responsibility is to be placed on the Army Reserve to develop another type of cadet corp system which, apart from being yet another obligation on schools, will place an additional responsibility on the reserves. This is all happening at a time when the tax concession is being removed and there is no immediate certainty that anything will be put in its place. Certainly, the Minister has said that he will refer the matter to Mr Justice Coldham. In part of a general statement the Minister said:

I think that I can indicate that the Government's policy on any of these matters is that they do not have retrospective effect.

He is withdrawing the tax concession. He is saying that there will not be any retrospective effect. Those who are members of the reserves are virtually being put on notice that whatever the result of the reference of their pay to Mr Justice Coldham of the Committee of Reference for Defence Force Pay they will not be compensated for that period covered by the phasing out which is part of this legislation. There is little doubt that these changes, as they affect the reserves, will be yet another impost on their service obligation. The changes will make it more difficult to attract people of the kind needed to maintain the quality of the reserves. I believe it is a very retrograde step indeed. I draw the House's attention to some remarks made by the Chief of the Defence Force Staff, Air Chief Marshal Sir Neville McNamara, made in early September 1983. An article reporting those remarks stated:

. . . the members of the reserve forces also were considerably concerned about the proposal to tax their incomes. 'I am not too sure, again, what is driving this perceived need to tax them in this regard . . . I can only assume that it is the feeling that where people have a normal employment or appointment which calls in perhaps a significant salary in itself, then they have an unfair advantage over other members of the community if they also have a part-time employment which adds to their income without taxation on it.'

Let me intercede to say that we all know that the character of our taxation system places on people with this second job-if that is what one calls service in the reserves-a greater taxation liability than they would have if they had only one job. They will pay a penal tax obligation for serving the nation; they will pay a penal, tax obligation because they are a member of the reserves; and they will pay a penal tax obligation because the Prime Minister says they are loyal. Indeed, there could be no greater condemnation of the changes this Government is introducing in this area than the fact that these people are to be disadvantaged, instead of advantaged, for serving their country. Sir Neville is reported in the article as also saying:

If that is the thrust of it, then I would represent the point that I have a considerable admiration for those people who volunteer for the reserves. To fulfil their obligations in that respect they put in a considerable amount of what would otherwise be their free time or time that they would devote to their families or other pursuits.

They give up quite a bit, and that applies right through from a soldier up to a colonel or lieutenant-colonel, and I think they deserve some recognition for that fact.

Let me intercede again that that recognition has not come from Labor. The article continued:

But, aside from that, again I have a fear that there would be an adverse effect in terms of reducing the numbers who would be prepared to give of that time.

The strength of the reserve was important to the Army for times of emergency.

The article also said:

Servicemen were not looking for big pots of money, but they were looking for those things which gave recognition to the special nature of their volunteer service.

Sir Neville is reported as saying:

Take an example . . . When the postal concessions were cut out-

another of Labor's measures--

it wasn't big money, but it was very sorely felt because servicemen saw it as a lessening of that recognition of their special service.

The potential impact resulting from either firm decisions like the firm decision to conduct a DFRDB review--

of course, we have the tax obligation in that area which is another burden of Labor's--

or other proposals which have not yet firmed up, like taxation on commutation, increased payment for steward services, increased rentals, and all those things, concerns me . . .

I feel that not enough advice had been taken on board before the proposals were mooted, and it has the appearance of not recognising the special nature of service by personnel within the Defence Force.

There is little doubt that the Services feel let down, and properly so, by Labor . The legislation which this House is discussing tonight implements those changes for the reserves. It is a sad case of Labor, having gone to the people before 5 March presenting that glorified picture of a government that would deliver and, in practice, presenting legislation such as this which will demonstrably affect the capacity of the reserves to attract the sorts of people they need. It follows reductions in numbers in the reserves. It follows the reduction in training hours for the reserves. It follows the added responsibility given to the reserves by their being called on to maintain a new type of cadet corp. It generally represents a reduction in defence capability at a time when Australia cannot afford it.

There is a whole range of measures within this package before us tonight. I am sorry I will not have time to deal with them in full detail. I wish to pick up briefly, however, a couple of other aspects as they affect very significant areas of our community. I endorse completely the very wise and well considered amendment moved by my colleague the Leader of the Opposition (Mr Peacock) which picks up the principal deficiencies of the Income Tax Assessment Amendment Bill (No. 4). We need to realise that this package of legislation tries to change the structure of our society. This Bill, for example, is to abolish the rebate on up to $1,000 dividend income of individual taxpayers. That measure was introduced by our Government to encourage people to invest in Australia. Of course Labor is not interested in investing in Australia; it is not interested in trying to develop self-ownership. Labor members make great play of overseas owners coming in and buying Australia. What is the Government doing about measures to encourage individuals to invest in Australia? It is removing the rebate.

I now turn to the modification of the averaging system applicable to the primary producers. There is a very interesting story to be told. I regret again that I will have inadequate time to follow it through. The Australian Labor Party's policy for agriculture prior to the election commented:

Fluctuating prices and unpredictable seasonal conditions mean that farmers and fishermen have particularly unstable incomes.

Need I say how true. Labor's policy continued:

Labor recognises the need for government to provide individual producers with the ways and means of minimising any disadvantage flowing from such instability.

Brave words in Labor's policy before the election. The agricultural policy continued:

Labor will maintain tax averaging;

Labor will maintain the income equalisation deposit scheme . . .

Yet by this measure we find that Labor is to remove that scheme. I draw the attention of the House to a letter written by Mr David Trebeck on behalf of the National Farmers Federation that identifies the very real and adverse consequences that this Bill will have as far as tax averaging is concerned. Instead of maintaining the offset as it affects primary producers, including fishermen, to try to compensate for the fluctuating incomes that the policy addresses, the purpose of this Bill is to remove significantly the advantages of tax averaging as it affects primary producers. It will impose an added obligation in a way that again will impede recovery from the drought; yet it is the recovery of the rural sector that so significantly will contribute towards the recovery of Australia's economy and the regeneration of employment opportunities in this country.

There was another aspect in that brave Australian Labor Party policy which sold the Australian people a pup. Labor said:

The Australian Labor Party believes in consultation.

We all know what a farce the National Economic Summit Conference was, but we need to recognise that in that same correspondence from the National Farmers Federation, which even Labor accepts is the body which predominantly represents the rural producer, the Federation comments that there has been virtually no consultation either in respect of the changes to tax averaging or income equalisation deposits. These two schemes were introduced at the request of the rural community to try to ensure some way of reducing the impact of those fluctuating incomes which, through drought and market changes and the added burden that Labor policies are imposing on them, mean that there is a need to try to contain the way in which a farmer can face the future. Tax averaging is designed to reduce the effect of highly variable incomes and the tax payable on them. Income equalisation deposits are designed to reduce the impact on the taxpayer of having to provide large sums to help the farmer in times of drought. Yet these two measures are being changed significantly without consultation with the farming community or those who represent it.

I should like to look at another change in the Bill; that is, expenditure on land clearing and swamp drainage. This measure is to be deleted because the Labor Party says it is concerned with land conservation. What a farce! There is no doubt that, in the development of this nation, unless we properly impose various constraints on land development we will find it extraordinarily difficult to maintain productivity. True it is that most of those involved in agriculture are far greater conservationists than many of those who profess to be supporters of the conservation cause. Of course it is necessary to maintain environmentally sound practices, but the deletion of the concession is not the way by which we will achieve that objective. This concession was introduced to try to help farmers to maintain productivity, to try to help combat some of the effects of drought and to try to ensure an ability to develop and utilise Australia's soil resource in the most equitable and most effective way. This measure does not help to achieve that end.

We heard the excellent speech by the shadow Treasurer, the honourable member for Bennelong (Mr Howard). He addressed himself to the proposed increase in the expenditure threshold for the tax rebate on concessional expenditure. Such an increase would affect adversely many of those who are already very heavily penalised by the ridiculous Labor education policies. We heard the Prime Minister applaud these policies today. They will prevent many of those attending Catholic and other independent schools around Australia from paying the fees they will be required to pay. Labor's policies are forcing schools to increase fees and will add to the general burden of providing a choice in education for Australians.

That measure, like each measure in this Bill, is part of Labor's socialisation program. Each of the Bills within the package deserves to be rejected by the Australian people. They will not assist Australians; they will add to the penalty on individuals who are prepared to help themselves, whether they are members of the Reserve, primary producers or parents of school children. Each of those sections of the community is being penalised by the package of legislation before the House. I thoroughly commend the amendment moved by the Leader of the Opposition, which addresses those groups.