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Wednesday, 13 May 1987
Page: 3095


Mr BRAITHWAITE(3.10) —This matter of public importance arises from natural circumstances. Only yesterday there was a report in the Australian Financial Review which emanated from South Australia through the efforts of the South Australian Small Business Corporation, which has carried out a survey of financiers and found a steep rise in personal bankruptcies in all States. It says that the worst is yet to come. This comment was made on the same day as the Department of Social Security in South Australia admitted that it was giving advice to its clients to transfer from the productive sector to the welfare sector, to wind up their businesses and to become recipients of welfare. It seems strange that the cause of this particular problem that we see around Australia has an agency in the Department of Social Security, which is prepared to advise its clients on how to go about it.

We have up to date statistics on bankruptcies in Australia which are far from favourable reading for anybody who would claim to be trying to be productive in this country. The Library figures show that in 1984-85 there were 4,664 bankruptcies. That increased to 5,539 bankruptcies in 1985-86-a 19 per cent increase. In the nine months to March of this year, it has already reached 5,478-a 33 per cent increase on the 1985-86 figure, but a 57 per cent increase on 1984-85.


Mr Hunt —How much?


Mr BRAITHWAITE —A 57 per cent increase on the former year. We have a farcical situation of this Government trying to propound economic theory to this country. The bankruptcies, which I have just mentioned, are a reflection of the policies it has adopted. They are not the statistics of a caring government-far from it. Every day we get a sermon from the other side of the House about how caring and everything else this Government is. Certainly, these statistics do not show that. In fact, the statistics are a morbid testament of the failure of government policy, a testament to those policies that affect all businesses throughout Australia, all communities, all States and all the people who would be proud, in the normal circumstances, to call themselves Australian.

It is rather enlightening to realise that only this week in an adjournment debate the honourable member for Mitchell (Mr Cadman) gave an indication that a company that the Department of the Special Minister of State is dealing with for computers to be used by members of this House is in liquidation.


Mr McGauran —Is it a Saffron company?


Mr BRAITHWAITE —It is not a Saffron company. The company, HRC Technologies Ltd, on the night of 26 March, filed for liquidation in Tasmania, and yet this Government is going into this arrangement. The liquidations and bankruptcies are right on our doorstep.

The extent of these bankruptcies affects small business and farmers. There is a domino effect that also has its fall-out on personal bankruptcies. The domino effect is, surely, that if businesses which were thriving before this Government got into power are forced to reduce their capacity or even go into bankruptcy, that means lost opportunities for employment. I will give an indication of that. A company that I know very well in my own home city four years ago, at the time the Hawke Labor Government came to power, had 150 employees. At the moment it has 90 employees. That is lost opportunities for 60 people. In between that its bad debt experience is greater than the profit it is able to make after a year's trading. All of these-the bad debt experience and the lost opportunities-are part of the sad story of the economic plight of Australians. There is also the domino effect of mortgages foreclosed on homes. We see that on a daily basis. Again, I suggest that any honourable member representing his electorate in this chamber has such cases brought to him on a daily or weekly basis.

The claim by the South Australian Small Business Corporation showed that the increase in interest was a major contributor and also the fact that people were spending more on their credit cards in advance of their income. I suggest to honourable members that if these people are taking their example from this Government, it is a fair reflection that they should be spending in advance of their income, because this is precisely what this Government has done over the last four years it has been in office. It is a matter of do as I say, but not as I do.

Let us look at the excess expenditure which has produced the deficits under the four Keating Budgets. Keating No. 1 deficit, $7,932m; Keating No. 2 deficit, $6,720m; Keating No. 3 deficit, $5,726m; and Keating No. 4 deficit, if it runs to plan, $3,503m, but we expect that it will be overrun. The forward Estimates for next year give rise--


Mr Ian Cameron —This is a sham.


Mr BRAITHWAITE —It will give rise to this sham that we are going to have tonight, as my colleague says; it is about to produce $6,000m. The populace is spending like crazy because they are taking their example from this Government. At Question Time today I asked a question in connection with the commitment on tin-$45m. Again, this Government has from time to time overlooked its responsibilities in the world market and its world organisations and was not prepared to intervene or issue instructions to get out of that. As a result, we are faced with a greater liability.

Let us look at table No. 10 of the last report on the Bankruptcy Act. Unfortunately, it is for 1984-85. This table shows the major causes of business bankruptcy. Of a selection of 1,284 such bankruptcies, 596 are listed as having economic reasons for failure; that is 46 per cent of the total failure for business bankruptcies. I will just mention what they are. There were 262 bankruptcies due to lack of sufficient capital-in other words, they could not borrow in the current climate to do what they wanted to expand; economic reasons, 247; excessive interest, 40; and bad debt experience, 47. I mentioned before what the bad debt experience is-it is just another experience in this bankruptcy situation. Forty-six per cent of the total claimed that there were economic reasons for their bankruptcies.

If we go back to published figures, in my own State of Queensland, it is suggested that 26 per cent are bankruptcies of businesses and 73 are personal but, as I said before, it is due to the domino effect brought about by the policies of this Government, to a large extent. What we do need is a change of policy and a change of direction in order to assist the small business, farmers and the families of Australia which are at the production end.

I have already stated what the effects of the deficits will be. The expenditure cuts which are part of that problem will be addressed tonight. We have all got to ask ourselves the question at the moment: Will those expenditure cuts be sufficient? I draw the attention of the House to table 3 of the 1986-87 Budget Papers on page 380. It indicates the real increases that have occurred in expenditure under the Keating Budgets. From 1982-83 to 1986-87 there has been a real increase in expenditure of $5,961m. That has been a 16 per cent increase in real terms. In monetary terms, it is $25 billion-almost a 50 per cent increase. If the Treasurer is fair dinkum and he wants to revert--


Mr McVeigh —He is not.


Mr BRAITHWAITE —He is not fair dinkum; but if he were fair dinkum, I would suggest that he go back to the last Budget of the present Leader of the Opposition (Mr Howard), then Treasurer, and try to seal the expenditures on that basis. If the present Treasurer is fair dinkum, he has got $5,916m to get back. We are being faced with the suggestion that $2 billion is going to be too much in that respect. I just happened to notice that in those figures the interest on public debt from 1982-83 to 1986-87-that is turning over the debt-has increased from $3,378m to $7,514m. Again, that is what this Government says we should do, but it is not what it does. The Government has bypassed the major fundamental business principle that one should not borrow to pay one's interest. This is precisely what the Government is doing. I suggest that the Government has a greater capacity than $2 billion in cuts if it returns to the 1982-83 standard.

The effect of the rate of interest on bankruptcies has been listed previously. I want honourable members to look at the history of borrowing rates that every small business and farm in Australia has faced since 1984. I obtained from a major bank this morning a list of the prime bank rate changes that occurred between September 1984 and April 1987. There were 48 changes during that period. Interest rates went from 13 per cent-a rather modest figure-to a peak of 21 per cent on 23 December 1985. What a wonderful Christmas present that must have been for every small business and every primary producer throughout Australia at that time. Interest rates surged to 19 per cent on 3 September 1986 and currently stand at 17.5 per cent. If one is a good borrower one can get that prime rate of interest. There are no small businesses in Australia, and very few primary producers, who can get interest at that rate; it is normally one or 2 per cent higher. Imagine the effect those rates have on businesses and on the economic environment.

Other policies will have to change if small businesses and farms are to cope. There are on-costs resulting from the fringe benefits taxation, which is estimated to bring in $325m this year. I understand that we have already gone well over that figure. As a colleague at Question Time said, the capital gains tax is likely to bring in between $130m and $160m this year, following an estimate of $5m.


Mr Slipper —How much?


Mr BRAITHWAITE —It is an increase from $5m to $160m. That is not a bad effort. Again, this has a very telling effect on small business in Australia. I now refer to the costs involved for taxpayers. We are about leaving enough money in the hands of taxpayers so they can pay for and consume the goods available on the market. It does not matter what sort of investment recovery we have or what type of businesses are provided, unless there are consumers with enough money to spend on those goods there will not be any business resurgence. Today, a person has to earn only 1.6 times average weekly earnings to get into the highest tax bracket. In 1970 one had to earn 14 times average weekly earnings to get to that same high tax bracket. So the consumer today is left with less money in his pocket than before. I suggest that there is very little equity and fairness in this, and we depend on those people to come through. These economic policies have very sad results-results which can be counted on the scrapheap of bankrupts and liquidated companies. Another policy the Government has pursued is the famous prices and incomes accord.


Mr Rocher —Infamous.


Mr BRAITHWAITE —It is infamous--


Mr Tuckey —Mark which one?


Mr BRAITHWAITE —I am not sure mark what. That policy has allowed a portion of the population to have some semblance of the same level of income. But the people who have suffered are those in business. They have suffered in the way I have mentioned earlier, and also the Government has allowed some of the worst work practices to remain. Nowhere in the prices and incomes accord has productivity been stated as the means by which increases should be given. It is interesting to note that only yesterday ICI Australia Limited paid out $1m in bonuses in an effort to scrap such practices as overtime payment for work not undertaken and other such practices. It seems to me that this comes a little late.

The strike factor over the last 12 months has risen by 17 per cent. This has been particularly so in the coal industry. While the prices and incomes accord affects such major businesses as ICI and industries such as the coal industry, the service industries, the smaller industries, also suffer because of it. It affects families because of jobs that are lost, and the effect on the unemployed is major. Tomorrow we will see the Hancock legislation come into this House, and that will reflect this Government's complete subservience to the Australian Council of Trade Unions.


Mr Howard —Yes, a scandalous sellout that is.


Mr BRAITHWAITE —Of course it is, it is a scandalous sellout to the rest of Australia. We will be walking away from civil court remedies and will be establishing union leaders as leaders of this country and they will have no consideration for real Australians. Expenditure restraint and a return to balanced budgeting is required. We have to reduce interest rates. There has to be a repeal of taxes and charges which are in no way reflected by the income of the taxpayer but are--


The DEPUTY SPEAKER (Mr Leo McLeay) —Order! The honourable member's time has expired.