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Thursday, 14 May 1987
Page: 3195

Mr MILDREN(1.08) —Throughout the length and breadth of Australia I do not suppose there is any issue which is of more major concern to citizens than taxation because everybody, directly or indirectly, is affected by taxation. Over the years some people have been affected unfairly and other people have been able to gain far greater benefit than they should have been able to in an equitably managed nation. The honourable member for Forde (Dr Watson) has probably given us the most useful of the speeches that the Opposition has given us today, although I must say there are parts of it which I did not agree with. Unfortunately, his speech was in great contrast to those of some of his colleagues, which indicated just how barren the Opposition parties are in the area of taxation reform-in fact, in the whole area of taxation. Representatives of the Liberal Party are running around the country proclaiming that they have policies that will help Australia to a more prosperous future. They spend much of their time talking about interest rates, Budget deficits and union power. I guess even in my electorate of Ballarat the same noises are made. When Opposition members are pressed to say what their policies are they either paraphrase the Queensland Premier by telling us not to worry too much about that or they say that if we wait long enough they will release the policies for public inspection.

They either have the policies, or they do not. They either are capable of actually forming the policies, or they are not. On taxation policy I think we have to put a negative to both of those possibilities. Yet this is an area of enormous interest to all Australians.

I might say that it is even of interest to a number of Liberals. Take for instance the comments of the major challenger of the Leader of the Opposition (Mr Howard)-that is, in this House-the honourable member for Kooyong (Mr Peacock). In the Australian Financial Review of Monday, 11 May 1987, he said, among a number of his usual modest comments about his suitability as Opposition Leader, that he would have had a taxation policy announced a year ago had he been Liberal leader. He said:

I can hardly move away from the position that I put when I was leader and that was that all policies would have been finished and released by the middle of 1986.

In fact, what do we now have? We have a Leader of the Opposition who asks the Australian people to have patience; he promises to release the Liberal Party's tax policy within the next two or three months. Of course, this is hardly the stuff that confidence is made of. Even the honourable member for Mayo (Mr Downer) will be aged before we see a satisfactory Opposition tax policy.

Lest we become too excited by the prospect of seeing an Opposition policy the Leader of the Opposition has cautioned us not to expect too much in the tax policy, whenever it is released-it will not contain much detail. Of course it will not. It will not contain much detail because there are just too many members of his Party, both inside and outside this Parliament, who are heading off in different directions. There are too many of them who want a different range of policies from other members. Also, they do not want much detail so that they can continue to try to fool people into thinking there is such a thing as a Liberal Party tax policy.

What people need to know is that there is confusion within the ranks of the Liberal Party regarding all areas of taxation, including of course consumption tax. The Leader of the Liberals wants a consumption tax which would seriously affect all low and middle income earners, while the stated 40 per cent top tax rate which they suggest would mean cuts in welfare; the destruction of the health system as we know it, leaving millions of Australians without health cover as was the case when they were in power; the sale of low rental public housing; and the crippling of public education. I would not want to be an age pensioner or a war veteran under a Liberal government. When the Liberals stop indexing pensions-in the unlikely event they ever come to power-our pensioners will sink once again into the depths of poverty they were in when the current Leader of the Opposition was Treasurer in the Fraser Government.

We are talking today about a specific range of taxation measures in the entire tax reform package and the changes to company tax. As I have indicated, this is the only Government that has brought equity and reason into company taxation. Just in case people think I have been a little strident in my criticism of the Liberals, let me say that the way they would reform company tax is not through imputation but rather through going back to a period of not adequately taxing fringe benefits or non-cash payments and capital gains, and allowing negative gearing. That is, for them, company tax reform. This is totally unacceptable from the standpoint of taxation equity and sound business management.

It never ceases to amaze me to hear the voices of the New Right such as John Elliott, the Treasurer of the Liberal Party, Andrew Hay and such like call for businessmen such as themselves to be appointed to the Parliament as though they deserve it by some kind of right of birth. What they do not say is that carpetbaggers such as themselves have provided no evidence at all to justify their claims to be responsible managers of this nation. They are not in any way the repositories of statesmanship that are needed to ensure that this country has a sound and just future. In fact, John Elliott, the Treasurer of the Liberal Party, in his other role as chief of Carlton and United Breweries Ltd and Elders IXL Ltd, says that if he does not get his own way he will pack up his bags and take his company off-shore. So much for the Prime Ministerial pretentions of one of the spoilt brats of the Liberal Party's New Right!

I was present at a function at which the Treasurer announced the legislation that we are dealing with today. Also present was a wide range of business representatives from both large and small business. These were responsible people who recognised how important was the need to continue tax reform to incorporate the range of businesses. They were uniformly enthusiastic about these changes. They also saw clearly that the Government was concerned to move the direction of investment towards growth. The honourable member for Jagajaga (Mr Staples) indicated that there is a $300m lost to revenue from this legislation and that those people should recognise that they have a responsibility to ensure that the nation gains a benefit from that loss of revenue.

One of the most welcome provisions of this legislation to business is the abolition of Division 7 undistributed profits tax. From the time I was first elected this was one of the major complaints I received from businessmen. It was especially frustrating for small industries with growth potential. They complained of the lack of incentive that existed for those businesses that wished to invest rather than to distribute profits. In other words, it was anti-growth, anti-business and anti-employment. In fact, this entire package that we are dealing with is specifically directed towards enhancing business growth and it should be particularly welcomed by those building up manufacturing industries, in particular in the area of exports, which we require most. It has to be admitted by those opposing this measure that the socially irresponsible activity of corporate debt financing over equity has been one of those devices that has led to market inefficiency in our economy. It has contributed at a time when we are receiving so much less for our non-value added farm and mining products to our decline in the balance of trade.

The spectacular takeovers of recent times have certainly increased capital values and might even have built in some efficiencies but they have also been used to increase corporate debt at the expense of more useful investment. They can also result in economic distortions because of the investment in areas of rapid return but with little lasting value to the nation. Some people got rich and, as the honourable member for Jagajaga pointed out, are squandering their wealth on self-indulgence.

The new system will encourage firms to aim at increased dividends as a result of improved services and production. This is because dividends will be taxed only once rather than twice as at present. Here is a Labor Government doing this when for decades conservative governments, which proclaim themselves to be the representatives of business, allowed this sort of thing to continue. As the Treasurer said, the alignment of personal income tax rates with company tax at the top marginal rate of 49c will return to the shareholder 51c in the dollar-a rate that is twice that under the system that we inherited from the conservatives. Hopefully, it will encourage more and more Australians to invest in the future of their own country. As the Treasurer said, there is now incentive for people on modest incomes to invest because any rebate or franked dividends will be available to reduce tax on other income, including capital gains. So this measure is not ad hoc, it is not devised as a sop to a few wealthy friends or a populist response to a noisy lobby group, as would be the case with the Opposition. It is part of a most significant body of taxation reform legislation that has as its goals, tax equity for ordinary Australian taxpayers, incentive for industry and business to invest dividends productively, and overall to get this country's economy growing. No wonder it has been received well by most. Also, no wonder it has drawn complaint from the likes of John Elliott, Andrew Hay and so many of the representatives opposite.

How typical of the Liberals is the comment of John Elliott, their National Treasurer, that he has threatened to move his business off-shore should the legislation be passed by this Parliament. He obviously believes that he should be able to continue along this path of accumulating vast capital gains and palming off responsibility to the pay as you earn taxpayers of this country and to those businesses that are more concerned and that have a sense of social responsibility.

Mr Deputy Speaker, for so long we have been subjected to cries for tax reform from those who believed the high rates of tax reduced incentive, and they did. Well, here it is: The Australian Labor Government has done what our supposed experts in business opposite could not or would not do for decades. Not only did they preside over the distortion of the tax system and undermine it, but also their regime distorted business investment in this country, and we are paying for it.

By our legislative actions we have put our position firmly on the line and now it is up to the Opposition, if it wishes to salvage any credibility, to do the same. I congratulate the Treasurer for his courage in pursuing the comprehensive tax reform package and, in particular, this legislation we are debating today. I commend the Bills to the House.