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Tuesday, 8 November 1983
Page: 2388

Mr ROBERT BROWN(4.25) —Mr Deputy Speaker, like yourself, I was taken somewhat by surprise as a result of the failure of the Leader of the Opposition (Mr Peacock), in this display of offended virtue, to utilise the full time which was available to him. In fact, I was surprised that the Leader of the Opposition had taken the opportunity to lead for the Opposition on this occasion. It is quite obvious that he has decided that he needs to adopt a higher public profile . He has been very seriously overshadowed, of course, by his Deputy Leader, the honourable member for Bennelong (Mr Howard) who is the shadow Treasurer and Opposition spokesman on Treasury matters. The honourable member for Bennelong is recognised by those people who sit behind him as being the most effectively informed on Treasury and taxation matters of any honourable member of the Opposition. What we had today was the Leader of the Opposition who quite clearly decided that, because of that significant overshadowing of his own performance by his Deputy, it was necessary for him to come into this chamber and polish up his performance. It simply did not work. I have never heard a more pathetic presentation of the Opposition's case than I have just heard by the Leader of the Opposition. And the--

Mr Groom —Mr Deputy Speaker, I take a point of order. I suggest that we have a problem in this House in that many speakers tend to get way off the mark in addressing themselves to a particular Bill.

Mr DEPUTY SPEAKER —Order! The honourable member will state his point of order.

Mr Groom —Mr Deputy Speaker, I suggest that the honourable member is not relevant. It is about time he was.

Mr ROBERT BROWN —He is just trying to waste my time.

Mr DEPUTY SPEAKER —Order! There is no point of order.

Mr ROBERT BROWN —It is quite obvious that members of the Opposition are frightened by the prospect of my exposing the deplorable taxation record which they displayed while they were in government. The honourable member for Braddon (Mr Groom), one of the members from Tasmania, quite clearly was simply trying to waste my time.

Let me get back to the subject of the debate. The genuineness of the Opposition in connection with these measures is indicated quite clearly by the amendment which was just moved by the Leader of the Opposition. That amendment stated that the Opposition does not oppose the passage of the Income Tax Assessment Amendment Bill (No. 4). In fact, by stating that they do not oppose the passage of the Bill, it is quite clear that they support the passage of the Bill. The alternative for them would have been to oppose this Bill in total.

Mr Ruddock —It is a Budget Bill.

Mr ROBERT BROWN —An explanation is offered that they are not opposing it because it is a Budget Bill. Their record in connection with any conventions of this Parliament will not stand up to any respectable measure. For them to suggest now that the reason they are supporting the passage of the Bill is that it is a Budget provision is just a statement of complete and utter cynicism.

Let me again refer to one of the statements that was made by the Leader of the Opposition in connection with what he suggested was some degree of cynicism on the part of the Government in relation to these measures. If, as the Leader of the Opposition has suggested, there has been any element of broken promises by this Government, the fundamental reason-which does not need restating-for any adjustment in the implementation of those undertakings is clearly and fully understood by the Australian electorate. I do not intend to rehash the exposure of the potential $9.6 billion deficit which would have occurred this year had the former Government been re-elected. We inherited a very serious situation. That situation is more than adequately understood by the Australian electorate. The fact that our electorate support at this stage is now 2 per cent higher than it was on 5 March indicates that the electorate not only understands but also endorses the actions which this Government has taken.

Fancy members of the Opposition referring to broken promises, particularly broken promises in relation to the taxation area! The Australian community well remembers, for example, the series of broken promises that were made by the former Fraser Government in connection, for example, with tax indexation. The former Government was going to remove 'tax by stealth'. It was going to remove ' the hidden tax of inflation'. The undertaking to apply tax indexation was never honoured. During the seven disastrous years of the former Government full indexation was never applied.

Just prior to the time when the former Government was first elected it said it would reduce Labor's tax burden. Let us have a look at the record. Let us have a look at the extent to which that very firm, clear undertaking was honoured by the former disastrous Government. At the end of its term in office Australia had the highest level of taxation which had ever been experienced in the history of the Commonwealth. The highest proportion of gross domestic product was being absorbed by taxation. The highest proportion of tax was being paid by pay as you earn taxpayers-the wage and salary earners-and a declining proportion of tax was being paid by the large corporations in the Australian economy. Everyone knows that tax evasion and tax avoidance absolutely exploded under the former Government. In the last year of the former Labor Government about 641 people and companies were identified as being involved in tax avoidance. By the time the Fraser Government left office the number exceeded 22,000. What an explosion!

Of course, despite the former Government's claims to the contrary, very little was done about tax evasion and tax avoidance in Australia. On an annual basis some $7,000m of government revenue was being lost to the Treasury as a result of the former Government's tardiness, a tardiness which was encouraged by its continuing desire and determination to show patronage for its powerful financial backers, supporters, members and the chairmen of its State finance committees. There was quite a deliberate attempt on the fomer Government's part to show patronage to those people. The loss in taxation revenue represented additional tax of $25 a week on average to the ordinary families, the ordinary households of Australia because of the tardiness of the former Government's approach to tax evasion and tax avoidance. The Leader of the Opposition's speech was choked with cynical misrepresentations, not only of this Government's position, but also of the position which the former Government had adopted on taxation.

The cognate debate at present is concerned with five taxation Bills. Probably the major Bill of those five is the Income Tax Assessment Amendment Bill (No. 4) 1983. It is an omnibus Bill which contains a number of amendments dealing with various aspects of the income tax system. In particular, one of the main provisions is the modifications which are being built into the prescribed payments system or the system which has become better known as the tax at source . The Leader of the Opposition called this an attack on small businesses. Essentially it represents-this is again being increasingly recognised by the community-an application of the pay as you earn system to contractors and operators within the building industry, the transport industry and the industries which provide personal services.

How can it possibly represent an attack on small business when it represents no additional tax for those people who are participating in those areas of industry ? It is an attempt on the part of this Government to make sure that the cash economy is not used as a shield behind which tax evaders and tax avoiders can protect themselves. It represents an attempt on the part of the present Government to ensure that the taxation system is applied equitably, to make sure that all people within the Australian community pay their fair share of the total tax burden. As I indicated before, the total loss to revenue through the taxation evasion and avoidance industry amounts to something like $7,000m. Half of that amount is lost through tax evasion. Most of the loss has resulted from the failure to pay tax in the cash economy. The modifications which are now being built into the legislation are designed to remove some of the irritations by reducing the paper work burden and by making the compliance of people under that scheme much easier.

I am aware, as all honourable members are aware, of some of the criticisms which have been made against the introduction of the prescribed payments system. Some of those criticisms have been justified; many of them have been exaggerated . The Government proposes to monitor the operation of the system. If genuine and valid concerns are expressed by people who are affected by the introduction of that new scheme, the Government is, quite clearly, prepared to respond to them. This legislation indicates that we are prepared to respond to them. The changes which are being introduced as a result of this legislation resulted from the inquiry which was undertaken by the Senate Standing Committee on Finance and Government Operations. The Government has accepted the legitimacy of some of the findings of that Committee.

There is no question about the success of this legislation. I feel sorry for operators within those industries who have, quite clearly, experienced some problems of liquidity as a result of the introduction of this scheme. I have no doubt that many of them have suffered some degree of difficulty on that matter. As I said before, the purpose of introducing the legislation was to ensure that the cash economy would not be used as a shield for people to hide behind in order to avoid their reasonable tax responsibilities. This has worked. There is no question about that. A number of people have suddenly arrived in Australia from New Zealand. They had not been putting in tax returns before, but now they are required to put them in. What is the explanation for their not having made a tax return for the last number of years? One of the main explanations is that they had suddenly arrived from New Zealand. Another explanation is that people say they have been unemployed for a number of years. So they have had no income on which to submit tax returns. All of these people-I make no apologies for this statement-are now being brought out of the woodwork. They are all being made to meet their tax responsibilities. All the genuine, legitimate, honest people, the vast majority of people within those industries, understand that that is the position. I hope they all understand that as a result of the introduction of this measure the individual tax burdens on themselves, the legitimate, honest and genuine taxpayers in Australia, must be reduced as those people who have been avoiding their responsibilities are brought out of the woodwork and made to face up to their responsibilities and make their own appropriate contributions.

A number of provisions are being made in this legislation, to overcome some of the burden of the paper work. In particular, the changes which will be introduced will include, first of all, the removal from the prescribed payments system of those payments to payees who hold exemption certificates because of their previous good tax compliance record. It will also allow payees to lodge a deduction form at any time during the month preceding the month of payment. It will relieve the payee from lodging a fresh deduction form for a payment that is deferred and it will ensure that a payee will not have to prepare and furnish more than an annual deduction form to a payer if the payer completes the forms on the payee's behalf. There is no question that those changes will overcome a large number of the particular irritations which have been associated with this legislation. All of those provisions are important to simplify and modify the way in which the system operates.

Some of the other provisions of this legislation will represent savings to revenue. Some of them will result in additional expenditure by the Government and some of them will result in additional revenue to the Government. Of course, the Bills represent in total an attempt on the part of this Government to honour its continuing commitment to the Australian electorate; to ensure that the taxation system is just; to ensure that it is equitable and to ensure that all people who earn incomes in Australia make their appropriate contribution; to ensure that the concessions which are provided through the taxation system are not simply designed as a means of handing out patronage; to ensure that the taxation system is not merely used as part of a total package of political tactics in the way in which it was used by the former Government.

One of the other important provisions which are designed to establish uniformity within the taxation system exempts from tax the payment of assistance to the children of unemployment, sickness and special beneficiaries. That, of course, will bring those payments into line with the provisions that exist at present for pensioners. There is also provision to exempt from tax the assistance given to sickness beneficiaries for rent, board and lodging, so that they are treated in the same way as pensioners are being treated. The Government is making an obvious attempt to ensure that the taxation system operates uniformly and treats people equitably. People who experience similar circumstances will be treated essentially in the same way.

Another provision of this legislation is to phase out the present tax exemption for the pay and allowances of part time members of the reserve defence forces and the emergency reserve defence forces. This has caused some concern among members of those voluntary defence forces, but a number of volunteers in my electorate have told me that that is not a matter of great concern to them. They are concerned to ensure that the actual rate of pay that they receive is adequate. They are not looking for payment for the service that they provide; they are volunteers who are trying to make available their services towards the development of Australia's defence preparedness. All that they are concerned about is receiving an adequate rate of pay to compensate them for the costs and the inconvenience which they experience as a result of making their time available. To suggest, as the Opposition has suggested, that these high spirited Australians who volunteer for the reserve defence forces volunteer only because of the amount of money they will get out of it, is extremely offensive to the people in the reserve forces. They are not there for that reason. In fact, many of them make their own financial contributions towards the provision of special facilities and special equipment which improve not only their comfort but also their effectiveness at a regimental level. I pay my personal respect to those people in the reserve forces for the great voluntary contribution which they make.

One of the other provisions relates to the abolition of the tax rebate on the first $1,000 of dividend income. This was referred to with great cynicism by the Leader of the Opposition as an attack on small business. It is all very well for people who make investments to receive an exemption on the first $1,000 of dividend income. What about the people in my electorate who put their savings into interest bearing accounts? No provision was made by the previous Government -the present Opposition-to exempt from tax the first $1,000 interest that they received. No fear. It was not concerned about them. Those people in my electorate who put their savings into interest bearing accounts find that, firstly, the value of the principal is reduced by inflation and, secondly, the interest they earn is often less than the rate of inflation, and then the interest thay they earn is taxed any way. The Opposition has the hide and the gall to suggest to us that there is some discriminatory treatment on our part as a result of the removal of that special concession. We make no apologies for it. We do not resile from it.

We will make sure that increasingly in the future the taxation system is applied with equity, justice and fairness to all Australians, so that when people pay their tax they know that the fellow down the street, the fellow in another electorate who received the patronage of the former Government, that all people in Australia are making an equitable contribution. They will also know that when that money is spent by the Commonwealth, everyone will receive his fair share.

Mr DEPUTY SPEAKER (Mr Rocher) —Order! The honourable gentleman's time has expired.