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Tuesday, 8 November 1983
Page: 2407

Mrs DARLING(6.16) —Until one hears individual members of the Opposition speaking on economic matters, one can be forgiven for wondering how on earth the Fraser Government or any government could have allowed a once affluent nation such as Australia to end up in such an economic mess. But after hearing such Opposition members as the honourable member for Mitchell (Mr Cadman) speak, one is no longer at a loss. There is no longer any excuse for wondering how this happened. This honourable gentleman has been breaking his heart over a situation which does not exist. He has entirely misinterpreted certain provisions of the income tax legislation. I refer particularly to those provisions which he feels will lead to the taxation of children who are doing little bits of work, helping little old ladies across the street in order to make pocket money or to make money in a small business of their own.

I point out to the honourable member the words spoken by the Treasurer (Mr Keating) last week when he introduced the Income Tax Assessment Amendment Bill. The Treasurer pointed out that this legislation contains a number of important exclusions. One of these is particular classes of children who are not subject to the measures at all; for example, children who are handicapped, disabled, orphaned or in full time employment. To clarify further the matter for the honourable member, the other exclusion covers specific classes of income, such as salary and wages and other remuneration for services rendered, income from a business genuinely carried on by a minor, income from damages, awards, compensation, divorce settlements, deceased estates and the like where no avoidance arrangements are involved. It is, therefore, quite clear that the provisions do not apply to children's earnings attributable to their own part time or full time work. To refer to it in such a term as the newsboys' tax is absolute nonsense and a grave misrepresentation of its true nature.

This misinterpretation of the legislation being put forward is not one off. Regrettably, it covers a number of aspects of the legislation which we are now considering. Some six months ago this Government presented to the House a Bill designed to give effect to its election promise to recover personal tax avoided by former owners of companies that were the subject of bottom of the harbour schemes. In an unmatched display of political expediency designed to harm the people of Australia, in a bid to stop this Government from recouping avoided tax to the tune of $6 billion, which the former Government allowed to slip through its fingers, the Opposition forces joined hands in the Senate to block this essential legislation. The honourable member for Hunter (Mr Robert Brown) has already capably outlined the appalling loss of taxation revenue allowed by the present Opposition when it was in government. We, as a government dedicated to lifting Australia from the depression into which it had plunged after seven years of Fraserism, will not be hindered from achieving our aim on behalf of the people who elected us.

The most recent Taxation (Unpaid Company Tax) Assessment Amendment Bill will be debated at a later time this day. The legislation I am supporting now is another aspect of measures taken to achieve a more equitable distribution of income in Australia. In some areas it is stronger than we would have wished, were the economic climate more favourable. It must not be forgotten that this Government did not inherit a comfortable economic situation We were elected precisely because the economic outlook was so dark. The electors of Australia sorely needed a firm, just and responsible government which would take those steps necessary to ensure that the growing number of poor and jobless Australians were not left to their own ineffective devices as the victims of a world-wide slump which had attracted new policies in other countries, but which the previous Australian Government did not have the intestinal fortitude to introduce.

This legislation implements some of the Government's Budget decisions. I am proud to note that it exempts from tax the open employment incentive bonus payable after 1 October 1983 and the remote area allowance payable from May 1984 . It also exempts from March 1984 the additional benefit paid to unemployment, sickness and special beneficiaries caring for children, and the supplementary allowance paid to sickness beneficiaries to assist with rent costs. The legislation provides for the remote area allowance received by a taxpayer to be deducted from any income tax zone rebate otherwise allowable to the taxpayer, and for the spouse carer's pension which is to be introduced from 1 December 1983 to be taxed on a similar basis to a wife's pension. This Government is not interested in bringing forward taxation legislation which protects the wealthy and the corrupt, but in protecting those at the bottom end of the scale, those whom the previous Government sorely neglected.

Also included is the phased withdrawal of the tax exemption for pay of part time members of the reserve defence forces. In this context I believe that the Leader of the Opposition (Mr Peacock) and other Opposition members have done a grave injustice to members of the reserve forces. I join with my colleagues the honourable member for Bendigo (Mr Brumby) and the honourable member for Hunter in declaring that members of the Reserve-those whom I know-are generally dedicated, patriotic Australians. They are not in the forces for the money alone , but to help to train young people in the defence of Australia, and they are absorbed with this training. I do not say that they should not be fairly paid for this service, but in the past they have not been treated in the same manner as the regular forces, which they deserve to be, given the high quality of their work. In fact, the entire area of staffing and facilities in the defence forces has been permitted to run down. This measure is one of many undertaken by this Government to ensure that defence money is spent in the most effective manner to upgrade our forces.

I would be most disturbed if members of our reserve forces were to be disadvantaged in comparison with their fellow members in the regular forces. I do not believe that that will be so. The tax exemption was introduced in 1964 by the Government to stimulate recruitment. However, the Millar report-the Committee of Inquiry into the Citizens Military Forces-in 1974 recommended the continuation of this exemption from income tax. A subsequent committee of reference for defence force pay proposed that if the taxation exemption were abolished, the earnings should be increased. Following the adoption of these income tax amendments, the Committee is to:

. . . inquire into, and to recommend appropriate rates of pay and allowances for members of the reserve forces in the light of the Government's decision to provide an exemption from income tax of 50 per cent of the pay and allowances of the part time members of the reserve forces, with this exemption to terminate after a period of twelve months.

The Committee will report by 30 June 1984. What could be fairer? This Government is proud of the part played by members of the reserve defence forces.

I will now briefly comment on changes to the prescribed payments system. This is another area in which the Opposition has been extremely irresponsible. It is logical to expect that people, be they self-employed or pay as you earn taxpayers, should pay taxation at the same rates. As I have pointed out before, we in government tried to bring in legislation which would recoup some of that taxation which was avoided and lost to the previous Government. That was blocked in the Senate. We are now trying, through this legislation-and, I point out, on the figures provided by the honourable member for Bendigo we are succeeding in getting the tax avoided-to have a prescribed payments system which will ensure that people who are self-employed put in a return and pay the just amount of tax owing. It is obvious that those builders, contractors and other self-employed persons who have honestly paid taxes on their earnings in the past will in no way be affected by the legislation. Those who have been cheating will have to pay. It is as simple as that. The Opposition has been grossly irresponsible in its response to this legislation, particularly in its efforts to arouse opposition by misrepresenting the motivation for and effects of the legislation.

As the honourable member for Hunter noted, although the Government believes that the prescribed payments system is fundamentally sound, refinements have been made to some administrative aspects in an attempt to reduce the paper burden on some taxpayers. Payees with a large number of different payers will be provided on application with an exemption certificate to be used on invoices and statements. The Australian Taxation Office will accept this as an alternative to the declaration. This should result in a significant reduction in paperwork, both for the exempt payees and the payers with whom they deal. Provisions under which a payee may submit the monthly deduction form have been modified. This shows the manner in which this Government is sensitive to the needs of the electorate.

It has always seemed fairly stupid to me that in a parliament a government should bring forward legislation which it says is right and which it will not change for any reason; that oppositions should always oppose; and that the people who are affected by the legislation can go hop. This Government does not see the situation this way. We bring forward legislation such as the prescribed payments system in an effort to attain equity in payments of taxation. When we found that the additional paperwork was causing inconvenience for many self- employed people, we quickly moved, as seen in this legislation, to modify our first requirements so that now those who have been disadvantaged in some small way, those who have been honestly paying that amount due by them, will no longer be disadvantaged in this manner. These modifications will ensure that affected taxpayers can more readily accommodate the requirements of the system into their business operations. The changes to allow payers at their convenience to complete both parts of deduction forms will certainly be welcomed by those payees who operate computer based business systems. These amendments clearly evidence the Government's willingness to refine the system to meet valid concerns about its operation.

The proposed amendments to the Income Tax Assessment Act are designed to change the previous system which we all know was fraught with decades of amendments and abuses; to restructure the taxation system and provide a more equitable distribution of the more obvious benefits of being an Australian. The Fraser Government left this country in an unprecedented economic mess. As a result of the economic mismanagement, we have had to prune the deficit by amendments, many of which we realise are unpopular with some segments of the community. These changes will result in an Australia with a more mature social conscience, and a country whose population again has greater access to home ownership; where the elderly, disadvantaged and disabled can live in comfort and dignity, and where the unemployed can feel a sense of belonging.

As announced, on 1 July 1983 the Government terminated the home deposit assistance scheme, which was available to all home owners paying in excess of 10 per cent per annum in housing loans on their sole or principal residence. From 1 October 1983 access to the March 1982 home loan interest tax rebate scheme was also terminated. This has been replaced by a new housing package which includes the first home owners assistance scheme, providing help where it is needed most, for first home buyers, and which stimulate the public housing industry which was in a very depressed state. Social welfare benefits will be increased under these amendments. Additional benefits for children were increased from $10 to $12 a week for each child from last week and these benefits will be made tax free from March 1984. Allowances to mothers and guardians are to be paid at the rate of $8 a week and will also be tax free, as are the supplementary rental allowance payments to sickness beneficiaries.

Sitting suspended from 6.30 to 8 p.m.

Mrs DARLING —I have already outlined the manner in which the Bills before the House seek to rectify the inequities in taxes paid by taxpayers in past years, noting particularly that, apart from exempting from tax additional benefits paid to unemployment, sickness and special beneficiaries caring for children and the supplementary allowance paid to sickness beneficiaries to assist toward rent costs, the legislation provides for the remote area allowance to be deducted from any income tax zone rebate otherwise allowable to the taxpayer. As well as this, a special rental area allowance to be introduced on 1 May 1984 for permanent residents of income tax zone A will also be tax free. All these social welfare measures will benefit the needy in the community, as will the open employment incentive bonus which was introduced for those people in receipt of a sheltered employment allowance of six months standing or more who move to full time paid open employment and remain there for at least 12 months. This $500 bonus is also tax free. The legislation is designed to achieve equity for all Australians. It brings our nation one step closer to the land of equity and justice which we know it can be.