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Friday, 15 June 1984
Page: 3117

Senator Dame MARGARET GUILFOYLE(11.41) — The two Bills before us relate to the income equalisation deposits scheme. This scheme was introduced by the previous Government and it gave great assistance to many Australian primary producers by allowing them the needed facility of averaging or equalising their incomes over a period. It took a lot of work over a long period, with many representations, before the IED scheme was introduced. I will be brief in my remarks. I say at the outset that the Opposition will not ultimately oppose the Bills, but I propose to move an amendment to the motion for the second reading of the Bills which puts forward our point of view with regard to a number of matters.

What must be said is that the Bills before us will virtually destroy the income equalisation deposits scheme as a useful aid to Australia's primary producers. The legislation reflects the Government's attitude towards rural people or rural industries, in that is has removed a benefit that was welcomed and used by them in the conduct of their business. The Opposition does not oppose, in principle or in any other way, any Government measure that would prevent abuse of the schemes. The interaction between the averaging provisions of the existing legislation did lead in the past to some abuse. We believe, along with the Government, that that was not the intention of the scheme and that that should not continue. But it is a fact that the changes that have been made to the averaging provisions have achieved the prevention of abuse that was able to occur. We do not believe that there is any need to take the further step that has been taken in bringing in changes to the IED scheme.

What has resulted from the changes of the Government is that what was a valuable income equalisation deposits scheme has been converted into nothing more than an alternative form of holding government paper or securities. The deposits are now glorified savings bank deposits and they provide no incentive in the way in which the original scheme did. The scheme is useless and is not now used by the rural sector in the way that it was. One can see this quite readily from the figures that show that about $160m was deposited in it when the changes were announced in May. That figure has fallen, on the last occasion that I extracted figures, to about $3m. The Opposition recognises that some of that reduction would reflect the fluctuating fortunes of primary producers. But we still maintain that the reduction in deposits in the scheme reflects that in the future it will be virtually useless.

The Opposition would propose three changes to the proposals that are presently before us. These changes are listed in the amendment that has been circulated in the name of the Opposition. I take this opportunity to move:

Leave out all words after 'That', insert 'the Bills be withdrawn and redrafted to provide for:

(1) deposits to be deductible in full,

(2) interest to be payable on the investment component only of deposits where the investment component is equal to the balance of the deposit as if tax had been payable in the year of deposit at the rate applicable to a producer's average income, and

(3) interest to be payable at the rate of 9.5 per cent per annum'.

The Opposition's amendment reflects our views about what ought to be the continuing nature of the income equalisation deposits scheme. We ask for the support of the Senate on this amendment to the motion for the second reading of the Bills.