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Thursday, 6 September 1984
Page: 598

Senator PETER RAE(5.47) —As I understand it, we are debating cognately the Sales Tax (Nos 1 to 9) Amendment Bills 1984, the Sales Tax ( Exemptions and Classifications) Amendment Bill 1984 and the Customs Tariff Amendment Bill (No. 2) 1984. I wish to clarify whether that is the Government's intention.

Senator Gareth Evans —By all means.

Senator PETER RAE —I speak to all of the Bills, which are Budget measures. In that context the Opposition does not oppose any of them. However, the Opposition wishes to criticise some of the actions taken by the Government in relation to certain of the Bills and to make some comments on the overall question of the Budget and its likely impact on the Australian economy. In speaking to these measures, which are all part of the Budget and which traditionally give one the opportunity to talk at large on the Budget, I point out that this year it is anticipated that total revenue collections will rise by no less than 10.7 per cent in real terms. People sometimes get confused as to what is meant by 'in real terms' or other such expressions. Let me say in the broadest possible way that that rise is very significant. It is a rise which means that over and above inflation the revenue collection is anticipated to increase-that is, an increase in the total impost of government on the community-by nearly 11 per cent. The Budget Papers show that that increase is the largest increase in revenue collections which has occurred since the end of the Second World War.

This Government has told us that it is a government which, because of the accord and its management, will cover all the problems of the community. We heard the Minister for Industry and Commerce (Senator Button) happily stridulating away here this afternoon about what a wonderful success rate the Government has. We find that in fact its Budget will impose the largest increase in revenue collection which has occurred in any year since the Second World War. We note that this is a special situation because the Government is basing its Budget strategy on a one-off increase in revenue collections. However, the problem is that in doing that it is storing up immense problems for the following years. One of the things that has been said recently which is very hard to deny is that from any one drought it is possible to have only one recovery. We cannot keep spending the recovery, time and again. What this Government appears to be attempting to do is spend the product of the recovery from the Australian drought again and again. I notice that Senator Walsh is in the chamber. I will be interested to hear any response he might make in due course in relation to this point. The Government is spending windfall money. It is spending it not on investment but on extra programs for extra votes for its retention. In summary, that is what this Budget is all about.

Senator Walsh —We don't need to pork barrel.

Senator PETER RAE —If the Government does not need to pork barrel I do not know why it is doing so much of it. Perhaps the Government might like to reconsider its Budget. I believe I could say with absolute confidence of support from the totality of the Opposition that if the Government reconsidered its Budget and cut out all the pork barrelling in it we would give the Government leave and assist in any way for it to be recommitted. If ever there was a pork barrelling Budget, this is it. The Budget was formulated for short term benefit. There is no doubt whatsoever that the Budget will not be able to be maintained or sustained. If by some misfortune the people of Australia are misled into re- electing this Government, of the few for the few, the Government of the accord- so called--

Senator Robertson —No response. How disappointing. I bet you worked that one out for days. Please carry on.

Senator PETER RAE —I could send Senator Robertson some articles which I have written about this in the last few months if he would like to read more about it . I did not work it out in just the last few days. It might help Senator Robertson's education if I did so. I know he spends a lot of time cut off from the real world of communications because he puts his head in the sand. However, if Senator Robertson would like to pull his head out of the sand from time to time to hear what is going on in the real world he would find that it is not the first time that I have used that expression in this chamber and in the media.

Senator Robertson —You usually get a response, don't you?

Senator PETER RAE —I am glad to have got a response from Senator Robertson and I thank him for it. I go back to the point I was making. This year total revenue collections will rise by no less than 10.7 per cent in real terms. What is alarming is that the 44.7 per cent increase in provisional tax collections will contribute to the total revenue collection increase of 10.7 per cent in real terms. That is a very significant impost upon the relatively few people in Australia who pay provisional tax. From what we can gather, the reason the increase will apply is that there will be a large cross section of the rural sector who, having made losses before, will now make a profit. Therefore, these people will start paying provisional tax. They will be required to pay very substantial provisional tax. This is where we come to the point made a moment ago which is that it is possible to recover only once from one drought. It is possible to have more than one drought and more than one recovery but we can have only one recovery from each drought. The point I am making is that the Government's economic philosophy is based on some sort of continuation of some thing descending from heaven which will, in some cargo cult way, provide us with a means of continuing without running into a gigantic deficit.

I was absolutely amazed when sitting at a table at a dinner of the Confederation of Australian Industry in Sydney just a few days ago to hear the Prime Minister (Mr Hawke) say that when he restructured the tax scale that would not involve an overall increase in tax. He said:

You do not need to reduce expenditure in order to reduce the deficit provided economic growth exceeds the rate of growth in government spending.

That sounds quite logical and simplistic. However, if we are budgeting on the basis of a projected growth which is in excess of a growth in income, how is that done? It does not seem to me be possible to project a tax cut and to restructure the tax scale-that is beneficial in the ways in which the Prime Minister was referring to-at a time when the growth rate in the economy, as projected in the Budget Papers, is lower than the growth rate of taxation expenditure, projected in real terms as 6.1 per cent.

I was so surprised when I heard the statement made by the Prime Minister at the dinner in Sydney that I wrote on a piece of paper to a leading businessman next to me: 'Is it your understanding that what he has just said is . . .?' I then set out certain equations. He put ticks beside each one of them. The other point he made-one which I think is of very real significance and one to which I think this Government must address itself-is that the Government is endeavouring to budget on a basis of decreasing interest rates and decreasing government borrowing rates at a time of increased loan debt roll-over, both of Commonwealth and State debt, and at a time of increasing difference in the real interest rate , the difference between inflation and the rate of interest being charged. Any government which budgets on that basis must be budgeting on the basis of skating on what can only be described as the most incredibly thin ice.

I do not want to spend a lot of time talking about the Budget because I need to spend a little time talking about the other Bills. One of the Bills introduces two taxes in relation to beer. The Government has varied the tax on low alcohol beer by reducing it. That is to be welcomed. The Government has introduced a new tax on very low alcohol beer. I understand that only one company is producing very low alcohol beer. However, if it continues to be as successful as it has apparently been no doubt the technology and chemistry involved will be taken up by others reasonably quickly. In this process we get a beer with virtually all the alcohol extracted from it which, while tasting like beer and to the consumer gives the impression of normal beer, is without the alcohol impact of normal beer. In the interests of road safety and in the interest of matrimonial harmony -for the sake of children and wives in the community-I would have thought the consumption of that beer should be encouraged, not discouraged. I am concerned that this Government has seen fit to impose an extra tax on very low alcohol beer even though I acknowledge there was an argument put that it was in competition with soft drinks which were in an unfavourable tax relationship to the very low alcohol beer. I will not go into the matter further because I understand one of my colleagues will be doing so. I simply make the point that it is a disappointing result of the Budget that this step has been taken.

My next point is the introduction of a sales tax on wine. Most people will not regard the broken promise by this Government on this issue as extraordinary because they have grown fairly adjusted to the broken promises of this Government. Let me just take honourable senators back into the history of the Prime Minister, the man who made the promise in Griffith on 20 February 1983 when he stated:

The wine industry is beset with problems. The industry is faced with a need to make bold decisions at a time of low profitability if the industry is to be in a position to meet the opportunities of the 1980s

Labour has pledged not to impose a sales tax or an excise tax on wine.

That was said by the present Prime Minister at a meeting held in Griffith on 20 February 1983. Along with all the grape growers and wine producers, I find it a matter of some considerable disappointment that that firm promise has been broken at this time. That is not to say that there is not some equity in having alcoholic beverages taxed on some sort of uniform basis or some basis which does not give an unfair advantage to any particular one at a particular time.

Beyond doubt, Australia is beset with an onslaught of what is alleged to be dumping. This matter is subject to investigation at the moment and there is preparation for further investigation as to the extent to which dumping is taking place. I refer to the onslaught of exports from Europe to Australia of subsidised products of the common agricultural policy countries that allegedly are being dumped onto the Australian market. It is inappropriate to introduce a wine tax at a time when there is a promised inquiry into the wine industry, at a time when the wine industry is still reeling from what was done by the introduction of the tax on brandy and the non-repayment as yet, although promised, of some of the revenue which was drawn out of the people who were involved in brandy production, at a time of destabilisation in the wine industry and at a time when concern is felt by so many people about the uncertainty of the future of the wine industry and the industry is under major international onslaught. This is a very inappropriate time to be introducing a wine tax. The Opposition regards this tax as objectionable. I will be moving an amendment in the following terms to the motion for the second reading of the Sales Tax ( Exemptions and Classifications) Amendment Bill 1984:

At end of motion, add ', but the Senate is of the opinion that the impact of the government's new tax on wine, when taken in conjunction with changes in the taxation treatment of imports of wine, unreasonably and unfairly disadvantages the Australian wine producing and grape growing industry at a time when imports of surplus protected and subsidised European wines are disrupting the Australian wine industry and when there is an inquiry proceeding into the future structure of the industry'.

I have no doubt that every honourable senator has received a request from various people associated with the wine industry throughout Australia to ask the Government to delay the application of a 10 per cent sales tax on wine until after the proposed inquiry into the wine grape industry. I have received messages such as that from a broad cross-section of the wine growing industry of Australia. In response the Opposition has moved this amendment as it is not in a position to move for the rejection of this Budget measure. Will the Minister for Resources and Energy (Senator Walsh) have regard to and give a specific answer to the request from the industry today that the introduction of the tax be deferred?

Senator Walsh —What request?

Senator PETER RAE —That the introduction of the tax be deferred until after the inquiry into the wine growing industry has taken place. I referred to that a moment ago. The Minister may not have heard me. A request has been made by representatives of the wine grower associations and the wine producers throughout the various States of Australia. It is a very widespread industry with the prospect of being a major growth industry and a major export industry. At a time when that industry is trying to stabilise itself, the imposition of this tax has had an extremely destablising impact and is extremely undesirable at this time. On behalf of the Opposition I have moved an amendment and on behalf of the Opposition I make this formal request to the Minister: Will the Government consider deferring the introduction of this tax until after the inquiry has been completed? I hope that I can obtain a specific answer to that question.

Senator Walsh —You have. The answer is no.

Senator PETER RAE —The answer is no, I record, by way of interjection, but I would like it to be part of the Minister's final speech as well.

Senator Jack Evans —He would have to explain it then.

Senator PETER RAE —I thank the honourable senator. I am inviting him to explain it. Why will the Government not consider deferring the introduction of the tax until the inquiry has been undertaken? If it is that the inquiry will take too long, I have no doubt that measures will be taken to expedite the inquiry. If it is that the problems of dumping are taking some time to determine, I have no doubt that a Government with the industry's goodwill and best interests at heart would be able to facilitate and expedite that inquiry. I refer again to the broken promise on the wine tax. I note that in Tasmania on 4 November 1974 the present Prime Minister, whilst President of the Australian Council of Trade Unions, told the Whitlam Government that it should break its election promise in relation to the reduction of taxes and increase tax as that was the appropriate way to overcome the current economic conditions prevailing in Australia. It is quite clear that for a period of at least 11 years the Prime Minister has done two things. First, he has regarded election promises as matters of convenience only and not as promises he feels bound to comply with. Secondly, he can promise anything and hope to get away with it. If people are foolish enough to believe that this Budget is what this Government really means to do for Australia in the ensuing year, this Government will have proved the majority of Australians to be more foolish than I take them to be. I believe that most of them will see through the confidence trick which is the accord. They will see through the confidence trick which is this Budget. They will see through the confidence trick which is the arrangement for the benefit of the industrial wing of the Australian Labor Party. The Australian Council of Trade Union members are entering into an arrangement with the political wing of the Australian Labor Party, the present Government, for the benefit of the few and to the disadvantage of the many. I only regret that, because we have given an undertaking not to oppose Budget Bills, I cannot take stronger measures.