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Wednesday, 20 March 1985
Page: 507

Senator COOK(4.44) —This urgency motion was moved by Senator Peter Rae. I say 'Senator Peter Rae' because I would not want any listeners to mistake him for Senator Robert Ray, my Collingwood-supporting Labor colleague. When I first saw this urgency motion I thought only that the Liberal Party must have no shame. The Liberal Party, having been in office for 31 of the last 36 years, specifically for the seven years prior to the last two years in which we came to office, has moved an urgency motion for something to be done about the tax system despite the fact that between 1975 and 1983 it presided over the system. One could well ask what the Liberal Party did and why it allowed for so many years the taxation system of this country to decay. That is how I approached this debate in the beginning. My breath was further taken away when I heard the Australian Democrats announce that they will support the carriage of this urgency motion. They do so in the most qualified of ways, saying that the innocent words of the motion, on their face value, cause them to move to support it. That would have to be the most guileless approach by a party that has demonstrated that it wants things both ways. The Democrats say that they support the taxation summit and tax reform, yet they support this urgency motion. They pretend that the innocent words, on their face value, will not be construed by the coalition as some general support against the Government and for the coalition in the coalition's attempts to maintain the tax system in Australia. That tax system essentially and blatantly protects the wealthy at the expense of the poor.

The Liberal Party has launched this urgency motion, although it had been in office for seven years between 1975 and 1983. The Liberal Party was responsible for collecting revenue and for expenditure as the economic managers of the country. Now that we have been in office for two years it calls for an urgent review of these matters. It is important that it be placed firmly on the record that the Australian people have not forgotten the sort of government they had when the coalition was on these benches and not on those they now sit on. The most essential point to be made in this debate is that the credibility of the Opposition depends on its performance when it was in government. Its performance then shows that its creditability on this issue as on so many others can in no sense be justified. During the Fraser years we had high unemployment and high inflation. High inflation, incidentally, pushed wage earners into higher tax brackets as the silent thief of inflation robbed workers of more and more through their payment of income tax.

During the years of the Fraser Government we had high income tax, high industrial unrest, low growth, low investment and low confidence. When setting the parameters for how we approach public discussion of these issues, it is important that the turnaround in the Australian economy be again recited. The most important recent comment on the status of the Australian economy at present was given on Monday of this week by a respected political commentator from that conservative newspaper, the Australian. Paul Kelly, writing in his column on Monday-

Senator Watson —Ha, ha!

Senator COOK —Senator Watson may well laugh, because the facts are always uncomfortable. Paul Kelly began by asking the rhetorical question:

What are the facts?

He continued:

The February employment figures, a key indicator of economic activity, have been a transforming boost to the Government.

After 23 months of office they mean that 360,000 jobs have been created and clearly suggest Mr Hawke's 500,000 target is well within reach.

Yet this target was regarded as a mere pipe-dream when the economic scenarios were being discussed at the national economic summit in autumn 1983.

The jobs target for 1984-85 of 150,000 is virtually certain to be reached since 110,000 jobs have been generated so far. These latest results suggest the economy has improved from it lull in the early part of 1984-85. There is now confidence the momentum will be maintained.

On fiscal policy the Government is in good shape to cut spending and bring down an August Budget for 1985-86 with a deficit of about $6 billion. Indeed, there is hardly any dissent even in the ALP Caucus on this broad figure.

Mr Hawke explained such an outcome would mean that in two years the deficit as a proportion of GDP had been reduced from 4.3 per cent to 2.5 per cent. This is the sort of reduction which should delight the financial community.

While the hard decisions are yet to be made, the Government is significantly advanced in its expenditure review process, although it is more likely the announcements will wait until August rather than be made in May.

He went on to recite other achievements of the Government as well as scotching the story which the coalition is trying to develop in the community that the accord is not a success when unequivocally its success is endorsed, as is this Government on all other fronts.

Senator Peter Rae —That is not the editorial policy of the Australian.

Senator COOK —This is a respected and independent political commentator writing for a conservative newspaper. It is important that those facts be put on the table not by us but by independent commentators so that the people can see where the arbiters of political commentary stand vis-a-vis this Government's economic performance and so that they can see that it is a question not of our expounding our virtues but of our virtues being applauded by others in an independent position. It is important to do that as well for another reason: It is important that we approach tax reform in this country as a government in control of the economy with a respectable track record behind it. This is not a reckless attempt to do anything. It is a solid attempt, based on a performance which is well recognised and applauded, to make a most significant and much needed change in the Australian economy. However, it is of course a matter of urgency.

That leads me to the urgency motion moved today. Many of the remarks in this chamber by the Minister for Finance (Senator Walsh) and by my colleague Senator Maguire have now made a mockery of paragraphs (a) to (f) of this urgency motion. Let us just go back over it briefly to give a thumbnail sketch of some of its major deficiencies. It calls for urgent reform of the tax system. One cannot argue about that. It calls for fundamental reform of the tax system. One cannot argue about that. However, one may well argue why those opposite did not do it when they had the opportunity. Paragraph (a) calls for a total review of expenditure. Many in this Parliament would say that a total review of expenditure has been going on, and in fact some would say that it has been too tough a review of expenditure and not too light a review of expenditure. When this question is raised we must also remember the performance of the Opposition under the Howard regime when a Budget never came in at the level propounded in the Budget Papers; it was always overspent. The record of those opposite is one of failure. Our record is one of living up to our expectations; and the review of expenditure is solid and is respected in the independent community.

More importantly, Senator Peter Rae raised the fiction of trying to reduce government expenditure. I go back to what Bryan Kelman, chief executive of CSR Ltd, said as reported in the National Times last weekend. When talking about tax he put aside this whole red herring of talking about government expenditure by saying that it does not matter what the figure is. If the figure is X, some may argue that it should be X plus 20 and some may argue that it should be X less 20. But if the figure is X, that has to be raised and the question is: Is it to be raised equitably? That is not an issue which is addressed in most debate in this chamber. I come to paragraph (b) of the motion-The restoration of incentive. One could well ask, as Senator Maguire did so penetratingly in his address, what is meant by the words of this paragraph. Increased incentive was achieved by halving the inflation rate, increasing employment, bringing down interest rates and generating investment in the economy. That was an economic achievement. That is on the record. It is now part of our economic history. That is generating incentive and was achieved through the accord. That is what the Government intends to continue doing.

I come to paragraph (f)-'the emphasis upon neutral, efficient and equitable taxes'. Of course, this is the purpose of the national tax summit. We want to conduct a review of the Australian taxation system. That review is well and truly necessary because of the way in which the tax system in Australia, on grounds of fairness and equity, has become an absolute joke. There is a wealth of literature and material about what has happened. All of that literature and material containing factual studies comes to the conclusion that there has been a shift in the tax burden from the rich to the poor in this community. In fact, the poor are subsiding the rich, and words to that effect were uttered in 1980 by Professor Russell Mathews when he reviewed the system. In an undated Current Affairs Bulletin which I will make available to any member of the Opposition who wishes to check it there appeared an article which I think they all ought to read. It is headed 'Unequal Burdens-Personal Income Tax Changes Since 1975', and is written by Ann Harding. It sets out on page 18 a table which repays study. That table shows that the burden has been shifted quite clearly so that at the higher range of incomes, $64,000 and above per annum, there has been a reduction in income tax paid of 0.2 per cent, that at the bottom of the table, incomes of $10,700 and below, tax has increased by 38.1 per cent and that on average weekly earnings of $16,654 there has been an increase of 21.6 per cent in the years from 1975-76 to 1981-82, a span of only six years. The burden has been shifted on to the backs of the poor. That is a fundamental reason why there should be a reform of the system.

Another major concern is the massive tax avoidance going on. There are still $2 billion of uncollected taxes because this chamber refuses to vote through the legislation necessary to recover that type of tax avoided. Those opposite could ask how people can trust them when they talk about taxes when they, by their legislative votes, encourage that type of avoidance. In addition, the Australian Taxation Office, held down by artificial staff ceilings during the Fraser years, was unable to collect taxes that were properly due and, if properly staffed, would have been able to collect much more. Those figures are all available.

In the end, the summit comes down to a government addressing one of the most fundamental and tough issues of political life. It is a political question: How does one conduct a fundamental reform of the tax system in this country without seeing what we are seeing today-the Liberal Party embarking once again on a massive scare and fear campaign to try to frighten people with all the hocus-pocus of its rhetoric into believing that they will be worse off? That is what it comes down to. That flies directly in the face of the Prime Minister's commitment in the election campaign. When laying down the nine points on which the national tax summit would conduct its affairs, he started by saying:

First, there must be no increase in the overall tax burden, as measured by the share of Commonwealth Government revenue in gross domestic product.

He went through his nine points, finally saying in the ninth point:

. . . any reform package must have widespread community support, including support at a widely representative National Tax Summit of economic organisations and community groups.

The Opposition may well want to try to run a fear campaign to scare people out of confronting the problems of the tax system and making it impossible for governments to legislate, but if it does that it has to take responsibility for the inequities that that will create and for wrecking the possibility of long-standing and much needed fundamental tax reform.

That brings me to a major point which I think it is necessary to conclude on, because this debate has been launched by the Opposition and its position needs some explaining. It is interesting that on the speakers list Senator Dame Margaret Guilfoyle is the last speaker for the Government.

Senator Peter Rae —The next Government.

Senator COOK —I am sorry; not the Government, the Opposition. She may well at long last want to answer an important question for this chamber. On the Sunday program a few weekends ago Andrew Peacock made it clear that the Liberal Party would not block in this chamber Bills associated with tax reform if they came forward in association with Budget measures. That has since been derided by many spokesmen in the Liberal Party, many of the various factions in the Liberal Party, starting with John Howard arguing that the Opposition may block such Bills. I would like Senator Dame Margaret Guilfoyle to make it quite clear whether her Party does or does not intend to try to find an accommodation on an ad hoc and populist basis with the Australian Democrats to block tax measures and thus resist the overwhelming consensus of a national tax summit. We await Senator Dame Margaret Guilfoyle.