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Monday, 23 February 1987
Page: 430

Senator POWELL(3.45) —The matter of public importance before us today is:

The failure of the Labor Government to take the necessary action to stop the decline in living standards of Australian families.

This failure is supported by ample evidence. The living standards of average Australians, and particularly of families on average incomes or below, are certainly falling. The Prime Minister (Mr Hawke), the Treasurer (Mr Keating), and leading business persons all agree that our living standards will fall further. I might add that, at the same time, the living standards of speculators, takeover merchants and foreign investors, who can take advantage of Australia's economic miseries, are rising. The wealthy are getting wealthier, middle income families are being squeezed, and those dependent on social security payments for their income are, by and large, living in poverty.

Evidence of the loss of net disposable income by families is, as I said, readily available, and one figure demonstrates that: Between 1975 and 1985 the amount of income tax imposed on a family with four children, living on average weekly earnings, has increased by 435 per cent, while wages have increased by only 135 per cent. The tax system has changed to the point where individuals are favoured over families. For families dependent upon government support the picture is also grim. Let us consider the case of a typical single mother, with two dependent children, whose only income is a supporting parent benefit and the family allowance. She is divorced, as are 80 per cent of single mothers, and receives no financial assistance from the father of the children. If she did, she would not be typical, since 70 per cent of maintenance orders are not complied with. Her total income, which comprises the supporting parent benefit of $106.20 a week, the mother's or guardian's allowance of $12 a week, the children's entitlement, twice over, of $34 a week, plus the family allowance, comes to $164.97 a week. The Melbourne University's Department of Economic Research states that the poverty line for one adult not working, with two children, is $211.70 per week. Therefore, that family's income is $46.73 below the poverty line. The `Social Security Review' has recently drawn attention to the fact that Australia's rate of cash transfer to families and its rate of tax rebates or deductions were the third lowest of the 18 Organisation for Economic Co-operation and Development countries listed. The `Social Security Review' stated:

This is a reasonable argument in favour of immediate increases in cash transfers and tax rebates or deductions to families with children.

The children that we perhaps ought to be most concerned about are the children who are living in poverty. Current figures show that 19 per cent of Australian children-some 800,000-are in families with incomes below the poverty line, and that percentage is increasing. This, of course, is an extraordinarily serious situation. There will be drastic consequences for these children and for Australia as a whole if this trend is not reversed. This is an argument in favour of targeting cash payments to families in greatest need.

I gave the example of a single mother with two children, but let us take the example of a couple with two children to see how that compares and to draw attention to the fact that their position has declined during the Hawke Government's term of office. In March 1983 a couple with two children dependent on government support was $21.55 below the poverty line. In December of last year it was $37.60 below the poverty line. A couple with four children moved from $41.65 below the poverty line when this Government came to office to $69.60 below the poverty line at Christmas 1986. A single parent with three children has moved from $40.20 below the poverty line when this Government came to office to $62.30 below the poverty line at Christmas last year. One of the reasons for that decline, and the reason why I stress the situation at Christmas last year, was that the action taken by this Parliament in delaying consumer price increase rises had an impact which was felt by those families particularly at that time. They are having to wait until July this year to catch up.

Of course, it is women in our society who are bearing the bulk of the burden in those families dependent on social security payments, government payments, for support. In the last four or five years, families-particularly single parent families, largely headed by women-have slipped further and further below the poverty line. As I have said, it is particularly women who are suffering in this situation. Of course, one of the most effective ways of improving this situation, of getting people out of poverty, would be to ensure that more family breadwinners, whether in single families or not, are able to secure employment.

The level of unemployment among sole parents is extraordinarily high; 83 per cent of sole parents come within the social security system. Given that fact, it is significant that we should recognise the obstacles facing these unemployed people, particularly women, in attempting to get employment, particularly those women who have responsibility for families and who have to exercise that responsibility while living below the poverty line. The general high level of unemployment is the first barrier; it is still at over 8 per cent. In that context there is strong competition for jobs. Regrettably, it is women in our society who find it most difficult to overcome the obstacles in that situation. Even though we are approaching the end of the twentieth century, women and girls are still not achieving the same levels of educational qualifications, experience or expertise, or having the same opportunities, as men.

I refer here to a recent Government action, supported by members of the Opposition in spite of their cries of protest over the issue, namely, the imposition of the $250 tertiary education fee which has placed another barrier in the way of women attempting to increase their level of qualifications and expertise. They have been hit markedly, as we are now seeing coming to this new education year. As Senator Zakharov said, those women also face the problem of child care. There has been a lot of talk about lower tax rates, flat tax rates and so forth. Not enough attention has been paid to the fact that people dependent on government benefits are really suffering an extraordinarily high effective tax rate. If they are able to earn money, they lose 50 per cent of their benefit. Also, once they move beyond the tax-free threshold, they suffer the regular tax rate. That seems to be a particularly unfair situation.

We need to look at what is causing this decline in living standards and at what solutions this Government, the Howard Opposition and perhaps even the Joh party are offering. Our living standards are falling. We are massively in debt to foreigners and yet most individual Australians have not borrowed overseas. That borrowing is mostly at the hands of governments-State governments in particular, through their instrumentalities-and the private corporations which borrow overseas, use the money to take over an existing company, deduct the interest payments through negative gearing on companies owned overseas and thus avoid their tax liability. As we saw in the Budget session, this Government then turns around and says to people such as those families that we are discussing today: `You face the responsibility. You take the cuts'. At the same time those companies go ahead on their merry way. As a nation we owe over $100 billion overseas. All Australian governments since World War II, with the exception perhaps of the Whitlam and Gorton governments, have fed to us the line that it is the thing to do and that it will benefit Australia. We are now reaping the cost of that kind of bipartisan policy. Our domestic economic problems are a reflection of that overseas problem. We need to re-establish our trade position, which is bad because we continue to import at a massive rate. Our manufacturing industries cannot replace imported goods quickly enough and the prices for our exports, particularly of primary products and resource products, are falling in the world markets. Our dollar is low, our interest rates are high, our level of economic growth is low, unemployment is growing and inflation is high.

What do the other parties offer? Well, the Hawke Government, the Liberal Party of Australia, the National Party of Australia, and even the Johists, all offer variations of the same solution-less government expenditure and let the unregulated market somehow solve everything. Senator Zakharov understandably leant upon the historical record of the Australian Labor Party-understandably because, of course, the current Hawke Government is scarcely recognisable as a Labor government. Its attitude to that very part of our overseas debt problem, which she was prepared to admit is relevant-that is, the negative gearing problem-is a clear demonstration of that.

The Australian Democrats have looked at the policies of the other parties. As I suggested, they appear very similar to each other in fundamental principles. The Howard alternative would reintroduce the free lunch and abolish the capital gains tax, the fringe benefits tax and the assets test in order to benefit the wealthy. It would also introduce further tax cuts on top of the Keating cuts and finance those by further expenditure cuts and by increasing indirect taxes. The increasing of indirect taxes would hurt all families since food, clothing, footwear and shelter would not be exempt. Massive expenditure cuts in social security would push those already living in poverty into the miserable conditions of people in Third World countries. We would truly be a banana republic, with a class of Australians so poor that they could not afford basic food and shelter. These people would work for very little money because they would want to eat. There would be created a group of desperately poor Australians. The abolition of Medicare would increase health costs for middle income Australians and leave the poor without health care. The reintroduction of tertiary fees would mean that only the wealthy would be able to afford tertiary education for their children. Yet the New Right and Mr Howard believe that such acts would make Australians better off. Perhaps those with jobs and those who are wealthy and have no children would be better off. The wealthy would continue to get wealthier.

Joh's party-if there is to be one; it seems to change daily-does not want a consumption tax. The Australian Democrats agree with that, except that we do believe that there could and perhaps should be one on luxuries, but not on necessities. His party wants to deliver even bigger tax cuts but he will not tell us how they would be funded. Mr Howard says that 70 per cent of Australians would be worse off with the 25 per cent flat tax proposed by the Johists. I suspect that Joh's party would abolish or severely reduce unemployment benefits, as well as reducing other social security payments. It would introduce tertiary fees, abolish Medicare and abolish departments such as the Department of Aboriginal Affairs, the Department of Arts, Heritage and Environment and so forth. It would sell off Telecom Australia, Australia Post, and on its goes. It too would guarantee that the wealthy would get wealthier, that the poor would become slaves and that middle income earners would struggle to pay higher charges for gas, electricity, transport, health care and education to finance the past borrowings of Labor, Liberal and National governments and of business people.

The Australian Democrats say: Get the economy in shape; stop selling out to the overseas takeover merchants; remove the tax burden from ordinary people, including that higher effective tax rate burden on pensioners and beneficiaries; introduce further measures to ensure fairness in the tax system, beginning by abolishing negative gearing for company takeovers; impose a 6 per cent duty on luxury imports; eliminate transfer pricing; tax the massive amounts of money leaving Australia to speculate against our currency; require superannuation funds to be responsible in their disbursement of funds and stop them from moving assets overseas unimpeded; tax all money leaving the country; and reduce petrol prices and interest rates. If that is done, families can be helped. Pensions and benefits can be lifted to levels above the poverty line and significantly indexed, as can child allowances for the unemployed, pensioners and beneficiaries. Rental allowances can also be raised and indexed. The tertiary education assistance scheme allowance could be a significant payment-120 per cent above the poverty line, as we have suggested. We would be able to pay for retraining for our unemployed people and particularly for low income earners with dependants. Let us get rid of the poverty traps. No, there may not have been any coalition representatives at the lunch with the poor people last week, nor was I sitting down to that lunch because there were people there who had voted to delay reductions in the poverty traps to those people whom I am speaking about today.

The ACTING DEPUTY PRESIDENT (Senator Colston) —Order! The honourable senator's time has expired.