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Tuesday, 11 April 1961

Mr OSBORNE (Evans) (Minister for Repatriation) . - Mr. Chairman, a few moments ago you ruled, undoubtedly with reason, that the removal of import licensing had nothing to do with this debate. I do not wish to go over that. I only wish to refer to some arguments which the honorable member for Yarra (Mr. Cairns) developed in following that digression, when he suggested that there was some situation in the Government in which the Country Party members had over-borne the Liberal Party members in achieving certain purposes for the interests they represent.

Mr Cairns - On a point of order, Mr. Chairman: When I was dealing with this matter you said I was out of order and that the debate should be confined strictly to the bill. I accepted your ruling and dropped the discussion and went on with other matters. Now the Minister for Repatriation wants to answer what I was saying when 1 was ruled out of order, and I submit that he will be out of order, too.

Mr OSBORNE - On the point of order, Mr. Chairman, I am not trying to do anything of the sort. The honorable member for Yarra was developing an argument about import licensing and you ruled it out of order. I do not want to cover that at all. The situation the honorable member referred to is a complete figment of his imagination - some situation which, he said, existed in the Government.

The CHAIRMAN - Order! The honorable member for Reid also, to illustrate a point, mentioned this matter which had been mentioned before. I asked the honorable member for Yarra not to make his speech upon this particular subject-matter and said that he had been given the latitude to reply to what had been said by the honorable member for Mallee and other members. I point out to the honorable member for Yarra that I was not in the chair when the matters to which he has referred were raised. When I feel that the Minister for Repatriation has spent too much time on the subject with which he is now dealing I shall rule accordingly.

Mr OSBORNE - All I ask for, Mr. Chairman, is the same latitude as was extended to the honorable member for Yarra. I say that his statement is a figment of the imagination. The two parties of this Government are as much at one with each other in relation to these measures as they have been during eleven years of very successful coalition. For myself, as a Liberal member representing a metropolitan constituency in the City of Sydney, I would not have the slightest difficulty, if this became necessary, to explain to my constituents why some regard is necessary for the primary producers of this country, having in mind particularly Australia's dependence upon its export income and upon the fact that its export income is earned predominantly by its rural industries.

Mr Cairns - I want to raise another point of order. The Minister is referring to Australia's dependence upon our export income. I submit that this has nothing to do with sales tax. If I was out of order previously, clearly the Minister is out of order now.

The CHAIRMAN - I uphold the point of order that has been raised by the honorable member for Yarra, and I ask the Minister to discontinue his remarks along the line that he has been following.

Mr OSBORNE - I shall return to the resolution which the committee is now debating. The Opposition, by its amendment, is seeking to have refunded the additional 10 per cent, sales tax that was imposed on motor vehicles on 16th November, 1960, and subsequently removed. The Government cannot accept the amendment for reasons which were stated by the Treasurer (Mr. Harold Holt) this afternoon, and to which I shall refer again now.

The Opposition's arguments depend upon three assertions, first, that the additional tax was of short duration; secondly, that in the opinion of the Opposition the additional sales tax was a mistake; and thirdly, that the fact that a refund of the tax would be contrary to precedent is, in the Opposition's opinion, unimportant. None of these arguments is acceptable. The first assertion that the tax was of short duration and so should be refunded contains neither logic nor common sense. The honorable member for Yarra, if I understood him correctly, stated that he would not have objected if the tax had gone on for six months or for twelve months, and that he would not have claimed that it should be refunded. In principle, what possible difference is there between a tax which has operated for three months and a tax which has operated for six months? There is none! The same reasons for not refunding a tax which was reduced after six months apply with equal force to one which was reduced after three months.

To the Opposition's second assertion that the increased tax was a mistake we give a firm denial. The truth is that the increased tax, together with other financial measures, achieved its purpose which was to dampen down the rate of increase in the activity of the motor industry. The purpose, I emphasize, was not to dampen normal activity or even a normal level of increase in the industry's activity, but to dampen the rate of increase which, in November of last year, had reached about 30 per cent, per annum. Even the honorable member for Yarra would not argue seriously that that rate of increase could be sustained in the general interest. It had to be dampened and restrained, and it was. When the tax was increased in November the Government undertook to review it and to remove it as soon as practicable. We have done so after three months. But the Opposition complains that the tax was imposed for only three months. Presumably it would have complained less if the tax had gone on for longer. Indeed, the honorable member for Yarra conceded that. The Government has discharged its undertaking.

As to the Opposition's third argument that the matter of precedent is of no importance, presumably because the increase was small and was levied for only a short period, I point out to the Opposition that since 1930, when sales tax was first introduced in this country, rates have been reduced many times. Invariably the policy of all governments has been that reduced rates shall apply only from the time of reduction, just as increased rates apply only from the time of increase. It is an essential element of sales tax, just as it is of customs and excise duties, that changes must come without notice and must apply immediately. If a precedent were established in this case, presumably on the ageold argument that it is only a little one, how could a similar claim possibly be rejected logically in other cases?

There are also other objections to refunding the tax. There is the practical one of making the refund. Several Opposition speakers have argued that there would be no practical difficulty in finding the persons who paid the tax and refunding it to them, but that overlooks the fact that some of the motor cars have been re-sold in the three months. To whom would we make the refund, the original owner or the man who has bought the car from him? Perhaps a more serious objection, as the honorable member for Hume (Mr. Anderson) pointed out, is that an increase in the level of sales tax on new cars affects the price of all cars, new, nearly new, old and very old. The whole car market is affected. How could any one follow the ramifications of an increase of this kind and try to refund it? What justice would there be in selecting one group of people and rejecting the other?

It is correct that this tax was not imposed for revenue-producing purposes, but another practical difficulty in adopting the Opposition's suggestion is that although the tax was not imposed for revenue purposes it has had an effect on revenue, and if the tax were refunded the effect on revenue could not possibly be ignored. The additional tax caused a drop in motor car sales and, as a result, a reduction in revenue of about £1,500,000.

Mr Duthie - For how long did that reduction last?

Mr OSBORNE - During the period of the operation of the tax there was an estimated reduction in revenue of about £1,500,000.

Mr Thompson - But the Government did not impose the tax for revenueproducing purposes.

Mr OSBORNE - I have already pointed out that although we did not impose it for revenue-producing purposes it has had inevitable effects on revenue which cannot be ignored. The refunds would cost about £3,800,000, so the total loss to revenue would be over £5,000,000, an amount which certainly cannot be ignored.

On every ground of administrative practice and common sense this amendment cannot be accepted.

Question put -

That the words proposed to be omitted (Mr. Crean's amendment) stand part of the question.

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