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Thursday, 6 December 1973
Page: 2588

Senator WEBSTER (Victoria) - I wish to express my regret that the Government has introduced measures such as Income Tax Assessment Bill (No. 5). The Parliament must recognise the action that the Labor Party is taking in regard to these matters. There have been taxation provisions which have been of benefit to and an encouragement for primary production and manufacturing in this country. However, initially on the decision of the Coombs committee and undoubtedly with the. encouragement of members of the Government who hold to the idea that profitability in industry in this country is something which is not to be complimented, the Labor Party Government has commenced, in this particular Bill, to take great strides in depreciating our rural industries. I refer in regard to this Bill to matters such as the loss of the deductibility for tax purposes of investment by primary industry in plant and the investment of manufacturing industries in plant and equipment. We find that the greatest detriment that will be caused to primary industry is contained in clause 17 of the Bill. This relates to the deduction for expenditure on land used for primary production. Such expenditure is to be lost so far as being deductible in the year of income tax is concerned.

I do not know what it is within the Labor Party that makes it decide that in its first year of office primary industry will be its initial goal. Even whilst one or two honourable senators were speaking we heard interjections from honourable senators on the Government side who one would think would have some interest in primary industry. I heard one of them comment that people in primary industry are making lots of money now so what does it matter. That expresses the general view. I think that you, Mr Acting Deputy President, would recognise that this is the first year in which primary industry has had some reason to be pleased about current sale prices.

Senator Murphy - That is because there is a Labor Government

Senator WEBSTER -The brilliant AttorneyGeneral bumps in to say that this is because there is a Labor Government and then he breaks into idiotic laughter. I think that demonstrates the attitude of a true socialist. Labor in power has been able to produce high prices for rural industries. Senator Murphy's comment will be recorded in Hansard and people who read it will recall the brilliant comment we heard some years ago from Senator 0 'Byrne who said that Labor was responsible for the good rains that occurred in Tasmania, or some such statement. The fact is that high prices are being obtained overseas for primary production but the Senate has just passed a Bill by which Labor will try to dampen them down. That Bill will pull the carpet from under primary industry and stop it from getting the benefit of the prices that are available. Labor, in its wisdom, considers that competition and high prices from overseas are hurting the local market. That is the view that Labor has taken. I wonder why the Labor Government has been so harsh and economically stupid. Clause 17 proposes to amend section 75 of the Principal Act which relates to the expenditure on the following items:

(a)   the eradication or extermination of animal or vegetable pests from the land;

(b)   the destruction and removal of timber, scrub or undergrowth indigenous to the land;

(c)   the destruction of weed or plant growth detrimental to the land;

(   d ) the preparation of die land for agriculture;

(e)   ploughing and grassing the land for grazing purposes;

(f)   the draining of swamp or low-lying lands where that operation improves the agricultural or grazing value of the land;

(g)   preventing or combating soil erosion or flooding on the land; or

(h)   conserving or conveying water for use in carrying on primary production on the land.

Expenditure on all these items is lost so far as deductibility in the year of income is concerned. Any government must recognise the great value of primary production to this country. I do not think any senator would not acknowledge that when there is economic health in the rural industries there is economic health throughout the country. I point out that over the past 50 years there have not always been the good times and heights of rural production that there happen to be at the moment. The prices of wool, meatincluding lamb- and other commodities are high at the moment. All those products are in demand in a unique world situation, and they are bringing satisfactory prices in Australia. But they are unlikely to continue.

Under this Bill, a farmer who ploughs his paddock knows that he will not be able to claim that as a deduction for part of the production of his taxable income during the year. Rural production will gradually decline. I think that it is a particularly poor action by this Government, in its first year of office, to take harshly to the rural industries and to take away from them taxation benefits associated with the cost of producing their assessable income. The rural sector of the Labor Party must have been inadequate in arguing these matters in Caucus, if its attention was directed to these matters. I think that when these matters are generally known throughout the country the Australian Labor Party will lose enormous support. The things which Labor promised that it would do for rural industries are not supported in this Bill.

There is one other matter in this Bill to which I refer, and that is that the rate of private company tax will be lifted, over one or two years, to the rate of public company tax. I have always thought that a lesser rate was imposed on private companies because they were generally conceded to be those smaller family organisations in the community. They paid a lesser rate of tax because they had an ability to retain certain of thendividends in the companies for expansion. The rate of tax on private company income will be lifted eventually to the rate of tax on public company income, which is 47.5 per cent. While I congratulate the Treasurer (Mr Crean) on realising that there was a demand on private companies to disgorge the profits which they had made during the year, I remind honourable senators that he had to be prompted. He has seen fit to declare that all private companies, after the payment of tax, should be able to retain 50 per cent of their profits for the development of their own business. This is something of a benefit because there is not now the necessity for private companies to calculate that the payment of $ 1 in the $ 1 in dividend was often a more acceptable practice than the payment of tax at the rate of 50c in the $ 1 on undistributed profits.

I regret that the rate of private company tax will be increased. I imagine that one of the things which Labor must have had in mind in this regard was to prevent Australian private companies from developing as rapidly as they have done in the past. Listening to the arguments of honourable senators opposite in support of Australian enterprises, I would have thought that the Government would have taken the opposite action and held the level at that set by the former Government. However, in all these matters, there has been a harsh application of tax incidence by Labor in its first year of office. The Prime Minister (Mr Whitiam) appeared on Mike Willesee 's show, 'A Current Affair', I think last Monday night. Mike Willesee put to him: 'Mr Prime Minister, did you not promise that you would not raise indirect taxation?' The Prime Minister, in very bold fashion, said: 'No, no, no. I never promised that. I promised that personal tax and company tax would not rise. ' He put on a firm face to the audience. Let me prompt Senator Murphy, who suggested that I spend half my time trying to find out where the Prime Minister has misled the Australian public, that if one watches current affairs programs on television one finds instances. Other instances are in this Bill. The Prime Minister promised that company tax would not be raised. It is raised in this Bill. This is another instance of Labor not keeping its promises.

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