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Tuesday, 11 April 1961

Mr L R JOHNSON (Hughes) .- I support the Opposition's proposal that the Government refund the increased sales tax collected on motor cars between 16th November, 1960, and 22nd February, 1961. The money involved could, of course, be refunded. There is no doubt that it appeared most unlikely to people who bought motor vehicles during that period that any government would contemplate imposing an increase of tax of that sort for such a short period. Nothing in our history provides any precedent for that brief imposition of such an increase of tax. In fact, many people came to members of the Parliament - I am sure that many came to members on the Government side as well as to members on the Opposition side - and asked them whether they thought that the increase of sales tax on cars to 40 per cent, was to be only a very brief, temporary measure. I am sure that no honorable member thought that any government would be so flybynight, so inconsistent and so irrational as to impose such an increase of tax for such a short period - on in November, off in February. In reaching their opinions in this matter honorable members also took account of the fact that the Treasurer (Mr. Harold Holt) had stated that the purpose of the increase was not the raising of revenue.

Like other honorable members, I have been inundated with letters of protest regarding this tax. I have sent many of these letters on to the Treasurer. They show that many ordinary people in the community have been the victims of the increased tax, and that large amounts of money are involved. They show that among those who have suffered are people who saved for a deposit on a motor car and bought their cars during the time when the increase of tax operated. In many cases the people involved are the kind of people who need very sympathetic consideration from any government.

One would gain the impression from the Government's attitude that cars are not one of the ordinary necessaries of life in Australia - that a car is a luxury which should be taxed excessively whenever the Government has the inclination to do so. But the fact is that in this country, probably more than in most countries, cars are very necessary.

I cannot help but feel that the Government's original action in increasing the tax was itself inflationary. This, of course, was one of the reasons why the Opposition opposed the increase when it was first mooted. There are so many people in the community who are able to pass on to the consumers any increase in sales tax or other charges, and thus add to the cost of living of the ordinary person. The butcher, the baker, the candlestick maker, and all people in business in fact do this. Yet the Government claimed that the purpose of the increase was anti-inflationary.

Sales tax is a transferable tax, as has been proved throughout this country's history. It can always be passed on, and so. by increasing sales tax, the Government would not be going towards the objective of reducing inflation. And inflation is very fundamental to this problem, because it is inflation which has contributed to our inability to export sufficient to enable us to pay our way. Our cost structure has been affected by the inflationary conditions, and although we are now unable to export sufficient to pay our way we are still importing too much. So the Government's answer was to curb the motor car industry. In the process it has aggravated the inflationary trend, because people have had to pay more for cars. To-day, as a result of our very complex taxation system, there are many people who are able simply to transfer increased taxes to the consumer while they themselves are able to gain tax concessions from the Government. So I seriously contend that the Government is not making much progress towards the solution of inflation. It went into this thing in a foolhardy and indifferent way. When all is said and done, when we are dealing with the motor car industry we are dealing with an industry which employs 330,000 workers, or about one-seventh of the Australian work force. There can be no doubt that the Government had the objective of bringing about a substantial retrenchment of employment in this industry. When you play so dangerously with an industry involving one-seventh of the Australian work-force you are doing something that brings about a decline in our economic position. The Government has caused a loss of confidence throughout the community.

I was interested to listen to the honorable member for Hume (Mr. Anderson) explain that the purpose of the increased tax was to dampen down the buoyant conditions in the car industry. The honorable member said that the Opposition had no alternative propositions to make. Of course, we have plenty of propositions. The honorable member for Reid (Mr. Uren), the honorable member for Yarra (Mr. Cairns) and the honorable member for Melbourne Ports (Mr. Crean) have all indicated the Labour Party's great interest in the fundamental necessity to increase Australia's exports and minimize imports. We have proposes to stimulate the steel industry. We have heard nothing from the other side of the chamber in that regard. Honorable members opposite have spoken about the two import contents of car manufacture - steel and petroleum. If they are both considerations, it is necessary to look at each of them when thinking about the national development programme.

The Opposition has proposed that a. people's steel industry should be developed, and we think that a great deal could bedone to bring down the price of petrol by establishing a Commonwealth oil refinery. We have made other proposals which would materially affect our balance-of-payments problem and make increased sales tax unnecessary. We have talked about the need to stimulate the coal industry. At present, the Government is allowing that industry todecline seriously. It is not examining the possibility of developing by-products from coal which would increase our exports and obviate the necessity to hit the car industry in such a savage way.

In effect, the Treasurer said that Australia was devoting too much of its resources to the motor car industry. That was another reason given for the increased sales tax. He said that resources in excess of what the country could afford, having regard to its other requirements, were being swallowed by the car industry. The Opposition has suggested that if that is the case the position could be remedied by the reimposition of import controls. Why did the Government lift those controls in February of last year when it was so easy to anticipate the state of affairs that led the Government to impose additional sales tax on motor cars?

The motor car industry has become an aunt sally for the Government. What the honorable member for Reid said was true. In the lifetime of this Government sales tax on motor cars has been increased from 8i per cent, to 40 per cent. The Chifley Government's tax was 81- per cent. In October, 1950, under this Government, the tax rose to 10 per cent. Tn September. 1953, it was doubled to 20 per cent. However, it was soon reduced to 16} per cent, just after a general election. On 15th March, 1956, the present Government increased this tax to 30 per cent., as a " temporary " measure. But this so-called temporary impost remained until November, 1960, when the Government tossed it up to 40 per cent. What is the reaction of the motor car industry? Recently a report of the Chamber of Automotive Industries of New South Wales said this about the Menzies Government -

For the record, when the " Little Budget " was introduced in 1956, the Prime Minister, Mr. R. G. Menzies, said unequivocally that the 30 per cent sales tax then imposed on motor vehicles was " a temporary restraint on the motor industry."

We accepted ,ne Prime Minister's word, just as we accepted his dictum that the temporary 30 per cent, impost, unfair as it seemed, was for the good of the nation.

Neither did we protest too much when we were told later that some Government members, both inside and outside the Cabinet, had been in favour of a 25 per cent, sales tax on motor vehicles.

In fact this great industry, with its vast staffs and wide ramifications, has continued to support the Government through the ups and downs of its economic policy, which we believed honestly intended for the good of Australia, although we protested and warned responsible people against high discriminative taxation.

But now our belief in the Government's sincerity has been strained too far, and our feeling has become one of disgust.

The members of this organization are not traditionally Labour people. The statistics provided show th: t the Government has been hitting the motor car industry terribly hard. The total tax imposed on it has been £144,000,000. Sales tax alone has totalled £77,000.000 and even before the 10 per cent, increase 47 per cent, of sales tax from all sources came from motor cars. We find it very difficult to see how the Government can justify its attitude. By way of customs and excise on petrol, for example, the Government has been taking £241,000,000 from the car industry and has been returning only £174,000,000.'

The TEMPORARY CHAIRMAN.Order! The honorable member's time has expired.

BARNES (McPherson) [4.45].- Obviously, the Opposition is having great difficulty in finding arguments to support its proposal. First of all, the honorable member for Batman (Mr. Bird) said that we could forget the past. I think that that is a very wise argument for the Opposition to advance because if we remember the past we recall that when Labour was in office we could not even buy a car on which to pay sales tax. If we could find a car somewhere, we could not buy petrol to run it.

The honorable member for Reid (Mr. Uren) suggested that the large motor firms had not suffered and that in some way they had influenced the Prime Minister (Mr. Menzies) to remedy the sales tax position. To suggest that large motor firms such as General Motors-Holden's Limited and the Ford company have not suffered is completely ridiculous. We know that they have had to reduce employment because new cars which were piling up had no market. By December, 1960, the sales of cars had dropped by over 40 per cent. There was an improvement last month, but sales were still down 30 per cent, or 35 per cent.

Members of the Opposition have suggested that a mistake was made by the Government. That is their version of a mistake. They got this idea from the press. The increased sales tax on motor cars was imposed by the Treasurer (Mr. Harold Holt) to bring about a certain level of car sales. When the tax was increased he promised that as soon as that level of sales had been achieved the tax would be removed. Of course, no one knew when that time would come. I think that members of the Opposition and our metropolitan press have panicked the public into making the effect of these measures far more severe than ever was expected. Responsible newspapers such as the " Financial Review " which we look to for guidance and to see trends in the financial world, have joined in putting the argument that we have heard from the Opposition, But facts are running against the press and the Opposition. The very effect which the Government set out to achieve is being accomplished. Our balance of payments has swung in our favour. Our import position is improving and, despite the claims of the Opposition, our unemployment position is improving.

Mr Reynolds - Oh, yes!

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