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Thursday, 11 June 1970

Mr TURNBULL (Mallee) - Mr Deputy Speaker,in introducing the subject with which I intend to deal, I desire to read a question that I asked on 15th May 1970 of the Treasurer (Mr Bury). As reported at page 2240 of Hansard, I said:

I address a question to the Treasurer. Is it a fact that a taxpayer who receives only, say, 20% of his income from primary production is regarded for taxation deduction purposes as a primary producer and receives primary producer taxation deductions calculated on his total income, irrespective of its source? If so, 1 ask: Will the Treasurer investigate means of correcting this anomoly?

Some people may not regard this as an anomoly, but 1 do for the simple reason that these taxation deductions are special taxation deductions for primary producers with the objective of assisting our great primary industries.

I will give one instance of what I mean. A block of land of perhaps 500 acres or 600 acres - it could be even 1,000 acres - in a rough state comes up for sale and is put to auction. When it is offered, let us assume that a man with a big income - a big city business man - bids for that land. Such a person can pay much more for that land than can a young man in this country yet we desire that young men should have the opportunity to take part in primary industry. Usually, a property such as this, needs clearing, seed beds must be prepared and other things must be done to bring it to a stage ready for production. The cost of all those things that must be done is a taxation deduction in the year in which the money is spent on those things.

So, the man with the very big income spends the money on these improvements and receives the taxation deduction. The taxation deduction is based on his very large income. What is the position of the young man buying such a property with very little money and hoping to start out in life in this way? For the first few years after he purchases the property, he would not have any income at all. He would be working to clear the property, to prepare the seed beds or to do whatever was required to bring that property up to the stage when it would be ready for production. He would not have any income. He would not receive the benefit of taxation deduction. The taxation deduction varies according to a person's income. Therefore, a city business man with a large income is placed in a position in which he enjoys a much more favourabe advantage in this respect than does the young man or anyone else who wants to start out in life on such a property. I think that is an anomoly. It is the anomoly to which I was referring.

We know also that the businessman who buys this type of property is generally speaking an absentee owner. This is not something to be desired. So many matters come into our consderation of this problem that are against the interests of the primary producer and of course favour the big business man. Because of these things, I thought that the best thing that I could do was to put the subject up to the Treasurer so that he might look into it to try to overcome the anomolies to which I have referred by making the law provide that a man has to receive, for instance, at least 80% of his income - I put that figure forward, but it is subject to change - from primary production to be entitled to the taxation deduction. That would cut across the possibility of some opportunists coming into primary industry just to secure taxation deduction.

It has been said that, at the present time, the situation is changing and that a lot of business men would not wish to buy into land. But is this true? We know that the value of land has fallen considerably and that few sales are being made throughout the country. The very few sales that are being made are at figures at least 50%, 60% and perhaps even 70% lower, in certain areas where certain products are grown, than the prices would have been 3 years or 4 years ago. So, a dual advantage awaits the big city business man who buys into land at this time. He builds up property. He has a capital gain in the actual value of the property. There is always the chance that primary industry will be in recession for a very short period only. I hope that this is so. If it is, the big city business man has the chance that the property will increase in value.

Now. primary producers up and down this country think that this is an anomaly

I agree with them, or they agree with me - which every way honourable members like to put it. I think that this anomoly is something that should be overcome in the way in which I have suggested.

Mr Crean - Will the honourable gentleman give us the answer that the Treasurer gave to his question?

Mr TURNBULL - Yes. I will do that. The honourable member for Melbourne Ports has asked me to give the answer that the Treasurer gave. I did not intend to take up time by reading this answer because I have another subject with which I wish to deal. But, as the honourable member is a friend of mine, I will do so. The Treasuer said:

As with so many other matters, this matter is not quite as simple as it appears on the surface. It so happens that a good many primary producers do have a taxable income from their nonfarming activities that is greater than their taxable income from farming activities. Their farm income in the first place is written down considerably for taxation purposes by very numerous deductions for primary production which the Government has built up over the years in the taxation laws.

In many cases, people whose lives are spent on farms and farming properties do gain greater income out of some outside investment than they do out of farming income per se. This is particularly so al the moment. A large number of people who may be thought of nominally as Pitt Street farmers are in fact genuine full time primary producers who have been unfortunate particularly in the last few years not to earn as much income from this strenuous activity as they have from a perhaps limited number of investments which they have been able to acquire.

That was certainly not the answer I was seeking as a practical solution to the problem I put forward. This morning I asked a question which honourable members seemed to greet with some levity. I said that the chief object of the Murray Valley Development League was, as its name suggests, the development of the Murray Valley. Of course it has other objectives, too. I asked the Treasurer whether he would give urgent consideration, when Budget discussions were taking place, to permitting donations to this League to be allowable as taxation deductions. From its headquarters in Albury the League works in regions along the Murray Valley. Committee members and voluntary helpers of the League in the regions receive no pay whatever. The League is a non-profit organisation. Its slogan indicates that it seeks to have a million people in the Murray Valley, and this is not beyond the bounds of possibility.

This great fertile valley should be developed and members of the League are dedicated to that proposition. With more water becoming available development should accelerate. If my suggestion of piping water came into operation, as it surely will, still more water would be available. We lose too much water through evaporation and seepage. Piping would give us 50% more water from the present storages and would, therefore, duplicate all the storages in Australia. The fertile soil in the Murray Valley will grow almost anything if given water. It can grow crops that we can export, and most crops can be grown best under irrigation. Even wheat, which we grow on dry land, can give a bigger yield if water is available. Fat lambs, fat cattle and everything that is dependent on a good supply of water can be produced in the Murray Valley and development of the Valley in New South Wales, Victoria and South Australia will do much to lift Australia's

Standard of living, to the benefit of this great Commonwealth.

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