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Tuesday, 10 December 1974
Page: 3346

Senator Devitt asked the Minister representing the Treasurer, upon notice:

Is sales tax at the rate of 1 5 per cent currently applicable to all types of life-saving equipment used on small boats; if so, and in view of the growing use of small boats by inexperienced operators, will the Treasurer consider removing the tax as an incentive to small boat users to acquire such equipment.

Senator Wriedt - The Treasurer has provided the following answer to the honourable senator's question:

Small boats used for purposes of pleasure, sport or recreation are taxable at the rate of 15 per cent. Most life-saving equipment used on them is taxable at the same rate but some is exempt under provisions in the law relating to other goods, e.g., life jackets are exempt as clothing for human wear. The removal of tax from the equipment that is not exempt will be considered when the question of granting further sales tax exemptions is next under examination.

Taxation: Private Companies

Senator Wriedt -On 26 September 1974 Senator Webster asked me a question without notice concerning the taxation treatment of private companies. The Treasurer has provided the following answer to the honourable senator's question:

I preface my reply by drawing to the honourable senator's notice the announcement by the Prime Minister on 12 November 1 974 that the rate of tax payable by public companies on their 1973-74 incomes will be reduced from 47 Vi per cent to 45 per cent and that the rate of tax payable by private companies will remain at 45 per cent.

That said, I point out that the need to impose an undistributed profits tax on private companies stems from the fact that the owners and managers of private companies are usually one and the same persons. Unlike public companies, they do not have the same pressures on them to meet the demands of shareholders for regular returns from their investments. It would be possible, therefore, for the owners of private companies to avoid the payment of personal tax on their companies' profits by refraining from distributing those profits. The Division 7 tax is intended to prevent avoidance of an appropriate amount of personal income tax.

By no means, however, is the tax levied to raise additional tax from private companies nor could it be said that the retention allowance provisions hinder the accumulation of funds by private companies; the fact that the companies' shareholders and management are usually the same people suggests that they should be able to make arrangements for the reinvestment of dividends received after, of course, paying the appropriate amount of personal tax on them. I might add that, even as the law now stands, private companies are able to retain for ploughing back a percentage of their trading profits roughly comparable with the percentage retained on the average, in practice, by public companies.

In view of these considerations, I do not think a relaxation of the retention allowance is warranted.

Consumer Goods: Advertising Costs

Senator Wriedt -On 17 October 1974, Senator Everett asked me several questions without notice on the cost of advertising. The Treasurer has provided the following answers to the honourable senator's questions:

(a)   It is extremely difficult to measure the overall effect of advertising upon the price of essential consumer goods.

Advertising costs, regarded as part of the costs of selling and distribution, will naturally be reflected in the final price of the product.

Some advertising could be considered unnecessary and would therefore maintain prices at higher levels than need be. However, advertising also has a legitimate function in conveying information about the product to consumers. It may also create additional demands which lead to longer production runs and a lowering of unit costs. This effect would, however, seem more likely to be substantial for new products than for most essential consumer goods. Unfortunately, no one has yet discovered a means of identifying that portion of advertising expenditure which could be considered unnecessary.

(b)   I am not aware of any information which shows the extent to which the cost of advertising of essential commodities has increased in the past 10 years.

(c)   The imposition of a special tax on advertising, or in particular on advertising of essential commodities, would give rise to significant administrative problems stemming in the main from the discriminatory nature of the tax. The likely effects of such a tax on the amount of advertising and consumer prices are problematical. While the amount of advertising would presumably be somewhat reduced, it could be expected that the higher costs of advertising as a result of the tax would to some extent be passed on to consumers in the form of higher prices.

Because of the definitional problems in collecting information on advertising and because of the varying interpretations which could be placed on any results obtained, I feel there could be difficulties in conducting or making effective use of the results of an investigation into the extent to which manufacturers, wholesalers, distributors and retailers of essential commodities spent money on advertising on television, radio and in the Press.

This is not to say that this Government is not concerned with matters which could be adding unnecessarily to costs and therefore to final prices.

Recently the Government invited the Prices Justification Tribunal to scrutinize with care price claims where selling costs, including advertising, appear excessive.

I would also envisage that the Government's recent Trade Practices Act would have significant effects upon the consumer protection aspects of advertising.

Capital Gains Tax

Senator Wriedt -On 22 October 1974 Senator Bessell asked me whether a liability to the proposed capital gains tax will arise when land is compulsorily resumed by a State or the Australian Government. The Treasurer has provided the following answer to the honourable senator's question:

Where property is compulsorily acquired by a government or public authority, or is sold to such a body that has given notice of an intention to acquire the property, the disposal will not be treated as an occasion to collect the resulting capital gains tax, if the proceeds are used to acquire, within a short period of time, another property as a replacement for the original property. The deferment of tax that is to be given in respect of gains used to acquire replacement property will be achieved by deducting from the cost of the replacement property the amount of the capital gain arising from the disposal of the original property. The amount of capital gain so deducted will therefore not be taxed at that time, but the reduction in the cost of the replacement property will result in a correspondingly larger capital gain, or smaller capital loss, if and when it in turn is ultimately disposed of.

Queensland Health Services

Senator Wheeldon -On 31 October 1974, Senator Sheil asked me a question relating to statements by the Minister for Social Security that additional money would be allocated to Queensland for health services. At the end of my statement in reply I said that I would refer the question to the Minister for Social Security for an answer. The Minister for Social Security has provided the following answer to the honourable Senator's question:

Senator Sheilseems to suffer some confusion on the operation of ' Medibank '.

The fact is that the Minister for Social Security has pointed out that there would be a substantial allocation of additional money to the Queensland public hospitals system once the universal health insurance program was in operation: Senate Opposition has delayed the introduction of the program. The Senator may have forgotten that he was one of the speakers who opposed the introduction of the 'Medibank 'program as recently as the Joint Sitting of the House of Parliament last July. The Opposition was, of course, unsuccessful and it is expected that the 'Medibank' program of universal health insurance will be operating from 1 July 1973. Expenditure by the Queensland Government in respect of the running costs of public hospitals will be reduced by an estimated $30m- $40m in the first year of operation of the Program by virtue of the fact that the Australian Government will meet 50 per cent of hospital operating costs. The impact of the Government's initiative will be more apparent in future years in view of steeply rising costs in this vital area of health care delivery.

Finance for Semi-government and Local Government Bodies

Senator Wriedt -On 13 November 1974 Senator Carrick asked me a question, without notice, concerning finance for semi-government and local government bodies. The Treasurer has provided the following answer to the honourable senator's question:

The Government is aware of the problems which semiand local government authorities have faced in raising loan funds to finance their work programs for the current financial year.

There has, however, been a marked improvement in the borrowing position of these authorities during October and November. Measures taken by the Australian Government and its instrumentalities which have assisted these authorities in their borrowing activities include:

In September 1974 the Government proposed to the Loan Council, and the States agreed, that the borrowing programs of the States be increased by $92. 5m. Approximately one-third of this will be made available as an interest free grant. The States are free to pass on to their local and semi-government authorities any part of these increased funds.

The Government has taken a series of steps to improve liquidity including reductions in the Statutory Reserve Deposit ratio and the creation of a Special Drawing Facility for the trading banks, the suspension of the Variable Deposit Requirement, the reduction of the prohibition on short-term borrowing from two years to six months, and reductions in the issue yields offered on Treasury Notes. In addition, the Australian Government has not undertaken any public loans on the Australian market since last July.

These measures have substantially increased the flow of funds to the private sector and to local and semi-government authorities. The lowering of Treasury Note yields, with accompanying reductions in market yields on short-term Government bonds, has increased the relative attractiveness of local and semi-government securities, the rates on which have not been changed. Following each yield reduction on

Government securities there was a marked improvement in subscriptions to local and semi-government securities.

Savings banks are major lenders to semi-government and local authorities, and there has been a substantial increase in the total volume of loans made available to these bodies from this source since the end of September.

In view of current progress being made by local and semigovernment borrowers towards filling their 1974-75 loan programs, no need for further special action by the Australian Government in respect of these programs is apparent at this time. However, the position is being watched carefully and should additional action be warranted it will be taken, in consultation as appropriate with the State Governments which, of course, have a primary responsibility for semi- and local government authorities created under their legislation.

Lack of Co-operation by Anti-Labor State Governments

Senator Murphy - On 19 November 1974 (Hansard, p. 2473) Senator Button asked me, as Leader of the Government in the Senate, to provide a statement listing the range of measures which are being frustrated by anti-Labor State Governments. The Prime Minister has supplied the following information in answer to the honourable senator's question:


Matters raised by the Australian Government with the Premier of Queensland which remain outstanding or with which the Queensland Government has not co-operated include:

Amendments to State legislation discriminatory to Aborigines.

Transfer of responsibility for Aboriginal affairs.

Aboriginal Land Rights.

Ratification of I.L.O. Convention 107 of 1957.

Refusal by Queensland Government to permit the

Queensland Director of Fisheries to serve on the Board of Applied Ecology Pty Ltd.

Aboriginal Health

It is understood that at 30 June 1974, the Queensland Government held $2.356m as unexpended funds for Aboriginal health projects approved in previous years.

Community Issues

The Premier of Victoria has refused to grant approval for the Royal Commission of Inquiry into Human Relationships to deal directly with State officers and agencies. He has, however, offered to consider specific requests.

Australian Health Insurance Program- Public Hospital Agreements

It is the Australian Government's intention that the Australian Health Insurance Program should come into operation on1 July 1975. Under the Program agreements are to be drawn up between each State Government and the Australian Government for the funding and provision of public hospital services, such that every Australian resident will have access to standard ward treatment in public hospitals free of charge and free of means test. In return the Australian Government will share the net operating costs of public hospitals on a 50/50 basis with the States. Offers to negotiate agreements were made in a letter dated 1 5 August 1 974 from the Prime Minister to each Premier and the Minister for Social Security followed up this initiative with a similar letter to State Health Ministers dated 5 September 1974. Negotiations have commenced with South Australia and Tasmania. Queensland is the only non-Labor State which has done more than acknowledge these letters. Discussions arc taking place with that State at officer level, although the Queensland Government has not yet indicated its attitude to the offer. New South Wales and Victoria have only acknowledged the correspondence and nothing at all has been received from Western Australia.

Family Planning

In the development of Family Planning initiatives there has been a reluctance, to date, to include Family Planning facilities in the Australian Government funded State Health facilities in Western Australia and Queensland.

Dental Health

The Victorian Health Minister has indicated that Victoria will not support the proposed Advisory Dental Council of Australia and that a representative for that State will not be nominated. This is in line with a similar Victorian stand on the Advisory Medical Council of Australia.


The Australian Government's offer to assume full responsibility for the planning, construction and operation of hospitals at Westmead and Campbelltown in New South Wales, Sunshine in Victoria and Mount Gravatt in Queensland and to extend and operate the Royal Newcastle Hospital in New South Wales, were not accepted by the Governments of those States.

Sea Transport

The Australian Government has, since the election in December 1972, actively sought the Queensland Government's approval to allow participation by the Australian National Line in Queensland general cargo intrastate trading. ANL maintains regular services to Queensland ports as part of its interstate services and regularly has up to 1 , 000 tonnes of vacant space when leaving Brisbane northbound for Queensland ports.

On 15 December 1972 the Prime Minister wrote to the Queensland Premier seeking his agreement to this proposal. Since this time there has been no formal response from the Queensland Government apart from advice from the Acting Premier on 24 May 1973 that the matter had been referred to an Interdepartmental Committee. The Prime Minister has written twice in 1974 seeking a response- on 10 April and on 5 June.

Representation supporting the move have come from Harbour Boards and north Queensland consignees as well us politicians. A specific approach was made by a motor vehicle company in 1973 to ANL to carry cars intrastate as a rail strike was causing supply problems. ANL approached the Queensland Government but permission was refused.

Rail Transport

In his election policy speech in November 1972 Mr Whitlam offered to accept responsibility for the railways of any State which was prepared to offer them subject to mutually satisfactory terms being agreed. The offer was subsequently confirmed by letter. Four States- South Australia, Tasmania, Western Australia and New South Walesagreed to discussions on the matter without commitment. However Victoria and Queensland refused to even discuss the oner.

The Victorian Premier stated that his Government would not transfer its railways 'as a matter of transport policy'. The Queensland Premier requested more information about the offer and when this was provided he indicated that the

Queensland Government was not prepared to transfer its railways.'

Discussions at official level on the transfer of the Western Australian Railways had reached an advanced stage. With the change of Government in this State in March of this year, however, the new Premier wrote to the Prime Minister breaking off the discussions and indicating that he considered the matter closed.

Air Transport

The Australian Government has supported TAA's proposed entry to the Perth-Darwin airline route in competition with Ansett 's wholly owned subsidiary MacRobertson Miller Airline Services. In the latter months of 1973 the then Labor Government in Western Australia introduced the necessary associated State legislation to permit TAA to operate services within Western Australia. The legislation was, however, defeated by the Liberal-Country Party dominated Western Australian Legislative Council. This action has clearly not been in the interests of the residents of Western Australia because the TAA proposal would have meant better aircraft, lower fares and a substantially improved freight service.

The Queensland Government maintains a stand against controlling land speculation. It is known that this stand by the Queensland Government would have made it more difficult for the Department of Services and Property to acquire additional land to the north east of Brisbane Airport. It will also make it more difficult and expensive, when the Department of Transport is able to state its precise needs to acquire land for Brisbane's second airport, as directed by the Government, in the Caboolture area. Similar difficulties could be expected in relation to the acquisition of land, as and when required, for an international terminal to the immediate north of Townsville Airport.

Land Commissions Program

The Prime Minister wrote to the Premier of Queensland on 27 December 1 972 outlining the Government 's proposals for the stabilisation of land prices. Following subsequent correspondence the Premier indicated, in letters dated 16 May and 3 July 1973, that the Queensland Government was not prepared to adopt the course proposed by the Australian Government, but was prepared to take action under the States Acquisition of Land Act provided finance was available from the Australian Government and acquisition was at current prices'.

Growth Centres

The Prime Minister wrote to the Premier of Queensland on 21 August 1973 indicating that the 1973-74 Budget provided $4.4m for growth centres in Queensland, viz. Townsville and the Fitzroy and Moreton Regions. The Premier has not replied to that letter. Discussions have been held between officials, however, and the Cities Commission and the Queensland Co-ordinator-General 's Department are cooperating in joint studies.

The former Western Australian Government was willing to co-operate with the Australian Government in developing the Salvado region north of Perth, but was unable to pass the necessary legislation through the Upper House. Negotiations with the present Government have centred on the land commission discussions.

Co-ordinated Attack on Inflation

The Australian Government has tried repeatedly to initiate a co-ordinated nation-wide attack on inflation. On each occasion these initiatives have been frustrated.

Instances of the obstruction are:

As a result of the May 1973 Premiers' Conference an Officials' Report was prepared on possible guidelines for co-ordinating an attack on inflation. New South Wales, Victoria, Queensland and Western Australia did not provide substantive comments on the report.

The matter of referral of State powers was raised by the Prime Minister at the Constitutional Convention in September 1973 and has been pursued subsequently with the States but with no results, so far as the non-Labor States are concerned. After the May 1974 elections the Prime Minister wrote to the non-Labor Premiers saying that he wanted lo pursue the offer to refer power for prices regulation they made during the election campaign. Nothing eventuated.

At the 13 August Premiers' Conference a number of working parties were established to examine areas where joint action might be taken in order to restrain inflationary pressures. The Prime Minister has sought Premiers' reactions to the findings of the working parties. Queensland has not replied and the other non-Labor Premiers have called for another Premiers' Conference to discuss the general economic situation.

Asprey Committee on Taxation

The Committee, set up in 1 972 under the Chairmanship of Mr Justice Asprey was charged with inquiring into the 'structure and operation of the present Commonwealth taxation system ' and formulating proposals for its improvement.

In accordance with an undertaking in his 1972 election policy speech, the Prime Minister wrote to all Premiers on 25 June 1973 proposing an additional term of reference covering State and local taxes.

Victoria saw no justification for the proposed expansion of the Committee's terms of reference.

Queensland offered only qualified support. The Premier advised that his Government would consider making available to the Committee information requested by it in writing which the Queensland authorities considered appropriate to the matters under inquiry.

The proposal was not proceeded with by the Australian Government, in the light of lack of co-operation from some State Governments.

Moore v Doyle

In the case of Moore v Doyle, it was held that registration of unions under State legislation bestowed separate legal entity and the Industrial Court suggested that Federal/State authorities examine the development of a system of trade union organisation under which one body could represent its members in both Federal and State arbitration systems.

On 24 January 1 973 the Prime Minister wrote to the Premiers of New South Wales, Queensland and Western Australia asking them to consider taking legislative action along the lines proposed by South Australia to resolve the problem uniformly.

Queensland replied that it did not favour the Federal body of a union being recognised under State law.

The Premier of New South Wales said that the solution rested with the Working Party (consisting of representatives of Australian and State Government Departments, the ACTU and employers) set up to resolve the problem.

Owing to lack of progress a Committee of Inquiry was established, chaired by Mr Justice Sweeney. The Committee reported on I July 1974. Consequently, on 24 October 1974 the Australian Parliament passed the Conciliation and Arbitration (Organisations) Bill which incorporated essentially Commissioner Sweeney's recommendations. The Prime Minister sent a telex on 25 October to the Premiers of New South Wales, Queensland and Western Australia requesting advice as to when their Governments would be able to pass complementary legislation.

Queensland said that it was no: possible to consider the Prime Minister's request owing to the dissolution of the Queensland Parliament. By itself this does not provide evidence of Queensland 's lack of co-operation but, as indicated above, Queensland has shown no willingness to co-operate on this matter.

New South Wales is considering the matter. Western Australia has not yet replied.

Australian Government Grants to Queensland

Senator Murphy - On 2 1 November (Hansard p. 2628) Senator Keeffe asked me, as Minister representing the Prime Minister, a question without notice concerning how many millions of dollars in Australian Government funds have been refused by the Queensland Government, and how much remains unspent of funds received from the Australian Government. The Prime Minister has now supplied the following information for answer to the honourable senator's question.

See my answer to a question without notice on 4 December 1974 (House of Representatives Hansard, p. 45 1 2 ) in which I stated, inter alia-

In fact, if the Queensland Goverment had co-operated no further with the Australian Government than the other nonLabor State Governments it would be receiving more than $50m more than it is. The money is available under Acts passed by this Parliament with the support of both Liberal and Country Party members of both Houses . . . The money is available for the asking. Above that, of course, Queensland has received $70m more in grants than it would have received if it were receiving only the average per capita amounts for all the Australian States'.

Taxation: Fringe Benefits

Senator Wriedt - On 27 November 1974 Senator Webster asked me a question regarding the taxation of benefits available to Ministers and Members of the Australian Parliament in the form of the use of Government-owned motor vehicles, aircraft and private housing and other fringe benefits. The Treasurer has provided the following answer to the honourable senator's question:

Amendments proposed by the Income Tax Assessment Bill (No. 2) 1974 will provide for a minimum amount to be included in the assessable income of a person for whose private use a car is made available by an employer or by a person for whom services are rendered. The proposed amendments will apply also to ministers and other members of Parliament where official cars are made available for their personal and private use.

The proposed amendments will reinforce existing provisions relating to the taxation of fringe benefits provided for employees. They will provide that where, in connection with a person 's office or employment a car is made available for private use, the assessable income of that person is to include a minimum amount to be determined under a formula prescribed in the legislation. Generally, the minimum value prescribed to this particular benefit will, on an annual basis, be an amount equal to 12 per cent of the first $6,000 of the purchase price of the car and 24 per cent of the balance. Where a car is available for private use for part, but not for the whole, of a year of income the minimum assessable amount will be proportionately reduced.

Members of Parliament who may be carried by cars from the Government pool in the course of the performance of their parliamentary duties, and who do not have cars made available for their private use, will not be affected by the amending legislation.

Benefits in the form of the use of Government-owned aircraft and private housing and other fringe benefits available to Ministers and Members of Parliament are assessable under long-standing provisions of the income tax law to the extent of their value to the Minister or Member as the case may be. The assessable value, if any, would, of course, be one for determination on the facts by the Commissioner of Taxation.

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