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Thursday, 18 April 1985
Page: 1423

Mr GEAR(5.15) —I was interrupted during the previous debate on these Bills, Appropriation Bill (No. 3) 1984-85 and Appropriation Bill (No. 4) 1984-85, by the grievance debate. I was talking about our unfair taxation collection system, the basis of which has moved to the pay as you earn taxpayer. I gave some examples of how unfair the taxation system has become. To support my contention I refer to 'Occasional Paper No. 8A' entitled, 'Australian Economic Statistics' published by the Reserve Bank of Australia. It shows the breakup of taxation collection in Australia from 1949-50 until the present. The figures are broken down into broad categories. If we look firstly at the category of indirect taxes we find that as a proportion of total tax collection they reached a high of 40.1 per cent in 1958-59. They have been going down ever since.

At present, indirect taxes comprise only 27.9 per cent of all taxes collected. In 1956-57 company taxes comprised 17.9 per cent of all taxes collected-a record high. They have been decreasing ever since until now they stand at only 10.4 per cent. We cannot blame the companies altogether for that because, under the policies of the present Opposition, which was the Government during that time, we saw more and more companies go to the wall, go bankrupt. So the capacity of companies to pay tax has been severely inhibited by the restrictive policies of our predecessors. Certainly, the taxation contribution to revenue of companies has fallen significantly.

If we compare those two sources of taxation collection with another source, the pay as you earn taxpayer, the honest taxpayer, who reached a low point in 1959-60 of contributing only 19.3 per cent to total taxation collection, we can see what has happened to his contribution to taxation collection. It has been going up ever since. It reached a high point in 1981-82 under the former Government of 42.7 per cent. That is more than a 200 per cent rise in proportion to total taxes collected. In the next year, 1982-83, in the infamous family Budget designed to win the former Government the election of 1983, the contribution of pay as you earn taxpayers was brought down to 42.3 per cent. Under this Government it has been falling. In 1983-84 it was 40.3 per cent and in 1984-85 it was 39.1 per cent.

Previously I talked about the need for tax reform and how the former Government would never attempt it because of the political risks involved. It was happy to sit on its hands and watch the system grow more inequitable. One aspect of the previous policy the Opposition has stuck with is supporting the tax avoiders. This Government has had two elections. We have two clear mandates to collect the money that these tax avoiders have ripped off the honest taxpayers of Australia. I refer to legislation that has been through this Parliament a number of times. Firstly, legislation was introduced to try to collect tax from the bottom of the harbour schemes. As the honourable member for Jagajaga (Mr Staples) pointed out, we have put that legislation to the Senate five times and it has foundered because the Liberal Party, the National Party and the Democrats have ganged together to knock it on the head. So be it. Those parties are breathing new life into the tax avoidance industry by doing that. Tax stripping is not practised by the ordinary, honest taxpayer but by the cheats in society. The cherry picking schemes were possibly the worst examples of tax cheating, where workers' superannuation benefits were used for tax advantages.

Mr Staples —Parasites.

Mr GEAR —They are parasites, as the honourable member for Jagajaga points out. The Government has a clear mandate to collect those taxes and it will keep putting that legislation to the Senate to remind the people of Australia of the friends of the tax avoiders. This Government has the guts to tackle the difficult question of the taxation system.

When honourable members opposite heard of the tax summit, they backed away at the fastest rate of knots we have ever seen, because they do not want to know anything about it. They will only try to make political mileage out of it, as they have with the debate on the matter of public importance, the Queensland dispute, in the last couple of days. Honourable members opposite do not care about the economy of Australia; they are trying only to score political points.

I want to look at the state of the economy because that is important in raising taxes. It goes without saying that the healthier the Australian economy, the more able it is to sustain a greater level of taxation. I came into this place early, as did you, Mr Deputy Speaker, because of the election called by Mr Fraser when he saw that the Australian economy was getting worse. He went to the Australian people a year early because in his estimation the Australian economy was going downhill so fast that if he waited another year he would have been decimated. The Australian people know why he went early.

As soon as this Government was elected the situation was reversed. The previous Government had used inflation as the basis for its decimation of the Whitlam Government in the unconstitutional actions it took at that time. The previous Government said after that disgraceful performance, that it would lower inflation. That Government came in when inflation was approximately 11 per cent and when it went out it was approaching 12 per cent; in seven years it did nothing. As soon as the Hawke Labor Government came in, that situation was reversed. As the Prime Minister (Mr Hawke) said in Question Time today, the inflation rate was halved under the policies this Government adopted. Unemployment was going up at an alarming rate. In the last years of the conservative Government 200,000 jobs were lost. Unemployment is going down now, and that is great. Not only are people able to come off the dole and pay tax but also, in humane terms, a job gives a person a purpose in life. If we can do that for our fellow Australians, we are doing a great job indeed.

The Opposition pretends to be a friend of business, yet it sent many businesses broke. The small businesses that went to the wall under the policies of the previous Government give the lie to the fact that the Liberal and Country parties looked after the business sector. Under this Government the economy and profit levels of all those companies have risen significantly.

I refer to a Treasury paper, 'The Round Up', issued in March 1985, headed 'Highlights for March 1985'. It states:

In the December quarter 1984, average weekly earnings for all employees increased by 0.8 per cent and average weekly ordinary time earnings for full-time adult employees increased by 1.7 per cent.

Not only has unemployment gone down, but also workers have had their wages maintained under the wages accord with the Australian Council of Trade Unions. The accord is proving to be a real plus for the Government. The document continues:

New motor vehicle registrations grew by 3.7 per cent in the three months to January to be 10.2 per cent higher than in the same period a year ago.

That is a significant economic indicator of how well the economy is going. When people are buying new cars they are confident about what is happening in the Australian economy. Another indicator is:

New dwelling building approvals rose by 4.1 per cent in January 1985 and by 4.2 per cent in the three months to January.

Under the policies of this Government the first home owners scheme has been a tremendous success. It has led to a resurgence in the building industry, which has flowed through the whole economy. The document continues:

Employment grew strongly in February (0.7 per cent) to be 3.3 per cent higher than a year earlier. Employment has grown by 110,000 persons since June 1984.

Employment growth will exceed the predictions of the Government at Budget time, notwithstanding the disgraceful performance in Queensland where people are being laid off and the strike situation is affecting the employment prospects of many other people. Looking at the other side of the employment coin-unemployment-the document continues:

The unemployment rate fell to 8.3 per cent in February while the labour force participation rate rose to 60.7 per cent.

That means people can see that there is now a chance of getting a job, and they are starting to respond to that by applying for jobs. While that might tend to keep up the unemployment level, at least the Government's performance is an indication to the people of Australia that they have a much better chance of getting a job than they did a year earlier. There are many other statistics I could point to.

My colleague Senator Graham Maguire has issued in the last few days a significant paper entitled 'Inside the Faltering Queensland Economy'. The Prime Minister read from that paper some of the alarming statistics comparing the rate of growth in Australia to that of Queensland where it is actually going backwards. The most significant point of that is that Australians generally are working together. Australian employers and employees have come to the conclusion that when they work together and pull in the same direction, they will achieve their goal a lot easier than if they are fighting all the way, which is what is happening in Queensland. This statistic can only be described as dreadful: The working days lost due to industrial disputes for the 12 months to January 1985, compared with the 12 months to January 1984, in Australia went down by 15.6 per cent and in Queensland went up by 83.9 per cent. There is a direct corollary between the industrial situation in Queensland, and the state of its deteriorating economy, and the situation in the rest of Australia. I feel really sorry for the people of Queensland who have been subjected to the sorts of jack-boots tactics that we have seen in the last few days. The Federal Opposition does not cover itself with any glory when it supports that sort of action.

Finally, there have been calls for a restraint in government spending. I have been contacted at my office by a few people who say that the tax summit in July should not be about raising taxes but about restraining government spending. The Government quite rightly points out that the tax summit in July should go on, regardless of the level of government spending, because we are not talking about government spending; we are talking about raising taxes for a particular level of government spending. Government spending is a different issue altogether. For any level of government spending there has to be a more equitable taxation system than we have at the present time.

I would like to give an example of how this Government tried to cut government spending and the role the Opposition played in that. I refer, of course, to the assets test. The assets test is a clear example of how the Government tried to limit government spending in an area where it would not greatly hurt the people affected. When I say 'greatly', I realise that there are anomalies in the assets test, but we can work them out as the assets test is applied. What we are saying with the assets test legislation is that the richest 2 per cent of pensioners do not really need the pension.

In fact, the assets test is very generous in that it allows pensioners to have the family home plus $100,000 worth of assets before they are affected. Under the previous incomes test it was hard to measure a person's wealth in terms of income alone. Executives on high salaries were able to get out of expressing income on their tax returns by taking lurks and perks, just as rich pensioners could put their assets into non-income bearing schemes to receive the full pension and benefits, whereas that money should be more correctly addressed to the needy people. Certainly, the very emotive attack that was launched on the Government by the Opposition once again does not bring it any glory at all because if the Opposition were responsible it would have agreed with us that that was a necessary move. I notice that one of the new Liberal members of this House, when in civilian life, actually supported the assets test. Now that he is a member of the Opposition he is bagging it. All I can say about that honourable member is that he has leadership potential in the Liberal Party.

Mr Leo McLeay —It will be a long time before he is a member of the Government.

Mr GEAR —He will not be a member of the Government for a long time. I come to the question that arises from the Government's move in trying to limit government spending by putting an assets test on pensioners. I pose this question: If the Opposition does not support our move to introduce an assets test to limit the pensions paid to the richest 2 per cent of pensioners, where would it restrain government spending? Arising from that question is another question that has never been answered. If the Opposition abolishes the assets test, will it raise taxes so that the richest two per cent of pensioners who do not really need a pension will get it or will it lower the pension so that the people who really need it will get less? In conclusion all I can say is that the people of Australia should be thankful that they have a Government that had the guts to take on this difficult question. I am sure that as a result of our action the Australian economy and the taxpayers of Australia will come out of this a lot better off.