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Tuesday, 7 May 1985
Page: 1800


Mr CONQUEST(10.42) —In the adjournment debate I wish to support the speech made this evening by the honourable member for Moncrieff (Mrs Sullivan) on the Appropriation Bills. I, too, am concerned at the direction in which the Government's Expenditure Review Committee is heading in respect of its recommendation to reduce the rate of payment of family allowance. It is inconceivable that this Government is setting its sights on the family as the target of its razor gang attack. A family with children bears an inordinate share of the taxation slug now, and the size of the slug grows as the size of the family grows. It is not just a question of personal income tax; it includes those indirect taxes with which the family has to contend at progressively greater amounts of expenditure depending on the number of mouths that the taxpayer has to feed.

Peter Groenewegen in his article in the Australian Financial Review of 21 February 1985 entitled 'How to Achieve Tax Equity: An Alternative View', highlights a deterioration in the relative position of the family with children vis-a-vis the single taxpayer. This has been achieved by the introduction of the tax threshold and its association with higher marginal rates in the guise of simplification of the rate scale where we now have a 32 per cent standard rate. He further notes a substantial sacrifice in horizontal equity with the elimination of concessional rebates closely allied to the actual expenditure patterns of families with children. He referred to education, chemist, doctor and dentist-type expenses.

The family with dependants requires concessions in areas of tax and welfare. In this regard I refer to the Sydney Morning Herald of 27 March 1985 in which the Minister for Finance, Senator Walsh, is reported as saying that he believes that people with dependants must be given priority in the tax and social security system. In a similar vein the former Minister for Social Security, Senator Grimes, stated his position forcefully to the National Economic Summit Conference in April 1983. Arguing that family allowances had never in any strict sense been a welfare program, he said:

Rather, they are designed to achieve a broad measure of equity in the tax-transfer system between those with and those without dependent children. They recognise that at any level of income those with children face higher costs than those without.

This statement would seem to be an admission that horizontal tax equity has been sacrificed. However, it is of no real consequence at whose altar the ceremony was performed. The important aspect is that it highlights the necessity not to reduce the level of family allowance payments.

Having said that, I would now like to suggest an increase in the allowance. Senator Grimes, in a matter of public importance debate in another place on 24 October 1984, pointed out that, if family allowance was not increased regularly or indexed, its value would quickly fall away with the rate of inflation. He further indicated that, despite increases in money terms, the real value had fallen by 22 1/2 per cent between June 1976 and March 1983. There is a real need to increase family allowance payment levels. To ensure no loss in real terms in the future, it is essential that such new levels be indexed.

A final point to be covered is the question of the means testing of the family allowance. When the national child endowment scheme was introduced, the Government of the day was of the opinion that it would be expensive to administer. Former Prime Minister Scullin was of the opinion that a system of equal payments without regard to income was the optimum course to follow. The Australian of 12 July 1985 quoted the honourable member for Lilley (Mrs Darling) and the honourable member for Canberra (Mrs Kelly) as opposing the introduction of a means test. I tend to agree with that line of thinking. We have come a long way since Jack Lang introduced child endowment in 1925 for his State of New South Wales; 44 years have elapsed since it appeared nationwide. I trust the initiatives of yesteryear will not be lost by this Government.