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Friday, 10 May 1985
Page: 2054

Mr TUCKEY(10.48) —The Customs and Excise Legislation Amendment Bill and cognate Bills address a number of matters but, because of the constraints of time, I will deal with only a few of them. In particular, I wish to deal with the Customs and Excise Legislation Amendment Bill. Clause 23 of this Bill amends section 269P of the principal Act to enable the revocation of tariff concession orders in several additional circumstances. These include where the Minister for Resources and Energy becomes satisfied that an order has become obsolete. I think the Government is now well aware that the decision in this legislation, if enacted, would create a situation of retrospectivity. There have been rumours that the Government proposes some amendments, and I sincerely hope that that is the case.

Mr Barry Jones —Yes, that is the case.

Mr TUCKEY —I thank the Minister for Science for assuring me of that because, quite clearly, people in the business of buying and selling and bringing in imports would be severely disadvantaged if, having concluded a sale, there was a retrospective decision to the effect that someone had made a mistake and charged the wrong duty. I have been in business for a long time and with relation to sales tax I have always discovered that, if a wholesaler makes the mistake of applying the wrong rate of sales tax, there is no sympathy from the purchaser; the wholesaler is left holding the baby. I welcome the Government's advice that that oversight is to be attended to.

The other matter I wish to discuss and to which the Opposition proposes to move amendments relates to clause 37 of the Bill which refers to the indexation of rate of rebate. Clause 37 inserts a new section into the principal Act to provide for the automatic indexation of the rate of rebate on diesel fuel in exactly the same terms as for the Customs Act. What we are talking about here is one of the great attacks upon the primary industry sector in Australia. For many years the primary industry sector was not charged excise on the fuels it used for off-road purposes. This applied particularly to people in my electorate who were farming and using large quantities of fuel, for instance, to plant crops. The off-road sector was recently defined as agriculture, mining, fishing, forestry, households, hospitals and nursing and aged persons homes. To me and my constituents agriculture and fishing in particular are major consumers of fuel and are large payers of the taxes that result.

As I have said, for many years those people were exempt from the payment of any excise. Excise, of course, is separate from the other levies that government places on fuel. The excise is now substantial and represents a major burden. When this Government inherited the treasury benches the excise was approximately 5.155c per litre, which, of course, was fully rebated. That situation continued for a little while. On 1 July 1983 the excise was 6.155c per litre, which again was fully rebated. Then things started to change. On 29 August 1983 we saw an increase under the Government's policy of automatically indexing excise and the excise became 7.155c per litre. That was the last time that the full rebate was paid to people in primary industry.

The Government, knowing full well what it was doing, announced that it was proposing to freeze that excise. Two factors emerged. The first was that, for the first time in the history of this Parliament, the imposition of an excise was taken away from parliamentary scrutiny. It was taken out of the visible arena. For many years-in fact I estimate 40 or 50 years-the growth of excise struggled along to that figure of 5.155c per litre. As I understand it, that figure included the 1c per litre special Australian bicentennial road development program levy which was negotiated by the previous Government with the community and introduced with its approval. We had 40 years in which to achieve a 5c a litre increase on fuel. Why? Because the excise was visible. The Treasurers of the day, principally from our side of politics, were game to come into this House and take the criticism for announcing an increase in the levy. It gave the community an opportunity to lobby against it because it was usually anticipated as a Budget measure.

But what has happened? This Government has chosen automatic indexation-taxation by stealth. Consequently, on 2 February 1985 the excise was running at 9.641c per litre. That means that in the life of this Government, in just over two years, we have had a 2.5c per litre increase. In 40 years we had an increase of 5c and in two years we get an increase of 2.5c-a 50 per cent increase. Why? Because this has been taken out of the public arena; it is no longer visible. The natural result of that is that when people pull up at the bowser there are no double dials on the bowser and there is no dial that tells people how much they are paying in tax, as has been demonstrated recently by various newspapers that have chosen to use the bowser as the indicator of the tax grab. People do not know whether it is a price increase associated with the retailer, the oil company, the oil producer or somebody else. No longer are they told about it. It is a disgrace that governments follow that form of taxation. We have seen this massive increase in the excise levy because of that mechanism.

While that has been happening the rebate has remained static at 7.155c per litre. For the first time in our history we find that those primary producers whom I listed earlier are being required to pay a 2.5c per litre excise. This is at a time when there has been a massive growth in the price of fuel because of the parity pricing policy that was introduced by the previous Government and endorsed by this Government-a major turnaround because this Government criticised that policy while it was in opposition. This burden has been placed on the rural community at a time when it is trying to get out of a major drought and is suffering a major deterioration in its terms of trade. There is no secret about that. The Prime Minister (Mr Hawke) recently tried to convince members of the rural community that their figures were wrong, that they were still making a profit, were doing fine and had never had it so good. Of course, the farmers were not believed. They eventually proved that the Government was wrong and that the figures that they had presented to the Government were true. The farmers' terms of trade are disastrous at present and the imposition of this type of burden will not help.

Clause 23 of the Customs and Excise Legislation Amendment Bill is still perpetuating a major fraud on these people. It has been hinted to them that the Government recognises the major burden that has been put on this sector and it is seeking to do something about it. What is this Government trying to do? It is to reintroduce indexation of the rebate. But what is not being said-what is being treated with the same degree of stealth as the automatic indexation of excise-is that the consumer price index is now going to be applied to two different figures. The CPI will be applied to the 7.155c per litre and exactly the same percentage will be applied to the 9.39c per litre. The only certainty is that the larger figure will grow-I am sure that the Minister for Science (Mr Barry Jones), who is at the table, could make that calculation very quickly-and this burden of 2.5c a litre on these people, who believe that they are being offered some relief, will continue to grow.

Consequently, I welcome the Opposition's announcement and the statement of the shadow Minister handling this matter in this House that he proposes to amend that situation in the Committee stage. I will certainly be pleased to support him. The Opposition is proposing to end the fraud and to return to a position that the agricultural sector has expected for many years and in fact enjoyed under the Fraser Government and all previous Liberal governments. They do not expect to pay excise on fuel that they use when they take the risk of putting a crop in the ground. Excise is a tax on enterprise. It is a tax on people who have to go out and use the greatest bulk of that fuel for the purpose of taking a risk to create an income.

I think I have said in this House before that these sorts of up-front taxes can only be equivalent to a worker being required to put, say, $5 a day in a tin at the factory gate as he walks into work for an employer who is in financial difficulties and may not be able to pay him at the end of the week. That is the situation that governments create with these sorts of taxes when they impose them on the rural and other primary sectors. There is no guarantee that they will get a return on their investment; that is up to the weather and other seasonal conditions. Many people are starting to recognise this. The Shire of Narrogin chose to write to the Treasurer (Mr Keating) the other day and draw his attention to this fact:

Council are particularly concerned at the effect the imposition of taxes on fuel will have to agricultural industry. This is borne out in that 66 per cent of the cost of fuel is directly related to Commonwealth or State taxes.

A recent survey indicated that during last season, an average of $14.00 per hectare was spent on fuel. This cost was higher where ground was turned over more than twice.

The letter went on to say:

On the above figure, removal of the tax would mean a saving of $9.24 per hectare in the operation costs.

I am talking about farmers in my electorate who plant up to 25,000 acres of crop and I am sure that the Minister can also do a quick calculation on that. The letter went on to say that this was before the imposition of the 3.9c per litre increase of 1 May. Is that not significant? What did the Prime Minister do while he was, in his words, sitting down and negotiating with the National Farmers Federation-he even had the cheek to call it a summit-and while the Treasury and the National Farmers Federation economists were arguing the farmers' figures? Because of the disagreement over figures the Prime Minister promised these people another meeting at which, he said, he would further consider their very real concern about the deterioration of their general terms of trade. What did he do? He sat down at a Cabinet meeting and took this decision on parity pricing which further deteriorated and reduced the terms of trade for farmers, fishermen, foresters and others. The fishermen, farmers and the mining industry, in particular, use the huge quantities of fuel from which this Government reaps its profits. The Government has imposed an excise of 2.5c per litre on fuel. This has affected the farmers. It has been estimated that it is costing the farmers an additional $25m a year. This is a trick and a fraud.

The Government was great on claiming all the things that it inherited, but it is not returning to the position which it inherited in this regard when it was elected to office and assumed the treasury bench. The Government is still imposing a major tax burden on an industry that just cannot afford it. The Government knows that it cannot afford it, it just has different priorities in this whole tariffs arena concerning both the primary sector and the manufacturing sector.

The estimated revenue of the Government in its Budget this year is $57,203m. Excise on oil, liquefied petroleum gas and petroleum products, which we find in two different parts of the Budget, is $5,846m. In other words, taxes on fuel now represent 10.2 per cent of total Government revenue. This is for an item which is so important to the Australian community. I heard a Minister in this place yesterday saying something about the amount of money that transport represents in the cost of all goods that we buy. He gave it in dollar terms. My understanding is that approximately 45 per cent of the cost of most things that we consume is represented by freight costs. We transport fuel to the iron ore mine and the iron ore to the smelter and before that iron becomes something that we can use huge costs of freight are involved. Every time the Government increases the tax on fuel it, in turn, increases the cost of freight and the cost of all goods within Australia. But some people bear a much heavier burden than others and people living in the country invariably bear the cost of fuel more heavily than anybody else.

It was interesting to hear the honourable member for Bendigo (Mr Brumby), who should accept responsibility in this regard, giving tacit approval to the legislation we have before us today. As with the assets test, country members on the Government benches seem to have a rather peculiar attitude to all these things. They will not listen to their constituents or to rural-based members on this side of the House. They almost scoff at us at times and say that we are just looking after the fat cats, yet they continue to ignore that a large percentage of people in rural areas are wage earners. A large percentage of people on properties are not wealthy. These are the people who get hurt by these sorts of decisions. There is no doubt that people living in rural areas are forced, whether they like it or not, to use much larger amounts of fuel and this tax bears disproportionately upon them. These people are trying to keep our national economy afloat. They came to the aid of this Government when it first came to office; they produced a record wheat crop for Australia which pushed the economy up. This Government took all the credit. This Government has yet to achieve the economic levels of 1981. It is very strong on percentages. I am wondering whether, at Question Time today, we will be told about the great growth in the value of the Australian dollar! The Government might tell us that the dollar has gone up by 8c from the low of 62c. The fact is that the dollar is worth 30c less, compared to the American dollar, than it was when this Government floated it. That is the reality.

We have a wonderful situation of our taxes going up, the price of fuel going up and the value of our dollar going down! That is a better statement of what the Government has done. This taxation by stealth, this automatic indexation of excise, is something that I sincerely hope this side of politics will not practise again. It is quite wrong. I like to use four words about taxation. Many of my words have been ignored in this present confusion that has been created by an indecisive Prime Minister. When he does make up his mind he is bound to change it. He has changed sides on the tax debate almost daily in the last fortnight as he gets his messages from the different factions in the Australian Council of Trade Unions. The Australian economy is being carried by people such as the farmers-and they are attacked. This legislation does that.

On 8 April I drew to the attention of the House the problems relating to the cost of running a truck. I mentioned that an owner-driver had 30 per cent of his revenue consumed by various taxes. But that was before the price of fuel increased recently. That person is now substantially worse off because the tax burden has increased even further. These people are the backbone of our economy. In general, they have the great burden of the policy that is espoused in these tariff amendments today. In today's issue of the Australian Financial Review there is the headline 'Protection ''invisible conspiracy to beggar exporters'' '. The article mentions Professor Kenneth Clements of the University of Western Australia and Professor Larry Sjaastad of the University of Chicago. It states:

More than half the cost of protection in most countries is borne by the export industries and in Australia's case it is as high as 70 per cent, according to a new report . . .

. . .

. . . 'an implicit, indeed an invisible, conspiracy to beggar one's own exporters'.

. . .

They estimate that 'at least one half of all protection acts as a tax on exporters'.

'Estimates for individual countries range from about 50 per cent of nominal protection being shifted onto exporters in Uruguay to 70 per cent in Australia, and over 90 per cent in Colombia,' the report says.

Other examples are given. The Government is going to increase the tax on farmers, it is not going to reduce it, by this legislation. It has already increased the excise tax substantially, as I have explained, on all consumers of fuel. There is no objection to the parity pricing policy as it is aimed at encouraging fuel production and exploration in Australia. That is an excellent policy, but it does not warrant the tax grab that is being practised by this Government through excise in particular. The Government could reduce excise from 9 per cent to nothing as a balance and still see the producers getting a world parity price.

Mr DEPUTY SPEAKER (Mr Keogh) —Order! The honourable member's time has expired.