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Tuesday, 15 October 1985
Page: 1270


Senator ROBERTSON(9.39) —I enter the debate to consider the implications of the tax package for the Northern Territory. I make no apology for this. I have not done so on previous occasions. I have often said in this place that senators representing the Northern Territory, perhaps with the exception of those who accept high office and don the mantle of that position, are closest to the original concept of what senators ought to be. They are able to speak up for the Territory in this place-something that perhaps some of the senators from the States are not able to do.

I am going to avoid, if I can, any repetition of what has been already covered, particularly so eloquently by my colleagues Senator Richardson and Senator Maguire. However, before I start I will just make a couple of comments because these comments, being general, relate to the Northern Territory. I think it is fair to say that the tax package has been well received at all levels. There has been some criticism but it is fairly reasonable to say that it has been generally received around Australia. The anti-Labor media in the Northern Territory attempted to denigrate it, as the media always do. They could not find anything to hang any reasonable argument on. They found very little to criticise. As is so often the practice of the media, they resorted to scare tactics. This practice is employed by a number of people, the media and others, when there are no facts to substantiate what they intend to try to push. There are a couple of honourable senators sitting on the other side of this chamber who are well known for using this technique around Australia. I will refrain from mentioning who they are.


Senator Peter Baume —I am sorry; there are only two senators sitting on this side at the moment.


Senator ROBERTSON —The honourable senator to whom I am referring is not in the chamber at the moment, but the honourable senator who has just interjected is not unknown for this practice-in a very subtle way, of course. The tax measures which are in front of us are the outcome of an extensive process of consultation. It is strange that the present Leader of the Opposition (Mr Howard) seems to disagree with this process of consultation, this attempt to reach consensus. In a television interview regarding the summit, he said that the Government should decide what it wants to do and push it through. Fortunately, this is not the approach favoured by the present Government. It believes that wherever possible consensus should be reached, but certainly at all times there should be consultation. As we all know, the tax summit did not reach consensus. That is unfortunate, but perhaps it is understandable. It is quite clear that a number of competing interest groups would not even consider compromise. Therefore, there could be no consensus. However, the whole exercise was well and truly worth while and the Government is to be commended for attempting to get this consensus.

There is general agreement-there had been before the tax summit-that the tax system is in a crisis. Previous governments have walked away from this. They have put the problem into the too hard basket. I think that this was elaborated quite clearly by my colleague Senator Richardson. I think it is fair to say and to claim that the Australian Labor Party had courage to tackle the problem and it must be commended for it. One observer speaking of the summit had this to say:

Speaker after speaker at summit congratulated Prime Minister and Treasurer for having the courage to hold the summit-unfortunately at times it seemed that this was the only thing that many speakers could agree on.

What is this crisis? What does it involve? It involves three major issues-avoidance, evasion and minimisation at all levels but, quite obviously, mainly at the higher levels. The package does not go as far as many of us would wish it to go, but for all that it is still the most far reaching in living memory. The fundamental aims of the Government's tax reforms have been outlined. Perhaps I can itemise them. The aims are, firstly, to reduce marginal rates significantly; secondly, to curtail tax avoidance and evasion; thirdly, to restore fairness to the tax system; and, fourthly, to gear the whole system to economic growth by doing three things-firstly, providing greater rewards for initiatives; secondly, removing distortion of shelters, and, thirdly, ending the double taxation of dividends.

I wish to look briefly at the main elements of reform. These will apply to all Australians, including Territorians. Then I would like to look at a number of specific cases which are of special relevance to the Northern Territory. Firstly, let us look at the top marginal tax rate, the one that has been mentioned by the last three speakers. It is quite clear that people who should have paid 60c in the dollar under the system did not do so and they used every trick in the book to try to avoid it. Quite clearly, they tried to get away without paying that rate to which their salary or their income relegated them. What was more disturbing perhaps was the fact that it became socially acceptable to avoid and evade tax. One observer commenting on this said:

Australians often seem to admire people who can get away with cheating the government without realising it is the community and honest taxpayers who suffer from tax evasion.

This is one of the most difficult concepts to sell to the man in the street. If one spoke to a man in the street about someone who had managed to avoid paying tax or who had engaged in tax evasion he would say: `He's a smart cookie. He has good business techniques. He is able to get away with it'. Then one says: `But it is your money that he is fiddling with. If he were paying more you would not have to pay so much'. People find that very difficult to understand. The whole concept is very difficult to sell. There is no doubt that over recent years the whole system has become distorted. As was pointed out by Senator Maguire and Senator Richadson, what we have come to call the tall poppies-those people on higher incomes-have been joined by the mass of the ordinary middle income earners and that is where the problem lies. There is no doubt that people have come to resent paying more than half their income in tax and so they have tried to avoid it. In avoiding it they have tried to avoid paying any tax at all. We have situations where people on many thousands of dollars, even hundreds of thousands of dollars, a year have paid virtually no tax at all because they have been able to recruit clever accountants and clever lawyers to do something for them.

Other speakers have dealt with this. Perhaps I can recap the main item in the reform of tax rates. The Government is to reduce the rate of tax in the top bracket from 60c in the dollar to 49c in the dollar. The intermediate rate of personal income tax will be reduced from 46c in the dollar to 40c. It is claimed that these reductions in the tax rate will enhance our economic performance by better rewarding initiative. With these reforms, no Australian will be required to pay more than half his or her income in taxation. The other details have been outlined in much more detail than I intend to go into.

Let me move now to one or two specific comments I want to make about the Northern Territory. Firstly, I wish to deal with Northern Territory air fares. I refer to the taxation to be imposed on recreation air fares. I think all of us in this place know the situation that operates. We all know what the statement of the Treasurer (Mr Keating) had to say about recreation air fares. Let me say categorically that I am opposed to this. I have expressed my opposition within the party room and I will continue to do so in the same place. It is interesting that I am supported in this by the National Secretary of the Administrative and Clerical Officers Association-not the Northern Territory Secretary, but the National Secretary. In other words, it is seen as a matter of principle. The Northern Territory News of 10 October 1985 states:

Mr Paul Munro has thrown his weight behind the campaign to save Territory public service holiday air fares.

Mr Munro has sent a letter to Federal Treasurer, Mr Paul Keating, calling for recreation leave air fares to be exempted from the proposed tax on fringe benefits.

His letter argues that the air fares should not be classified as fringe benefits.

He said limiting or doing away with the air fares would have a gravely detrimental effect on family situations.

Mr Munro also claimed not only did the Territory have an ``extraordinarily high'' cost of living but it was still a remote locality despite technological advances.

I wish to elaborate a little on what Mr Munro has said. The facts are, quite clearly, that it is not a perk; it is a condition of employment. It is a condition of employment that many people went to the Northern Territory fully believing they would receive. As such it was a sort of contract. When people were recruited down south they were told: `This is one of the conditions of your service in the Northern Territory. You know that it was introduced, firstly, to overcome the disability of remoteness from families and, secondly, as compensation for the physical environment'.


Senator Peter Baume —Would you like us to divide on this matter to test the vote?


Senator ROBERTSON —If we come to that I have no doubt that we can come to some sort of an arrangement. Let me look, firstly, at remoteness. People in the Territory are isolated from many families. Air travel is the most appropriate method of travel. When I talk about being isolated from families I mean being isolated from parents and grandparents. The residents of the Northern Territory make more trips per head of population than those who reside in any other major centre in Australia. I seek leave to incorporate in Hansard a table which demonstrates this.

Leave granted.

The table read as follows-

PER CENT OF TRIPS MADE TO EACH DESTINATION BY EACH MODE

Destination

Aircraft

Bus/

train

Car

Other

Darwin...

51.4

6.8

36.1

5.7

Alice Springs/Cent. Aust....

25.7

16.1

39.7

(a)18.5

Cairns/Green Isl....

20.8

8.1

64.3

6.8

Hobart...

20.7

5.6

70.1

3.6

Sydney...

17.6

11.2

66.4

4.8

Snowy Mountains...

17.5

17.8

63.8

0.9

Townsville/Magnetic Isl....

16.6

3.3

76.4

3.7

Mount Isa...

16.4

1.4

64.5

17.7

Mackay/Brampton...

16.2

3.6

75.3

4.9

Adelaide...

15.5

8.2

71.7

4.6

Brisbane...

14.1

6.8

71.9

7.2

Rockhampton/Yepn/Keppel...

12.2

5.5

78.6

3.7

Perth...

11.7

4.9

77.9

5.5

ACT...

11.1

5.0

77.9

6.0

Melbourne...

8.7

4.8

80.0

5.6

Launceston...

8.6

3.5

86.7

1.2

Gold Coast...

8.5

2.9

86.1

2.5

Maryborough...

6.2

3.9

84.4

5.5

All Destinations...

6.2

5.0

83.8

5.0

Notes: (a) Travel by truck accounted for 16.2%.

Source: Bureau of Transport Economics, National Travel Survey.


Senator ROBERTSON —I thank the Senate. The table shows that of the trips made to each destination by each mode-aircraft, bus-train, car and other-51.4 per cent of people from Darwin travelled by aircraft. In Alice Springs-central Australia-25.7 per cent of people travelled by aircraft. A total of 14.1 per cent of people from Brisbane-I am sure that some will agree that that is another comparatively isolated area-travelled by aircraft. In Perth, on the other side of Australia, the figure was 11.7 per cent, and in Launceston-and Senator Walters is not here to hear this-8.6 per cent. So quite clearly people in the Northern Territory tend to travel more by aircraft. Let us look at the effect of remoteness. The Territory has the youngest population in Australia, and I seek leave to incorporate in Hansard table B which demonstrates this.

Leave granted.

The table read as follows-

Table B

ESTIMATED RESIDENT POPULATION BY AGE GROUPS, 30 JUNE, 1983

Age groups

(years)

Number

Males

Females

Persons

Percentage

Males

Females

Persons

0-4...

7,234

6,981

14,215

5.4

5.2

10.6

5-9...

7,532

6,940

14,472

5.6

5.2

10.8

10-14...

7,190

6,800

13,990

5.4

5.1

10.4

15-19...

5,657

5,374

11,031

4.2

4.0

8.2

20-24...

6,838

6,746

13,584

5.1

5.0

10.1

25-29...

7,689

7,110

14,799

5.7

5.3

11.1

30-34...

7,509

6,707

14,216

5.6

5.0

10.6

35-39...

6,329

5,079

11,408

4.7

3.8

8.5

40-44...

4,813

3,486

8,299

3.6

2.6

6.2

45-49...

2,971

2,330

5,309

9.9

1.7

4.0

50-54...

2,571

1,719

4,290

1.9

1.3

3.2

55-59...

1,960

1,265

3,225

1.5

0.9

2.4

60-64...

1,187

923

2,110

0.9

0.7

1.6

65-69...

693

648

1,341

0.5

0.5

1.0

70+...

803

784

1,587

0.6

0.6

1.2

All Ages...

70,976

62,900

133,876

53.0

47.0

100.0

Source: ABS Catalogue 1201.0


Senator ROBERTSON —I thank the Senate. The figures set out in this table show quite clearly that 31.8 per cent of the population are between the ages of 0 and 14, but only 2.2 per cent in the 65 plus bracket. In other words, the Territory consists mainly of younger families, people without the advantage of grandparents, whose older members of the family live south. The normal graph is skewed towards the bottom end. Grandparents live away from the Northern Territory. I am sure the Opposition would not deny the great value of contact with grandparents by young people. Older people tend not to live in the Northern Territory. The main reason is another issue I have to raise now, and that is climate. The air fares were initially introduced to allow people a break from the distressing conditions of living in the north. I have spoken on this aspect in this place before and the following table reinforces this. I seek leave to incorporate table C.

Leave granted.

The table read as follows-

Table C

MEAN TEMPERATURE BY MONTH, 1984.

(0C)

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Darwin...

Max

31.1

30.2

31.2

32.6

32.7

30.5

29.4

30.9

31.9

33.5

33.0

32.2

Min

24.6

24.4

24.6

24.2

23.3

19.9

18.8

21.5

23.4

25.3

25.9

26.0

Nhulunbuy...

Max

32.5

30.6

30.8

31.6

30.9

29.3

28.2

29.3

30.5

31.6

32.5

32.5

Min

26.6

24.7

24.9

24.4

23.7

21.6

20.2

20.3

21.9

23.3

24.5

26.2

Tennant Creek...

Max

33.0

35.2

32.0

30.9

28.7

24.2

22.6

27.9

28.2

33.7

41.0

38.2

Min

23.0

23.6

22.2

19.5

16.8

12.8

10.9

14.4

15.7

20.7

24.2

25.3

Source: Bureau of Meteorology.

MEAN HUMIDITY BY MONTH, 1984

(per cent)

Jan.

Feb.

Mar.

Apr.

May

June

July

Aug.

Sept.

Oct.

Nov.

Dec.

Darwin...

9 a.m.

86

88

85

69

65

51

59

68

74

62

71

76

3 p.m.

72

75

73

46

40

33

38

41

53

49

60

68

Alice Springs...

9 a.m.

49

34

34

35

43

37

61

26

39

29

19

28

3 p.m.

31

18

20

26

25

21

32

33

24

16

12

19

Tennant Creek...

9. a.m.

64

54

49

40

37

37

50

34

35

25

26

46

3 p.m.

41

27

35

25

22

19

29

18

36

16

13

20

Source: Bureau of Metorology.


Senator ROBERTSON —I thank the Senate. The graph shows clearly the temperatures and mean humidities. I will not go through them all, but let me simply say that when our friend Brian Bury in the morning says that in Darwin it is 34 degrees and bonza, it certainly is hot. It is hot, sticky and very unpleasant and it is like that for a good deal of the year. But we in the Northern Territory have so many advantages that those of us who are younger are quite happy to put up with it.

Let me look at some other special features of the Northern Territory-mining, for example, one of our larger industries. There are two features worth mentioning, and I think they are best dealt with by reading the section on mining in the Treasurer's statement:

At present, excess deductions for exploration and development expenditure cannot be transferred to another company, even where the companies satisfy the 100 per cent common ownership test.

Mining companies therefore cannot take full advantage of the group loss provisions available to other companies.

As canvassed in the draft White Paper, the Government has decided to extend that opportunity to petroleum and general mining companies.

This will apply to excess deductions from exploration and development expenditures incurred in 1985-86 and subsequent income years.

The estimated revenue costs of this measure are $70 million in 1986-87 and $65 million in 1987-88.

The Government also proposes to freeze, until the 1986-87 Budget, the difference between the diesel fuel excise and the diesel fuel rebate for diesel fuel used in mining operations.

The rebate will be further reviewed in the context of the 1986-87 Budget.

I am sure that even our friends in the Chamber of Mines in the Northern Territory will be very gratified with that inclusion in the tax package.

I turn to the subject of primary production. The number of hobby farmers in the Northern Territory is increasing. We have mainly pastoralists, but there are a number of hobby farmers and there is something in the package for them also. I refer to page 14 where in the last three paragraphs under the heading `Quarantining of farm losses' the Treasurer's statement reads as follows:

Partly offsetting these revenue gains will be a significant improvement in the primary production averaging provisions.

An additional $20 million per annum benefit to farmers will arise from a complementary increase in the notional farm income limit for primary production averaging purposes, from the current level of $5,000 to the new level of $15,000.

This represents a significant increase in the amount of non-farm income which may benefit from the averaging provisions.

I believe that it is unfortunate that the Government has been thwarted in its attempt to bring in what it considered to be the best package. But once again I commend the Government on its courage in attempting to bring fairness back into the system. I think that is the key word on which the whole success of the package will hang. The average man in the street will see a fair system being introduced once again into taxation, and I congratulate the Government on what has been achieved.

I must admit, in conclusion, that the people of the Northern Territory do not regard the finance section of our Government as necessarily their closest friends. I have to admit that Senator Walsh is not number one pin-up boy in the Northern Territory, but it is fair to say that some very unpopular decisions had to be taken. Perhaps some of the harshness which may have been included, and to which I have drawn attention within the party rooms-they are the place to do it-has been prompted by the extravagant waste of public funds by the Northern Territory Government. Senator Walsh has drawn attention to those in the more public arena here at Question Time. I believe that this package will go a long way to restoring good relations between the people of the Northern Territory and the Federal Government, and I commend the Bills to the Senate.