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Tuesday, 5 November 1985
Page: 1549

Senator BJELKE-PETERSEN(5.31) —This afternoon we are debating the following matter of urgency:

The need of the Hawke Labor Government to abandon its proposed capital gains tax because of the destructive effects on incentive.

I believe that this is an urgent matter of importance to all Australians. Because of the imposition of this tax all sections of the community will lose the incentive to invest in property and business. The small investor who buys shares in companies with the thought of making some profit will certainly have no incentive. I have always been against a capital gains tax. I made that commitment to the people of Queensland. Most certainly it is good to know that if this tax is passed, because of the support of the Australian Democrats for the Government, we intend to repeal it when we get back to office in two years time.

One thing I can recall-it was brought to our notice earlier this afternoon by Senator Messner-is one of the many broken promises of the Prime Minister (Mr Hawke) which was put on record in the March 1983 election campaign. He said: `Let me make this clear so that even the Opposition will understand: There will not be a capital gains tax'. The Opposition understood it. We on this side of the Senate are very bright. But, unfortunately, the Australian Labor Party did not catch on. On 19 September, Mr Keating said: `The Government has decided to introduce a capital gains tax'. Mr Keating's statement that liability for tax in the case of death will be rolled over to successors simply means that there will be, in effect, a deferred death duty. That means that not only will people have to pay taxes all their life but their poor relations also will have to pay taxes after they are gone. That seems to me to be a very sad state of affairs.

I was very interested in the fact that 63 per cent of Australians have said that they do not want a capital gains tax, so I do not know where the pressure came from. I suggest that the pressure for this tax came from the Australian Council of Trade Unions, which wants to make everybody equal. It does not like anybody to have more than anybody else. It seems to forget that the people who have a bit of money provide the jobs and job opportunities for people. The ACTU's idea is to tax everybody as much as possible. The capital gains tax is a good place to start, with death duties attached to it. All I can say is that anybody who wants to support the present Government must like being taxed. We have already had the assets test. We have also had the lump sum superannuation tax. So there are plenty of signs that this Government is indeed a high taxing government.

The wealth of Australia, both today and in the future, is dependent upon individual creativity and incentive. It is dependent upon our creating a political, economic and social climate within which the average Australian is motivated and stimulated to enjoy his own life, to be industrious and to create wealth and opportunities for others. I do not feel that the changes the Treasurer (Mr Keating) is introducing in this taxation legislation will do anything to bring about that.

Today in particular we are thinking about the capital gains tax and its destructive effects on incentive. The Government is introducing a capital gains tax on the pretext that it will create a more equitable Australia. I say that the reverse will be the case. I feel that enterprise will be stifled, if not destroyed, because of the destructive effects on incentive that this tax will have. We have heard quite a bit about that from Senator Messner and Senator Jessop this afternoon. We will have a situation where businesses could be forced to the wall with the resultant loss of jobs for thousands of Australians. I would have thought that that would be of paramount importance to the Labor Party. At present 550,000-plus are unemployed.

Senator Puplick —Senator Cook is shaking his head. It is not of paramount importance.

Senator BJELKE-PETERSEN —I think, from hearing what members of the Labor Party have been saying this afternoon, they certainly do not seem to be concerned about this. They should be encouraging people to make jobs. They cannot encourage people to make jobs if they are going to introduce a capital gains tax and myriads of other taxes as well. Most certainly a capital gains tax does not create jobs. Rather, it destroys them. The capital gains tax will also inhibit less well-off Australians from acquiring assets in order to improve their personal situations. If the Government thinks it is going to penalise well-off Australians I believe that it is sadly mistaken. This sector of the population is already protected because those people acquired their assets before this tax was proposed. But the same will not apply for the people who are trying to accumulate assets. This capital gains tax is not good for them.

This Government has often been praised for being the Government to bring all Australians together, but it has done more to divide Australians and to create gross inequality than any government I can remember. I can remember lots of them because I have been around for quite a while. The actual practical effects of a capital gains tax will show the shallowness of the Labor Government's rhetoric. The Treasurer, Mr Keating, promised Australians that he would simplify the tax system in this country. In my opinion and in the opinion of small businessmen, rural producers and the average family, he has well and truly blown it.

When Senator Siddons was speaking in the Senate this afternoon he indicated that the Australian Democrats had done a deal with Labor to remove a capital gains tax on the family home. I am sure that many people who are in family homes will be delighted that the Democrats have connived with the Labor Party to do this. I want to know what will happen to the family homes on properties. Nothing has been said about them. I think that is very wrong indeed. I want everybody to know that the Democrats are in cahoots with the Labor Party to bring in this obnoxious tax package. I think everybody wants to know about that.

The capital gains tax, the company income imputation system and the attack on fringe benefits are nothing more than further impositions on the productive sector of our community. Indeed, the biggest losers will be the hard-working executives and Australia's small businessmen. In other words, the biggest losers will be the presently employed who are now facing the risk of joining the unemployment queues because of the attack of this Government on small business. I want to draw honourable senators' attention to the fact that small business employs 60 per cent of the Australian work force. Also, rural industry over the years has been responsible for vast amounts of overseas credits. I feel very sorry that these people are being attacked in this way. In the longer term the costs would almost certainly be borne by the whole community as a result of eliminated job opportunities and higher costs of living.

The capital gains tax which the Treasurer has introduced does seem to have a mild appearance, and it is certainly not retrospective-and one agrees with that-but the sting comes on individual enterprise and effort. The Government has put blatant tax avoiders and small businessmen into one barrel and pushed them over the cliff together. Where is the encouragement for entrepreneurs and their capital to invest in this country? Mr Keating's capital gains tax will hit hard those operators of small businesses who are able to afford new plant or equipment only through leasing arrangements. That is another problem, as I see it. The rural sector, as I said before, will certainly be hard hit by a capital gains tax. I asked a question about another tax this afternoon, namely the fuel tax, and how the poor people who live on the land have had their freight equalisation arrangements taken away. That is another matter, but one can see time and again how these taxes are affecting the man on the land.

The capital gains tax is a high-cost, low-return tax. In the past decade Britain's capital gains tax has rarely raised more than one per cent of tax revenue. I heard Senator Maguire this afternoon say that the Government would get only $25m out of this tax after five years. It seems to me that the cost of implementing such a tax will be more than the Government will make out of it. So why bring it in at all? It will not be good for business in any way. As far as America is concerned, I found some information just recently in one of the papers. The United States experience has shown that there is a clear correlation between decreasing capital gains tax and increasing employment. It is said that the United States has been progressively cutting back its capital gains tax because it recognises that the aggressive venture capital industry provides job-creating economic growth. That is something we should remember. A new captal gains tax even on its own would be very bad news for farmers and small businesses but if it were coupled with death duties or any form of assets tax many existing operations would go under.

What is it about Australians that we have to knock achievers? I refer to those people who are prepared to get up and have a go and make a success of their life. We want entrepreneurs. The work force needs them to create jobs and job opportunities; governments need them for that reason and many more. Yet `wealth' and `profit' are words which are condemned in this country by this Government, and I suppose by all socialist governments in Australia. Likewise, self-reliance and a fair go are fair game for the bureaucrats who devise all these Alice in Wonderland tax schemes, but I guess they are told to do this by Government Ministers. In its efforts to cut down anyone who shows a bit of initiative, who might aspire to rise above mediocrity, this Government is condemning all Australians to a lower standard of living. It has certainly taken away the incentive to expand businesses and therefore to create critically needed new jobs. There is no doubt in my mind, as I am sure there is no doubt in the minds of small businessmen and rural producers throughout Australia, that there is a need for this Labor Government to abandon its proposed capital gains tax because we all realise, particularly on our side of the chamber, that has destructive effects on incentive. I support the urgency motion that is before the Senate.