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Wednesday, 6 November 1985
Page: 1680


Senator COOK(5.20) —We are debating the statement by the Treasurer (Mr Keating) on taxation. The first comment which should be made in this debate is that reform of the tax system is widely regarded as the hardest political achievement of any government. That is no doubt that the previous administration displayed over the years considerable cowardice in attacking the need for comprehensive tax reform in this country. As a result of its failure to move in this area we have seen the Australian tax system become progressively unjust and unfair as the burden has been increasingly shouldered by wage and salary earners, all of whom by virtue of pay as you earn deductions have paid their full share of taxation. Increasingly, we have seen that those who are in positions of power and wealth are able to exercise that power and wealth to avoid the payment of taxation. So great was the loss to revenue that, increasingly, the burden that was shouldered by wage and salary earners was topped up, in order for governments to meet their income needs from taxation, by further loads being put on that sector. The scales of taxation, the marginal rates and average rates of taxation, designed for the really wealthy in this country 10, 15 or 20 years ago are now being paid by ordinary wage and salary earners. That is in itself is a major injustice.

The other outstanding major injustice has been that because the rich and wealthy have been able to avoid taxation the avoidance and evasion industry has flourished in this country and massive losses to revenue have been occasioned by it. The previous administration made no effort at all to bring this industry to heel. It was only in the face of a major public scandal that desultory attempts to focus on this were made at all and then, in the case of the Fraser Government, in outright opposition to some of the divisions of the Liberal Party of Australia, notably the division of the Liberal Party from my own State, Western Australia, whose finance committee attained great national notoriety by harbouring within its ranks a number of people named as large scale tax avoiders.

The first point that should be made is that there is a great deal of respect being accorded this Government because of its courage in facing up honestly, fairly and comprehensively to the need for tax reform in this country. There is a great deal of recognition by independant commentators and the media, grudging recognition by some politicians from the Opposition and recognition and respect from widespread section of the community that we have had the courage to confront this issue. The reason we have had to confront it is that previous administrations have not had that courage or have not been prepared for particular reasons, to do so.

The course of tax reform in Australia has not run smoothly. The Government, in deciding to deliver on its major electoral commitment laid down by the Prime Minister (Mr Hawke) in his policy speech at the Sydney Opera House last November, committed itself to nine major points of reform. In pursuing, after the election, that commitment we brought down earlier this year a comprehensive statement of various tax reform options, submitted them to public dialogue and debate and conducted a major exercise in consultation with the community at the National Taxation Summit early in July. As a result the package of tax reform measures that has been announced has come forward.

It has been said by some that to take that course displayed weak leadership. I assert that that is not an entirely false and indeed, in the case of this Government, defamatory statement; it is an illusion. To consult with the community, for a government to seek to reflect adequately the views of all the interests of the community, to go through a period of debate in which there is confusion by virtue of some of the blinds and arguments that are put forward and to endure that period of debate in the interests of full and frank consultation is a courageous step by government. It takes strong leadership to listen quietly while the community speaks rather than to adopt a dictatorial attitude of proclaiming from on high what policy should be. I think that the Prime Minister and the Treasurer both have to be recognised not only as effective reformers on the tax front but also as people with personal courage. Their courage and that of the Government that supports them is recognised. They listened to the voice of the community, absorbed it, and produced a statement which proposes a number of Bills all containing measures of reform that are necessary.

Many aspects of that statement have been widely and, in all honesty, grossly misrepresented. The changes that we have announced will complement the whole range of economic policies that this Government has put in place following its election in 1983. The set of tax reform measures compliments those economic changes in order that we will be able to sustain ongoing economic expansion and growth so that we can continue to maintain lower levels of inflation and unemployment, higher job prospects and a continuing scenario wherein the Australian economy will expand to this year's targeted growth rate of 5 per cent. So through economic growth we can achieve the employment climate that Australia and particularly young Australians require.

As I have said, some of the reforms that we have introduced have been misrepresented. In any package of major reform which involves overhauling a whole creaking, obsolete system, there will of course be winners and losers. I believe that there is no rebuttal to the assertion that the so-called losers in this package are those who ought to have paid tax in the past. From that point of view, they are not losers but rather people who, at long last, will be brought into the tax net and will be made to honour their obligations to this community.

It is possible to misrepresent a package by selectively choosing aspects of that package and then arguing against those aspects to make it appear that the whole package was not fair. We saw an example of such arguments only yesterday in this chamber when, in a debate on a matter of urgency, it was asserted that the capital gains tax was somehow unfair to the community of Australia. If one were to listen to the arguments of the Opposition and its lurid allegations regarding the Government's proposal on capital gains tax, one could contend that what the Government is proposing is unfortunate. I could not argue in any sense, nor could anyone who looks fairly at what the Government has proposed, that the capital gains tax that we are projecting is other than a necessary tax, an overdue tax, in terms of international levels of capital gains taxes a soft tax and, in the group of comparable economies with which we align ourselves, brings Australia into line with tax measures in those parts of the world. In any case, it is a single component of an overall package and it balances that package to give it the fundamental principles upon which this Government has launched tax reform. I refer to principles of efficiency in the tax system, principles of equity and fairness to all taxpayers and the principle that in any reform measures it should be fundamental to stamp out tax avoidance and evasion. At this point it might be appropriate to stop. I seek leave to continue my remarks later.

Leave granted; debate adjourned.

Senate adjourned at 5.30 p.m.