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Monday, 11 November 1985
Page: 1886


Senator HILL(3.16) —I raise the matter of `the detrimental effect on South Australians of the high interest and high taxation policies of current Labor governments'. It might be said that the matter is raised at this time because of the South Australian election to be held on 7 December. If that is said, it is true, because that will be when South Australians have the chance not only to change the direction of the State Government in relation to these policies but also to bring home a message to Prime Minister Hawke that his high taxation policies, included within his recently released package, and his high interest rate policies are clearly not in the best interests of the Australian people. The South Australian voters will tell him that on 7 December.

The South Australian Premier intends that this be a `feel good' election. It was typified by his advertisement in last Wednesday's Advertiser when two-thirds of a page was taken up with a photo of a smiling Mr Bannon sitting in a racing car. The advertisement states: `South Australians should feel good'. We did enjoy the car race. Next year there will be a major horse jumping event in South Australia. The following year there will be a motor cycle race which, I understand, will be of international significance. We are building a casino. We are told that the conversion of our old railway station will give us the most luxurious casino in Australia. A new hotel will go with it. It might be said that we have been a little late getting into the casino race and the novelty has worn off; nevertheless, we are now building the most luxurious casino in Australia. No doubt all of us like to be involved in these major events. That is not an issue in this election. We are prepared to give credit for what the Government has managed to contribute to these so-called major events. According to the polls, 75 per cent of us like Mr Bannon, the Premier of South Australia. Seventy-five per cent of us find him appealing. Clearly, on such figures, he is well liked. That also is not in dispute in this election.

What this election is all about is not a popularity contest, as Mr Bannon would no doubt like, but under which sets of policies, Labor or Liberal-I say to Senator Haines that I regret I cannot include the Australian Democrats-would South Australia be better off. Would the people of South Australia be better off under the high tax policies of Labor governments or the lower tax policies of the Liberals? I am pleased to advise honourable senators that it was announced today that under an Olsen government South Australia would take a lead as the first State to abolish financial institutions duty taxation, a precedent that all South Australians would no doubt applaud. Would they be better off under the high interest rate policies of Labor, or would they be better off under a Liberal government which was prepared to bite the bullet and reduce the size of government and thus relieve pressure on interest rates? Would they be better off under Labor's large government policies? A further 6,000 public servants have been employed in South Australia in the three years of the Bannon Government which, I understand, is costing some $100m a year. Would South Australians be better off under that type of expenditure which requires the high tax and high interest rate policies which we see from Labor and which are the subject of this debate, or would they prefer to get services that can be better and more cheaply performed by the private sector? Would they prefer to get them outside government?

I might say in passing that the Liberal Party surveys are putting a lie to the myth that Australians are concerned by the notion of privatisation. It appears that all Australians can see many examples of services that could be more cheaply and better performed by the private sector and would be only too pleased to see that be the case and have their taxation bills reduced accordingly. Would they be better off under Labor's tentative and ineffective responses to crime, or would they prefer to take some real and positive steps in that area? I only have to remind honourable senators of the backtracking by this Labor Government in relation to phone tapping. It was said at a crime conference some time ago that State police would be given power under judicial warrant to phone tap in the case of serious drug offences. Since then the Government has backtracked, which is evidence of its insincerity in the area of really attacking serious crime. Lastly, do South Australians really want Labor's education policies, or a program which as Senator Teague, who is an expert in this field, knows would give kids a better chance of being qualified for work and an opportunity of more discipline and competition and fewer soft options?


Senator Teague —The Liberals do much better on education.


Senator HILL —The Liberals have better policies on education. These are the serious questions on which this election is to be fought. These are the real issues that will be the subject of debate over the forthcoming month and upon which the voters will cast their determination on 7 December-not car races, casinos and smiling politicians. Under which alternative government would the people be better off?


Senator Crowley —We know.


Senator HILL —Senator Crowley may not be concerned about those people in outer metropolitan Adelaide who are battling to pay their bills and those who are worried about their kids' future. They know that their future will not be secured by car races and casinos. Car races and casinos are history from the point of view of this election.


Senator Crowley —They are not running on that. They are running on their record.


Senator HILL —It is an election about real issues. The Australian Labor Party wants to fight the election on the basis of smiling faces and casinos, but there are more serious issues facing the South Australian people. Let us look briefly at the record of the Labor Government in some of these critical areas. I revive a few memories for honourable senators. They will no doubt remember that Mr Bannon promised not to increase the rates of existing taxes or to introduce any new taxes. Since that promise, in fact, State tax collections under the Bannon Government have increased by 55.2 per cent. That is an increase of 55.2 per cent over three years, which I understand is a higher figure than exists in any other State in Australia. I understand that it is a higher figure than for any other single government in South Australia's history. As I indicated earlier, the State Government has included the FID tax-Labor's new FID tax on bank accounts. That was the first new tax to be imposed in over 10 years. Remember the promise that Mr Bannon would introduce no new taxes. Immediately that promise was broken. The FID or fiddle tax even taxes the bank accounts of school children.

Let us add to the State's sorry record of taxation that of the Federal Labor Government and look at its policies. Under the package that is before us a capital gains tax is to be introduced. It is not just any ordinary capital gains tax. It is a capital gains tax at marginal income tax rates. Perhaps Senator Maguire will tell us what other countries in the world tax capital at marginal income tax rates. I cannot think of any. The measure is about to come into effect. On the subject of promises, we might remember Mr Hawke's promise. Mr Hawke said: `Let me say in syllables that even my opponents can understand that we will not introduce a capital gains tax'. In the next term after that promise was made, a fringe benefits tax has been proposed. It is a new and additional tax proposed by Labor. It is a tax on employers, and shows the attitude of this Government quite clearly in regard to further employment opportunities. Honourable senators should look at the predictions that we are now receiving in regard to what it will do to the car industry, which is vital to South Australia. I note that Senator Foreman, a former member of the Vehicle Builders Union, will be speaking in this debate. I look forward to hearing what he has to say about the effect of the fringe benefits tax upon the car industry in South Australia. But we know who pays in the end. In the first instance it might be the employer who pays, but in the end, as always, it is the consumer who pays the cost.

Let us look at the exclusion of entertainment costs as a deduction in incurring taxable income. It is true that there have been abuses that must be cut out. But the standard answer of Labor governments is to take the sledge-hammer and that is what it did in that case. In many instances it is outlawing what is a very legitimate and reasonable expense in the earning of an income. The Labor Party knows that that is so, particularly in the case of the service industries. So that deduction is being cut out and business profits and employment will suffer. Mr Deputy President, no doubt you have seen predictions from the restaurant industry, which has a real reason to complain because its businesses were set up under the existing interpretation of the taxation regime. It has found that a red pencil is being slashed through that deduction, and employment in that industry will suffer. Employment opportunities in South Australia will suffer as a result of that action. I have mentioned the Vehicle Builders Union. In South Australia under the last two years of Labor government 14,000 jobs have already been lost in the manufacturing industry. That is something that those on the other side might like to consider when they speak in this debate. I would have thought that that alone was a real reason for this Government to be particularly concerned about the employment consequences of its taxation package, but apparently it is not.

It is true that some reduction in income tax rates will be offered. But I remind the Senate that that will take place in the future. It is very much a case of a person paying up now and being given a small advantage in the future, by which time inflation will have taken its toll and, in any event, his income would largely have moved into the next tax bracket. So it would seem to be very much an illusory benefit. I remind the Senate also that it has become more illusory because inflation under this Government is on the rise again. Already our inflation rate is significantly ahead of that of our trading partners, which does not augur well for the economic future of this country. Therefore, what the voters will remember on the subject of taxation is the sorry contribution of the State Labor Government and what they can see in the pipeline after the announcements by the Federal Labor Government. They will accordingly vote against those policies on 7 December.

Here are some more memories: Mr Bannon promised to reduce housing interest rates. They are now higher in real terms than they have been at any time in the last 50 years. That can be related directly to Labor's large government and high expenditure policies, at both State and Federal levels. First, it was a case of governments competing in the market place for funds to maintain excessive expenditure. Now it is a case of propping up the Australian dollar which, as we all know, has crashed as a result of Labor's economic policies. Some South Australians who have saved for many years for their first overseas trip will be terribly disappointed when they find that they can no longer afford that trip because hotel accommodation, et cetera, will have doubled in price as a result of the crash of the Australian dollar. I suggest that that is a sorry economic achievement. What does the Prime Minister, Mr Hawke, say about this achievement of high interest rates? Only last Saturday, after he spoke in Adelaide, an article in the Adelaide Advertiser stated:

The Prime Minister, Mr Hawke, yesterday warned of continuing high interest rates and said Australians would have to learn to live with them.

The high interest rates have arisen because of his poorly conceived policies. Instead of looking to rectify them or even expressing sympathy, he simply says to those living in the marginal areas: `Bad luck chaps, but you will just have to live with those high interest rates that we have inflicted upon you'.


Senator Teague —We need a change of government.


Senator HILL —We will have a change of government in South Australia, Senator. As a further example, what did Mr Bannon do about interest rates in South Australia? Shamelessly, in an effort to try to win cheap votes, he agreed to authorise an increase in building society interest rates but said that the Government would pay the difference; in other words, the taxpayer would pay the difference. He taxes the total community, including many who are paying even higher interest rates on their own home loans, in order to subsidise a particular sector of the borrowing community. I cannot imagine who would suggest that that is sensible economic policy. I am sure that there will not be any attempt today by those on the other side to justify that policy.

In regard to interest rates, Mr Bannon should be condemned. The State Bank of South Australia, the people's bank, has been offering money to consumers at a market rate instead of at the rate which is subject to a ceiling under legislation. Unfortunately in certain circumstances it forgot to tell the borrowers that that was the case. Now, embarrassingly it is having to renegotiate. That is a sorry story and something about which, no doubt, South Australians will vote wisely on 7 December, particularly those who have been forced to buy homes in the outer metropolitan areas of Adelaide because of Labor's high interest rate policy.

Mr Bannon also said that he would reduce unemployment. What is the position now in South Australia in regard to unemployment? It is largely no better off now than it was three years ago. In regard to youth unemployment we find that we have the highest level of unemployment-this is for teenagers-of any mainland State. That is shameful. Over 51,000 South Australians are still unemployed and the young people in our State are the worst off of all. How will South Australians vote in regard to that matter? What did Mr Bannon do in regard to that issue? He shamelessly took up the Federal Government's Priority One trainee scheme and renamed it YES-the youth employment scheme-and then spent $300,000 of South Australian taxpayers' money in promoting it as his own solution. No doubt Senator Vanstone in a little while will give further reasons why that scheme will not adequately address youth unemployment. It is simply part of a total election fraud.

The last memory of which I remind you, Mr Deputy President, concerns the cost of living. Mr Bannon promised to contain Adelaide's cost of living. I advise the Senate that the cost of living increase in the last financial year in Adelaide was higher than that in any other capital city in Australia. Under Labor, petrol has gone up by 36 per cent. In regard to housing, an average bank loan has increased by 55 per cent; interest rates, which I have been talking about, by 55 per cent. Bread has gone up by 21 per cent; beer by 27 per cent; electricity by 41 per cent; water rates by 64 per cent; and bus fares have gone up by 43 per cent.

These are the matters that those who are struggling under Labor's high tax, high interest rate policies will remember when they go to the polls to vote on 7 December. They are the real issues that South Australians will take into account. They will not be conned by Mr Bannon. I give the Senate an example. In regard to the advertisement I was talking about which portrays the smiling face of Mr Bannon, he even claims credit for Roxby Downs. I remind you, Mr Deputy President, that in the lower House the whole of his Party voted against Roxby Downs. The legislation was passed by the South Australian Parliament only because one of his members deserted and voted with the other side. In this document he claims credit for Roxby Downs and for Technology Park, another fine innovation of the former Tonkin Liberal Government; and so the story continues. South Australians are not so gullible. They will not be fooled by smiling faces in grand prix cars. What they will vote upon at the forthcoming election is performance and promises on taxation, interest rates, the cost of living, education policies and on what policies the Government and the alternative government offer for physical security of the South Australian electorate. Those are the issues upon which the electorate will vote. They are critical issues; they are issues upon which the Labor Government has failed. The Liberal Government is putting up better and more worthwhile alternatives for the benefit of all South Australians.