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Monday, 11 November 1985
Page: 1890

Senator MAGUIRE(3.35) —This afternoon I speak on the matter of public importance on interest rates and taxation which has been raised by Senator Hill from South Australia. I was rather surprised, as I know Senator Crowley was, at how much Senator Hill spoke this afternoon about the capital gains tax. Last week I had the opportunity to read Senator Hill's maiden speech in this place on 9 September 1981. This afternoon I would like to quote some relevant sections from that speech. Senator Hill said:

. . . those whose wealth is increased by capital gains rather than by income do not share in the taxation burden.

He continued:

We cannot forever remain the only highly developed nation without some form of capital or equivalent taxation at the Federal level.

I am not quoting an Australian Labor Party member of Parliament; I am quoting Senator Hill who this afternoon had the breathtaking gall to raise a matter of public importance on the detrimental effects of taxation on the Australian economy. Four years ago Senator Hill is on record in this chamber calling for a capital gains tax and this afternoon he criticised the Government of Australia for imposing a capital gains tax.

I have said time and time again in this place that the Government's tax policies involve a redistribution of the Australian tax burden. The Prime Minister (Mr Hawke) has made it abundantly clear that there will be no increase in the overall level of taxation in this country as a result of the Government's tax package. It has been made clear time and time again that we are talking about a redistribution and not an increase in the tax burden. The taxation level will not rise in relation to Australia's gross domestic product. There will be no overall lift in tax levels in this country.

I would like to make some comparisons between what will result from the Government's tax package and the taxation arrangements which applied under the Fraser-Howard Government in this country. It is very important to note that under the Labor Government as from September next year the bottom marginal tax rate in Australia will be 24c in the dollar. The best tax rate the Liberal Party could manage when in government was 30c in the dollar. That is the difference between the two parties. The Labor Party's bottom rate will be 24c in the dollar; the best rate the Opposition, when in government, could manage was 30c in the dollar. That is a very big difference. I think the Liberal Party has a long way to go before it can claim that it is a low tax party when the best it could manage was 30c in the dollar as a bottom tax rate. We announced that stage one of our tax cuts would apply from November last year. A tax cut of $7.60 a week applied to all wage and salary earners with incomes between $240 and $538 a week, a very significant tax cut. It was stage one of our three-year plan to reduce taxation in Australia. Those tax cuts were of major benefit to Australia's lower and middle income earners. From July next year the Government will increase the tax free threshold-the bottom level of income which is totally exempt from taxation-from $4,595 to $5,100, a significant rise in the tax free threshold. As I have indicated, the bottom tax rate will go down to 24c in the dollar. The 46c in the dollar tax rate which is paid by many middle income earners in this country will be reduced in 1987 to 40c in the dollar. This is a very significant taxation reduction for lower and middle income earners in Australia. I estimate that as a result of those changes persons on the average wage in Australia will benefit by a $6 a week reduction in income tax. That is a very large cut in tax on top of the $7.60 a week reduction which applied from November last year.

I turn to the reduction in the Medicare levy and the arrangements which came into effect just this month. A single income household with two dependent children will be totally exempt from paying the Medicare levy if their income is below $15,564-quite a significant income. Those are the sorts of cuts in income tax and tax levies which have been made under this Government. I think we can justifiably claim that for lower and middle income earners we are certainly the low tax party in this country.

I turn to Premier Bannon's 1985 Budget in South Australia. I point out that in that Budget he also brought in a range of taxation reductions and a range of reductions in State charges. He reduced stamp duties; he reduced the 5 per cent levy on turnover of the Electricity Trust of South Australia. That, in turn, will cut electricity bills-a very welcome reduction, I am sure. He has provided for a higher payroll tax exemption. Small businesses in South Australia are benefiting significantly from an exemption in payroll tax levels in South Australia. Those with a payroll amounting to around $250,000 a year will now no longer be liable for payroll tax. It is a very worthwhile saving. Those are some very tangible reductions in taxation which have been made by the South Australian Premier, John Bannon.

This afternoon Senator Hill made nonsensical allegations about the high levels of taxation in South Australia. I wonder whether he has ever read the Commonwealth Grants Commission reports on State funding. I challenge him to find a section in a Commonwealth Grants Commission report-the Commission is the body in charge of recommending the funds that Canberra allocates to the States-which indicates that State taxes are high in South Australia, because they are not high in South Australia, and quote it chapter and verse. They are about average; they are right in the middle. This afternoon Senator Hill talked a load of nonsense when he claimed that State taxes in South Australia are high. The Commonwealth Grants Commission-the most authoritive body on Federal-State relations in Australia-has never indicated that State taxes in South Australia are high.

On 10 November 1982 we had to tidy up the mess in South Australia's finances. I will tell honourable senators some of the things that were happening in that period in South Australia because I had to deal with the mess first hand. I happened to be one of the poor unfortunates who had to audit the State books and indicate just what was the order of the State deficit year after year under the Tonkin Liberal Administration. No wonder Dr Tonkin went to live overseas after the mess he left South Australia's finances in. When the Labor Party came to government and first audited the State's books it found that the recurrent deficit for a small State such as South Australia ran at $60m a year as a result of the policies of the Tonkin Government.

Senator Elstob —How much?

Senator MAGUIRE —It was $60m a year, an incredible figure for a small State. One of the things that had been done in South Australia under the Tonkin Government was that capital works had been bled dry as a result of its policies. Virtually no capital works spending occurred under the State Government as a result of the Tonkin Government's policy. Year in, year out, to try to cover up the hole in State finances that the Tonkin Government had created, it simply transferred capital works money provided by the Commonwealth Government in Canberra, to pay for biros, wages and salaries and pads of paper to keep the State running. That is what was going on. Vital capital works spending was being diverted to cover the basic recurrent costs of running the State. The Tonkin Government was using the mortgage money to pay the rent and the grocery bill. That is what was going on in South Australia under the Tonkin Liberal Government.

This afternoon we have heard some comments about interest rates from Senator Hill. I remember analysing interest rates under Mr Howard's policies. In a two-year period in the late 1970s and early 1980s there was a four percentage points rise-from 9 1/2 per cent to 13 1/2 per cent-an incredible rise in interest rates when Mr Howard was Federal Treasurer. That is the sort of impact that drove South Australia to its knees in the late 1970s and early 1980s.

Senator Hill claims that interest rates are high now. I certainly do not believe they are acceptable, but the fact is that in the early 1980s we had very high interest rates on top of a depressed economy. In South Australia we had very high interest rates; we had negative economic growth; we had a reduction in the total number of persons employed; we had an increase in unemployment. We had high interest rates on top of a stagnating economy. I challenge anybody to say today that interest rates, whatever their levels might be, are holding back economic activity. We are experiencing one of the most rapid improvements in the national economic situation for many years. That improvement is certainly being shared, as Senator Crowley is well aware, in our State of South Australia, where we are experiencing very rapid economic growth.

Senator Hill skirted around the figures, and he ignored the situation in the housing sector, making special pleas about people living in outer metropolitan areas. My word, that is the first time I have ever heard the Liberal Party taking an interest in people living in the outer metropolitan areas of Australia. Let us look at what has been happening in housing in South Australia under the Labor Government. When the Tonkin Government lost office in 1982-83, the total number of new dwellings approved in South Australia was 8,700. That was the legacy that that Government left South Australia. In the year that has just finished, 1984-85, the figure was not 8,700 new dwelling approvals but 15,000. That is the increase in new dwelling approvals under the Labor Government in South Australia-a tremendous increase, and one that has produced enormous benefits for the State economy. This really shows the achievements under Labor in our State.

The crisis in housing in South Australia is over because the Bannon and Hawke governments gave the housing sector high priority. We embarked on a public sector-private sector partnership to boost housing activity in South Australia, because we know that housing is not just a matter of providing shelter, although shelter is a very important thing; it is also a very labour intensive sector. It creates a lot of jobs. There are a lot of flow-on jobs to manufacturing industry, which is also very important in South Australia. So, as a deliberate matter of strategy, we gave a boost to the housing sector. At the national level we introduced the first home owners scheme, and in South Australia we introduced the home ownership made easier plan, both of which have the effect of assisting lower income households to purchase dwellings by, among other things, overcoming the deposit gap, the inability to save out of low incomes a significant amount of money to put down as a deposit. That is the sort of boost given to housing and employment in South Australia under the policies of the Bannon and Hawke governments.

I should like to refer to some other information on housing because many people just do not realise the extent to which the housing sector in South Australia has been boosted in the last three years. My colleague in another place, Mr Beddall, asked the Minister for Housing and Construction (Mr West) about the role of public housing in South Australia and Queensland. I should like to place on record the sheer size of public sector housing activity in my State, because although South Australia has the second lowest population of all the States, absolutely, in dollar terms, it has the second largest public housing activity. South Australia, under John Bannon's leadership, is now spending more on public housing than is Victoria, which has three times the population of South Australia. South Australia is spending on public housing a huge amount more than your State, Mr Acting Deputy President, under the Bjelke-Petersen Government, and Queensland has a million more people than South Australia. I am not talking just about public rental housing; I am also talking about funds through public organisations to provide for owner occupied housing. South Australia, under John Bannon, is spending $183 per head of population on public housing compared with a national average of $82. So South Australia is spending on public housing more than twice the national average and almost three times the level in Queensland, where the figure is not $183, as it is in South Australia, but $67 per head of population.

Last Thursday, in the build-up to this State election in South Australia, I happened to be reading the Adelaide Advertiser. I saw a comment from the Leader of the Opposition about what the issues would be in this election campaign. He said that the issues would be jobs, and unemployment. There is no reference to this in this matter of public importance today. I can see no reference to jobs or employment. Certainly Senator Hill's speech this afternoon was notable for the absence of reference to employment in South Australia. What actually happened was that between Thursday morning, when the Opposition Leader was reported in the Adelaide Advertiser as saying that employment was going to be a major issue in South Australia, and the calling of the poll yesterday, the issue of jobs dropped off his agenda. To put it bluntly, that is what has happened. The issue of jobs in South Australia has dropped off his agenda. I searched around to find why the Leader of the Opposition was talking about jobs on Thursday but other things on Sunday. Then I realised that the unemployment figures had been released last Thursday. Of course, they had shown further strong economic growth in South Australia, a further boost in the job market, and a big reduction in the unemployment rate. There went one election issue before the election had even been called. It was very unfortunate for the Leader of the Opposition to have said that. He got caught, and the issue evaporated in the space of a few hours.

The fact is that in the three months to October this year compared with the three months to October last year, in South Australia there has been a 2.8 per cent increase in the number of persons at work. We are not talking about job creation schemes or band-aid measures; we are talking about long term permanent jobs in the private sector. There has been a 15,500 increase in the number of long term jobs in South Australia compared with the same time last year-a tremendous increase in employment opportunities. At the same time, unemployment has been reduced dramatically. In October 1984, 59,300 persons were unemployed in South Australia; in October 1985 the figure was 51,700-a reduction of 7,600 in one 12-month period. The unemployment rate has come down from 10.4 per cent in October last year to 8.2 per cent in October this year. That is why the Opposition Leader dropped the issue off the agenda. Before the election campaign started, the jobs issue was off the map. So he is obviously behind the eight- ball in campaigning in this election.

I well remember in my previous occupation, working in Adelaide between 1979 and 1982, that consistently, in virtually every month of those three years and for almost 36 months in a row, South Australia had the highest unemployment rate of all the States. For practically the whole of that period under the Tonkin Government we had the highest unemployment rate. You would be aware of that, Mr Acting Deputy President. That was the fact of the matter in South Australia. In Question Time this afternoon we were told by Senator Walsh, and correctly, that South Australia has not got the highest unemployment rate of the Australian States. It did in the three years from 1979 to 1982, but that is not true any more. Tasmania now has the highest rate of all the States. Queensland-you are well aware of this, Mr Acting Deputy President-has the second highest rate of unemployment, not South Australia. South Australia was always the highest, but not now. That is yet another reason why the jobs issue has gone from the Liberal's agenda in this election campaign.

They are some of the points I think should have been made this afternoon by Senator Hill. They were studiously ignored by him. The fact is that under the Bannon Government, South Australia has had a tremendous record of growth, employment and reduced unemployment. There have been tax cuts also. But we are not going to run on our record. We are talking about what we will do in our next term. We will ensure that South Australia wins the submarine project to continue economic growth in our State.