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Tuesday, 12 November 1985
Page: 1978

Senator BJELKE-PETERSEN(4.37) —I wish to use this opportunity in speaking on the Appropriation Bills to discuss some of the problems that are facing various sections of the Australian community as a result of the economic policies of the Labor Government. Last week the Senate discussed by way of a matter of public importance the destructive effects that the proposed capital gains tax will have on incentive. Since then I have received some letters in the mail from various organisations relating to taxes on fringe benefits and entertainment expenses. A letter from the Bundaberg Wide Bay and District Activity Therapy Centre Inc. referred to what it called perks and fringe benefits. The Centre finds it difficult to understand how the money that it receives from sponsorship can be taxed. Various organisations in the Bundaberg district help the Centre to raise money. However, the sponsors now say that they cannot assist by donating prizes because the Government is going to tax all perks, fringe benefits and gifts that organisations are willing to give. As a result, groups such as the Bundaberg Wide Bay and District Activity Therapy Centre are not going to be able to continue to help those who are in need.

I received a similar letter-I have no doubt that other honourable senators would also have received one-from the Queensland Deaf Society with which was enclosed a copy of a letter that the Society had written to the Treasurer (Mr Keating). The Society cannot understand why charities affiliated with churches are exempt from paying the taxes that are being imposed but non-denominational charities are not. The Society, which is struggling to help people who are less fortunate in the community, feels that it is being discriminated against. In fact I was told that under this present arrangement the organisation could have to pay up to $20,000 in new taxes. It was also pointed out to me that Senator Grimes made a promise to the disabled community of Australia that the Hawke Labor Government would not permit a tax on disability. These are just some of the problems that can arise because of the new-type taxes the Labor Government says it will bring down.

Apart from that, there is the tax on entertainment. We have heard quite a lot from various restaurants about the problems they are having, with people having to close establishments down. I heard Senator Boswell speaking about the Camelia Restaurant in Brisbane that had had to close its doors. I know for a fact many other restaurants which are having lots of trouble and which are losing business. It is not so much the restaurants themselves with their loss of business, but the effect on the jobs attached to these restaurants. I refer to young people in particular. The Labor Party is very concerned about the jobs and job opportunities for young people. The restaurant and tourism area provides many opportunities for young people to get work. It seems to me that by hurting the restaurants in this way, it is hurting jobs and job opportunities. In one of the papers today there was a very big advertisement that said:

Most business meals are legitimate business expenses. But Mr Keating has decided that all are now illegitimate. He seems to have concluded this is the only way to beat tax evaders. Much the same principle as throwing out the baby with the bath water. The just alternative requires taxpayers to prove the legitimacy of the expenditure.

I think that this is a point that should be taken into consideration and that legitimate expenditure should be allowed. There will of course be costs to audit the system, but nothing like the cost of jobs lost in the food, service, tourism and hospitality industries. These are some of the facts that we should keep in mind when thinking about these new taxes that are being proposed by the Government.

The rural industries have also suffered under this Government. Australian agriculture is in a serious economic decline, and it will certainly need a greater degree of sympathy and positive action from the Government before our own economy and world trading circumstances are in better order. It used to be that Australia could be reliably called upon to supply Britain's primary production requirements, until she joined the European Economic Community. Now, the EEC supplies Britain's requirements, and I suppose Britain these days is providing quite a lot of her own requirements. Unfortunately, over there they use a series of subsidies to overproduce in grains, sugar, dairy products and beef. These surplus products are then dumped on world markets at subsidised prices. This depresses the world prices. Judging from what I saw when I was over in the European Parliament and when I went to Brussels and spoke to the people in the EEC, I do not think they are likely to change their tactics. Therefore, we must try to find some cure here.

I am sorry to have to say that the value of rural production fell 19 per cent for 1984-85. Record interest rates, exorbitant fuel prices, high wages and now the new tax liabilities that are proposed are sending hundreds of farmers broke. The Bureau of Agricultural Economics has predicted a further 26 per cent fall in the value of rural production next year and, coupled with the low value of the dollar which is increasing interest rates and inflation, I would say that this could indeed spell disaster for Australia.

Our rural and mining industries have faced a steady increase in costs during two years under this Government. Under Labor, country people and industries have been treated with contempt. The effects of rising costs and declining markets have been to reduce the viability of our rural industries to their lowest level. The tax changes of which I have spoken have not helped. The Hawke Government is certainly the highest taxing government in Australia's history. These proposals that are being brought forward as a tax reform package have dealt a further blow to the men and women on the land. The tax debate thus far has been most noticeable in the fact that it has ignored the people and industries outside the major cities. It has ignored the industries which provide 80 per cent of our export income. But tax reform does affect people living in the country. Indeed, these people are hit hard by the vagaries of taxation, protection, regulation and economic distortion.

Taxation so-called `reforms' which do not take account of the concerns of country people and our rural and mining industries will be rejected by those people and those industries. The National Party of Australia certainly believes that tax reform must come, but not in the way that the Labor Government has proposed. A capital gains tax, a wealth tax and death duties-these are all totally unacceptable to the rural community and to the National Party which represents them and their best interests. But this Labor Government's desire for increases in pensions and/or benefits is of absolutely no help to the self-employed farmer. The net cost of government costs and charges, regulation and industry protection is $16,709 per farm. Unfortunately, the average person on an ordinary farm will, in 1984-85, have a personal income of just $6,500-roughly one-third of average wages. One of the biggest costs for country people is the freight component at the point of sale. Indeed, transport costs make up a major part of the total cost of almost everything they buy in the country. An accumulated farm debt of $6 billion is being compounded by record high interest rates due to Labor's Budget deficits and monetary policies designed to prop up the dollar.

Returns to farm capital now average less than 2 per cent. In fact, it sometimes makes me wonder why anyone in Australia wants to be a rural producer-there are so many problems for the man on the land. If there is not a drought, there are floods and other disasters. When one bears in mind the returns such as those I have been speaking about, many problems beset the man and woman on the land. Labor's latest tax measures will take a further $150m to $200m a year from farmers in addition to the $442m Budget rip-offs since the Hawke Government came to power in 1983. The combined effects of capital gains tax and the quarantining of farm losses from off-farm income will accelerate the fall in farm land values throughout Australia. It is certainly very sad when people on the land are not able to use off-farm income greater than $30,000 to offset against farm losses. I feel that there is discrimination in this area, too, because Broken Hill Proprietary Co. Ltd can off-set losses in its steel division against revenue from its oil division. That does not seem very fair to me. There are already falling land values due to record farm indebtedness, record high real interest rates and low commodity prices.

The state of the Australian economy under this Government is indeed a disaster. We have an inflation rate which is almost twice that of our major trading partners. We have the highest real interest rates since the Depression. We have an ever-growing national debt. We have a dollar which has depreciated by 20 per cent so far in 1985, and our current account deficit is running at 20 per cent higher than last year's record figure of $10.1 billion. It is not at all the rosy picture which Mr Keating would have us believe and I am sure honourable senators would agree.

Soaring interest rates are contributing to the farm debt servicing problem. As a result of the Government's determination to hold down housing interest rates, business interest rates are higher than they should be. Interest rates in business areas, such as farm term loans and overdrafts, are carrying the brunt of this policy approach. The result is that they are higher by up to 5 per cent. Rural industries have not been assisted to the same extent as other industries in this country. Since the 1974-75 Budget, outlays for rural industries have fallen by a massive 29 per cent while assistance for every other sector of society has risen. Just recently Mr Hawke said that Labor must try harder for the rural vote. When speaking to delegates at the New South Wales Labor Party country conference he noted the turmoil and new militancy in the bush. He stated:

. . . the party's traditional strength in country N.S.W. was one of the foundations of the Government's stability.

I am certainly pleased that he feels there is a need for the Labor Government to try harder for the rural vote. After what I have said today, it is quite obvious why this is necessary. For many years the people of Australia have enjoyed a very high standard of living compared with that of other countries. This is due in no small way to the export earning capacity of our rural industries. The people of rural Australia have had to put up with a lot over the years. They are hard working, loyal and selfless in the way they approach their work. They have never asked for much and yet they have given their all to the country they love. I wonder how many people in the cities would like to get up before sunrise to begin their gruelling 15, 16 or 17-hour day which consisted of a lot more than just sitting behind a desk. I do not think too many people would be prepared to put in those hours for an income, as I mentioned earlier, of a mere $6,500 a year.

So why, when the rural industries are asking not so much for assistance as for a reduction in the barriers which prohibit them from being commercially viable, do we have silence from the Labor Government? No one is more deserving, and no one less assisted, than the primary producer. While the ordinary wage earner is highly protected, the manufacturer shelters behind substantial tariff protection and social welfare recipients have their income guaranteed, the Aussie farmer, the most efficient in the world, is reduced to begging for some relief.

Last week I spoke in a debate on a matter of urgency about the apparent policy of this Labor Government to reduce everybody to the same level, to stifle initiative and to reduce the incentive for people to get up, have a go and make a success of their lives. Once again, I say that by trying 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. The rural producers of Australia are not a mediocre bunch. They are solid, hard working, proud Australians who want nothing more than to be left unhindered by governments and bureaucrats to get on with the job of producing. We certainly do not need increased wages for workers in rural industries, about which I asked a question today. They got a 2.6 per cent wage rise on top of the 3.8 per cent rise that was given to all workers in Australia. This will increase wages in rural areas by $14 a week. I am sure that it will be very hard for farmers to meet these increased costs.

Protectionist policies may have been appropriate for the 1960s but I certainly believe that the encouragement of free trade is the only way to succeed in the 1980s and into the twenty-first century. The positive encouragement of our export industries is the only way that Australia can look to reduce its massive deficit on the current account which is expected to exceed $10 billion this year for the second consecutive year. Excessive labour costs, union induced strikes and work to rule campaigns damage Australia's productivity and ruin any chance Australia has of proving itself to be a reliable supplier.

It is sad to think that 80 years ago Australia was one of the richest countries in the world. We are now down to fourteenth and regrettably we are still falling. What our export industries-that also means our rural industries-need is the heavy hand of socialism lifted in order to enable them to compete successfully on world markets. If we could see the removal of government induced costs, we could once more become a viable exporter, able to match the EEC. This is very important because wage costs in our rural industries are high and this puts us at a great disadvantage compared with Asian and EEC countries which are heavily subsidised. We have to be able to match producers in the Pacific and Asian markets so that not only our rural industries but also all other export industries will be able to compete on a worthwhile basis. I am pleased to have offered these comments today as we are looking at the appropriation Bills. I certainly hope that this Government will take some actions that will help rural producers in Australia. (Quorum formed)