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Tuesday, 12 November 1985
Page: 1985

Senator TOWNLEY(5.28) —I rise briefly to add to some of the comments made earlier today by Senator Missen. I believe that he made some very valid points to which I would like to signify my agreement. I have always suggested tax reductions for the average taxpayer. Years ago, I suggested that we have a 50c in the dollar limit for any personal tax. I always thought that a situation in which a taxpayer at a maximum rate had one dollar for himself and one for the Government was fair. Before the light struck the National Party in Queensland I was one of those people who suggested in this Parliament that we should copy countries such as Switzerland and Hong Kong, both of which have a flat tax structure. I think that the Hong Kong structure is that about 15 per cent of income is paid in tax and in Switzerland the rate is about 25 per cent. At the time that I first suggested this measure, a rate of about 28 per cent in Australia would have been satisfactory.

Although I do not like a lot of the taxes and impositions that this high spending Hawke socialist Government is planning for the Australian people, the package that involves reduced personal income taxes should, in balance, be basically supported. As an Opposition, we have been asked by many people to save them from the impositions of Labor. Previous speakers have pointed out that some of the so-called business expenses that were put down as business lunches in the past should not have been fairly allowed by the Commissioner of Taxation. Even with the present tax legislation he could have taken action had he so desired. In its wisdom, Labor has decided to impose certain taxes, among them a tax on business lunches. I do not particularly agree with it but I want to look at the package of taxes. If a package is to offer certain reductions it must have some impositions. I believe that if we are going to have a lowering of personal taxes, which so many people in this country are agreed is desirable, we must accept some of the impositions that will come with it.

This Labor Government has made its decisions and Labor will have to live with the package and the imposts applied by that package so we can move toward lower taxes for general taxpayers. On balance-this is a matter of judgment-I believe we must let the Government collect the revenue in order to allow that reduction in tax. I do not believe that as a Senate we can oppose some bits of the package and accept only the goodies, as they have been called. These days the realities of political life do not allow us that kind of financial freedom. The Government has its program; it must be prepared to face the problems that its programs cause. I do not intend to be one of those senators who oppose some elements of the Government's package-the nasties, the revenue raising measures and then say that the taxpayer can have only the goodies. I do not believe life is like that any more. Anyway, I also do not intend to be one of those senators the Government can blame later for its not having the money to finance the tax cuts.

The Government has promised those tax cuts next year. My only worry is that by the time the next Budget is brought down the economy of this country will be so bad the Government may not be able to afford the tax cuts anyway. Is that the real reason why the tax cuts have not yet been brought in and why they are only to start late in 1986? I believe that by then our balance of payments-which is bad now-and our deficit will have increased by millions of dollars because extra dollars are needed to pay the interest on our national bill. This is due to the very high interest rates that prevail on money lent to Australia and the very low value of our dollar at the moment.

There is no question that this country is in very deep financial trouble. As we have heard from several speakers in the debate today, our balance of payments situation is most serious. We have a deficit of some $5,000m so far this financial year. That represents an increase of some 25 per cent on the deficit for the same time last year. We have heard it said that rural exports will be reduced. In general I believe it will be very hard for this country to maintain its export level. I do not believe it will be long before this Government is forced to impose import restrictions to help solve the balance of payments problem.

As I said before, Australia's overseas debts are huge. Those people who say that our dollar is floating are completely wrong; I believe it has sunk. Once more, I repeat that we are more in debt per head of population than countries such as Argentina, Brazil, Mexico, Chile and Poland.

Senator Button —Don't talk rubbish.

Senator TOWNLEY —Did Senator Button say that that was rubbish?

Senator Button —Yes.

Senator TOWNLEY —If Senator Button bothers to get certain figures from the Parliamentary Library-if necessary I will send him a set-they will show that our overseas debt per head of population is in excess of that for those countries I just mentioned. I do not believe that the Government will regain the confidence of the international money lenders-and that therefore the value of the dollar will increase-until our deficit spending is reduced. Unless some serious action is taken soon by this Government we will head the way of the South American banana republics. Let us just look at our interest payments. On page 9 of the May Forward Estimates of Budget outlays and staffing put out by the Department of Finance it was estimated that this year our interest payments would be $6,467m. That was then 9.5 per cent of estimated outlays. Of course, those figures were conservative.

Senator Jessop —What was it last year?

Senator TOWNLEY —Last year the figure was meant to be $5,601m but in fact it was $5,656m, due most probably to the lower value of the Australian dollar.

Senator Jessop —It has increased this year?

Senator TOWNLEY —Yes, it has increased by $1,100m this year. The important thing is that between May and August there has been an increase of $300m in expected interest payments on our debts. In the Budget it is estimated that that will represent 9.7 per cent of outlays. Interest payments are increasing more rapidly than anything else. I believe that that interest payment estimate was made when the Australian dollar had a much higher overseas value than it now has.

I do not want to speak at length. As I said, I believe the Government must take immediate action. It must attempt to regain the confidence of the international money market before we lose our triple A rating. That means cutting the deficit. Until the Government does that we will continue to go down hill towards the status of a banana republic. This will be helped very rapidly by the big-spending Hawke socialist Labor Government.