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Friday, 29 November 1985
Page: 2582


Senator MICHAEL BAUME(11.16) —I object strongly to the fact that in the Senate we are now hostage to the Government's incompetence. We have to rush through the Sales Tax Laws Amendment Bill (No. 2) 1985 and the cognate Bills because of the failure and the incompetence of the Government in handling its legislative program effectively. We are limited in what we can say about this legislation because it has to go back to the House of Representatives before that House rises and Government members scurry off to protect the Government from the continual and deserved attack it has been receiving in the lower House.


Senator Peter Baume —Spoken like a true senator.


Senator MICHAEL BAUME —Indeed; I thank my cousin for his assistance. What is particularly irritating is that we are being held hostage at a time when the Parliament this year has sat for far fewer days than has been traditional in the past. I am not talking about recent years; I am talking about the days when governments-of course, this was particularly so under the many years of coalition government-regarded the Parliament properly as a place where legislation could be examined, not rammed through with people being asked not to speak and being required not to raise matters that should be raised in this House of review.

What kind of review is it when we are given five minutes or so to talk about this major tax package with elements which obviously deserve significant attention? The Australian Democrats have done a disgraceful deal with the Government on this legislation, selling down the river the small businesses and the farmers which they claim to be protecting. One never knows what the Democrats really stand for but I was interested to hear that at least one of them stands for introducing the most expensive possible tax system, paid for, of course, by the private sector. I refer to a value added tax. The VAT system that Senator Siddons is enamoured of in many instances involves taxing the same item on multiple occasions as it goes through the production process. Who pays?


Senator Siddons —That is not true.


Senator MICHAEL BAUME —Of course it is true. It involves repeated administrative costs through each link in the chain of production. Senator Siddons cannot deny that. That administrative cost is borne by private enterprise, which he pretends to represent.


Senator Messner —It has sent small businesses to the wall in the United Kingdom.


Senator MICHAEL BAUME —It is disastrous for small businesses, as Senator Messner says. But this group, which has sold out small business and farmers, pretends to represent their best interests.

Of course, some of the concessions that have been made are very useful indeed. It would be ridiculous to pretend that they are not but, having gone a bit of the way, the Democrats were so busy doing their disgraceful deal with the Government that they were not prepared to stand up for their principles. They made a gesture towards that. For example, with farm losses $40m will be saved out of $105m. Having gone so far, why not do the job properly? One cannot be partially pregnant. But the Democrats have managed to do that. Unfairness still exists in this matter. In this instance and on the issue of water conservation they have obtained only one-fifth of the--


Senator Chipp —I take a point of order, Mr Acting Deputy President. Will you allow members of that pathetic party to talk about the whole range of the tax package, including quarantining of off-farm losses as this honourable senator is doing now, during a debate on the sales tax legislation? If you are going to allow that, we shall be here till Christmas. I plead with you to exercise some discipline on members of this pathetic party who have remained thunderously silent about tax ever since it was announced.


Senator Peter Baume —On the point of order, Mr Acting Deputy President. Usage is very important in the Senate, and Senator Michael Baume is doing no more than debating these Bills in the terms in which they are traditionally debated. It is improper for Senator Chipp, even by any implied threat, to speak to the senator in the way that he did.


The ACTING DEPUTY PRESIDENT (Senator Elstob) —Order! There is no point of order, but several speakers have ranged wide of the Bills. I suggest to all future speakers that they keep within the confines of the Bills.


Senator MICHAEL BAUME —I can understand why Senator Chipp is so sensitive about his disgraceful deal which sells out the farmers and the small businesses of Australia. Naturally, he does not want to hear any more of this debate and is now moving. However, because there is so little time, I should like to deal with specific disasters that are involved in this legislation. For example, there is now a retrospective correction in respect of those elements where the Democrats have been successful in having some reduction in sales taxes. We see here that in respect of solar panels for domestic water heating systems, and school atlases, this is what will happen:

Amounts already paid or remitted to the Taxation Office in respect of these items will be refunded. They should refund or credit to their customers any amounts they have collected on account of sales tax not remitted to the Taxation Office as well as amounts refunded to them by that Office. It is not the Government's intention that the proposed retrospective amendments of the Bills provides a windfall gain to such suppliers.

A couple of matters arise out of that. Who pays the administrative costs of those people who have collected tax and then have to pay it back, acting as the Government's agents? That is just a little question, in passing. The essential question is this: Why should the Government have introduced that tax before it introduced the legislation? That is the essence. This demonstrates this Government's incompetence and the impropriety of this kind of legislation. It is a disgrace that before the Government has even worked out what will be in its legislation-and we can see that from the deal that it has done with the Democrats-it had this measure introduced, two months ago. It became operative on 20 September. Here we have a deal now done which changes the basis of that legislation. This is a disgrace. It demonstrates a totally improper course of action. The Leader of the Opposition, Mr Howard, said in Adelaide, in a very appropriate speech on 5 November:

It is a totally unsatisfactory way to introduce key legislative changes. It might be justifiable to stop tax avoidance practices by issuing Press releases and then following up . . . with legislation. But it is quite unacceptable to introduce new taxes using this method. It now seems that six months will elapse between the Treasurer's statement and the legislation coming before Parliament.

It is inconceivable to see how the operation of many of the new taxes would have been materially affected if they had not come into operation until the legislation was proclaimed.

This is especially so in the area of capital gains tax, which will raise only about $25m after five years. It is absolutely indefensible that the Government should act in this way.


Senator Messner —They propose a tax and will not tell you what they are taxing.


Senator MICHAEL BAUME —Exactly. In the tax package, on 19 September, the Government admitted that some design details remain to be settled. This relates particularly to capital gains tax. How dare they introduce taxes from 20 September when they do not know what those taxes will be, when they have no idea what the legislation will contain! And then they subsequently do deals with the Democrats which involve having to repay money already collected. I quickly pass on from that major issue, because we do not have time to discuss it and, as a result, next week I shall seek to raise the matter again as a most serious matter of general principle. Let me briefly simply deal with ice cream. I was astounded to hear Senator Siddons say that he was very sympathetic about the dairy farmers involved, and what a terrible shame it was, but that an end has to be put to it somewhere. How can he happily say that people can sit down and eat, say, fruit salad and ice cream and distinguish between the fact that the fruit salad part of it, produced by Australian primary producers, should be free of tax but ice cream, also the product of Australian primary producers, particularly the dairy and sugar industries, somehow deserves to be taxed? The incredible illogicality of the man astounds me.

The reality is that ice cream is not, in fact, a snack food, as the Government claims it is. A survey shows that on 36 per cent of the occasions on which people eat ice cream, it is always as part of a dessert after meals. Another 22 per cent of occasions involved it mostly as a dessert. The final figure was that only 11 per cent eat ice cream mostly or always as an individual snack. This survey, which was done by Reark Research Pty Ltd for the Australian Dairy Corporation, is something that the Government has just wiped aside, and the Government has quite improperly said that ice cream is only a snack food.

Because of lack of time, I cannot address myself further to this matter. All I say is that the key thing is that the Democrats' great deal, in which they are supposed to have done so much for small business and farmers, is a hoax. They have knocked off 3 1/2 per cent of the nasties introduced in this tax package-one cannot call it a reform; there is no reform involved; it is the most dishonest use of the word `reform'-and 96 1/2 per cent of these tax nasties will remain in place because of the deal that the Democrats have done and because the Democrats will vote for them in this Senate.