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Friday, 29 November 1985
Page: 2588


Senator MESSNER(11.56) —The question of small business has been raised quite a lot in the course of the Committee debate. It seems to me that this tax package, which is now in tatters as a result of the Australian Democrats' interference with it yesterday, has totally ignored small business. I wish to draw the attention of the Senate to significant moves that are being held by this Government in the introduction of a capital gains tax. We know that that tax is part and parcel of this package. We know that the Government introduced its capital gains tax on 19 September by announcement, but without telling us what it intended to tax. Of course, we on this side of the Committee have been asking the Government for the past two months what it intends to do with such things as goodwill for small businesses. As a result of the negotiations undertaken by the Democrats, we see--


Senator Button —On a point of order, Mr Temporary Chairman. There is some licence allowed in a second reading debate on taxation matters, as Senator Michael Baume pointed out earlier. However, in the Committee stage of a sales tax Bill dealing with particular sales tax items, as the amendments do, it is quite improper for Senator Messner to canvass the one tax issue that he is concerned about-a capital gains tax-in this context. If he wants to turn this place into nothing more than a talking shop, that is the way to do it. His comments are quite irrelevant to the clauses in the Bill.


The TEMPORARY CHAIRMAN (Senator Elstob) —Order! I uphold the point of order. Honourable senators must speak to details of the Bill.


Senator MESSNER —I will obey your ruling, Mr Temporary Chairman. The point about the sales tax amendments before us is that they are part and parcel of a far broader package. Indeed, these Bills raise an extra $110m for the revenue, notwithstanding the fact that they were designed, as we were told by the Treasurer on 19 September, to be a neutral kind of tax, fiddling at the edges, if you like, something to fix up some of the anomalies in the sales tax system. They were not supposed to impose new taxes. But we find now that, like the capital gains tax and like the fringe benefits tax, these matters raise substantial revenue for the Government. In that context we have seen a hasty rush to introduce these measures, only to see the Government being forced to back off from various measures that it had included in its original statement because it has not thought through the possible effects of the intended legislation. The classic example is what is has done to the ice cream industry. It will cost the ice cream industry a large share of the market and have a similar effect on the dairying industry. As a result, that will mean a fall in the number of jobs and opportunities for young people in those areas where dairying is carried on. In particular, I refer to the southern part of South Australia, around Mount Gambier, which is a very great dairying area. It will suffer as a result of the Hawke Government's tax policy.


Senator Michael Baume —And the south coast of New South Wales.


Senator MESSNER —As Senator Michael Baume points out, it will also affect the south coast of New South Wales. All these areas will be affected directly because of this Government's incompetence and its rush to introduce measures which it has not properly thought through.

The fact that the Government has backed off in some areas of sales tax and on some aspects of the capital gains tax-only very minor aspects of the capital gains tax-shows just how ill thought out these Keating proposals really are. In order to make my point, I must say again that the capital gains tax is a classic example. Goodwill is being taxed in this measure. We find that there is to be some minor relief in that respect as a result of yesterday's announcement but obviously the Government--


Senator Button —Mr Temporary Chairman, I rise on the same point of order. Sit him down.


The TEMPORARY CHAIRMAN —Order! Senator Messner, I think you are ranging too wide. You must talk to the specific items in the clauses.


Senator MESSNER —I will obey your wishes, of course, Mr Temporary Chairman. The final point I make is that although these anomalies are being addressed in this legislation, the fact that it has been prepared in such a hasty manner means that new anomalies will be created. I fail to see why a government should impose new taxes on white goods at a time when the building industry is headed into a slump, driven that way by the highest real interest rates that this country has seen in the past 50 years. This is a direct policy line of the Hawke Labor Government. The Hawke Labor Government's policy is designed to drive up interest rates and to follow that by imposing higher taxes in respect of building goods and materials, refrigerators, stoves and those things which go into new homes. I find that totally incongruous. It again shows quite clearly that the Keating tax proposals are a total sham and a mess.