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Monday, 2 December 1985
Page: 2693


Senator SIDDONS(5.25) —We are supposed to be debating the States Grants (General Revenue) Bill. This is a piece of legislation which puts into legislative form the formula the Government is using to pay back to the States their share of income tax. Thanks to your ruling, Mr Acting Deputy President, we have had a boring dissertation from Senator Messner on a full range of issues relating to the South Australian election. We have heard about small business, the car industry, high taxation, the need for tax cuts, privatisation and low rental public housing. We have heard about everything except the formula by which the Government proposes to hand income tax back to the States. Since it apparently is in order to talk about anything under the sun during this debate, I believe I have a responsibility to take on some of the things that Senator Messner alluded to.

Let us take his comments about the need for tax reductions-very pertinent at this time. We have heard from the Opposition a very clearly stated policy that the Government's tax package was to be opposed flat footed; there was straight out opposition to all aspects of the Government's tax package. Let me remind the Opposition that that tax package also contains billions of dollars of tax cuts for all Australians. Presumably, as the Opposition is opposed to the tax package, it also opposes the tax cuts that the Government has promised and is under a commitment to grant next year.


Senator Peter Baume —Mr Acting Deputy President, is there a standing order that requires the honourable senator to tell the truth? He is misrepresenting the Opposition's position on the tax package quite outrageously.


The ACTING DEPUTY PRESIDENT (Senator Townley) —Senator Peter Baume, I think you have been here long enough to know that you should not impute incorrect motives to another honourable senator. I call Senator Siddons.


Senator SIDDONS —Thank you, Mr Acting Deputy President. I have read with great care the Opposition's statement on the tax package, and every aspect was to be opposed by the Opposition. In clear, cold and stark political terms that meant one thing: The money Bills relating to the tax package were to be opposed by the Opposition. Had that opposition by the Liberal Party succeeded in the Senate it would have been a straight block of the whole tax legislation, which would have had the inevitable effect of forcing a double dissolution; it could have had no other outcome. I ask the Opposition and the Leader of the Opposition, Mr Howard, whether he is fair dinkum when he says that this legislation should be blocked. Is he saying that he wants to face the people of Australia in an election at a double dissolution by blocking the tax legislation? With the present state of disarray of the Liberal Party; is he fair dinkum about this?

It is very easy to say that we need lower taxes. It is much more difficult to say where the money is coming from so that those lower taxes can be granted to the people of Australia. It is very easy to say that we need low rental public housing. Where is the money coming from to achieve these things? Time and again I have heard the Opposition ask such questions as: Should not goodwill be considered a legitimate deduction for capital gains purposes? Is it not important for averaging provisions to be in the tax legislation? I have heard question after question along these lines. The Australian Democrats sat down with the Government through a whole week of very intense negotiation, often going into the late hours of the evening, with the Prime Minister (Mr Hawke) and with Mr Keating and managed to negotiate the very things that the Opposition was talking about. Now those opposite turn around and say that these things are unimportant-that it was not very important to have averaging or to include good will as a deduction in the capital gains legislation. The hypocrisy of the Liberal Party on the whole tax question is almost unbelievable.

Having said that, I turn very briefly to the legislation before us which, as I have said, is the formula that hands back to the States their share of income tax. When reading through the legislation-which was on my desk a moment ago but now seems to have disappeared-I was very interested that the Government has been successful in negotiating a formula which is set down for a period of two years, this year and the next two years. I would have thought that that was quite an achievement by the Government. The formula is very simple. It is the total amount of money to be paid back, taking into account the consumer price index and the population of the various States. It is a very clear, concise formula which leaves no room for minor silly objections. Certainly it does not give any grounds for raising the sorts of matters Senator Messner raised relating to low interest public housing, the car industry and so forth. The Democrats will support this legislation. We think it is very clear and concise. It is good that we have a formula that will, in effect, last for a period of three years in this highly contentious area.

Let me turn briefly to the car industry since Senator Messner raised the matter. Presumably he raised it on the basis that the Government's tax package would adversely affect the car industry, which of course is an important industry in South Australia. One has to look at the fringe benefits part of the tax package in a balanced way. The Democrats do not particularly like the fact that in most cases in the fringe benefits package the responsibility will be put on the employer rather than where it should rightly be placed-on the employee, since it is the employee who will be the beneficiary.

Having said that, let us look at the enormous problems that would have occurred in trying to assess the liability of employees who have company cars. It would have caused enormous problems. We assessed the whole legislation as best we could from an objective point of view and we came up with the conclusion that, all in all, the changes to fringe benefits in the tax package that relate to an employee's car were reasonable. There is no doubt that there has been a rort on employee cars. At one time a chief executive was given a company car if he was lucky. I admit that that was many years ago. That benefit was extended to other people such as secretaries of companies. When the secretary of the company got a motor car the assistant accountant said `If the secretary has one, why can't I?' and so it went down the line, until most executives in enterprises expected to get a company car. There is no end to this situation unless somebody is prepared to make a stand. The Government has done that. Perhaps the matter could have been attacked in other ways, but at least, all in all, I believe that that part of the tax package is not unreasonable.

We agree with the formulas that relate to the financial arrangements between the States and the Commonwealth. We believe a three-year period is good; it is an achievement. I still wait to hear from the Opposition on how it proposes to raise the money for the billions of dollars that are necessary to make worthwhile tax cuts, if it is not prepared to allow the Government to raise the revenue as it is proposed in the legislation.