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Tuesday, 3 December 1985
Page: 2850

Senator MAGUIRE(10.18) —The Taxation Laws Amendment Bill (No. 4) 1985 continues the Government's attack on tax avoidance and evasion practices, and tax shelters in particular. It contains measures to put in place four of the reform proposals announced in the 19 September taxation statement by the Treasurer (Mr Keating). There are two major measures in this legislation. First there is the removal of tax deductions for entertainment expenses and, secondly, there is the introduction of substantiation requirements for the deduction of employment-related expenses by employees and self-employed persons. It is very important to note that the extra revenues raised by these tax reforms will finance taxation reductions for other Australians. As a result of these tax measures and of the Government's overall taxation package there will be no overall lift in tax levels in the community.

It is true to say that for many years now the average taxpayer has been forced to subsidise the frequently social activities of well-off persons through the allowance of tax deductions for all forms of entertainment expenses. It is very clear that in recent years the practice of remuneration through allowances rather than through wages and salaries escalated. To my mind, that is a very clear tax avoidance practice. For the taxation system to become fairer and more equitable in Australia, this practice had to stop.

The availability of deductions for entertainment expenses has been abused. To my knowledge, nobody who has called for changes to this legislation has claimed that there were no abuses under the system. There were abuses; the system was widely abused. I believe that the Government had no other option but to disallow altogether entertainment expenses as a tax deduction. I am pleased to say that the Australian Democrats, to their credit, realise that position now.

To clear up some of the confusion that has been caused by some honourable senators on the other side of the chamber, I also place on the record that we are not putting a tax on the restaurant industry. We are not levying a new tax on that industry, as has been widely claimed by Opposition spokespersons; we are simply removing a tax lurk that was not available to most Australians. We are simply removing a tax concession which had a very narrow applicability in the community. The fact that the benefits of the free lunch were flowing to a small privileged minority can be clearly seen from the results of a recent survey published by the Australian Bureau of Statistics entitled: `Employment Benefits'. That survey, dated August of this year, shows that only 4.3 per cent of all Australian employees received an entertainment allowance. Over 95 per cent of Australian employees did not get one of these entertainment allowances. Further, 17.8 per cent of those in the top income bracket-defined by the Australian Bureau of Statistics as those receiving over $600 weekly-received entertainment allowances, compared with the average figure for the entire work force of 4.3 per cent. So we can see which members of the community and which members of the work force were benefiting from that measure.

I go further and point out that although the taxpayers in that income bracket who earned over $600 a week constituted only 4.7 per cent of all employees in Australia, they received a whopping 19.5 per cent of all entertainment allowances. That shows how the system was distorted and how it was skewed to the benefit of the highest income earners in this country, when 4.7 per cent of all the employees in Australia received 19.5 per cent of all entertainment allowances. To put it in other words, of the one-twentieth of all employers receiving entertainment allowances one-fifth went to those in the top income bracket. That is what was going on under the previous Government. That is what was paid for by the workers of this country, and that is what this Government is cleaning up.

It is clear from the survey that the higher an employee's weekly earnings, the more likely it was that that employee would have been receiving an entertainment allowance. As I pointed out, 95 per cent of Australian employees did not get an entertainment allowance. It is also clear from the very new survey published by the Australian Bureau of Statistics that very few low income earners received an allowance; in fact, the Bureau of Statistics pointed out that they were statistically insignificant. The Bureau just could not record enough people in the low income bracket to categorise them as receiving entertainment allowances.

Furthermore, hardly any female employees received entertainment allowances. Only 1.3 per cent of all female employees received an entertainment allowance in 1985. I said earlier that 4.3 per cent of all employees in the work force received entertainment allowances. One can see how the position was further distorted against female employees. Very few public sector employees received entertainment allowances. In short, the free lunch was something which went to high income, male, private sector employees. I believe that there was absolutely no justification for that allowance on either efficiency or equity grounds. Other countries in the world have realised that for many years.

There is no comparable allowance in the major countries with which we normally compare ourselves. I instance the United States of America, where there is an allowance for business lunches only in a purely business setting, so there is absolutely nothing in it for the restaurant industry. In the United Kindom, a country with which we have been compared often by those honourable senators on the other side of the chamber in recent weeks, there is no comparable allowance. Senator Messner knows that for many years there has not been a comparable allowance in Thatcher's United Kindom. We have been told that we are taking discriminatory measures against a particular activity in this country and that we are somehow out of line with the major countries with which we normally compare ourselves. The fact is that those countries have never had such allowances. I am very pleased to say that in this area the Hawke Government has had the guts to bring Australia into line with other countries.

As a result of the Hawke Government taking this measure, the Australian tax system will be much fairer and more equitable. The Opposition is barking up the wrong tree. It is supporting a privilege received by only 4.3 per cent of the work force. In the second half of the 1970s and later, we heard Liberal gurus from around the world, and Mr Howard himself, telling the community week after week, month after month, year after year, that there was no such thing as a free lunch. Yet we find now, with this legislation, that Mr Howard, Senator Messner and all the other members of that raggle-taggle gang are saying that they want to have subsidised lunches. For years and years they told the Australian community to tighten their belts because there was no such thing as a free lunch, yet now they want to perpetuate a system of tax subsidised lunches for a mere 4.3 per cent of the Australian labour force.

The other 95.7 per cent of the work force does not want the free lunch to continue, and that is why the Government's taxation package has been so well received and why it is so popular in the community. It has been reported daily by our candidates in the South Australian election that the removal of the tax deduction for free lunches is the most important and equitable thing this Government has done. I think that shows the enormous common sense of the Australian electorate. The removal of the free lunch is seen as being equitable by that 95 per cent of the community who have never received it. Unfortunately, the free lunch had become an institution for some Australians. While those people dined in expensive restaurants at the taxpayer's expense, the ordinary employee took his or her paid-for sandwiches to work in a brown paper bag. The difference was that some people were dining in expensive restaurants while lower and middle income Australians paid for their lunches out of their own pockets. Where was the equity in that arrangement? How can we justify the poor paying and the rich getting a free lunch?

Of course these changes may have some effects on the restaurant and hospitality industries. Some restaurants may lose business, but I believe that to the extent that that occurs it will demonstrate very clearly to that other 95 per cent of the population that most free lunches were not necessary for business operations, as some people would have led us to believe in recent weeks. In fact, what has happened in Australia is that the restaurant industry has been supported by unintended government subsidies, financed, I regret to say, by the general body of taxpayers.

Debate interrupted.