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Wednesday, 4 December 1985
Page: 2881

Senator TOWNLEY(11.17) —Today the Australian Democrats told us how many concessions they had obtained from the Government in their dealings. I must admit that some of the benefits which they have achieved will be of help. However, the question I ask myself is: Have they obtained enough benefits? In view of the fact that sometimes the Democrats go in all directions, I have to wonder whether they will all vote in the same way. If they do not vote in the same way, will it mean that some of them feel that not enough benefits or concessions were obtained? I am sure that we will not know which way the Democrats are voting until the numbers go up. If the Government can allow some alteration to this tax package, which was supposed to be complete, as dictated by the Democrats, I believe it should accept some of the amendments proposed by the Liberal Party, particularly the amendments relating to the restaurant industry.

The Treasurer (Mr Keating) admitted in his speech in the other place that there are legitimate claims that should be allowable for businesses as businesses expenses, but he seemed to indicate that it was just too hard for the Government or the Commissioner of Taxation to organise. No doubt other speakers will expand upon that later. I believe that early next year the Government will see the effect of this legislation. At that stage the holiday period will have passed and restaurants will have to reduce their staff further. I have been informed that some restaurants already have had to reduce their staff and that they will look at the situation much more closely next year.

Senator Knowles —A temporary upturn.

Senator TOWNLEY —There has certainly been a downturn in the restaurant industry. I believe that some retaurants are continuing during this holiday period, which is one of their busiest times, and after that they will make decisions. I am sure that some restaurants will not support the Government's claims. I have suggested in this place that reducing tax is a way of trying to get some initiative back into the Australian community. Years ago I suggested that there should be a 50c limit for any personal tax rate. Before the light struck the then National Country Party in Queensland--

Senator Aulich —Has it ever?

Senator TOWNLEY —They have a lot of lightning in Queensland and they have to get struck every now and then. Way before then, I was one of those who suggested that Australia should copy countries such as Switzerland and Hong Kong, both of which have a flat tax structure. I think that in Hong Kong a flat tax of something like 15 per cent applies. In Switzerland, which is a quite different country in many ways, there is a flat tax of about 25 per cent. Anything that moves us along that course towards a lower tax rate, which provides more initiative, is something which I believe has a lot going for it. To obtain such a structure for our tax system is a problem for this Government, as it was for its predecessor.

We have to recognise in this country that the time has come when there has to be a true attempt to reduce government spending. On many occasions I have pointed out that over recent years Australia has been spending much too much. This has been particularly so since the Hawke socialist Government came to power. Australia is more in debt per head, as I have said before, than many of those South American countries about which we have heard so much over recent years. We are more in debt per head than Argentina, Brazil, Mexico and Chile. One thing noticeable under the previous Fraser Government was that there were real attempts to keep the deficit at a much lower value than has been the case since the Hawke socialist Government came to power. I do not believe that this country can go on like this for much longer. I also believe that in years to come the people of Australia will hate the Australian Labor Party, which has allowed the massive overseas debt to rise so rapidly. A country is not much different from an individual. If an individual borrows too much the time comes when the bank, or whoever is lending the money, says that it will not lend him any more or, if it does, the interest rates that it asks are even higher than the rates that the present Government is having to offer to keep the value of our dollar up where it would like it to be.

We have to keep in mind that our public debt interest rose from $967m, or 4.4 per cent of Budget outlays, in the financial year 1975-76 to $5,656m, or 8.9 per cent of Budget outlays, last financial year. It is expected to rise by nearly $1,100m to $6,724m in the present financial year. That figure represents 9.7 per cent of Budget outlays. That is a frightening amount. Whilst I do not like to talk about figures, because I know that many people do not listen when one talks about figures, it is a frightening amount and a very frightening increase in the proportion of our outlays that is being paid out as interest. The amount represented 4.4 per cent of Budget outlays in 1975-76. This financial year-if things go the way the Government thinks they will, I think that position will be worse than this-the figure will be up to 9.7 per cent of our total Budget outlays. That is more than is spent on education, health or defence. We are getting to a very dangerous situation. To put the amount of interest that we are paying into figures that can be understood, the figure is 67 followed by eight zeros. I was not in the last war, but if I had been followed by one zero I would have been worried. Certainly, a figure followed by eight zeros is a very frightening one.

The Government's spending has to be reduced, or at least it must be held static whilst we attempt to trade out of our very real difficulties that I believe almost put us on a par with those countries of South America. One has only to look at the prices we are getting these days for some of our major commodities. It is very difficult to sell our wheat. The prices we are getting for our coal, iron and other exports are not increasing to the extent we want. If we are not very careful we will become a Third World country.

Getting back to what the Democrats claim to have done, what guarantee have we that the Government will bring in legislation to reduce tax rates in this country? Have the Democrats obtained a cast iron guarantee that that will happen? I have been advised that the Government will not be able to honour its commitment to reduce tax rates. The value of the Australian dollar is such that, I believe the Government is already looking for ways to get out of that commitment. Therefore I believe we are now being presented not with a whole part of a package but with a tax increase package and it is very doubtful whether tax reductions will ever come to fruition. If the Government is serious about this package it should bring in tax reduction legislation now, dated, if the Government wishes, for the time it has stated it will become effective. If the Government does not bring it in now we have no way of knowing whether it is serious. We have seen the Government change its package because it was told to by the Democrats. It is a real pity that the Government will not accept, because it is stubborn, some of the amendments that have been foreshadowed by Senator Messner on behalf of the Liberal and National parties.

About a week ago I said that I would support a reduction of taxes. That is the main change I want to see happen in this country. I am now not sure that that will happen and unless the Government can bring in supporting tax reductions at the same time, I will not necessarily support its legislation.