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Wednesday, 4 December 1985
Page: 2883

Senator COONEY(11.27) —The argument for entertainment allowances being tax deductible has been put very well by the other side. Perhaps all that can be urged has been urged most eloquently by honourable senators opposite. The difficulty that this side faces is this: That advocacy has been undertaken on behalf, as Senator Maquire has said, of about 5 per cent of those employed, which leaves this side to represent the other 95 per cent. That is the problem. If funds are abundant there are no problems at all with taxation. The other side has pointed out that a free lunch is perhaps a matter that could be taken into consideration but if, as honourable senators opposite have said, there are problems with taxation and how the money is to be divided, are 95 per cent to be denied proper tax relief for the sake of 5 per cent? By that I do not indicate that the 5 per cent should not have their case put as it has been. What I say is that the 95 per cent are entitled to have their case put-and put strongly. Should a person who is troubled with mortgage payments, troubled with the amounts of money that go out of the income that comes into the household each week, not be entitled to some consideration? People who get additional consideration are those who get the entertainment allowance. They get all the other benefits that the ordinary wage earner gets but, in addition, this 5 per cent wants a further allowance above and beyond what others get; that is, an entertainment allowance.

I have no difficulty with the Opposition putting the argument as it has on behalf of the 5 per cent. However, I should say that honourable senators opposite get paid the same as honourable senators on this side who are advocating on behalf of 95 per cent of the public, as distinct from the 5 per cent. That is a reality. Is the proposition about an entertainment allowance that people cannot be entrepreneurial, people cannot do business, people cannot produce, carry on industry or trade without doing it over lunch? If that is the proposition does it mean that a judge who will hand down sentence can do so only if he goes to lunch with the prosecution and the counsel for the defence in order to work out his judgment?

I can understand the proposition that, if one has lunch with someone, that ought to be a tax deduction because business is done in nice surroundings. But honourable senators opposite put the argument with vehemence; they say that this is absolutely crucial. This is a vital element of their argument. It is the emphasis honourable senators opposite give to that which leads one to the conclusion that they are saying that no industry can be carried on, nothing can be carried on, unless it is done over a free lunch. If honourable members opposite are not saying that, there will be an opportunity for others to correct it later but certainly the vehemence with which the arguments have been put from the other side would lead one to that conclusion. Later speakers in this debate may disabuse me of that opinion by simply saying: `A business lunch is not really vital for their business; it is simply an additional perk of office'. If that is the position there are certainly enough Opposition speakers following me who could disabuse us of that opinion.

Senator Messner —You won't listen; that's the trouble.

Senator COONEY —The people outside will not listen? I am sure people will listen if the honourable senator puts his argument logically, strongly and well. The honourable senator said that that has not been done. I thought the Opposition had done a good job putting its argument but if it now says that the argument has not been put properly, perhaps Opposition senators who will speak later can put the argument with the vehemence which the honourable senator thinks is appropriate. We will wait and see what is said about that. As it remains, the Opposition's proposition seems to be that business cannot function in this country, industry cannot be carried on, unless it is done over lunch between the lobster and the caviare or whatever else one has. In my old trade we used to work over lunch preparing what had to be done for that afternoon. Apparently, some say that this cannot be done unless it is done outside the office, away from the papers that would otherwise be needed, away from the facilities that people normally need to do business and at a considerable price and at a restaurant.

It seems perhaps ungracious that people are willing to take others to lunch to do business if they get a tax deduction for it but are not willing to take them to lunch if it will cost them anything. I often wonder about the graciousness of that. It seems rather ungracious to say to someone: `I will take you to lunch only so long as I can get a tax deduction for it'.

Senator Townley said that the real answer to this matter is a flat tax and he suggested that everybody pay a flat rate of 25 per cent. So a person on $4,000 would be taxed $1,000 and be left with $3,000 to live on and a person on $200,000 would be left with $150,000 to live on. Does that mean that a person earning, say, $10,000 a year with four children would be left with $8,000 while a person on $100,000 a year with no children would be left with $75,000? Is that equity? It was put by the Opposition that that is the equitable way of doing things. We on this side of the Senate say that the family man, the person who is battling to educate his children, to pay off a mortgage and to set himself up in life, should be given some regard for those situations; that a deduction ought to be allowed for his children, that the family ought to be encouraged, and that it ought to be recognised in the tax structure. To say simply that those sorts of considerations should be ignored and that people should all be taxed at the same level, no matter what their incomes are or their sources, seems to this side of the Senate to lack equity. But again, that is a proposition put by the Opposition, and it will be interesting to see whether Opposition speakers who follow me in this debate adhere to the proposition that there ought to be a flat tax, or whether they will move away from that.

It is said that Australia is more in debt than various other countries. It was not pointed out that the major debt is private debt, or what that debt is compared with this country's assets. It is a playing around with figures to create what can only be called a false impression. A complaint was made by Senator Reid, properly, that interest rates are a problem for mortgagors. I understand that the Opposition's proposition is that interest rates for housing loans should be deregulated.

Senator Messner —You are about to raise the ceiling, after Saturday, aren't you?

Senator COONEY —Well, there will be various--

Senator Messner —After the South Australian election, up they go.

Senator COONEY —The evidence is the only thing that we can go on, and it is that there is a proposition, accepted by Senator Messner's Party, that interest rates for housing loans ought to be allowed to rise. If that is not the situation, the 10 speakers to come on the other side can deny that. If there is a denial now that the Opposition embraces the proposition that housing loan interest rates should be allowed to rise to whatever level banks might care to put on them, one of the 10 speakers who follow me will have the opportunity of stating that. If none of them does, the conclusion can reasonably be drawn that they accept the situation that the banks should be allowed to declare whatever interest rates they like for housing loans, and then it is a matter for the people of Australia to judge whether they want to accept that situation. In any event, Senator Reid having quite properly raised the question of interest rates for housing loans, it is left where it is. This side says, `Yes, there are restrictions, and there are limits on the amount of interest that banks can charge people who borrow for housing'; the Opposition says, `No, no such limitation should prevail'. That is the situation.

The other thing that ought to be mentioned about the measures brought in by this Government is that they have made an attack on the poverty traps. An illustration is that as from 1 November next year, the amount of private income that a pensioner may earn before his or her pension is reduced under the income test will be increased by $10 per week for single pensioners and by $20 per week for pensioner couples. This will increase the amount that single pensioners can earn each week without affecting the pension from $30 to $40, and for couples the figure rises from $50 to $70. These measures bring in provisions to enable pensioners to earn more than they previously did, to get extra income so that they can sustain a decent standard of living. If that sort of situation is brought about by coming down on entertainment expenses, does anybody complain? That is the choice. Do we take measures which will help to enable money to be given to those who need it-mainly pensioners-or do we leave tax deductibility to people who want to have lunches, and, as Senator Maguire so eloquently put it, very expensive lunches?

Again, this Government will abolish the separate income test on rent assistance. At present, as is said in the statement, this test leads to the withdrawal of 50c in rent assistance for the first and each subsequent dollar of income earned. Abolition of the test will mean that a benefit of up to $15 a week will flow to 300,000 pensioners with non-pension incomes in private rental accommodation. Also, the Government proposes to assist pensioners with children further. That has already been set out in the statement. The Government looks at the people in real need of help, and it gives it to them. In addition, as Senator Maguire will confirm, the Government has lowered the base rate of taxation, the lowest rate, to 24 per cent, I think, whereas the best that the Opposition could do when in government was to reduce it to 30c in the dollar.

This Government is given over to the proposition that those in need should be helped, and that if money has to be taken from anywhere in rearranging the way that money in the community is distributed, it should be taken from those who can afford to have it taken from them. Whereas it is true that the Government takes away the entertainment allowance, it gives extra benefits to pensioners and to those on lower incomes, and indeed, it reduces the rate of taxation for everyone.

Senator Peter Baume —No, it doesn't. That is simply wrong.

Senator Messner —That is totally misleading.

Senator COONEY —No, that is right. The tax rates will be lowered.

Senator Messner —When?

Senator COONEY —They will be lowered, in accordance with the scheme, next year and the year after. That is the proposition.

Senator Messner —Some time, never.

Senator COONEY —It is dreadful to see such cynicism coming from people in this chamber whom we have come to know and love. But there is no doubt, as night follows day--

Senator Messner —After you see an assets test and a lump sum superannuation tax which were not promised, you know how to take it.

Senator COONEY —Senator Messner's difficulty is that the Government has set down a program, which I think the honourable senator secretly admires, and the only way that he can get over it is to say, `It will not happen'. I could understand a proposition put by the honourable senator--

Senator Messner —Have you been living in academe all your life?

Senator COONEY —Let us follow through what the honourable senator has said. I could understand an argument coming from him in which he said, `The Government's proposal is wrong for the following reasons', and then set them out. But he does not say that. He says, `The Government's proposal is never going to happen'. It must follow from that, as night follows day, that what he is really saying is, `Yes, the Government's proposal is good; the only way that I can get round it is simply to say that it will not happen'. The reality is that it will. By his comments, the honourable senator is really endorsing the program that the Government has set forth. I have not gone into these matters as deeply as Senator Maguire did in his excellent speech. The reason I have not done so is that Senator Maguire's speech was definitive in this area.

Senator Messner —You are in real trouble then.

Senator COONEY —I do not think so. I thought that Senator Maguire's speech was lucid, well researched and very accurate.

Senator Boswell —Written by the ACTU.

Senator COONEY —If Senator Maguire's speech was written by the Australian Council of Trade Unions-which it was not-or if it was written by anyone else, what does that matter when he pointed out the great benefits that will come to this country through the Government's program? If the benefits are there, if what Senator Maguire was saying is true and correct, if, as he said, there will be benefits to everyone, if he says, `I am here to look after the 95 per cent of the population, as distinct from Opposition speakers who look after the 5 per cent'-that does not seem to be denied-what does it matter who wrote the speech? That is the point I make. I think that the speech has about it all the hallmarks of Senator Maguire. It is clearly a speech by him. Senator Boswell would agree with that. He wants to help the poor, does he not?

Senator Boswell —I do, but I don't want to help by putting them out of work, and that is exactly what you are doing.

Senator COONEY —Of course Senator Boswell does. Of course he wants to help those who are less fortunate. This is the program by which we have set out to do it.

Senator Messner —It will help the accountants and lawyers; that is about it.

Senator COONEY —I will not, on Senator Messner's invitation, go into a hatred session on accountants and lawyers. I think accountants and lawyers perform very good and proper functions. With great respect to Senator Messner-I know that he did not intend this-the effect of his comment is to condemn the lawyers and accountants of this country; they are members of very honourable and very productive professions. The fact that some lawyers and accountants might do the wrong thing does not mean that all accountants and all lawyers do it. In fact, they are both very traditional and very honourable professions. I defend them and rebut the suggestion that in some way they should be condemned. In any event, the reality of the whole matter is that this is a great scheme and, as Senator Siddons has said, an historic scheme, encompassing the greatest reforms that have been made in this country in the last 40 years.