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Wednesday, 4 December 1985
Page: 2893

Senator JESSOP(12.31) —Mr Acting Deputy President, I immediately seek your protection from my left, from Senator Georges. I know that he can become rather violent on occasions, which has been evident in recent times. He has not had a haircut either.

There have been some very thoughtful contributions from Opposition senators to this debate on the Taxation Laws Amendment Bill (No. 3) and allied tax Bills. It is of regret to me and to many people throughout Australia that the suggestions made by members of the Opposition in their very thoughtful speeches have not been regarded as significant by the Government. Moreover, and perhaps even more significantly, the Government has had no regard for the outrage expressed throughout the community of Australia about the damage that will inevitably be done and has already been done by the taxation measures that the Government has seen fit to introduce.

I am very disappointed that the personal tax deductions were not introduced immediately. That was something that needed to be done to encourage people to put more effort into their work, to spend more money, to generate more revenue for the Government in other ways. It just demonstrates how badly thought out this package has been. The Hawke Government has adopted this package, some of which the Senate is considering in these Bills. These measures are designed to raise money in order to provide Australian taxpayers with long overdue personal tax reductions.

Senator Georges —Do you object to that?

Senator JESSOP —No; I am saying that I am all for that. But I object to the manner in which this Government chose to do it. These reductions should have been provided, at least in part, immediately. I do not think the Treasurer (Mr Keating) did his sums correctly. People throughout Australia have to wait for the personal tax reductions until next year, with a little more the following year.

By the end of this Parliament, both the Treasurer and the Hawke Government will go down in history as the worst economic managers in Australia's history. Regrettably, many Australians will be forced to suffer at the hands of the Hawke Government because of the economic course that it has chosen to take. I add that the best thing that was going for this Government during its term in office was the wage freeze initiated and put in place by the Fraser Government. It was about the only thing that had any effect on the economy.

The people of Australia will remember 1985 as the year of the Hawke Government's taxation mess. It will be long remembered for a tax summit that revealed the decadence, disorder and disunity of the Hawke Ministry. It will be remembered as the year in which Mr Hawke was able to exercise his expertise in attacking entrepreneurial drive and businessmen throughout Australia who create wealth and jobs. For over a decade when he was President of the Australian Council of Trade Unions he led the charge, creating inflation, unemployment and a record number of strikes. It was with that background that he came to lead Australia as Prime Minister.

During this year Mr Hawke and his Treasurer have attacked the restaurant business, the wine industry, the food and beverage industry, the fishing industry, the farmers, the hospitality industry, the convention industry, the travel industry, the tourist industry and the made in Australia car industry. The Taxation Laws Amendment Bill (No. 4) is the result of confusion and ideological vindictiveness at the hands of the Hawke Government towards small business. Honourable senators ought to examine some of the effects of the tax measures in the Bill.

A lot has been said about this package, its alleged pleasantries and its unpleasant aspects. I start with the so-called pleasantries. The pleasantries are supposed to generate the need for the damaging unpleasantries of these measures. First, let us not forget that all the benefits are for the future. Only part of the promised tax cuts comes into effect in the next financial year. The rest are due in the following year. At the same time, the Government is fuelling inflation which will mean that the effects of the tax cuts will be cancelled out before they come into being. I mention the plummeting dollar and the escalating interest rates which today reached a record level, I think, of 19.75 per cent. These are combined with indexed taxes on items such as beer, petrol and cigarettes. It was a very clever move by the Hawke Government, was it not, in its first Budget to increase automatically the price of petrol every six months? It is an inbuilt inflationary factor, because no matter what commodity one deals with, transport costs are very significant. Fuel costs represent a major percentage of overall costs.

Beer, petrol-all these commodities-are consumed essentially by the working population, the people this Government purports to represent. Inflation means that, by the time the tax cuts arrive, most wage and salary earners will be in higher personal income tax brackets. Therefore, the revised personal income tax provisions will not give much relief at all. We will be back to our present terrible situation. In order to assuage the wage and salary earners, I have no doubt that it will be necessary for the Government to increase the rates of the tax unpleasantries in this Bill and to find other ways to milk the community. The present tax package must be seen in this light because the effects of this Bill will be cumulative. In other words, more of the same will be absolutely necessary if the Labor Party continues its present extraordinarily inept economic management.

The critical aspect of the Taxation Laws Amendment Bill (No. 4) is that a substantially increasing tax burden will be placed on com- panies. Estimates of the figure vary from between 15 to 20 per cent. Corporate costs inevitably will be increased which, in turn, will adversely affect employment, prices and investment. The Government believes that corporate profits are such that business can afford this hike of 15 to 20 per cent in company taxes. This is not the case, even with a profit share of 15 per cent of the gross domestic product-not high by world standards. Businesses are still recovering from previously low profit levels. The mining industry, agriculture, the raw material processing industry and most of the manufacturing industry has not yet recovered from the slump of the early 1980s. The only industries that have made a small and fleeting recovery are the building industry, the motor vehicle industry and the service industries. The building industry has recovered mainly as a result of an injection of government funds. The motor industry and service industries are the very industries for which this Bill will create most dificulties.

I deal first with the motor vehicle industry. The tax on company cars is supposed to be a tax on salary packages. However, the majority of company cars are used by people such as salesmen, maintenance personnel and supervisory staff who must move from office to field or factory floor. Others affected are laboratory staff who are troubleshooters in industry and who have to go from the laboratory to their premises. The Hawke Government certainly had these industries in its sight and particularly the bosses or owners of businesses. They will not go without at all. Some in intermediate management may lose their Fairlanes or Fairmonts, but the boss will still buy his fully imported Rolls-Royce, Mercedes or Porsche. According to the figures I saw in Monday's Australian Financial Review the growth in sales of such imported luxury cars has not been affected by the tax on company cars.

Senator Georges —Not yet.

Senator JESSOP —No, it has not. That is right. But let us see where the industry is being affected. For the year to May growth in the upper luxury car market was 34.2 per cent. For the year to October it was 33.7 per cent, which is only a marginal change. However, growth in the market for average motor cars to May was 22.8 per cent. By October the growth rate had fallen to 5.9 per cent. The article I refer to is worthy of incorporation in Hansard.

Senator Georges —Oh, come on!

Senator JESSOP —It is only a small article. Is the honourable senator frightened of it? He is frightened to read it, frightened that the public of Australia will realise what a mob of phonies Government members are. Mr Acting Deputy President, I seek leave to incorporate in Hansard this short article which sets out in detail the effects of the tax on company cars on car sales.

The ACTING DEPUTY PRESIDENT (Senator Colston) —Senator Jessop, the article does not look too short to me.

Senator JESSOP —It is. It is only very short. You can have a look at it if you like, Mr Acting Deputy President and, if the Minister for Finance (Senator Walsh), who is at the table, agrees, I would appreciate having it incorporated in Hansard.

Leave not granted.

Senator JESSOP —Honourable senators opposite are still getting upset about it. Sales in the car industry, which affect the average worker, plummeted from 22.8 per cent in May this year to 5.9 per cent in October. That shows what an incredible imposition this Government has placed on the motor vehicle industry. At this rate it will not be long before the growth of the motor industry will be negative. In other words, the Australian care industry will be shrinking, which will mean a loss of jobs, profits and taxes and various sorts of losses by the States in registration fees, by insurance companies in comprehensive insurance and by the State Government Insurance Corporation in South Australia in third party insurance.

At this very moment I suspect that a demonstration is being held in South Australia by the motor industry against the Hawke Government's devastating impositions which have created such a downturn in business. The industry would be demonstrating against John Bannon and the Bannon Government for their gutlessness in not standing up to the Hawke Government. It is no wonder that people in South Australia are extemely upset about the damaging effects of the taxation package this Government has introduced. It is all very well for honourable senators opposite to try to interject, but a considerable amount of anger is being demonstrated right now in South Australia against the Bannon Government. In Adelaide, just this week, a demonstration was held which was organised before the election was announced. It was a spontaneous revolution against the gutlessness of the Bannon Government. I believe that it is an endorsement of the assurances that have been given by the future Olsen Liberal Government which will be in control of the Treasury benches after Saturday.

Debate interrupted.

Sitting suspended from 12.45 to 2 p.m.