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Tuesday, 13 October 1970

Dr GUN (Kingston) - We have just heard a remarkable speech by the honourable member for Angas (Mr Giles). It was remarkable in terms of a contrast to the great words we heard him utter a couple of months ago when he was speaking on the same subject, lt was a very remarkable contrast to the opposition which he expressed in his Budget speech. It was also a remarkable contrast to the words of his Liberal-Country League colleagues in the South Australian Parliament when they discussed the same matter on 19th and 20th August this year. Having listened to the honourable member for Angas the only comment I have is that if that is his attitude and his Government's attitude to the wine industry, most of which is in his electorate, then I am afraid that the wine industry is in for a very severe economic hangover.

Mr Clyde Cameron (HINDMARSH, SOUTH AUSTRALIA) - He will not bo there much longer.

Dr GUN - No. I dare say that his electors will bear it in mind when he shows his attitude by voting on this issue when it comes up later tonight. The Opposition is opposed to these taxation measures. The general tenor of our opposition has been expressed by the honourable member for Newcastle (Mr Charles Jones) when he pointed out that these forms of taxation are regressive and because they impose an undue burden on those in receipt of low incomes they are unacceptable to the Opposition which in principle supports progressive taxation which takes into account the principle of the capacity to pay and apportions the taxation burden according to that principle. 1 wish to speak mainly on the question of the effect the increased excise will have on South Australia, but before doing so I crave your indulgence, Mr Speaker, to mention a matter in relation to sales tax and indirect taxes that was referred to by the Minister Assisting the Treasurer (Mr Lynch) before the suspension of the sitting when he was speaking to the Sales Tax Bill. He claimed that the Labor Opposition was being irresponsible because, he said, it was saying that the Government should spend a lot more money and yet lower taxation at the same time. If this were what the Labor Party was proposing this would be irresponsible, but the Labor Party is not suggesting this at all. Members of the Labor Party believe that there are many fields in which expenditure should be increased, but this does not mean that we would try to reduce taxation at the same time. What we do maintain is that there are many fields in which there has been misdirection of resources and misallocation of moneys by the Government. Even apart from that, the Labor Party is not necessarily suggesting that the overall revenue of the Government should be decreased. We have suggested that there should be drastic alterations to the present means of imposing taxation. We believe that the Government has done wrong in increasing regressive taxation. With respect to income tax we believe that as prices and wages have risen with the fall in the value of the Australian dollar the scale of taxation on the lower and middle income earners has been increased out of proportion. There should be great alterations to the taxation scales related to income. However the Government has not done this. All it has done is to provide an across the board reduction in income tax. lt has reduced by some 10 per cent the incidence of income tax on all incomes up to the $10,000 a year bracket. This has done nothing to alter the relative imposition on those in the lower income bracket. 1 wish, however, to refer to the effect on South Australia of the measures we are now discussing and the sales tax measures debated earlier. These are, in fact, sectional taxes upon South Australia, lt should scarcely be necessary for me to point out the great dependence of South Australia on those industries that are affected by sales tax - industries associated with motor vehicle production and with the manufacture of consumer durables. The honourable member for Port Adelaide (Mr Birrell), when he was debating the estimates of the Treasury, referred to the great number of people who are employed in South Australia not only in the manufacture of motor vehicles but in the manufacture of component parts. The South Australian Labor Government is doing its best to diversify industry in South Australia but it does not seem to receive much encouragement from its Liberal Country League opponents in that State. One of the most significant things done bv the first Dunstan Government in South Australia was to create a department to promote industrial development and appoint a full time director for it. lt is history now that when the Hall Liberal Government was elected in 1968 one of the first things it did was to ease Mr Currie, that wellqualified director, out of that job and replace him with someone else who had about 3 other important jobs as well Apparently the Hall Government believed that the job of diversifying and developing South Australian industry could be left to somebody who had a lot of other jobs - perhaps he could do that work on a Wednesday afternoon instead of playing golf.

The wine industry is of tremendous importance to South Australia, as was pointed out by the previous speaker. In the motor vehicle industry there have been some instances of adverse effects on South Australia's economy. Already we have experienced such effects because of the high interest rate policy which is pursued by the Commonwealth Government. It was hoped that there would be some easing of this policy but the Treasurer (Mr Bury), when he returned from Copenhagen last week, gave us little reason to hope for any relief from the existing rates, because he has said much about the principal problem facing all nations of the western world being inflation. It seems as though we will get more of the same high interest policy and the higher the interest the worse the effect on the consumer durable industries in South Australia. Added to this, of course, is the proposed increase in sales tax from 25 per cent to 274 per cent on consumer durables.

Regarding the wine industry, most of the facts were mentioned by the honourable member for Riverina (Mr Grassby) in his excellent account of the industry, but it is worth remembering that in South Australia there are more than 5,000 grape growers who could be severely affected by the imposition of the proposed excise. A few facts are worth recapitulation. The Commonwealth Government will get the same revenue from a ton of wine grapes as will the grape grower himself. One ton of grapes produces between 120 to 140 gallons of wine and the taxation, in the form of excise, from this production will be about $60 to $70 which is almost equal to the average value of non-irrigated grapes and greater than the value of irrigated grapes. The honourable member for Angas said how 'iffy' the whole question was and that we could not say what the effect would be on the industry.

Mr Giles - Quite right.

Dr GUN - That is conceded, but surely we have to take the evidence that has been presented. I do not know why the honourable member for Angas chose to ignore the report of the Bureau of Agricultural Economics, which is the only thing we have really on which to hang our hat. I think he referred to this review when he spoke so forthrightly on the subject during the Budget debate, but now that he has shown his hand and is going to vote against the measure he will not mention it at all.

Mr Kennedy - He wants 2 bob each way.

Dr GUN - That is right. The facts are that at present there is something of a boom in the wine industry, particularly in relation to table wines. The reason for this, as has been well shown by the report of the Bureau of Agricultural Economics, is that there has been a fall in the real price of table wines. In other words the actual price of the wines has gone up by a lesser amount than the retail price index has risen. The Bureau's report showed also that there is great flexibility in sales in relation to prices, so much so that however much the real price decreases there is a more than proportionate rise in sales, and the converse can be expected to apply. This is the only thing we have to go by, but could we examine what has happened in the short time since the price of wines has increased? It is perhaps early to draw any real conclusion about this, but my information is that with certain types and categories of wine sales have actually dropped and, as was predicted by the honourable member for Angas, the sales of flagons of fortified wines have dropped. It is possible, of course, that this is due to the fact that many consumers stockpile when they received notice that prices were to rise. If we are to draw any conclusion at all it is that there has been some effect already as a result of the increase in the price of wines. The honourable member for Riverina gave an excellent account of how this action by the Government is another example of the misallocation of resources by the Government. As I pointed out in my speech on the Budget, it is quite irrational for the Government to be subsidising certain primary industries that are very uneconomic at the same time as it is puting these penalties on very efficient industries. The wine industry is one such efficient industry that has not received any assistance. It has been in a buoyant state, but the Government is now trying, apparently, to crush this industry as well. The honourable member for Angas and some of the other South Australian members of this Parliament might like to be reminded of the following resolution that was passed by the South Australian House of Assembly on 20th August this year:

That this House calls on members of the Federal Parliament representing South Australia to take action in the Federal Parliament to protect employment and development in South Australia from the impost on the sale of wines of 50c per gallon and from the increase of 2\ per cent in sales tax on motor vehicles and electrical goods which are proposed in the Federal Budget and which will adversely affect South Australia far more than any other State.

Mr Clyde Cameron (HINDMARSH, SOUTH AUSTRALIA) - Did all the Labor members vote for that?

Dr GUN - All the Labor members voted for it. I might point out the attitude of the Liberal-Country League Opposition in the Parliament at the time. I think the view of the Opposition was to support this in principle. This can be seen by the Amendment that was put forward by the LCL Opposition in the South Australian Parliament, which is not much different from the original resolution. This amendment was moved by Mr Rodda in the South Australian Parliament:

To strike out all words after 'That' and insert this House inform the Prime Minister that the interests of the wine industry and the manufacturing industries in South Australia will be beneficially served if the increased taxes on the sale of wines and consumer goods be removed as soon as possible'

This seemed to be pretty well the unanimous feeling of the South Australian Parliament, but I should mention that there seems to be one notable exception in all these deliberations, and that was the present South Australian Leader of the Opposition, Mr Hall, who seems to oppose persistently making any moves to the Commonwealth Government to try to get relief for South Australian industry. He has said that if we try to oppose the imposition of sales tax and excise, which is a sectional tax on South Australia, we are just running for help and asking for special treatment. But we are not doing anything of the sort. We are not asking for special treatment, but South Australians ask that they are not discriminated against. I. fell that the attitude of Mr Hall in this was quite remarkable, to say the least. South Australian members in this place now have the opportunity - and I hope that those on the Government side will take heed of the directions given by the South Australian Parliament in almost the same words by both sides - to. vote against these Bills.

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