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Tuesday, 22 April 1980
Page: 1669

Senator MacGIBBON (Queensland) - The Income Tax Laws Amendment Bill and the Income Tax (Rates) Amendment Bill give effect to announcements over recent months concerning various taxation reforms. Although the proposals cannot be construed in any way as major revisions of the income tax structure, they represent significant legislative advancements in those areas to which they apply. No one would argue about the provision of tax deductibility for gifts towards relief efforts in Kampuchea and East Timor. At the same time, the changes in the basis of taxing the income of trusts and dependent children, and the moves to counter tax avoidance and the exploitation of bad debts as deductions to evade taxation are all legitimate and responsible actions taken in this Bill.

Senator Wriedtmentioned the zone allowance. Whilst it is not part of this Bill, I do enter a plea for the zone allowance to be upgraded because people living in the remoter parts of Australia, particularly in Queensland and Western Australia, do suffer great financial disabilities from living in those areas. Just off the top of my head, I would think that many country areas in the north of Queensland have an increment of at least 15 per cent to 25 per cent in their cost of living coming out of the freight cost of bringing all the goods needed and the services required into the areas. There is need for a revision of the zone allowance so that people who are in those remote areas in the legitimate service of Australian commerce get some compensation for being there.

I wish to direct my initial remarks to that part of the legislation which covers the taxable value of housing provided by employers. I would take issue with what Senator Wriedt said about its applying principally to the supporters of the Liberal Party of Australia in the centre of Sydney and Melbourne. I do not think that he has read the legislation. I will deal with that in a moment.

These provisions represent a most socially productive and economically sound measure. Over 18 months ago- on 12 July 1978- the Treasurer (Mr Howard) announced that the Government had begun a review of the provision of the Income Tax Assessment Act relating to subsidised housing, which is to be found in section 26E. Those Australians with no choice but to accept subsidised housing from employers welcome this legislation as recognition of their legitimate demands. In dealing with the point which I think Senator Wriedt did not understand, I would like to read out the five clauses of the Bill which deal with determination made by the Commissioner of Taxation. They are: Firstly, the remoteness from major centres of population; secondly, whether it is customary in the particular industry for employers to provide accommodation; thirdly, the lack of suitable alternative accommodation; fourthly, whether the accommodation provided exceeds the standard that that employee would normally seek; and finally, any onerous conditions applying to the use of the accommodation. I think that remoteness from major centres of population and the lack of suitable alternative accommodation do provide a barrier against people living in the centres of Sydney and Melbourne who claim that they need support for their housing. Of particular importance to many taxpayers is the application of this legislation to the 1977-78 financial year to ensure a reduction in taxation liability, regardless of whether rights of objection and appeal have already been made.

My principal concern with this amendment to section 26e relates to the provision of housing for employees of the sugar industry in Queensland. Historically the sugar industry has provided some housing for mill employees. Over the last 18 months I have received many submissions from all sections of the industry. The industry was quite concerned that it would not be fairly treated in this matter. Late in 1977 a major reassessment was made of the rentals paid by occupants of houses provided by the sugar mills. In some cases that resulted in the assessments going up by nearly 800 per cent. When the Commissioner of Taxation moved against the mining industry, which is also a big supplier of housing in Queensland, the industry through its unions announced a series of strikes and threatened further strikes if it was proceeded with. It was after that that the review of the Act was initiated. I am pleased that this legislation applies universally to housing in this category. I am pleased also that the fears of the sugar industry have been allayed.

The sugar industry has provided housing more or less since its inception. ( Quorum formed). The sugar industry has always had to provide housing for some of its employees in the mills. The reason for that is that the mills were always situated in the centre of cane fields to minimise transport problems and in some cases there were no towns nearby. In a submission prepared by the Australian Sugar Producers Association and the Proprietary Sugar Millers, Mr Roy Deicke summarised the problems facing the industry. I would like to quote four paragraphs from that publication because it summarises the position very well. He said:

It has been a long standing policy of Bundaberg Sugar Co. to afford staff and some employees housing to an appropriate standard. To the best of our knowledge such a policy has applied for at least 50 years. For staff, especially those with a tertiary level of education, such a condition was and still is frequently necessary to provide an incentive to move from a capital city environment to the remote areas of the country. Further, competition demanded that at least equivalence be offered with other competing industries relative to conditions of employment. The exclusive nature of the sugar industry vocationally also provided for significant staff movement between sugar companies and the offer of company housing removed the restriction of ownership of a residence which was inherent when the need to shift employment to gain experience and promotion came about.

That situation still exists. He went on to say:

More recently, because of the integration of the milling companies locally into one corporate body, the provision of company housing is of cardinal importance in allowing transfer between mills in the one group. Of equal importance has been the general need to have staff and some key employees reside close to actual operations and in this regard the remoteness of these operations from normal urban development has multiplied the need to provide housing close to mills at hand.

That statement puts the situation very well. It has been necessary to provide housing in close proximity to sugar mills. That has been a functional aspect. Having seen many of these houses and been in a large number of them, I know that by and large they cannot be classed as providing luxury levels of accommodation. Most of them are old. The residents suffer some disability in living in them. The mills work shifts through the week when crushing is taking place. There is a lot of noise from the heavy machinery and whistles and a great deal of dust because the environment of the mill is usually unsealed. There are few roads or pathways for cane trucks to use. Generally the mill accommodation is not to be compared with the accommodation enjoyed in a suburban residence.

The sugar industry has played a very important part in the development of the Queensland and Australian economies. Sugar is one of Australia's largest export earners. Australia ranks as the world's third largest sugar exporter after Cuba and the European Economic Community.

I would like to contrast their conditions with those of the mining industry which also provides a great number of houses in Queensland. Compared with the houses provided by the sugar industry, the houses provided by the mining industry offer a much higher standard of accommodation. The houses, by and large, are of recent construction. They are situated in well laid out towns that have enjoyed the benefits of a high degree of urban planning. By and large, the residences are very pleasant. They do not suffer the disability of being on the mine site. They are usually a few miles away. The noise, dust and all the other problems of mining are remote from where the families live, and this is how it should be. It is possible to provide such accommodation in that industry.

The point I cavil about in the mining industry relates to the unions. Whenever any assessment is made of the liability of unionists to pay income tax on the housing benefit they receive in lieu of salary, the unions have reacted by using the strike weapon, something which was never used by the sugar industry. It has to be remembered that the miners enjoy many privileges other than cheap housing. A month or so ago I saw a miner's pay slip and I was surprised to learn that his union dues were $ 1 a week more than he was paying in housing rental. I find that quite surprising. One or two parliamentary recesses ago I was at Blackwater. I found that fuel was being sold through the Ampol and Shell service stations for 37.5c a litre. The Blackwater mine owned by the Colonial Sugar Refining Co. Ltd was making fuel available to its employees at a cost of 30.5c a litre. That to me was an evasion of the income tax liability of those mining employees. They were receiving fuel at a lower than retail price in lieu of an increase in wages. People cannot avail themselves of such facilities in the sugar industry.

I will now look briefly at some of the changes to the income tax law which are contained in this Bill. The tax scales operated by the Government have been significantly improved. The level at which earnings are free of tax has increased from $2,5 1 9 to $4,003. The spouse rebate has doubled from $400 to $800. {Quorum formed). Under the present Government some half million people no longer pay income tax at all. That is a notable change.

I would like to see the whole business of tax looked at in a major way. While the changes are welcome the Bill is really part of a fine tuning of a system that is already vastly overstressed

I was interested to see the document proffered by Senator Messner during his very penetrating speech delivered a few minutes ago. I noted that the Income Tax Assessment Act was about three centimetres thick. It is a huge document and is far too complex for Australia. I acknowledge that there is a problem of altering income tax laws that plagues all governments, irrespective of their political hue. One of the major changes made in recent years to the personal income tax law has been to reduce the number of tax categories to three. However, even that significant amendment did not address itself to the basis of the taxation system itself. It simply grafted to the existing system a different administrative method of raising revenue.

As I see it, the problem is twofold. The first problem relates to the system by which we collect our taxation and the second lies in the assumption that the Government can pay for anything and that if it needs more money it can raise more taxes. This second consideration is rarely challenged in this chamber. I do not believe that the community has an infinite capacity to pay for measures introduced by the Government. Furthermore, I do not believe that the Government is the right vehicle to fund a lot of the programs that society needs. The Government is in no position to make the myriads of decisions which would normally be made in the business world. The exercise of judgment comes only with experience. The government is denied the experience to make decisions in fine detail as to how the economy should be run.

Most importantly many of the services that the government provides could be provided much more economically by smaller units in the community. The key to doing so is to bring in lower tax rates to enable people to pay for services themselves. At present, we have a system of very high taxation, both direct and indirect, where people are denied the right to provide for themselves many things that they should be able to provide through their working lives. Most importantly, the taxation rates are so high that people cannot provide for their own retirement and so are dependent on support schemes such as pensions and health insurance when it would be more efficient if governments gave people the capacity through their working lives to provide for themselves. Therefore, I make an earnest plea that the tortuous system we now have in Australia for the collection of tax be looked at and that a much simpler and fairer system be introduced which allows people to provide for their own welfare to a much greater degree.

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