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Thursday, 25 August 1983
Page: 281

Mr SINCLAIR —The Minister for Defence would be aware that, in his statement yesterday announcing the establishment of an independent tribunal on defence force pay, he said:

The Government is firmly committed to maintaining conditions of employment which recognise the special demands made on Service personnel.

I ask the honourable gentleman: In the light of the reduction in value of defence force retirement and death benefit entitlements to servicemen as a result of the increased tax on lump sum payments, the reduction in pay to Reserve Service personnel as a result of the removal of the tax concession on that pay, the increases in rent payments by Service personnel announced in the Budget and the increase in storage charges to those Service personnel, how does he propose to implement that commitment?

Mr SCHOLES —I wonder whether the right honourable gentleman has read the Budget Papers. I note the honourable gentleman's statement this morning that the matter of taxing would affect the unemployed in the Reserve. This statement was accompanied by a statement of my own that a review of remuneration for Reserve personnel would take place to take into account the changes in remuneration. I am surprised that the honourable gentleman is not aware that unemployed persons are the ones who benefit least from tax-free incomes because they really do not have sufficient income on which to pay tax.

Because the concession creates a situation in which the amounts of remuneration paid to members of the Reserve are dependent for their beneficial effect on the levels of private incomes of those persons, and, therefore, the rate of tax from which they are exempted, those persons on low tax incomes are very heavily discriminated against. The honourable gentleman would be aware that, in an earlier report, Mr Justice Coldham indicated that Reserve remunerations were fixed at a figure approximately 40 per cent below what they would be if the tax- free concession was not there.

Mr Sinclair —Will you increase it by that 40 per cent?

Mr SCHOLES —The honourable gentleman may care to listen. Yesterday I referred to Mr Justice Coldham the matter of CMF pay. In accordance with the Budget statements I asked him to consider the effects on CMF pay and to make recommendations taking into account the changes in tax status that had applied.

Mr Sinclair —Another change in the Budget.

Mr SCHOLES —If the honourable gentleman reads the Budget Speech he will find that matter referred to in it. It is unfortunate that some people do not read all the statements in the Budget Speech; they read only those things out of which they think they can make political mileage and with which they can do damage to members of the Services. The Leader of the Opposition did that recently.

In respect of the DFRDB payments, the conditions of members of the Services have not been altered by changes in tax arrangements in any way which would not have occured if any other form of taxation, generally applicable to the community, were applied. These matters of retirement ages and the effects of the tax rates are currently under discussion-they have been actively under discussion-and they will be resolved before the legislation is brought into this Parliament, and, I am confident, in favour of Service personnel. The honourable gentleman has made a number of other allegations which I suggest are baseless.