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Tuesday, 6 September 1983
Page: 419

Mr CUNNINGHAM(9.17) —It was interesting to hear the comments just presented to the House by the former Treasurer, the honourable member for Bennelong (Mr Howard). In his 20 minutes he failed even to address himself to the actual Bill before the House and attempted to put across the message that this was another allegedly broken commitment of the Labor Government. He tried to tell us that we had been saying that the previous Government's measures were too little, too late and for too few families. He claimed that the actions of the Labor Government are affecting adversely lots of people across Australia; that we have deceived those families.

Let us look at the facts. Firstly, the Australian public will be well aware that the honourable member for Bennelong, the former Treasurer, deceived the Australian public prior to the election. He clearly deceived it as to the very important projected Budget deficit figures. Yet tonight he tries to tell us that Labor has broken some commitment. The Australian people judged the former Government's performance. If Opposition members look across the chamber they will see the many seats filled on this side compared with the very few filled on their side. They should then quickly realise that the sort of approach that is taken by the honourable member for Bennelong is old hat and the public will not believe it. The real deception came from the very person who has just spoken, the honourable member for Bennelong. He did not tell the people the truth about the amount of deficit that they would have to face. He did not tell us how he would have overcome these problems if he had been re-elected. At least we realised in the last week of the election campaign that the public had been deceived. The message given to the Australian public was that because of this deception we would have to make adjustments to some of the policies that we had formed. That is quite clear when one goes through the matters that have been raised in this debate today. We still have the honourable member for Bennelong talking about freeing up markets and freeing up interest rates. The only sure thing about the policy that was adopted by the previous Government was that it had given up any commitment to get interest rates down to 10 per cent. That was the clear indication it gave to the Australian people.

The scheme it brought in offered people-very wealthy people, of course-a rebate of up to $60,000. Honourable members opposite admitted that they could not get interest rates down to 10 per cent and that they would have to subsidise interest rates above 10 per cent. That was a clear indication that they had no policy. They admitted it to the Australian people. They said: 'Elect us again and we will continue the high interest rates'. It was a quite simple proposition . We have said to the Australian people-we are acting upon this-that we will get the economy going again and get interest rates back down so that the former Government's policy will be null and void. There is no need for the former Government's policy. We have replaced it with a policy which is effective for the Australian public.

Let me get back to the general outline of the legislation before the House. The Income Tax Assessment Amendment Bill is designed to amend the tax laws to give effect to one of the decisions announced by the Treasurer (Mr Keating) on 19 May . Announcements were made at that stage also by the Minister for Housing and Construction (Mr Hurford) in relation to our housing policy. There are to be no new entrants after 30 September 1983 to the tax rebate scheme for home loan interest payments by first home buyers and beneficiaries of the scheme after that date are to be subject to an income test. This is clearly a change of priority and a change of direction- a changed endorsed by the Australian public at the election. The Bill will amend the provisions of the income tax law which allow a rebate of tax for home loan interest payments during the first five years of occupancy of a taxpayer's sole or principal residence.

It is very important that the public should be well aware of the effect of the amendments. There will be no new entrants to the rebate scheme after 30 September 1983, subject to some transitional measures. The entitlement to a rebate after that date will be subject to an income test. At present the rebate is 30c in the dollar of qualifying interest, subject to an upper limit of $500 in the first full year of occupancy, reducing by $100 a year during the following four years. The upper limit is increased by $200 where the dwelling is also the home of a dependent child or student dependent of the taxpayer. This increase is available on a pro rata basis if the dwelling is the home of the dependant for only part of the year.

Broadly, the Bill proposes that taxpayers who qualify under the rebate scheme on or before 30 September 1983-that is, those who have first occupied a dwelling as their sole or principal residence on or after 1 July 1977 or on or before 30 September 1983-will continue to receive the benefits of the existing scheme, but subject to the operation of an income test. The income test will apply in such a way that benefits under the scheme after 30 September 1983 will be available in full to taxpayers whose family incomes in the 1982-83 income year is $24,300 or less, shading out proportionately for family incomes up to $27,900. No rebate will be available after 30 September to a taxpayer whose family income is $27, 900 or greater.

The income to be taken into account for the purpose of the income test will be the combined 1982-83 taxable income of the taxpayer and the person, if any, who is his or her spouse on 1 October 1983. There are some extenuating circumstances that will allow some adjustments even in that case. For the 1983-84 year of income only the rebate entitlement attributable to the period after 30 September 1983 is to be income tested. The rebate otherwise available for the whole year in accordance with the existing law will be apportioned over the periods up to and after 30 September 1983 on the basis of the number of whole months in each of those two periods during which the taxpayer is an owner occupier of a dwelling which is his or her sole principal residence and in respect of which rebatable interest is paid. It is very important that this message is made clear to the public so that there is no confusion as to what the real situation is when this legislation is passed.

The Bill extends the operation of the provisions to taxpayers who, although they enter the rebate scheme by taking up occupation of a dwelling after 30 September 1983, have contracted to acquire or build or commence to build on or before that date the dwelling they will ultimately occupy. This transitional measure will protect those first home buyers who will not be eligible under the proposed system of income tested periodic cash payments to first home buyers who contract to purchase or build their principal residence on or after 1 October 1983. Because of differences in the tests which must be satisfied under the two schemes, some first home buyers would not, without this extension, be entitled to the benefits of either scheme. Hence the reason for the legislation. Where such a taxpayer comes within the rebate scheme, the income test will apply to the combined 1982-83 taxable income of the taxpayer and the person, if any, who is his or her spouse on the day the dwelling is occupied.

Mr Hodgman —You still broke promises.

Mr CUNNINGHAM —It is very important to understand why the honourable member for Bennelong did not address himself to the legislation and tried to work on the idea that this Government had broken a commitment.

Mr Hodgman —You have.

Mr CUNNINGHAM —The honourable member for Denison is interjecting about broken promises. I do not know how honourable members opposite can sit there and talk about broken promises after the deception which they perpetrated in this country prior to the election. The people of Australia decided to put them on the Opposition benches. They should not interject and tell us that we broke promises . We have to readjust to reality.

Madam Deputy Speaker, I now turn to a few points relating to the new scheme which will be introduced by the Labor Government. The first home owners scheme or the FHOS as it is called, will replace the home deposit assistance scheme from 1 October 1983. The scheme has been designed for special reasons. It has been designed to provide equity and uniform treatment as widely as possible between applicants. It has not been designed to create a special section of people in the community who are treated better than anybody else. It is designed to help those who really need help. It has been designed to weigh the benefits of eligibility criteria against costs to ensure that a majority of applicants are not put to inconvenience or processing delayed merely to apply a test which will relate to only a small number of applicants. It is also designed to be workable, simple to understand and to meet the reasonable requirements of lenders and of the housing industry.

I now outline the objectives of the scheme. These are as follows: To help people achieve greater capacity to borrow the necessary funds to build their first home; to aid those low income families who cannot bridge the deposit gap and thus have difficulty qualifying for a loan; and to provide assistance with repayments during those difficult first five years of home ownership. That is the really important part of this scheme. It will help to regenerate the building industry. It will help young people get into the housing market. They could not get into it before unless they put money in the bank and became eligible under the previous Government's assistance scheme. That reasoning by the former Government seemed to be based on the premise that public funds should be spent right across the board. I did not understand that reasoning. At the same time as the former Government was telling us that public expenditure had to be reduced it seemed to take clear action to spend money on people who did not need it. There is no logic in that approach. This Government will not take that approach. We have been in office only for six months but we have done more in that time to restructure this country than the former Government did in the six or seven years since it hijacked its way on to the Government benches in 1975.

Another objective of the scheme is to stimulate demand, thereby increasing general employment, particularly in the building and related industries. One does not have to go far around Australia at the moment to see how that policy is already taking effect. A lot of work has been generated in the building industry . When this legislation is enacted and the new scheme commences there will be an increase in the capacity of the building industry to build more homes. In the last year of the former Government only 106,000 dwellings were built. That is its record.

Mr Charles —No.

Mr TUCKEY —Well, if I am not, I ask the honourable member to keep quiet. The situation is that this is taxation by stealth and, of course, it is discriminatory. When we look at the Budget Papers we see that last year taxation on telecommunications amount to $560m and this year will amount to $741m in round figures. From those figures I presume it is reasonable to take $24.255m as being what the Government proposes to collect from the sale of Aussat Pty Ltd equity capital, if it has not changed its mind on that. We are looking at an increase of $156m in the taxes that are levied in this area. Of course, the bulk of that is the $100m that was picked up from Telecom in the mini-Budget. At that time the Treasurer (Mr Keating) said: 'Do not worry about it; it is one of these minor matters. Anyhow, it is a tax on Telecom. Telecom is hugely profitable; it does not charge people much'. He is at least honest enough to tell us as an illustration that in a full year the additional intered charge could be met by a 1c increase in the cost of a local call-the Isaccs call-a commensurate increase in short and medium distance STD charges and a $10 increase in the annual telephone rental fee; in other words, about 10 per cent all round. So that dollar a minute STD call that many people in the electorate of O'Connor are obliged to make but which people in the electorate of Isaacs are not nearly so frequently obliged to make will go up to $1.10. That is the sort of discriminatory burden that is being imposed by this legislation. If one lives in Isaacs, if one gets one's votes in Osaacs, what is 1c a call or 10c a minute? That is the difference, and that is what we are talking about. The facts of the situation are completely different from the low key, smooth and slinky approach of those Bills. They are the types of Bills that could crawl under the carpet in this chamber without a bump.

I have indicated to some extent the people who will pay in these circumstances. They will be the consumers, particularly in relation to the charge on television stations. I was a bit interested in some of the words of the honourable member for Isaacs. Two words seem to be climing out of the Government benches time and time again. Honourable members opposite like to use the phrase 'in a clear and co-ordinated fashion'. You cannot convince us; you must be trying to convince yourselves. It is unbelievable. You say it and the Prime Minister (Mr Hawke) says it. If you keep telling yourselves you will believe it as you believe in many of your other fibs but you will not be clear and co-ordinated because-

Mr DEPUTY SPEAKER (Mr Mildren) —Order! If you wish to have a private discussion you can have it afterwards outside; otherwise direct you comments through the Chair.

Mr TUCKEY —Thank you, Mr Deputy Speaker. I will do that. For your information, another comment of the honourable member for Isaacs was that the Government made a firm decision about Aussat. That would have to be the greatest joke I have heard in a long time. The firm decisions were made about Aussat. It was only the Government's procrastincation and its supporters coming froward with all their issues and pork barrels, wanting to get a piece of the action, that threw the whole thing back into the pork barrel. The previous Government had a firm and clear position from Aussat. We knew where we were going with it. It took another firm decision of this Government to get it back on the track that it was on before. We are still to know whether it is to be put under the control of Telecom so that we have all of Australia's major inter-city communications under one union so that that union can turn Australia on and turn Australia off.

Mr Robert Brown —Disgraceful.

Mr CUNNINGHAM —That is an absolutely disgraceful performance. Yet the honourable member for Bennelong stood up in this House for 20 minutes and told us how we have broken promises. Let us look at what this will really do. About 50,000 people will be eligible during 1983-84 to receive non-repayable grants under this new first home owners scheme. I repeat that 50,000 people will be eligible in the first year. This is an increase in assistance of some 40 per cent since 1982-83. The introduction of this scheme is evidence of the Government's firm commitment to give housing a high priority and to target assistance to the lower and middle income groups who need it most. The new scheme will replace the home deposit assistance scheme and the first home buyers tax rebate scheme which was introduced by the previous Government. The new single scheme will be more effective and better directed to lower and middle income families and will be more easily understood by the public.

The rhetoric of the honourable member for Bennelong in the House tonight, if people are foolish enough to believe him, will serve only to disrupt and deceive the people as to what this Government is all about in the new housing scheme. We are not in the habit of spending money where it is not needed. The job before governments in Australia at present is clearly to get the economy going. To do that we have to spend money where it will have the most effect-that is, we must put the money where the people will use it and not where people will use it to add to their savings. There is not much point in using public funds if those funds are just going to go into the bank and be borrowed at interest rates of 16 and 17 per cent, which was the case when the previous Government was in charge. It tried to get tax rebates and to recycle the money. It achieved 106,000 home starts in 1982-83. That is not much of a performance on which that Government can stand up and be counted.

I repeat that under this new first home owners scheme eligible first home buyers who buy on or after 1 October will have a choice as to the form of assistance they will receive. I hope that all the people listening tonight clearly understand this. First home buyers with two or more dependent children will be eligible for a subsidy of up to $7,000 over five years or a lump sum payment at the time of purchase with smaller subsidy payments over the first five years of home ownership. First home buyers with one dependent child will be eligible for a subsidy of up to $6,500 over five years or a lump sum payment at the time of purchase with smaller subsidy payments over the first five years of home ownership. First home buyers without dependent children will be eligible for a subsidy of up to $5,000 over five years or a lump sum payment at the time of purchase with smaller subsidy payments over the first five years of their home ownership. Applicants will have three options as to the amount of lump sum and subsidy. The subsidy will be paid monthly over a five-year period.

Assistance provided under the new scheme will be a major boost to the prospects of lower income families struggling to buy a first home at a time of economic difficulty. The assistance will be available at the time of purchase and will assist many home buyers in obtaining a larger loan to bridge the deposit gap. It will restore home buyer confidence and provide a much needed stimulus to the house building industry, which has been depressed for some time. The Goverment also will begin a publicity campaign focusing on the new scheme just before it begins on 1 October. The publicity will be designed to ensure that all eligible first home buyers are made aware of their entitlements under the new scheme and how to apply.

In concluding let me make a couple of points. One is that with prudent, economic management we can look forward to interest rates in this country falling. We can reverse that decision taken by the previous government. It virtually declared that it could not lower interest rates and brought in a subsidy scheme for interest rates over 10 per cent rather than attack the real problem and bring interest rates down to 10 per cent which would have assisted those who needed help. I solidly support the legislation the Minister has brought into this House. I look forward to its passage and to the new scheme coming into operation on 1 October. The decision of the Australian public at the last election will be vindicated by better government, better home building and a lot more homes being constructed in this country.