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Tuesday, 8 November 1983
Page: 2384


Mr PEACOCK (Leader of the Opposition)(4.05) —Last Thursday in this place I raised as a matter of public importance the growing community concern at the arrogant and provocative actions of this Government in introducing taxation measures for which it had no mandate. In speaking on this subject I mentioned the decision to impose new indirect taxes and index them so that in future they will increase automatically every six months; the withdrawal of the home mortgage interest rebate, increasing the tax burden on all home owners; the withdrawal of the medical insurance rebate before the introduction of Medicare, increasing the tax burden on almost every Australian family; the imposition of a new tax on lump sum superannuation payments, disrupting the retirement planning of hundreds of thousands of Australians and their dependants. All these measures have one thing in common: Not one of them was foreshadowed before the 5 March election. Indeed, whenever Australian Labor Party spokesmen mentioned these issues before the election they made clear and specific commitments that the measures would not-I repeat not-be taken. That is the background to the measures we have before us this afternoon, a background of hypocrisy and downright deception of the Australian electorate, a background of a government that has an absolute obsession with finding new and ever harsher ways of confiscating the income and savings of typical Australians.

Under this Government by early in the new year ordinary Australians on average weekly earnings will be paying 46c tax on every extra dollar they earn. Where is the reward for initiative under that sort of punitive taxation? Where is the incentive for men and women to attempt to get ahead and provide a better future for their families? Bluntly put, there is none because this Government is not concerned with those sorts of ideals and aspirations. Those are not the goals and the objectives of the Australian Labor Party, a party which is not interested in growth and not interested in development, in getting ahead. The Labor Party is interested only in confiscating people's income and savings, in redistributing the assets of those who have saved for their future, those ordinary Australians who have accum- ulated a few modest assets in their pursuit of security and financial independence.

When we look at the specific measures before us today we find that they follow the same pattern, a pattern of broken promises and shattered commitments, a pattern of callous disregard of the needs of ordinary Australians, a pattern of ill-considered ad hoc measures that show this Government for what it is-a government with no policy other than an obsession with ever more taxes, taxes, taxes to fund its ideological commitments. Two of the measures being discussed today-changes to the income equalisation deposits scheme and the abolition of 10 -year write-off of capital expenditure for land clearing and swamp drainage-will hit the rural sector. The cost to farmers of these measures is large enough; it amounts to around $23m in a full year. These measures need to be seen in their proper context as part of a deliberate and wholesale attack by Labor on the farming community, an attack which has been mounted at a time when the rural sector is still reeling from the effects of the drought and is desperately trying to recover the ground it has lost.

Consider for a moment what this Government has done to help our hard-pressed farmers. It has increased by almost 70 per cent the period over which primary producers can depreciate certain plant and equipment for tax purposes. It has increased the non-subsidised part of the cost of certain petroleum products. It has dumped the bicentennial water resources program.


Mr Andrew —That is shameful!


Mr PEACOCK —Absolutely, because it was done, was it not, at a time when the drought should have highlighted its very importance? The Government has not fulfilled its election promises to help the sugar industry. It has increased the excise on motor spirit, on distillate, on aviation turbine fuel and aviation gasolene. It has indexed all these fuel excises and it has failed to increase the excise rebate on diesel fuel used off-road by farmers. It has reintroduced the excise on grape spirit used in fortifying wine. What an indictment of this Government that short list is! Was any of it promised, foreshadowed or even hinted at before the 5 March election?

Opposition members-No!


Mr PEACOCK —No, it was not; that is quite right. Not one element was raised, foreshadowed, promised or indicated before the election. What did Labor say about tax averaging? Its agricultural policy document stated that Labor recog- nised:

. . . the need for Government to provide individual producers with the ways and means of minimising any disadvantage flowing from [unstable incomes].

The document then states quite categorically and without qualification:

Labor will maintain tax averaging.

Nothing more was said; that was it-'Labor will maintain tax averaging'. There is not one word or hint that Labor was considering emasculating the scheme and introducing what the National Farmers Federation has described as a whole range of new inequities. What are the changes in tax deductibility for land clearing and swamp draining? Were they foreshadowed? No, they were not.


Mr Uren —What about the environment--


Mr PEACOCK —One cannot but be amazed at both the hypocrisy and the gall of the Minister for Primary Industry (Mr Kerin) who came into this place and said, as the Minister for Territories and Local Government (Mr Uren) who is at the table seems to be saying, words to the effect that the decision reflected the Government's concern for soil conservation. If the Government were genuinely concerned about soil conservation, would it not have implemented its election promise to provide-what was it?-at least $4m in its first year in government.


Mr Lloyd —One million.


Mr PEACOCK —It promised to provide at least $4m in the first year towards the national soil conservation program, and as my colleague has reminded me, instead of that amount $1 million was allocated in the Budget. The fact is that soil conservation is just an excuse for the Government, and an allegedly handy one, to slug the farmer and to find a new way to increase the tax burden on our rural community.

Let us look at another measure. I refer to the Government's decision to abolish the rebate, at the standard rate of tax, on up to $1,000 of dividends. This provision, which applied only to taxable income received by resident individual shareholders from resident companies, was introduced by the previous Government in the 1982-83 Budget. The former Government recognised that the current tax system was making it unattractive, particularly for those on lower incomes, to put money into shares relative to other investments. The previous government was concerned for a number of reasons: It was clear that the tax system was discouraging the growth of wealth creating enterprises and it was discouraging Australians from making a financial stake in the future of the country. Most importantly, it was discouraging the development of the real consensus which can emerge when people realise that their financial future is dependent on that of the private firms which generate the wealth in this country. Labor simply ignored these arguments. It swept away the $1,000 tax rebate and did not replace it with an alternative measure to counter the unfair tax treatment of the small investor. Unquestionably, the result will be a decline in the role of the small investor. People will become increasingly less aware of the fact that their prosperity is dependent on the private enterprise firms which are the backbone of our economic system.

But it is not surprising, of course, that Labor has taken this approach. Many of those in the Labor Party are ideologically opposed to the values which private ownership of equities encourages-values which to us are the foundation stone of our private enterprise system. When one examines these measures, the real question now is: What will come next? Frankly, it is not hard to see the answer. Let me just refresh the memory of the House of an exchange I had with the honourable member for Casey (Mr Steedman) last Thursday. Honourable members should remember that he is not the only one who has this approach. I refer to Ministers who supported him, from the Deputy Prime Minister (Mr Lionel Bowen) down. At page 2298 of Hansard, I posed a question to this new, seemingly innocent, naive creature, the honourable member for Casey. I said:

Does the honourable member want a capital gains tax?

Mr Steedman's answer was:

Yes.

I said:

Does the honourable member want a resources tax?

Mr Steedman's answer was:

Yes.

I then asked:

Does the honourable member want a gift tax?

Mr Steedman said:

Yes.

He did go on to say that he did not want a Liberal Government. I asked him:

Does the honourable member want duties?

Mr Steedman said:

Yes.

The fact is, as I said last week, that that young honourable member is not alone . The whole Government is associated with the measures before us. The Minister for Finance (Mr Dawkins), the Deputy Prime Minister, the Minister for Industry and Commerce (Senator Button), the honourable member for Port Adelaide (Mr Young )-the former Special Minister of State-and the honourable member for Burke (Dr Theophanous), who is Chairman of the Caucus Federal Parliamentary Industry Committee, have all made comments broadly reflecting the ideas of the honourable member for Casey. So the direction of this Labor Government is clear. The abolition of the dividend tax rebate is just the first step in a deliberate and vicious attack on the small investor, and the list goes on.

Honourable members should consider the changes we have before us to the prescribed payments system. If ever there were an ill-considered arbitrary attack on small business, this Government's withholding tax must surely take first prize. Rather than adopt the approach of the previous Government- honourable members will recall that that approach was one based on readily available exemptions-this Government sought to maximise its tax collections, irrespective of the burden placed on small business, both directly through prior taxation of withheld income and indirectly through increased administrative costs.

The House should not be misled by the statement of the Treasurer (Mr Keating) that the measures before us will correct the situation. While the amendments do undoubtedly represent an improvement-an improvement forced upon a reluctant government by the Liberal-National Party coalition and the Australian Democrats- they by no means put right all the defects in the Government's original measure. They certainly do not, as the Treasurer has claimed, evidence the Government's ' willingness to meet valid concerns about the operation of the scheme on an ongoing basis'.

The facts are that exemption certificates are still not readily available to taxpayers with good tax records, particularly those in small business. Indeed, we have the absurd situation wherein only about one in every 14 participants in the scheme is regarded by the Commissioner of Taxation as having a good enough tax record to warrant an exemption certificate. The requirements for such certificates involve the provision of far more information, the preparation of which is more expensive, than is needed by the Commissioner in other tax matters . Why do these anomalies and deficiencies remain? It is because this Government, notwithstanding all its rhetoric, is not genuinely interested in addressing the tax avoidance problems of the cash economy. Its real interest is in maximising the tax take from small business and this measure is just another element in Labor's overall tax obsession.


Mr Shipton —Hear, hear!


Mr PEACOCK —The honourable member for Higgins, who supports me, knows that only too well. No one has fought harder than he has this year in this House for small business. He underlines that by his support for the remarks which I have just put to the House. Nowhere, Mr Deputy Speaker, is Labor's mad grab for an extra tax dollar clearer than in its decision to tax the payments made to part time members of the reserve defence forces. Night after night we see advertisements on television encouraging people to join the Army Reserve. I do not know how much that advertising costs, but the greatest incentive to those who were giving up time for their country was the fact that they would get a little remuneration which would not be taxed-and why not? This was done because we wanted to encourage people. We advertised for them to join the Army Reserve.

It is well worth recalling why we maintained a reserve Defence Force. It is to maintain adequate level of skills and to provide a source of trained personnel in the event of an emergency. About the only incentive to recruitment and retention in the Reserve has in fact been the tax free payments. The Government' s measure removes that incentive without warning, and again nothing is offered in its place. This measure will shatter Reserve morale since it will be construed, and quite rightly I would imagine, that the Government just does not consider it to be of any real value to the nation. The Government ought to be condemned for that. If the Government recognised the true value of the Reserve and viewed it as making a vital contribution to Australia's defence preparedness , it would offer some tangible incentive for young men and women to join up. The inevitable result of this measure is that those with the skills we most need in our Reserve-middle rank officers, experienced non- commissioned officers and, indeed, warrant officers-will inevitably drift away from the Reserve. But I assume that this Government does not care about that. It is not worried about our defence preparedness. The television appeal of the Prime Minister (Mr Hawke) for people to join the Reserve can be seen as nothing but a sham and a publicity gimmick. Labor's only principle is, yet again, that of the tax gatherer. Everything else, including our defence capability, must be sacrificed for that obsession.

I wish I could say that those were all the tax grabs in the measures before us. But unfortunately that is not the case. We also have before us a tightening of what has come to be known as the piggy-bank tax. This Government will even stoop to that measure. Under an anti-avoidance measure introduced by the former Government unmarried minors currently pay tax rates of 46 per cent or higher on unearned income above $1,040 per annum. It will be recalled that the measure was designed to discourage income-splitting by diversion of income to children. It has generally achieved that objective. But that measure was introduced in 1980. The Government should have been looking to increase the $1,040 figure in line with inflation increases since that time. Instead, the Government has reduced the figure to $416.


Mr Hawker —It is a newsboy tax.


Mr PEACOCK —It is. The Government has not offered one plausible explanation of why it has moved in the opposite direction from that which common sense would suggest. In May, and again in introducing the measure, the Treasurer blithely claimed that the existing provision 'has come to be exploited in many tax minimisation schemes.' But not one jot of evidence has been offered to support this claim. The fact is that any child who has over $4,000 in a savings account in a building society, et cetera, will now have to fill in a tax return. If grandparents wish to put aside some money for a grandchild's education the interest on it will be subject to tax at the 46 per cent rate. If a deceased parent leaves some money to support a child the interest on it will also be subject to tax at the 46 per cent rate. In some cases, accumulated family allowance payments put aside for education expenses will force parents to put in a tax return for their children.


Mr Howard —That is criminal.


Mr PEACOCK —Absolutely so. It is seemingly an overstatement-an appalling situation. Are these the tax cheats the Government is intent upon catching? Accounts for education expenses are copping a 46 per cent rate of tax. Is this what this Government is all about? It is clearly just another of Labor's excuses for higher taxation. I move:

That all words after 'that' be omitted with a view to substituting the following words- 'Whilst not declining to give the Bill a second reading, the House-

(1) condemns the Government for consistently breaking its election undertakings in relation to tax; and

(2) is of the opinion that the withdrawal of-

(a) the tax rebate on the first $1000 of dividend income, and

(b) the tax concession available to part-time members of the reserve defence forces,

is not in the nation's interests'.


Mr DEPUTY SPEAKER (Hon. Les Johnson) —Is the amendment seconded?


Mr Howard —I second the amendment and reserve my right to speak later.