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Thursday, 17 November 1983
Page: 2888

Mr KEATING (Treasurer)(4.7) —There is a dichotomy in the interests between the purity, as the Deputy Leader of the Opposition (Mr Howard) puts it, of the so-called taxation principles and the considerations which apply in respect of other tax matters which arise but particularly one which applies to people who give of their time for other reasons and other motives. In this case the Government took the view that the taxation principles were important but upon reflection and indeed upon representation we believe that other matters might have weighed more heavily in the considerations by the Cabinet at that time. We are giving recognition to those factors and at the same time paying some regard to the taxation principles involved. The Deputy Leader made another apologia for the performance of his Party in defeating the recoupment legislation-the bottom of the harbour legislation-in the Senate.

Again we on this side of the House find it very curious logic that the former Treasurer could make a distinction between the company tax payments, which would accrue to the Commissioner of Taxation as a result of his legislation, and the potential to collect the personal tax which would have been paid on the retained earnings from those very same dollars about which he waxed lyrical and fulminated last year when introducing his legislation to recoup company tax. The phoney argument given all the time in this respect is that some of the elements of the retained earnings in companies were legal at the time under certain judgments of the High Court of Australia. Therefore that exonerated the former Government from attempting to collect the personal tax even though it was clear in most cases that a strip of the company's assets was on. This is akin to having a debate with a burglar, when he is in the house about to steal somebody' s property, about what things he can steal. I think it is just a nonsense argument for the Deputy Leader of the Opposition to be proposing when his Party is not prepared to kick the tax avoidance people around. If that is the case, that is fine, but his Party and his policy have to run the test of public scrutiny on that matter. He should not be trying to hide behind these changes to make those points.

I will make another point: He talked about the $100m in respect of changes to budgetary measures calling into question, in some respect, the Government's budgetary stretegy.

Mr Howard —No, I am not.

Mr KEATING —The honourable member says he is not.

Mr Howard —I am calling into question your consistency; that is all.

Mr KEATING —The honourable member is calling into question the Government's consistency. I observe only that his last Budget had a projected deficit of $1.6 billion, if my memory serves me correctly, which became $4.5 billion. I am not talking about hundreds of millions of dollars, but billions; a difference of over $3 billion, not $300m. The outcome in the 1982-83 Budget, to a very large extent, disqualifies my colleague from making any criticisms of the present Government in terms of overruns, changes in projections or the prospect for the outcome of the Budget for 1983-84.

Mr Howard —But not of consistency.

Mr KEATING —He says that he never, ever changed a budgetary measure. Of course, he did. Government must be prepared to look at measures; it cannot debate Budget measures with the public or interested groups generally before a Budget. It must be prepared to say that there is, if one likes, a problem with the application of a particular measure, as there was in respect of swimming pools, which the honourable member mentioned, or fuel oil or grape spirit. In each case the full application of the budgetary measure would have been too harsh. For the Government actually to stand up and make those changes to its Budget ought to be something of credit rather than something which should be detracted from and is a measure of the reasonableness of the Government. The Government always stands ready to be reasonable about any of its measures. We do not want to get to the crazy position in this country where we make a decision and, if we think the decision is wrong, we stand by it lest we seem to be, what is called, backing down.

Everyone would like to get every measure right, but in the thousands of matters which are considered for a Budget they cannot always be right. The assessment of tax increases, bearing in mind particularly markets and the elasticity of demand , is not one which can be made easily or simply. It is really only when focus is placed upon the actual action of that measure or upon a particular industry, as the case may be, that one receives the sort of information that one would very much have liked to have had when the decision was being made. If a government is confronted with advice which indicates that the measure is too harsh, or that it is made on the wrong premise, I think it is incumbent on the government to make the appropriate changes. This Government has been prepared to do that. Frankly, I have never seen changes to budgets as something to be disparaged, but rather applauded if, indeed, there is a sound case for the change to be made.

On that basis the Government was prepared to make these changes in the Defence Force taxation. I hope it does ease the disquiet of many members of the defence forces who may have felt that the Government was harsh in terms of the application of taxation on their earnings. There is of course an overwhelming case in taxation equity for it but, by the same token, I think it was having a detrimental effect upon the reserve forces. Substantially, if there had been any offsetting salary changes they would have upset the relativities which existed between the defence forces and the reserve forces and we may have had a more difficult problem to solve. I think essentially these amendments are appropriate in trying to meet those concerns and to ease the fears of members of the defence reserve and in arriving at the point where many of the people who may have thought it was time to quit the reserves will reconsider their position.

Question resolved in the affirmative.

Resolution reported; report adopted.