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Thursday, 22 November 1973
Page: 3754

Mr DEPUTY SPEAKER - We are dealing with more than one Bill; we are dealing with a number of Bills. One of the Bills does in fact impose income tax on pensions.

Dr GUN (KINGSTON, SOUTH AUSTRALIA) - Yes, but the question of the age allowance was raised earlier by the honourable member. Of course that matter is related to one of the Bills before the House. But in the last 5 minutes the honourable member has been talking about fringe benefits and the means test, which are not the substance of any of the Bills before the House.

Sitting suspended from 6.16 to 8 p.m.

Mr TURNER - Prior to the suspension of the sitting for dinner I was dealing with the effect of the taxation legislation that is before the House on people on low and modest incomes. I had confined myself to that matter. I had said that, as a result of the Government's action in changing from the age allowance to the $156 rebate which diminishes according to income, many will suffer a diminution of income, I was pointing out the inequity that applies in relation to fringe benefits that may be worth anything from $500 to $1,000. There are inequities in 2 respects. Firstly, a person who qualifies gets all the fringe benefits to the value I have just mentioned. Secondly, a person who happens to have $1 too much does not qualify for any of them. There is no grading or shading at all. I had suggested 2 possible alternatives. One was the abolition of the health card as the passport - the open sesame - to all good things and the substitution of a test for the various benefits that are provided. I listed them all. I said that the other thing which could be done was the consolidation of the financial value of all these benefits and their tapering off or grading according to income.

I pass on from that to the prospects of the independent aged. I take the term 'independent aged' from my old friend Mr O. D. Bissett who, in a most benevolent fashion, has sought to champion the interests of the independent aged. What effect will this legislation have on an independent aged person who seeks to protect himself in his retirement by way of life insurance? Thirty per cent of the investments of life offices must go into government or semigovernment securities. The life offices are, to this extent, captive contributors to government or semi-government securities, which are of course particularly vulnerable to inflation. 1 have no doubt that we shall find the situation arising where an additional 10 per cent or more will go into the Australian Industry Development Corporation. It will be a matter of the savings of the people being conscripted through insurance companies. Not only has that happened, but also the tax on life offices has been increased in this legislation. In the case of one large life office, for example, it will involve an increase of 2i times the former tax. In that case it will mean an increase of $ 13m per annum in taxation. That will reduce the value of bonuses by 15 per cent to 25 per cent. The independent aged person who seeks to protect himself through life assurance will find that the life office is going to be taxed and penalised to this extent, making the protection less valuable than it would have been.

An independent aged person who decides that he will try to save enough to invest in securities in order to look after himself in his old age will be faced with swingeing taxation which takes about 50 per cent from the companies from which his dividends are derived and a further tax upon the dividend, which at the moment amounts to three-quarters of the dividend that he might receive and which, of course, diminishes downwards. One of the companies in which such a person might invest for, as he might have thought, his security is the Broken Hill Pty Co. Ltd, whose shareholders are not wealthy people who smoke cigars and drive around in Mercedes motor cars. A tremendous number of the people about which I am speaking invest in companies of that kind. What did the Treasurer (Mr Crean) say in this respect in his Budget Speech? He said:

It is also proposed to bring to an end the exemption of dividends paid out of profits from sales of locally produced petroleum or products of petroleum.

That means that a person who has been investing in companies in order to look after himself in his old age and who has been foolish enough to invest in shares in the Broken Hill Pty Co. Ltd will be hit once again.

It has been said that the Australian Labor Party is a low interest Party. That is splendid. Building societies will give an investor7½ per cent interest on his investment. Inflation - taking the rate as between September of last year and September of this year - is running at the rate of10½ per cent. So such a person would receive a return of minus -I emphasise the word 'minus' - 3 per cent if he puts his money into a building society. I donot know whether minus 3 per cent is a very attractive proposition today, but it is very difficult for the independent aged person who is trying to provide for himself to decide whether he should put his money into life assurance, whether he should put it into companies such as BHP, or whether he should put it into fixed interest bearing securities such as a building society. He will lose no matter what he does. I have mentioned that the Australian Labor Party claims it is a low interest Party. It is also a high inflation Party. When inflation is running at 10½ per cent it is absolutely impossible for an individual to look after himself in his old age.

The fortunate ones in our society at present from that point of view are the slick and the smart - the people who can buy and sellland, pictures or, as I think a cleric has suggested, wines. The fortunate ones are the ones who can buy and sell and who can manipulate companies by takeovers and other means. The rewards go to the slick and the smart but not to the sort of people who have tried to save in the ordinary way. Of course, superannuitants are particularly fortunate if they happen to be superannuitants who are providedfor by governments - State or Federal - or by large companies which can, on account oftheir monopoly situation, increase their prices or, because some prices justification tribunal decides the prices they charge, are successful in arguing that they ought to be able at least to earn enough to pay, among other things, the superannuation claims upon them. They also are fortunate people. The fortunate ones are the slick and smart and the people who derivetheir income from superannuation received from large companies or from governments.

In the past economic progress has consisted in the kind of slogan that was used in the United States of America - 'go west young man'. In our great country, with all its potentialities for expansion and with all its glorious future, the slogan now is 'Go into the government young man'. I do not know whether there is any future for such a country. I do not know whether, when people play for security in this way, that is the way in which to get economic progress. But perhaps we do not need economic progress any more. Perhaps it is enough to return to office a Labor Government that carves up the cake, such as it may be, and we should not concern ourselves with the size of the cake. We are turning from the old situation of homo sapiens - wise men, far sighted men - to that of homo servilis; that is, we are turning to men who depend upon the State for everything from the cradle to the grave. I do not know what future such a county has. That is for honourable members to decide for themselves.

Perhaps the old Protestant virtue of thrift matters no longer. We live in an age of plenty. Burns, a Scotsman, once wrote:

To catch dame Fortune's golden smile.

Assiduous wait upon her;

And gather gear by ev'ry wile

That's justified by honour:

Not for to hide it in a hedge.

Nor for a train attendant;

But for the glorious privilege

Of being independent.

I suggest that we are moving into an age when nobody will be independent but everybody will be dependent upon the Government. A commencement has been made on the abolition of the means test, which is a rough act of justice between the generation which is now suffering from inflation, for all the reasons that I have set out already, and the generation which has only to go on strike to double its pay overnight The abolition of the means test is a rough act of justice between them. But we are doing it so slowly - much more slowly than inflation is creeping upon us - and this is the great injustice.

It is not the responsibility of the Opposition to deal with these matters. The Government must take responsibility for its measures. Let it take responsibility and if there are enough people who still care about independence the Government will suffer at the polls. If these people have been wiped out and matter no longer, if independence matters no longer and if looking after yourself is of no consequence in the future, then of course the present Government will stay in office. I say nothing about the future of this country in such circumstances. But I do not believe that the people will tolerate this kind of slavery or servility for ever. If they do, I shall be deeply disappointed in the calibre of the Australian people.

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