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Thursday, 22 November 1973
Page: 3759

Mr ADERMANN (Fisher) - The Australian Country Party fully endorses the remarks of the Deputy Leader of the Opposition (Mr Lynch). We agree with his analysis and support the amendment. This Bill con- tains a number of major proposals, almost all of which my Party and I view with the greatest of disfavour and as completely reprehensible. It is just not possible in the short 20 minutes available to me to deal with them all. For example, the withdrawal of exemptions for goldmining - although I believe we may have some surprises here; the very major reductions in the concessions allowed to life insurance companies for calculated liabilities which, in rum, will affect millions of Australians through bonus reductions and probably increased premiums on new policies; the withdrawal of concessions for expenditure in the development of export markets; the change in valuation of stocks of wine-makers; the taxation of certain pensions; the removal of the age allowance; and the inadequacy of the small increase in company retention .allowance in view of the direct increase in private company tax, are all important matters on which I would take strong issue with the Treasurer (Mr Crean).

Honourable members simply do not have time to discuss all these matters and as the Country Party can expect to have so few speakers on this Bill we must limit our remarks to just a few of the propositions.

I shall be speaking predominantly to those proposals which are contained in clauses 12 and 13 of the Bill which provide for accelerated depreciation allowances to be removed from primary producers; to clauses 14 and 15 which provide for the investment allowance to be terminated; and to clauses 17 to 19 which propose that immediate deductions for capital expenditure on land used for primary production shall no longer be allowed. In the Budget Speech, and in so many speeches by Government supporters since, the Government has spoken scathingly and in a quite uninformed fashion about the privileges of country people. But country electors spoke very loudly and clearly in their ballot in the New South Wales State election. If this type of legislation continues to be introduced they will censure the Government again at ever)' ballot for what even the urban-orientated national Press has referred to as the Government's 'severe anti-rural bias'. The Government will probably, by a number of manoeuvres, seek to minimise the effect of this country vote. But the wrath of the country people is being made manifest and will be made manifest. I think that the Minister for Services and Property (Mr Daly), with his electoral maps and red pencils might do well to ponder this point.

I want to speak particularly about the accelerated depreciation of primary production plant and structural improvements. This concession is to be removed. The purpose of this provision was to allow as a deduction over 5 years at 20 per cent a year depreciation of plant and machinery used in primary production. These privileges were included in section 57aa and 57ab of the Income Tax Assessment Act. Section 57ab refers to the Northern Territory and it has been interesting to listen to speakers from the Government side of the House during the last couple of nights speaking about the rights of the people of the Northern Territory. This is one right that the Government proposes taking away. I contend that the Treasurer's statement that this provision should be removed and the depreciation allowance related to the actual life usage of the implement or plant is not justified. In my quite extensive experience in primary production and as an accountant and tax agent, I have found that the existing rates of depreciation are quite realistic and are related to the usage of plant in particular. They are not in any way inconsistent with the effective and best life of that plant. It is more realistic than the proposal to write the plant off over 10 years. In fact efficiency in primary production, as an industry, is very dependent on adequate and reliable plant. The insertion of the existing sections was a recognition of this factor. It was also a recognition of the very appositefact that some consideration had to be given to obtain this provision because unlike industry and business where fluctuations are more predictable and usually of not such great magnitude, where they are not assailed by seasons, pests and so many unpredictables and where they do not have to face the fact that one good season is often followed by a multitude of adverse seasons, we should realise that the primary producer is in a different position. The provision of these sections made it possible for primary producers in a good season to be encouraged - not privileged as Government supporters aver - and enabled to replace at reasonable intervals plant which had outlived its effectiveness and efficiency or had been superseded by more efficient and economical equipment.

Mr England - Or to boost productivity.

Mr ADERMANN - Or to boost productivity, as the honourable member for Calare reminds me. I stress, not for the information of primary producers who know it well but for members opposite who in the main do not know and understand primary industry, that probably no other industry sees its plant become obsolete more quickly than does primary production. When one considers the rising costs of production, the impossibility of obtaining even unskilled labour, the frightening costs of parts and repairs, the need to diversify or to alter crops according to market requirements, the primary producer who has to battle on with his worn out tractor and obsolete plant has little prospect of success. He is hamstrung and unable to alter his crop program -unable to diversify. Yet irresponsible voices from the Government benches call him 'privileged'.

Sections 57aa and 57ab do not confer any privilege; they are vitally necessary because of the vicissitudes of primary production. I have tried briefly to sketch the situation in the few minutes I have in which to speak. The Government does not seem to understand or will not understand. The removal of these sections of the Act will be disastrous and unwarranted. It is a blatant attempt by these people who talk of a 35-hour week - which at the right and proper time I do not condemn - to reimpose on the primary producer long hours and the necessity for slave labour where the whole family has to return to an unprivileged status of yesteryear. Why? The Postmaster-General (Mr Lionel Bowen) summed it up at another time when he indicated that these people probably support the Country Party and therefore by inference should be denied consideration.

I turn now to the investment allowance. The investment allowance for primary production in particular was introduced to maintain and increase production. Surely production is necessary particularly when sales commitments are being made by a Minister when there is a doubt of our ability to supply. The need for adequate and efficient machinery in obtaining top production was the reason for the introduction of this provision in the Income Tax Assessment Act. It provided that where new machinery was purchased an investment allowance of 20 per cent could be written off against that machinery. Its elimination at this time is senseless, untimely and shows a complete lack of comprehension. Farmers are expected to persevere with second hand or outdated machinery and, as far as this Government is concerned, future production does not seem to matter at all.

I turn to sections 75 and 76 of the Act. These are important sections and they are to be deleted. Those sections allow for immediate deductions for the cost of certain capital expenditure on equipment used for primary production. The removal of them from the Act is inexcusable and unacceptable. The reason for the elimination of those sections, according to the Treasurer and the Government, is the allegation that this benefit was predominantly being enjoyed by Pitt Street farmers. This just cannot be substantiated. There are far better ways of dealing with Pitt Street farmers than to remove such deductions from bona fide primary producers.

An examination of the expenditure covered by item 75 is interesting as it illustrates what I am trying to say. Let us look at what it says. Some of the expenditure was on the eradication or extermination of animal or vegetable pests from the land. Surely that is for the good of our nation and country. Another was for the destruction of weed or plant growth detrimental to the land. Of course that is necessary and desirable. Surely the Minister for Conservation should be on his feet supporting us on matters like this. Another thing was the draining of swamp or low lying lands where that operation improves the agricultural or grazing value of the land. Where it allows us to bring into production land that could not be used before, surely that is important. The section refers to preventing or combating soil erosion on the land otherwise than by the erection of fences. That is an expensive and necessary process. Has any urban based Government supporter ever seen the ravages of soil erosion and land going out of production to be lost forever, irretrievably? If not, let them talk to my friend the honourable member for Darling Downs about it and he will tell them something about this problem. We have to conserve our valuable land for production now and for the future. This positive step, which was a necessary assistance, is being removed and we have a Minister for Conservation on the other side of the House who does not seem at all concerned about it. Subsections (ti) to

The section deals with fodder conservation. There was an allowance for the immediate writing off of the cost of structures built for the conservation of fodder and grain. Fodder conservation comes into the same category as the water conservation of which I have spoken. In this country we strike very unreliable seasons. Many areas have a predominantly low rainfall. We get a bountiful season now and again and a multitude of droughts. Fodder conservation is something that is expensive and must be provided by the primary producer, but that provision is being removed, callously and senselessly. Only time prevents me from elaborating on the absolute folly of this action.

How, in such a short time, can I sufficiently emphasise the decision relating to valuation of wine and brandy stocks, which is a disastrous decision? It is not overstating the position to say that it will almost certainly threaten some manufacturers, particularly some family companies that are hit by other sections of this Budget, with hardship and even threaten bankruptcy. The Government has estimated that this will produce something like $15m. The wine producers have challenged the Government to prove that figure. They would be happy if the Government would guarantee that it would set a valuation at a level that would not bring in more than $15m. The wine producers say that it will be nearer twice that amount. I say that this valuation of wine stocks is something that is totally unfair. It means that no longer will the manufacturer be able to defer his tax until the commodity is sold and the profit made. I thought that that was a quite reasonable proposition.

Mr Giles - It is the usual proposition.

Mr ADERMANN - Of course it is the usual proposition, as the honourable member for Angas says. This consideration does not seem to enter the minds of members of the Government who seem to have a quest for revenue, and the way they get it or the discriminatory practices they use do not seem to matter. Where is it coming from? The primary production sector, and from the pensioners. So much for the promise that tax would not be increased. Removal of these deductions and concessions and the imposition of new stock valuation as well as the imposition of tax on pensions and the removal of the age allowance is specifically increasing taxation. To say otherwise is indefensible and thoroughly dishonest. It is discriminatory and motivated by political expediency. That is another promise that has now been dishonoured. My time could be completely occupied tonight in raising protests on behalf of the pensioners and the old people of Australia - to what effect? The Government in this House by the ruthless use of its numbers listens not to reason and indeed it is becoming somewhat unusual for Opposition members to be able to speak at all because of the gag and the guillotine.

Private companies have been savagely treated. Not only has there been a rise in private company tax but also there has been the new provision of quarterly tax assessments in advance of the usual time for payment. And the totally insufficient palliative of a minor adjustment to the retention allowances still impose upon private companies particular disabilities not applicable to public companies. This retention allowance leaves no room at all for provision for capital development and expansion. It provides no adequate buffer for adversity. It is not the first time in this House that I have appealed to the Treasurer to consider this matter. He seeks to equate the rate of tax on public and private companies but retains this imposition of the retention allowance for private companies that is unjustified. To excuse this on the basis that most public companies pay out in divi dends at least 50 per cent of their tax after tax profits is not realistic. They may do that on occasions, but there is no mandatory requirement on them to do it. But if a private company wishes to provide for expansion and development it is penalised by paying penalty tax on undistributed profits. These taxation Bills are direct indictments of a dishonest government which promised no taxation increases and which has now compounded previous taxation increases by way of direct increases in fuel tax and Post Office charges which are considerable and savagely anticountry.

This is a Government which insists that primary producers are enjoying great prosperity. Let us analyse that statement. This Government does not consider the problems of the past and the probability that not so bountiful seasons might lie ahead. It wants to tax the primary producers in order to finance its inflationary programs. This year, the first in many years, when primary producers had an opportunity to update their machinery, to replace their plant, to undertake necessary fodder, water conservation and irrigation projects, to eradicate pests and to carry out clearing in order to bring land into production, the tax deductions are taken away and the money is appropriated for revenue. The Country Party opposes this anti-country attitude. Therefore, we support the amendment moved by the Deputy Leader of the Opposition. We agree with his analysis and we endorse his remarks.

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