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Tuesday, 21 March 1972
Page: 735

Senator DEVITT (Tasmania) - The measure before the Senate at the present time is simple in effect I am not required to Spell out its specific terms. Suffice it to say that it is designed to reinstate a concession to industry which existed until 12 months or so ago. The Government, after removing that concession, found itself to be in error once again. Now it is reinstating the concession. I say that it is a relatively minor measure. It is one which would not cause my blood pressure to rise. But since it is a tax measure, it provides us with an opportunity to direct our thoughts to other aspects of taxation which have a relationship to the measure before us at the present time.

I hope that in the course pf the few comments I want to make on this measure I will show that what I say is relevant to a consideration of taxation in the total context and will indicate to .the Senate areas in which I believe there are quite serious discrepancies in the approach of the Government to this question which, in fact, give validity to the proposition which Senator Willesee has put to the Senate, namely, that this measure, as it is presented to us, should be withdrawn and that there should be a re-examination of the taxation situation in a much broader context. That is the purport of Senator Willesee's amendment which, I suggest, is valid in all the circumstances at the present time.

Originally a measure was passed to give a 20 per cent concession to industry on the provision and installation of plant, presumably to give a stimulus to secondary industry and the manufacturing industries which would be making that plant. I believe that there was a great deal of justification for the comment that was made by Senator lames McClelland, namely that there seems to be no discrimination between plant manufactured in this country and imported plant. No impetus seems to have been given to local manufacturing. No encouragement seems to have been given to the production of this sort of machinery and equipment in our own country. I believe that that should be encouraged.

The Government's attitude seems to be very much in line with its lack of forethought in other directions of manufacturing industry. I can think, for instance, of the problems which exist in the manufacture of light aircraft in Australia. Our record will stand against that of any other country in that field. We have had proof of this. Light aircraft manufactured in Australia in competition with similar products made overseas have come out on top on more than one occasion. We do not seem to have given the sort of encouragement that was necessary. There are many reasons why it is necessary for us to encourage the development of our own industries - not only from the point of view of the employment that is provided and the stimulus that is given to economic development in Australia but also in the context of defence. However, once again there does not seem to have been put into the preparation of this measure the sort of thought which would have some regard to that proposition. The removal of this concession to industry was found to have had some undesirable effects. I do not know whether Senator Wright is trying to interject or just mumbling in his beard. Some funny sounds are coming from the background, as usual.

I can see some validity in the comments that were made by Senator Webster in the course of his remarks in relation to the stimulation of industry. He referred to the experience in post-war Germany, where considerable concessions were given to industries for the rehabilitation and reestablishment of their industrial potential, in the form of taxation concessions on capital employed for that purpose. There is another aspect of this matter, lt has some relationship to the experience of Britain in relatively recent years. Because there was some lag in the installation of the most modern forms of plant and equipment in the industries of Britain it was found that the output or productive capacity of those industries was not keeping pace with the performance in other parts of the world and that the unit cost of the production of those factories was not comparing very favourably with the performance in other parts of the world.

British industries were handicapped very severely as a conseqeunce of that. It was a matter of British industries resting on their laurels. Britain had a very enviable record of production, particularly of machinery and equipment of that nature, and it tended to rest on its laurels because apparently not sufficient inducement was given to industry to upgrade the standards of its equipment and machinery and so enable that country to compete against the rest of the world in the very competitive markets that then existed. I think there has been an improvement in that situation' in more recent times; but it just shows the respective approaches of various countries to this important question.

In Australia we see this small measure of stimulus. I do not get carried away with it, quite frankly, because I think its application is relatively limited. For instance, we do not find manufacturing industries replacing their plant with terribly great frequency, and I do not think its implications in financial terms are all that great. But it is an indication of a desire, I imagine, to give some stimulus to industry and to employment in the manufacturing industries and to provide goods at a reduced cost. One would expect to find that as a consequence of the installation of more modern plant. The restoration of the 20 per cent allowance which is made by this Bill gives some acceleration to these 2 factors.

The proposition that Senator Willesee put, namely, that we ought to be looking at this matter in a far broader context, is a valid one, I suggest, because when we come back to the basic situation we find that all taxation takes its authority from the Constitution, in particular section 51 (ii.). It seems, to me that if we are to deal with measures of this kind in isolation from all the other questions related to taxation - such questions as income tax, probate, sales tax and even the tariff-

Senator Wright - Is not this but one item of income tax?

Senator DEVITT - 1 am just saying that all taxation takes its power from section 51 (ii.) of the Constitution. I think it ls improper, in all the circumstances, for us to be considering one small aspect of taxation in isolation from all the other things that we could be discussing. This validates the proposition that Senator Willesee put forward, namely, that we ought to be looking at the matter in the total context rather than in isolation. On this measure the Government has played the old game that we used to play when we were kids - 'Now you see it, now you don't; perhaps you will get, perhaps you won't'. This is a restoration of something that existed before, because of the fumbling and bumbling mismanagement of the economic affairs of this country. We have a concession on today and off tomorrow. Things of this kind do not do us, as the planners of the economic affairs of this country, any great credit.

Senator McManus,in putting forward his Party's view of this measure, said that he could see no validity in or justification for the point of view which the Labor Parly is putting forward in its amendment, namely, that we should be considering this matter in the total context. Having said that he proceeded by his advocacy to justify the very points which we are putting forward. He spelt out a number of our reasons. In fact, he spoke about turning the tap on and off. He said that there should be an approach to this matter on a long term basis rather than dealing with it piecemeal or higgeldy piggeldy as we seem to be doing at the present time. As I say, the honourable senator gave his Party's point of view as far as the amendment is concerned. He said that his Party was against our proposal but he then spoke in favour of it. That is a rare type of advocacy to be sure.

Senator Websterin that quaint and curious way of his somehow had the left wing of the industrial movement intruding into the situation. Quite frankly, I fail to see the relationship between this matter and the left wing of the industrial movement. 1 suppose the honourable senator used that as a vehicle to put forward his own rather curious attitudes to industrial matters and to the affairs of the working people upon which the development and progress of this country depends so much.

Senator Webster - I mentioned that matter, senator, because I realise that there are a number of right wingers in the Australian Labor Party who just do not understand the influence they have.

Senator DEVITT - Thank you for the explanation, Senator.

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