31st Parliament · 1st Session
Mr SPEAKER (Rt Hon. Sir Billy Snedden) took the chair at 10.30 a.m., and read prayers.
– Petitions have been lodged for presentation as follows and copies will be referred to the appropriate Ministers:
To the Honourable Speaker and Members of the House of Representatives in Parliament assembled the petition of the undersigned citizens of Australia respectfully showeth:
That restoration of provisions of the Social Security Act that applied prior to the 1 978-79 Budget is of vital concern to offset the rising cost of goods and services.
The reason advanced by the Government for yearly payments ‘that the lower level of inflation made twice-yearly payments inappropriate ‘ is not valid.
Great injury will be caused to the 920,000 aged, invalid, widows and supporting parents, who rely solely on the pension or whose income, other than the pension, is $6 or less per week. Once-a-year payments strike a cruel blow to their expectations and make a mockery of a solemn election pledge.
Accordingly, your petitioners call upon their legislators to:
And your petitioners as in duty bound will ever pray. by Mr Adermann, Mr Baume, Mr Lucock, Mr Les Johnson, Mr Sainsbury, Mr Scholes and Mr West.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully sheweth:
That the provision of payments for abortion through items of the Medical Benefits Schedule is an unacceptable endorsement of abortion which has now reached the levels of a national tragedy, with at least 60,000 unborn babies being killed in 1977.
Your petitioners therefore humbly pray that the Honourable Members should:
Amend the Medical Benefits Schedule so as to preclude the payment of any benefit for abortion.
And your petitioners as in duty bound will ever pray. by Mr Armitage, Mr Cadman, Mr Dobie, Mr Falconer and Mr Sainsbury.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:
That we the undersigned, having great concern at the way in which children are now being used in the production of pornography call upon the government to introduce immediate legislation:
Your petitioners therefore humbly pray that your honourable House will protect all children and immediately prohibit pornographic child-abuse materials, publications or films.
And your petitioners as in duty bound will ever pray. by Mr Dobie, Mr Drummond, Mr Martyr and Mr Sainsbury.
To the Honourable Speaker and Members of the House of Representatives assembled. The petition of the undersigned citizens of Australia respectfully showeth:
That there is no requirement for a communications satellite system in Australia
That the establishment of a communications satellite system would duplicate services which are now adequately provided for by Telecom Australia
That the terrestrial communications network owned and administered by Telecom Australia should continue to be developed so as to best meet the social, industrial and commercial needs of the Australian people for telecommunications services and to make these services available throughout Australia for all people who reasonably require those services
That the introduction of a communications satellite system would have an adverse effect on employment in a large number of Australian industries, including Telecom Australia and Australia Post, and would further monopolise ownership and concentrate control of the information industries in Australia.
And your petitioners as in duty bound will ever pray. by Mr Blewett.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:
That item 6469 of the standard Medical Benefits Table is the means by which payment is made for the slaughter of thousands of unborn babies every year.
Your petitioners therefore humbly pray that the Government should ensure that Item 6469 is removed from the standard Medical Benefits Table.
And your petitioners as in duty bound will ever pray. by Mr Jarman.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of we the undersigned citizens of Australia respectfully showeth that:
The proposed introduction of a Retail Turnover Tax will:
Your petitioners humbly pray that the Members in the House Assembled will not introduce indirect tax measures such as a Retail Turnover Tax or the administratively more difficult Value Added Tax as to do so would exacerbate the inequalities in our taxing system.
And your petitioners as in duty bound will ever pray. by Mr Les Johnson.
To the Honourable, the Speaker and Members of the House of Representatives in Parliament assembled. The petition of we, the undersigned citizens of Australia respectfully showeth:
That the Government’s decision not to proceed with a National disaster insurance scheme will cause financial and personal hardship to people living in the country and city who are victims of natural hazards such as floods, land slip and tropical cyclones. That it is impossible to obtain adequate insurance cover for natural disasters from existing private insurance companies.
Your Petitioners therefore humbly pray that-
The Federal Government reconsider its decision and honour its promise made in March 1976 to establish a National Natural Disaster Insurance Scheme.
And your petitioners as in duty bound will ever pray. by Mr Les Johnson.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of we the undersigned citizens of Australia respectfully showeth that:
The Trade Practices Commission draft decision to abandon the existing newsagency system will cause-
Your petitioners humbly pray that the Members in the House assembled will not introduce acceptance of the Trade Practices Commission draft decision to abandon the existing newsagency system as it is definitely not in the best interests of the public or the many thousands of newsagents themselves.
And your petitioners as in duty bound will ever pray. by Mr Eric Robinson.
– I seek leave to move:
That so much of the Standing Orders be suspended as would prevent me from moving forthwith General Business Notice of Motion No. 1 standing in my name.
Leave not granted.
- Mr Speaker, I raise a point of order. I think it should be pointed out to the House that it has always been the practice of the Government to allow the Opposition and back bench Government members to have a grievance day debate without the intrusion of a motion such as this. I remember the many occasions when the present Opposition was in government when it would not allow the then Opposition to bring forward special motions on a Grievance Day.
-There is no point of order.
-I ask the Minister for Primary Industry what provisions currently exist to make Commonwealth finance available to poor or marginal farmers for rural adjustments? Who administers distribution of the funds? Are the interest rates charged less than commercial interest rates?
– There has probably been no more effective system of adjustment in the world than that introduced through the rural reconstruction scheme in Australia by the LiberalCountry Party Government in the early 1970s. The scheme has provided a diversity intended to meet the particular requirements of individual industries. Significantly, it is there not only to help those farmers who are- as the honourable gentleman’s question suggests- poor or disadvantaged but also to help re-adjustment. The House would know that there are three principal components of the scheme. There is a debt adjustment component which is to enable farmers who are financially disadvantaged, either by markets or seasons, to fund their operations until such stage as those two factors are corrected. The second part is a farm build-up component which enables farmers whose size of holding is too small to have access to funds at slightly better than commercial interest rates to enable them to operate on a more commercially viable basis. The third component is a form of assistance to help farmers out of the industry. Debt adjustment funds are available at interest rates which represent a significant concession. Farm build-up funds also are provided below commercial rates of interest. The whole concept is that money is provided by the Commonwealth separately to each of the States and individual States have their own reconstruction authorities which in their operations make determinations as to eligibility. The system is co-ordinated through regular meetings between Commonwealth and State Ministers to determine the basis of funding for the future having regard to the method of past operation. I believe that the scheme has worked most effectively. Of course a time of rural recovery does not mean that there are not still pockets of disability in the rural sector. The Commonwealth recognises this and continues to maintain funding for the scheme for that reason.
– Has the Prime Minister seen reports suggesting that death duties should be reimposed and some sort of wealth tax instituted? Will the Prime Minister inform the House whether the Government intends to introduce such taxes?
– I have seen such reports, as I indicated yesterday. If I may broaden the answer that I gave yesterday, the Government has no intention of introducing any such taxes. Indeed, as the honourable gentleman would know, we have provided very great relief for small businessmen, small farmers, householders and many people in many different parts of the country by relieving them of the burden of death duties. It is worth noting that most Stateseven Labor States- are tending to follow that example because they recognise the inequity of that kind of tax.
It is possible that there is a different view and a different philosophy in the Australian Labor Party in Canberra. The honourable member for Gellibrand in the Laurie Oakes Report of 28 February- one could not possibly suggest that this was not an accurate report on this occasionstated that Labor was examining the options for the capital tax. That was confirmed by the Leader of the Opposition yesterday morning. The options Labor is examining apparently are death duties, capital gains tax or wealth tax or perhaps some combination of these- or perhaps all three. They certainly seem to be all embracing. The Government does not intend to be involved in such proposals. The people who would be affected would include pensioners, householders and small businessmen. I said this in the House yesterday and the Leader of the Opposition subsequently made a personal explanation claiming to have been misrepresented. But he did not deny that any of these groups would be affected by what he indicated.
His assertions on capital gains tax might be questionable because last year following the proposal of the alternative Budget he said that if Labor had won the 1977 election it would have introduced a capital gains tax. But unfortunately Labor did not tell the people of Australia before the election that it would have introduced a capital gains tax. I do not believe that the Leader of the Opposition can deny categorically that no pensioner, no small businessman, no householder, no owner of a farm under 100 acres, would not be affected by his capital gains tax scheme. I repeat that I do not believe that the Leader of the Opposition can deny categorically that no pensioner, no small businessman, no householder or no owner of a farm under 100 acres would not be affected by his capital gains tax scheme.
– The Prime Minister will recall that last year he was asked whether he subscribed to the philosophy that all members of Parliament should disclose the assets, liabilities and tax returns of their wives and families. In reply he expressed the view that such dependants should be exempt from such disclosures. I ask whether he stills holds this view and whether he has transmitted it to the inquiry which is being conducted under Mr Justice Bowen. Is there any special reason why the Prime Minister should take this view?
– I did not say that wives or children should be exempt. I was pointing out the difficulties of having a disclosure that was complete and adequate. I do not believe that the Parliament should indulge in a farce in relation to these matters and pretend to the people that it might have introduced measures which would involve adequate disclosure but which would not in fact do so. I was also pointing out the difficulties in relation to children of politicians and other matters. If disclosure is to be adequate one may well assume that all members of a family should be involved. Are children not allowed some life of their own? They cease to be dependent. Does it make much sense to say that under the age of 18 years they should be included but over the age of 18 years or 21 years they should not be included? There are very real difficulties in relation to these matters. They will no doubt be resolved or helped to be resolved when we have the Bowen report in relation to them.
I have spoken very plainly to Mr Justice Bowen in relation to those matters- to the inquiry. Because the Government will need to be standing in some kind of judgment over the report, making a decision in relation to it, I did not believe that I should be speaking publicly in detail about what I put to the Commission. I therefore gave evidence in camera. The Government will be judged by its reaction to the report. We can all look at that as it comes.
-Has the attention of the Minister for Defence been drawn to the suggestion in this week’s Bulletin that Australia can learn a lot from Israel’s defence? Can the Minister inform the House whether any assessment has been made of this novel idea?
– I read with considerable interest the article to which the honourable gentleman referred. Of course there are lessons to be learned all over the world about a great variety of matters. One can express admiration for the extraordinary defence capability which has been developed by the Israelis, but I hope that writers on that theme would observe the discipline that there are significant differences between Australia and Israel. For example, Israel spreads over two and a half parallels of latitude. This country spreads over some 32 parallels of latitude. We have approximately 3 million square miles of territory; Israel has 34,500 square miles of territory. There are very significant differences. I believe that that discipline should be observed.
I think it is a matter of regret that the writer of the article is so prejudiced in his views as to say that the defence capability of one country is significant and the defence capability of this country is insignificant. I repudiate that statement in the plainest of possible terms.
– I ask the Prime Minister: Is it a fact that the Rural Finance and Settlement Commission of Victoria receives Federal funds? Is it also a fact that in 1977 the Commission made a loan in the vicinity of $250,000 to a pastoral family at concessional rates of interest? Was the money loaned under the general financing power of the Commission or was it loaned under the rural adjustment provisions? Was the loan made to members of the Beggs family, including the Prime Minister’s wife?
-Whatever loans the Rural Finance and Settlement Commission has made it has made on its own judgment and in accordance with its own circumstances.
-I ask the Minister for National Development: How is world parity established in Australia for assessing the price applicable to locally produced crude oil at the refineries? Can the Minister advise what effect the high and fluctuating spot prices being demanded by world oil exporters have on assessing world parity for Australian locally produced crude? Is the Minister aware of the effect that high fuel prices have on Australian exporting industries, particularly the rural industries, competing against exports from highly subsidised overseas competitors? Can any such disadvantage be assessed by reference of the matter to the Industries Assistance Commission?
-The question asked by the honourable member for Darling Downs raises some very important issues facing us in Australia. In answer to the first part of the question, 70 per cent of crude oil which is used in this country is priced at world parity. A calculation is made every six months on 1 January and 1 July. This calculation is based on the price of light Arabian crude, but also includes the cost of transporting that crude to Australia, the cost of moving it around the coast, the exchange rates and the quality differential. All of those things are included in the calculation for determining the final figure.
The second part of the question relates to the effect on that pricing policy of the wild fluctuations in spot prices caused by the Middle East situation and some members of the Organisation of Petroleum Exporting Countries.
-I did not know he was that crooked.
-Order! The honourable member for Prospect will withdraw that remark.
-I ask honourable members on my left to remain silent while the Minister for National Development answers the question.
– It is peculiar that although this is a subject on which members of the Opposition have been so vocal in recent days they cannot even be bothered listening to the answer. The answer to the second part of the honourable member’s question is that those spot pricesthose wild fluctuations in Middle East priceshave no effect whatsoever on the calculation which I have just described, despite some of the drivelling to the contrary by the honourable member for Blaxland, and if the honourable member for Blaxland would just listen to the answer it might curb his drivelling. The fact is that we will calculate on 1 July a price which will reflect the price of light Arabian crude as set last December. That is a predictable price; it is a stable price. It does not reflect in any way whatsoever spot prices or prices that may be set by other OPEC countries, and I hope I make that clear without any equivocation whatsoever. If the honourable member for Blaxland wants a few more facts, this means that we will have a 5.3 per cent increase this year, and that is all. I hope that he has it clear now once and for all.
The third part of the question relates to the effect on rural producers. I met the leaders of several important farm organisations and we sat and talked about this policy. I cannot say that they all agreed with the policy, but I think that there was a general consensus that they understood the practical applications and the wisdom of the move that the Government had made. It is true that some other countries whose farmers are in direct export competition with Australian farmers do subsidise farm fuel. That is recognised and there is no argument about it. However, we must look at the totality of what governments do for their farmers, and energy prices cannot be taken in isolation. One must look across the board and calculate the pluses and minuses of what the Government offers. I suppose that if one wanted to examine the totality of the farmers’ position and how it was affected by energy prices, one option would be to hold an Industries Assistance Commission inquiry.
– I ask the Prime Minister: Will he say why he refuses to make any statement to Parliament on the details of the terms or understanding under which his difficulties with the Minister for Finance were resolved so that the Minister’s reinstatement was possible after only three days? If not, why does the Prime Minister persist in refusing to make himself accountable to the Parliament?
-The Minister for Finance has made a statement to the Parliament. That statement is appropriate and adequate. If the Leader of the Opposition wishes to pursue this matter he might well like to indicate to this Parliament why it is that his own representative on the Queensland Conference of the Australian Labor Party and on the committees of that Party is not acceptable to the Queensland members of the Australian Labor Party. Yet the Labor Party will ask that that senator have the confidence of the people of Queensland when the time comes. Quite plainly, the Leader of the Opposition has chosen somebody who is offensive to the Labor Party and he expects that person to be acceptable to the people of Queensland.
- Mr Speaker, I rise to order. The Prime Minister’s answer is totally irrelevant to the question that was asked. I do not think it matters how long he talks. He only does himself damage. Mr Speaker, can you enforce that part of the Standing Orders which requires an answer to be relevant to the question?
-Order! The honourable member will resume his seat.
– Is the Treasurer able to advise whether a decision has been made by the Reserve Bank of Australia to extend finance through the Australian Dairy Corporation to dairy product manufacturers for maturing stocks of cheese other than cheddar and gouda?
– I am able to tell the honourable member for McMillan that an application has been made by manufacturers of certain cheeses for financing of their stocks. The matter is under consideration at present, and I understand that very shortly a recommendation will be submitted to my colleague, the Minister for Primary Industry, within whose portfolio the matter falls.
-I direct my question to the Prime Minister. It is supplementary to an answer he gave earlier, saying that he was anxious to avoid any further taxes on pensioners, small businessmen and holders of land under 100 acres. In that spirit I ask the Prime Minister for his assurance that the 1.5 per cent personal income tax surcharge introduced in the Budget as a ‘temporary measure for 1978-79 only’ will not be reintroduced in 1979-80.
-The honourable gentleman should, look at the legislation. The legislation runs out from its own making. It is that kind of legislation. Quite plainly, that commitment stands. But I note that neither the Leader of the Opposition nor the Deputy Leader of the Opposition has claimed that the capital gains tax that they would impose would affect no pensioner, no small businessman, no farmer with under 100 acres and no householder. Quite obviously, those people, would be affected.
-I call the honourable member for Petrie.
Opposition members interjecting-
-Order! I ask the honourable member for Petrie to resume his seat. The dignity of the Parliament ought to be preserved by the members on my left. I ask them to cease continual interjection.
– On a point of order, Mr Speaker, the dignity of the Parliament would be facilitated if the Prime Minister’s answers were relevant to the questions.
-There is no point of order.
– He has not been relevant.
-There is no point of order. The honourable gentleman well knows that. When a member, be he a Minister or a back bench member, has the floor he is entitled to be heard in silence.
-Mr Speaker, I take the point -
-The honourable gentleman will resume his seat.
-Mr Speaker, there is a point of order.
-The honourable gentleman will resume his seat.
– Standing Order 145 -
-The honourable gentleman will resume his seat or I will deal with him.
– Standing Order 145 says that answers must be relevant. They are not.
-I warn the honourable gentleman that if he continues to speak while the Chair is speaking I will have to deal with him. He, above all, ought to give example to the House.
-Has the Prime Minister’s attention been drawn to a statement by the New South Wales Premier that his Government has proposed a joint Commonwealth-State task force to combat drug trafficking? Has the Prime Minister received any approach in this matter? If so, will the Commonwealth co-operate in this State initiative?
– I read in this morning’s newspapers that the New South Wales Government had approached the Commonwealth in relation to this matter. I was somewhat interested in the report because the facts of the matter are slightly different. I have not received any proposal from New South Wales from Mr Wran, and I do not believe any of my colleagues have received an approach from the New South Wales Government. I am well aware of the joint task force proposal which is, in fact, an initiative of the Commonwealth Royal Commission into Drugs. Mr Justice Williams put the proposal to the New South Wales Royal Commission of Inquiry into Drug Trafficking, which also supported it. So both royal commissions have a common view about a joint task force approach. Mr Justice Williams wrote to me outlining the proposal.
My colleagues the Minister for Business and Consumer Affairs and the Minister for Administrative Services agree that the concept of a joint task force should be supported. Therefore, I have written to Mr Wran proposing discussions between officials on the establishment of that force. It is an imaginative proposal by the Commonwealth Commission to combat the despicable trade of drug trafficking. I believe that Mr Justice Williams is to be congratulated for his initiative. I am very glad indeed that the New South Wales Commission and also Mr Wran support the proposal. But Mr Wran seemed last night suddenly to adopt it as his own thought and his own proposal. I suppose that is all right, but I thought the facts ought to be on the record.
-I direct my question to the Minister for Foreign Affairs and refer to recent statements made by him in relation to foreign policy. Can honourable members hear me?
-I will keep on going. Has the Minister been able to detect -
-Order! The honourable gentleman will resume his seat. The House will come to order. There is far too much audible conversation.
– That is the Prime Minister’s ears flapping.
-The honourable member for Melbourne will remain silent.
-Thank you very much, Mr Speaker. My question is directed to the Minister for Foreign Affairs and concerns recent comments by him in relation to foreign policy. Has he been able to detect a consistent pattern in the views on that foreign policy expressed by senior Opposition spokesmen here and in another place which claim that the Government has overestimated and, at the same time, ignored the current Indo-China, Middle East and East Asian situation?
-The short answer is that any examination of statements made by members of the Opposition on this issue over the past two months has shown that those statements have been totally contradictory, devoid of an examination of the facts and, I think, withdrawn from reality. The first fact to be borne in mind, which I pointed out the other day when I was making my statement -
– I rise to order, Mr Speaker, the statement made by the Foreign Minister is still under debate in this House and is listed for further debate today. If the Minister wants to come back into the debate he should do so then. The statement should not be the subject of a question, especially a Dorothy Dixer, at this time.
– Speaking on the point of order, Mr Speaker, I listened carefully to the question and noted its content. It did not relate to the debate before the Parliament. It specifically referred to earlier statements made -
- Mr Speaker, it related to statements made by members of the Opposition.
-The honourable member for Port Adelaide will resume his seat. The Minister may continue.
– The question specifically referred to a series of statements made by members of the Opposition which were made prior -
– In this place.
– No, they were made prior to that statement being made.
-I uphold the point of order raised by the honourable member for Port Adelaide. The question does anticipate a debate on the Notice Paper.
-I draw the Treasurer’s attention to a Press release dated -
– Start again. I cannot hear.
-Order! The honourable member will resume his seat. The House is in a most unruly state today. I do ask honourable members to behave as is fitting for a national parliament. I ask all honourable members on both sides of the House to remain silent.
-I draw the Treasurer’s attention to a Press release issued by him on 23 February drawing attention to the fact that a mission from the Organisation for Economic Co-operation and Development would be visiting Australia from 13 to 16 March and that that mission would be conferring with the Treasury and other departments in Canberra and with the Reserve Bank of Australia in Sydney. Will the Treasurer arrange for peak trade union organisations to confer with this mission and for time to confer to be allocated to the Leader of the Opposition, the Labor spokesman on Treasury matters and representatives of industrial and commercial organisations? I raised this matter with the Secretary-General of the OECD, Mr van Lennep, in Strasbourg on 3 October 1978 and he indicated that the mission was quite happy to meet these people if time were allocated. I also ask the Treasurer how it is possible for this mission to draft an independent report on Australia’s economy without first of all conferring with independent groups? Will the Treasurer also give an assurance that the Government will not interfere, as it has done in previous years, in the drafting of this report?
– If I can take the parts of the question in reverse order, I make it very plain to the honourable gentleman -
Mr Young interjecting-
-Order! The honourable gentleman will resume his seat. I warn the honourable member for Port Adelaide.
-I make it very plain that the Government rejects completely any suggestion by the honourable member for Newcastle that the Government has interfered with the preparation of previous OECD reports on Australia. The fact of the matter is that the honourable member for Newcastle and his colleagues do not like the endorsements that the OECD has given to this Government’s policies and so they are trying to raise the spectre of this Government having interfered with the preparation of those reports. That totally misleading suggestion ought to be nailed immediately and rejected as an absolutely baseless attack on the integrity of the OECD ‘s reporting.
So far as the other part of the honourable gentleman’s question is concerned, let me say to him that I understand- and I will check this further after Question Time- that under the present arrangements there is scope for consultation beyond the sources of official advice coming to the Government. I have no inprinciple objection to the idea of the OECD being exposed to the views of the trade union movement of Australia and, indeed, the views of spokesmen for the Opposition in these matters. But obviously there are considerations of time constraints and so forth. I will look further into that matter and let the honourable gentleman know what further can be done.
-Is the Minister for Trade and Resources aware of reports from Japan that negotiations between Australian iron ore producers and Japanese steel mills have been concluded? If so, can he inform the House as to the outcome?
-Our iron ore industry is of great national importance, being our fifth largest export industry. Therefore, I am very pleased to be able to say that a very satisfactory settlement has been reached between the major haematite iron ore producers and the Japanese steel mills. This is indeed pleasing. The Government’s having required certain export control procedures to have been undertaken has resulted in the speediest of negotiations taking place. In fact last year they were not concluded until about August. This year they have now been concluded. They have concluded in a harmonious fashion which has shown that there can be a successful and harmonious working relationship between the Government and the industry. Indeed, the negotiations with the Japanese steel mills have run very smoothly. Fundamentally these negotiations have meant something like $A1 a ton increase in the price. That increase is spread across the entire contracts of these companies and will have flow-on effects on sales to the other Asian markets. This means that there will be a gain to Australia of something like $A45m or $US50m. European contracts have also been concluded reflecting similar price rises.
– What about tonnage?
-In relation to tonnage, the undertaking which the Japanese gave us previously and which they have abided by is that they will maintain the same ratio as previouslythat is, approximately 48 per cent of the marketand they will continue to give approximately that percentage of the market even on the new contract basis. So we will maintain the same proportional tonnage or there will be an increased tonnage should the Japanese mills produce more steel this coming year.
I think the position is pleasing when one realises that last year there was a decline in prices for some of our contracts and also some unpleasantness. This year there has been none of that. When one takes into account the more realistic iron ore prices this year, measured against an international market situation of 30 per cent over capacity, it has indeed been a very successful negotiation. I am glad that all parties are satisfied with it.
– My question is directed to the Minister for Employment and Youth Affairs. I refer him to the recent decision of the Government to increase the number of apprentices in government services. Will the Minister advise the House whether this increase is subject to the existing staff ceilings? Is he aware that the Bendigo Ordnance Factory can take on only five apprentices this year as opposed to 20 the previous year? Is he also aware of the proposal to exclude apprentices from the staff ceilings, to encourage the employment of extra apprentices? If so, can he advise the House when a decision to accept this proposal will be announced?
– I thank the honourable gentleman for his question because it is one which is a matter of concern to him and to other members on this side of the House. The Government also was concerned about the situation relating to apprentices. As a result it asked for the Public Service Board and my Department to conduct a survey of the capacity to increase the number of apprentices taken on by the Australian Public Service. As a result of that survey the Government agreed that an additional 230 should be engaged.
We were also conscious that staff ceilings might inhibit the taking on of that number of apprentices. The Government, in its decision, asked for a report on the effect of staff ceilings on its desire to increase the intake of apprentices. The decision must be looked at in that light. On the other hand, if it is necessary to increase the staff ceilings to take on the 230 apprentices the Government will be favourably looking at that. A report from the Public Service Board should be available any day and it will be presented to the Prime Minister.
– My question, which I address to the Minister for Trade and Resources, refers to coal rather than iron ore. Will the Minister be approving coal contracts negotiated with Japan at prices well below the parameters fixed by the Government? If such contracts are to be approved, what then is the value, purpose and future of the Minister’s export guideline policy?
– I hope I demonstrated in my previous answer that immense benefits have been derived by helping the industry to be more co-ordinated and synchronised with the Government in the sale of these raw materials. I think all the jibing I might have taken has been more than recompensed by the very successful iron ore negotiations that have been recently concluded.
I mentioned in answer to a question last week that I was seeking a report from my Department on the progress of coal negotiations. I have received a report. No approvals have been given as yet. I am having further discussions with relevant people. When those discussions are completed I will be in a position to say more.
-Does the Minister for Post and Telecommunications recall that during his visit to western Queensland residents in these areas brought home to him very forcibly the importance of mail services? Did the Australian Postal Commission agree to consider carefully the provision of a minimum of two mail services a week wherever practicable? Can the Minister advise whether there have been any further developments towards achieving this very desirable and well justified objective?
– I remember my experiences with the honourable member in his electorate and in other electorates throughout central, western and northern Queensland. That visit brought home to me the importance of rural mail deliveries. It was at that time that the Australian Postal Commission agreed to consider the possibility of providing a minimum of two mail deliveries a week wherever practicable. I am delighted to say that the Postal Commission will now be aiming to provide a minimum of two mail deliveries a week wherever that is practicable. This basic standard of service has now been accepted. The Chairman of Australia Post has pointed out that this will involve additional expenditure amounting to $700,000 per annum by 1980-81. Consequently, over the next three years mail deliveries to approximately half of the households in rural and remote areas which now receive mail less than twice weekly will be improved.
-I direct my question to the Prime Minister. Is it the policy of this Government, as part of the attack on inflation, to reduce the level of real wages in Australia and oppose all efforts of the trade union movement to obtain wage increases in line with increases in prices? Is it the Prime Minister’s personal policy as a rural producer and a farmer to obtain for the -
-Order! The honourable gentleman is not entitled to ask a question about policy at Question Time, whether it be the Government’s policy or the personal policy of the Prime Minister. I will give the honourable member an opportunity to rephrase his question. Otherwise, I will rule it out of order.
The rephrased question having been disallowed-
-Order! I call the honourable member for Swan.
- Mr Speaker, I wish to raise a point of order. I take it that you have ruled the question out of order. Perhaps I should make it clear that I am asking whether there is a connection between -
-Order! The honourable member for Wills will make his point of order.
- Mr Speaker, I suggest that even if the question is out of order, with your indulgence I would not mind answering a question which is out of order.
-I refuse to establish such a precedent. However, I will allow the honourable member for Wills to rephrase his question and I will call him again.
– Is the Government opposed -
-Order! I suggest that the honourable member for Wills resume his seat and carefully rephrase his question. I will call him again.
- Mr Speaker, I must apologise for using the word ‘policy’ in conjunction with this Government. It has none.
-Order! The honourable member for Wills will resume his seat.
– Is the Minister for Defence aware that concern is being expressed, particularly in Western Australia and no doubt in other places, at the large number of civilians employed by the Department of Defence in comparison with the number of Service people in defence forces? If this is the case, will the Minister explain why we need such numbers of civilians and could, steps be taken to reduce the civilian element in the defence forces?
– This morning my attention was drawn to a newspaper article along the lines of the honourable gentleman’s question. May I say that I am puzzled to know whether persistence of error on this point as to the civilian-service ratio stems from genuine misunderstanding or stupidity or whether it is a carefully cultivated canard. May I take this opportunity to inform the House that the facts are quite to the contrary? In 1973 the number of civilians employed within the Defence Department was of the order of 37,300. Today that number has been reduced to 30,700. I do not know of any other Government department in which there has been such a significant reduction in the number of civil servants employed within the Department.
Then there is the other vision that all of those civilians at Russell Hill are- to put in homely language- pen pushers mucking up the system. This is quite false. Mr Speaker, I will not trespass upon your patience or abuse the House but I have here a table which gives a breakup of the number of civilians employed within the Department. May I take a moment to refer to it? There are more than 5,600 people employed in dockyards and overall some 10,000 are employed in naval technical supply and general supply delivering the groceries and what have you. The vision of them being pen pushers is an absurdity. There are some 6,000 civilians employed within the Army throughout the whole of Australia doing a multitude of tasks, the Air Force employs some 3,900 and approximately 4,900 are employed in the Defence Science and Technology Organisation. May I say to the honourable gentleman that the overwhelming number of those employed are under the direct responsibility of the Chiefs of Staff? At Defence central here in Canberra some 2,300 civilians are employed. I seek leave of the House and the Leader of the Opposition to have this table incorporated in Hansard.
– I thank the honourable gentleman for his most thoughtful question. I only regret that the honourable member for Robertson was not able to get in his question.
– My question, which is directed to the Prime Minister, concerns his statement to Parliament last week in which he claimed that the money supply is under control. I ask: How does the Prime Minister justify that assertion when the money supply has increased by 1 1 per cent in the year to January 1979, which rate of growth is well in excess of the target rate of 6 per cent to 8 per cent? Is it not the case that, contrary to the Prime Minister’s assertion, the Government is having great difficulty controlling the money supply and that it has already abandoned the target rate of growth for this year?
-Mr Speaker -
– I addressed the question to the Prime Minister.
-The speech made last week by the Prime Minister covered the whole range of the Government’s economic policies in regard to the money supply. I cannot recall the precise words but they are similar to a number of speeches made on the subject recently which draw attention to the fact that one of the very successful areas of the economic policy of the present Government since it came to power three years ago has been that it has been able to get the rate of growth in the money supply in Australia under control. The honourable member’s question gives me the opportunity to put into perspective statements and predictions about the rate of growth of the money supply which have been made by the Government. As the honourable member knows it has been the practice of this Government at the time of the last two or three Budgets to give an indication of the growth in the money supply which it thinks might be appropriate to activity in the economy over the period covered by the Budget.
It is true, according to figures on the money supply which have been released by the Reserve Bank, that to the end of January the increase is running at an annual rate of 1 1 per cent. There is no argument about that. That is a simple statistical fact. The honourable member also knows that there are seasonal fluctuations in the rate of growth of the money supply. Last year people were saying that it would go well under the projection. This year people are saying that it will go well over the projection. The point that has to Be made is that the figure given at Budget time is not a firm, absolute commitment.
It is likely that the money supply outcome for the current financial year will be above the upper end of the range in the Budget. But the important aspect is whether that of itself is an unfortunate occurrence and whether that of itself is inappropriate to economic conditions as they exist now. The projection is made on the basis of perceptions at Budget time. The important point is what the thrust of money supply policy is. The Government has consistently followed a money supply policy since coming to government to keep it at such a level that helps to bring down inflation whilst at the same time underwriting economic recovery. Given the developments in the economy since the time of the Budget, I would regard a money supply outcome which might happen to be above the upper end of the 6 per cent to 8 per cent range as entirely appropriate in achieving those two objectives. It is, of course, a question of magnitude. I think that it is understood that one makes a prediction at Budget time and, given developments since, that prediction ought not be seen as an absolute commitment.
-My question is directed to the Minister for Transport. What are the effects of picketing by storemen and packers on domestic and international airline travel? To what extent has the picketing prevented and will it prevent the freedom of movement by air of Australians and, perhaps even more importantly, overseas tourists? Will this action prevent many airport workers going about their legitimate work?
-The lack of supply of fuel at airports has now become quite serious. The situation is that the domestic airlines’ operations are continuing to deteriorate quite markedly. The Melbourne, Sydney and Adelaide airports are completely picketed, and picketing at Brisbane which began last night is becoming quite effective. We now have a tropical cyclone coming in on North Queensland and disrupting services through the northern parts of Queensland. I believe that there is one day’s supply of fuel at Adelaide Airport and one and a half day’s supply at Brisbane. Tasmania fortunately is functioning satisfactorily. Qantas Airways Limited is still operating normally. It still has several days of supply and is able to tanker supplies in. The situation is becoming quite serious. The dispute is scheduled to go before Mr Justice Coldham tomorrow morning in Melbourne. I hope that the unions involved in this dispute will recognise that there are proper procedures for the hearing of this dispute. I hope they also recognise that they are starting to create substantial difficulties for the travelling public. Indeed we are reaching a situation of almost total inconvenience to the travelling public. I hope that the unions recognise this and at least do not disrupt the Australian travelling public any more than they have to this point.
– I refer the Treasurer to the long list of recent company reports of increased profits such as the 37 per cent increase for the Bank of New South Wales, the 53 per cent for Associated Pulp and Paper Mills Ltd, 46 percent for Burns Philp and Co. Ltd and 55 per cent for Broken Hill Pty Co. Ltd, giving that company a half year profit on normal accounting methods of $ 161m. I ask the Treasurer Given this consistent record of booming profits for so many of our major companies, why does the Government still persist with policies that create further unemployment, supposedly designed to restore private sector profitability?
-The honourable gentleman is arguing an issue. I ask him to seek information.
– I ask the Treasurer Is it the Government’s policy objective that it believes it necessary to have booming unemployment to achieve and to sustain booming profits?
– The honourable member’s question is a total non sequitur. I would like to make it plain that the Government welcomes the profitability performance of major Australian companies. I have never been able to understand why any member on the other side of the House is concerned about the large profitability of a company such as Broken Hill Pty Cp. Ltd. If one goes beneath the surface one sees that the profitability of BHP is of direct concern to literally hundreds of thousands of ordinary Australian people because the shareholding in a company of that size does not involve just large shareholdings of individuals but, through superannuation and pension funds, the fortunes and profitability of that company benefit ordinary Australian people. So to the extent that the Leader of the Opposition and his followers denigrate that sort of performance they are indifferent to the interests of those ordinary Australian people.
The Government’s policy is not to promote booming unemployment in order to have booming profitability in Australian businesses. We have created economic circumstances in which profitability is once again possible in the Australian community. It is something we welcome. It lies at the basis of sustained economic recovery. It is something which we will continue to encourage.
-Mr Speaker, I seek your indulgence to add to an answer that I gave to the honourable member for Newcastle regarding the Organisation for Economic Co-operation and Development mission to Australia.
-The honourable gentleman may proceed.
-Thank you, Mr Speaker. I have obtained some further information. As far as I am concerned and as far as the Government is concerned, the OECD mission is free to talk to whomever it wishes in Australia. I understand that it has already made arrangements, apart from talking to sources of official advice to the Government, to talk to the Melbourne Institute of Applied Economic and Social Research. Through my Department I will convey to the OECD mission the interest of the honourable member for Newcastle and his two front bench colleagues. I take it, as was implied in his question, that he is authorised to speak on behalf of the peak councils of the trade union movement. I will inform the OECD in the manner I have suggested that I have absolutely no objection to that occurring. I welcome that if in practical terms it is possible for that to be arranged.
– Pursuant to section 28 of the Oilseeds Levy Collection and Research Act 1977 I present the annual report of the Oilseeds Research Committee for the year ended 30 June 1978.
– For the information of honourable members I present a report by the Bureau of Transport Economics entitled: ‘Mainline Upgrading- Evaluation of a Range of Options for the Kalgoorlie-Perth Rail Link’.
-Mr Speaker, I claim to have been misrepresented.
-If the honourable gentleman wishes to make a personal explanation, he may proceed.
– It has just been drawn to my attention that last night in the adjournment debate the honourable member for Ballarat (Mr Short) chose to attack me personally. The substance of his allegation was that I had used the privileges of this Parliament to attack hardworking public servants and particularly officers of the Commonwealth Employment Service. The facts are simply these: In an adjournment debate last week I drew to the attention of the House the decision made by the Government, due to restricted funds, to direct officers of the CES to limit their use of telegrams to people applying for jobs. I was most particular- although I had issued a Press statement previously that had been answered by a public servant who was named in his own Press statement- not to name the public servant concerned. I stated specifically that ultimately the Minister for Employment and Youth Affairs (Mr Viner) had to accept responsibility for Press statements issued on behalf of his department. I made the point that in my view the statement that had been made on behalf of the Government and the Minister constituted a lie. I fail to see how the honourable member for Ballarat- if he bothered to check his facts- on the basis of the facts as they are recorded in Hansard, could accuse me of doing anything other than attacking the Government and the Minister. I certainly was not attacking a public servant.
River Murray Basin: Salinity Control- Television Services -Commonwealth Compensation- Victorian Rural Finance Commission- Australia -Unemployment - Conservation- Organisation for Economic Co-operation and Development Mission
That grievances be noted.
-Yesterday I asked a question of the Minister for National Development (Mr Newman) in relation to the salinity problem along the River Murray basin. Salinity has reached a critical level. If it is not contained it could ultimately destroy the economic viability of the river. I regret to say that the reply I received from the Minister was evasive and unsatisfactory. The honourable member for Riverina (Mr Fitzpatrick) and I have persisted with this issue over the last two years. I am deeply concerned at the Government’s inactivity in this area. Users of the River Murray waters are sick to death of Federal and State governments passing the buck in relation to this problem. The salinity problem is now so serious that many irrigation settlements along the Murray will be lucky to survive another decade, let alone a bad drought, unless urgent action is taken.
The increasing salinity of the River Murray is costing the nation $20m a year in lost production. To the visitor- and, I suppose, in most cases the farmer- there are very few visible signs that the river’s increasing salt content is menacing. However, salinity in the river has increased by 10 per cent in the last 12 years and unless it is checked it will double by the year 2000. Our area of concern is fast spreading upstream as the salinity problems are reaching serious proportions, particularly in parts of Victoria. Just as South Australia has been to the fore in seeking political solutions to water problems it has also been in the forefront in seeking technical solutions to the problems. The recently released three volume River Murray Salinity Control Program outlines an integrated approach to tackling the salinity problem in South Australia. The total capital cost of the program will be about $ 15.3m, which is not a significant amount, I suggest, in view of the fact that salinity already is costing the South Australian people some $4m per annum. With increasing usage of the River Murray water, this would rise to about $ 10m per annum by the year 2000. The program is totally justifiable on economic, environmental and social grounds and is certain to be recommended in the final report of the salinity study being undertaken by the Commonwealth and the States by Maunsell and Partners. The technical program has been devised and, regrettably, lack of finance is the only real threat to the River Murray water quality.
It is imperative that the Federal Government support South Australia’s salinity program if it is to be successful in achieving its goal. It is also the responsibility of this Government to fund the program because salinity in South Australia, unlike most other water problems in the States, is due to causes outside the control of South Australia. River Murray water quality problems are affected and exacerbated by the quality of the water as it enters South Australia. I suggest to honourable members that it is a frightening fact to grasp- a little known yet devastating factthat some 800,000 tonnes of salt a year enter South Australia from upstream. As far as the sediment problem is concerned, the metropolitan Adelaide water treatment program is an important component in upgrading water quality in that State. This program has already been established and is accepted by this Government as justified. The program has been subject to careful scrutiny by the Snowy Mountains Engineering Corporation which stated in its 1977 report:
There is a definite need to treat all surface waters being delivered to consumers in the Adelaide region. It is recommended that the program of constructing plants to treat such waters be continued and that it be completed within . . . 10 years.
The Prime Minister (Mr Malcolm Fraser) has indicated that funding will be made available but- this is the problem- at a level which has, regrettably, yet to be determined. Although such support is appreciated in South Australia, the present hand-to-mouth nature of annual allocations under the national water resources program has serious implications for financial programming and maintaining efficiency of production. The financial requirements of South Australia under the water resources program will range from $ 17.5m in 1979-80 to at least $22.5m in 1982-83. This comprises $8.6m per annum for water treatment; $3.8m next financial year for Riverland salinity control and drainage rehabilitation, rising to $6.6m in 1982-83; and $5. lm, for rehabilitation of Riverland head works rising to $5. 3m. To meet these requirements the Commonwealth has earmarked $200m over five financial years for the national water resources program. This calculates to an average of $40m per year. Yet this year this Government has appropriated only $21m. When allowance is made for the national water resources assessment program, it is difficult to see more than about $3.5m per year becoming available to South Australia if this sum is divided on a population basis. This would represent only a fraction of South Australia’s needs and would be a reduction on the level of funding that it has been receiving.
Clearly, the Commonwealth has a duty to make available additional funds to South Australia for its water quality programs which are a national responsibility. It is also the Federal Government’s duty to indicate forward commitments for ongoing projects so that State authorities can plan their water quality programs in a logical, co-ordinated and efficient way. Although the Federal Government does not have the constitutional power- I concede that it does not have it- and it cannot use the incidental powers as this would provide grounds for extensive litigation; this is not a viable option to a national solution to the problem, it does have the financial power to ensure that the problem can in fact be overcome. Failure to act on this problem will now place one of the country’s most priceless natural assets at an intolerable risk, jeopardise the economy of South Australia and of the River Murray basin and face future governments with an enormous bill to pay for a problem that is worsening every day.
The problem as I see it is that if salinity is not controlled along the entire length of the River Murray basin, the River Murray will act as a giant saline drain for South Australia. Farm and domestic water supplies will be tapped from a major pipeline system taken from Lake Victoria. Irrigation as we know it will cease, riverside growth will die or change dramatically. Ecological change will be drastic and the lower Murray will no longer be a paradise for fishermen and will not be so attractive for swimmers and the boating fraternity. That is not a science fiction doomsday message, but neither is it a joke. It is just one of the options facing South Australia in the light of the steadily increasing salinity control challenge for the lower Murray environment. I call on the Minister and the Government urgently to revise and increase financial assistance to the States- not just to South Australia- if this priceless national asset is to be saved.
– I wish to raise a grievance on behalf of the residents of Marysville in my electorate. A number of residents of Marysville and particularly the Marysville Tourist and Progress Association have drawn my attention to the problems they are likely to experience in the near future with respect to television reception. This likelihood flows from the decision to change Channel ATV-O to Channel 10. That change is expected to take place towards the end of this year. Marysville residents presently receive reception on Channel 2 and Channel 0, and even that reception is down on the quality that residents of the metropolitan area of Melbourne would expect. At great expense, with the construction of many different types of antennae, they have tried to get channels 7 and 9 but very few have managed to obtain any reception of reasonable quality on those two commercial channels. They also receive some reception of Channel GMV 6, the Shepparton station, via a translator at Alexandra. The position is that towards the end of this year it is proposed that Channel ATV 0 will become Channel 10 and also that Channel GMV 6, the Shepparton channel which is presently received on Channel 10, will be transferred to Channel 1 1.
Marysville has a population of approximately 600 people and there are about 300 television sets in the town, including those in some of the recently built motel units. As I think most honourable members will know, Marysville is a popular family tourist resort with a number of guest houses and motels which are very well patronised throughout a great part of the year.
– It is a very beautiful area.
– It is a beautiful area, as my friend from Tasmania, the honourable member for Denison (Mr Hodgman), remarks. He obviously knows tha area. The Marysville Tourist and Progress Association has had some correspondence with the Department of Post and Telecommunications on this subject. It wrote on 30 December and pointed out the difficulties that the people of Marysville were likely to face with the transfer of Channel 0 to Channel 10 in that they were likely not to have any reception at all of that particular station, throwing them back entirely onto Channel 2, the ABC station in Melbourne. In its letter the Marysville Tourist and Progress Association pointed out:
As one of the few seriously disadvantaged reception areas in the State, it is hoped that any change will improve not destroy, the very limited reception available. Because of the interests of residents and the harm to the tourist industry, any worsening of TV in Marysville would be of major concern and so my association seeks urgent clarification of the position.
I realise that there are better things to do in Marysville than watch television all day. There are many other things to see and do but, nonetheless it is of benefit to the tourist industry as well as the residents of Marysville to have good reception on more than one channel. Certainly there should be at least one commercial channel that they can watch with some reliability. In its reply dated 7 February 1975 the Department said:
The change in channel for ATV is being proposed as pan of an overall plan to rationalise the usage of the television channels so that they can be used to provide additional television services in the future. It is an unfortunate byproduct of the change, that the marginal reception of ATV in Marysville, which is outside the normal coverage zone of the Melbourne stations, will deteriorate. The cause of the deterioration is a fundamental physical limitation in the propagation of VHF frequencies in mountainous areas and there is nothing that can be done to improve the situation directly. However, there will be some slight compensation in that the increase in power of the Alexandra translator will improve the reception of the Shepparton station to which you make reference.
– A very good station, too.
-And my colleague, the honourable member for Murray (Mr Lloyd), tells me how good that station is. The letter continued:
My Department is very conscious of the reception problems in Marysville and is constantly seeking means whereby reception can be improved. Whilst I am not in a position to make definitive proposals at the present time, you may be assured that the situation is under active examination with a view to the provision of at least one commercial station signal of viewable quality.
It was signed by F. J. Green, the Secretary of the Department. The Marysville Tourist and Progress Association has pointed out that the letter refers to a proposal which is ‘still under consideration’. Unfortunately, it received that letter on the very day that the announcement of the definite decision to transfer Channel 0 to Channel 10 was made, so the Association understandably is upset that it did not have an opportunity to have some input in the decision making process. The Association asked me to arrange for a deputation to go to the Department or, if necessary, the Minister in an effort to find an acceptable solution. I am grateful to the Minister for immediately agreeing to a deputation meeting with senior departmental officers to see what can be worked out, and then to himself meet a subsequent delegation. I am presently arranging that.
I understand that the reason for the decision to transfer Channel 0 to Channel 10 was that this would benefit the whole of the television network in Victoria. However, it is unfortunate that in making that decision, and with a view to cost and the benefits for the future development of the television spectrum in Victoria, a number of small communities is likely to be disadvantaged. One lesson to be learned from this is that before decisions of this nature are made, the communities likely to be disadvantaged ought to be given prior notification of the proposals so that consultations may be entered into at an early stage in order to try to solve the technical problems which inevitably arise. I believe also that the ATV television station would have a very substantial interest in seeing a proper solution to this problem because it has a monopoly commercial television in the Marysville area at the moment. I have suggested to the Marysville Tourist and Progress Association that it ought to take up this matter directly with the ATV station to see whether it can assist in reaching some appropriate technical solution.
Small communities which are already disadvantaged in their television reception should not be further disadvantaged by this type of decision. I hope that a satisfactory solution can be reached not only to compensate Marysville and retain the reception it is likely to lose, but also to improve the viewing quality of a number of television stations beyond that which exists today. I understand that the same problem affects Warburton, which is in the electorate of my colleague, the honourable member for McMillan (Mr Simon), and that he also is taking up this matter.
– I refer to a matter that I have raised in this House on a number of occasions and it is one on which the Government cannot look back with any pride. I refer, of course, to the way in which the Government has treated its employees who are injured during their employment and are off work for more than six months. Under the present compensation legislation, an injured employee receives full pay for the first six months but after that his pay drops considerably. I have spoken on many occasions about this matter without any response at all from the Government. Last year I wrote to the Minister for Social Security (Senator Guilfoyle) seeking a review of the payments that are made. The Minister replied that the matter would be reviewed in the context of the Budget. I placed a question on notice to the Minister last September and the Minister replied:
In accordance with the usual practice, the rates of compensation were reviewed in connection with the annual Budget. Although no immediate increases are proposed, the honourable member may be assured that the position of long-term compensation recipients will be kept under close notice.
That is all that is being done- it is being kept under close notice. What has happened in regard to this particular issue is that the Government has completely turned its back on its own employees who have been injured. Since 1974 there has been only one increase in the rate of compensation paid. That was granted nearly two and a half years ago and it is certainly a disgraceful rate in this day and age. A number of trade union organisations are taking up this matter, and I refer in particular to the Administrative and Clerical Officers Association. Recently the Secretary of the Canberra branch commented on the matter. The Council of Australian Government Employee Organisations also has taken up this matter. I understand that a submission has been made to the Minister for Social Security but to date nothing has happened.
I am particularly concerned about a Commonwealth instrumentality operating in my electorate- the Australian National Railways. It employs approximately 3,000 employees in the electorate and is one organisation with which I have a lot to do. I have expressed my concern on a number of occasions about the way in which people on compensation are being treated and, with a view to getting the latest information on this matter, in October last I directed to the Minister for Transport (Mr Nixon) a question relating to the number of employees in this category, that is, persons who had been injured at work and were off on long-term compensation extending past six months and who had dropped to a fairly low rate of pay. I asked what were the main types of injuries, how many were in this category and whether they were salaried or wages staff. I found out that 14 employees and 40 former employees were receiving weekly compensation on this particularly low rate. Among those 54 employees and former employees the main type of long term injury was spinal injury. For example, 35 of those referred to in part ( 1 ) of the answer were so incapacitated. The answer went on to say that one former employee was salaried and the remainder- that is, 14 employees and 39 former employees- were wages staff. Most of these people worked for wages as fettlers, tradesmen, guards and the various other classifications in the Australian National Railways.
The situation does not apply only to the people in the Australian National Railways. As in every other electorate in Australia many wage earners throughout my electorate are employed by organisations such as Telecom Australia, Australia Post, et cetera, and they are similarly affected by what happens. I feel that I have a special responsibility towards the Australian National Railways employees because there are so many of them in my electorate. As I mentioned, and as it says in the Minister’s reply, the greatest number of injuries are spinal injuries. I know that many people on the Government side of the House feel that every time somebody goes on compensation he is bludging. I have seen many people come into my office bent up and crippled. To my way of thinking, no one can put on the type of back injuries which I come across.
Perhaps I should mention the payments that are being made. At present, after six months on long term compensation, an employee receives $80 a week. He receives $2 1 a week for his wife and $10 a week for each child, which means that a man with a wife and two children receives $ 12 1 a week. It is about time that this Government had a close look at this matter and showed a little compassion, and introduced figures that were more in keeping with today’s wage rates. It should set a decent figure in line with what has been done in quite a number of the States. Of course, to ensure fairness, whatever figure is established in the future should be indexed so that every six months the weekly payments can be adjusted. I know the Government has chopped pensions back to once-yearly adjustments. At least the workers in industry are getting some benefit from wage indexation. Surely the Government can establish some decent rate for people on compensation.
When it appears that employees in this category may not be able to come back to work, their services are often terminated. Of course, this is done under a provision in the legislation. It gets the instrumentality out of paying any long service leave or any other entitlements applicable to an employee on the job.
Perhaps a comparison can be made between the payments that are made by the Commonwealth and those that are made by the various States. The figures I have do not include any alteration that will take place because of the December 1978 quarterly cost of living adjustment. It is a fact that the present payments are well below an acceptable rate. Since the Government last decided to increase benefits the consumer price index has risen by 28 per cent. This is not counting the December 1978 quarterly increase. The minimum wage has risen by 25 per cent. Under Commonwealth legislation, in November 1972 the weekly benefit was $43 a week, which represented 84 per cent of the minimum wage. During 1973 or 1974-1 am not quite sure which year- the Whitlam Government introduced a new compensation Act which would have given reasonable payments but, of course, the Senate tossed that legislation out. The then Government did increase the amount to $57 a week, which represented 84 per cent of the minimum wage. Prior to the dismissal of the Whitlam Government by Sir John Kerr, Senator Wheeldon, who was then the Minister responsible, introduced legislation which would have increased the payment to $73 a week. That would have made it 91 per cent of the minimum wage. Of course, we all know what happened. People on long term compensation were also victims of Kerr’s coup. The incoming Fraser Government waited another 12 months before it introduced compensation legislation. It set the - amount at $80 a week, which represented 83 per cent of the minimum wage. At present that $80 a week received by an employee after six months on compensation represents 67 per cent of the minimum wage.
A comparison with the States shows that in Western Australia an employee under exactly the same conditions would have received full pay; in South Australia he would have received full pay; in Tasmania he would have received full pay; in the Australian Capital Territory he would have received $87.89 plus the consumer price index increase for December; in New South Wales he would have received $88.40 plus an increase in the average basic award; in Queensland the amount would have been $77.40 plus the national wage increase; and in Victoria he would have received $73 plus an extra $30, which I understand the State Minister has agreed to because there was a ministerial promise to raise the amount by approximately $30 because of movements in the average weekly earnings over a four year period.
Mr DEPUTY SPEAKER (Mr Millar)Order! The honourable member’s time has expired.
– by leave- As a result of a question I was asked this morning I would like to read a statement made by Mr Ian Morton, Chairman of the Rural Finance and Settlement Commission of Victoria. Mr Morton’s statement is in these terms:
I have been informed of a question asked in the Parliament today about a loan made to relations of the Prime Minister by the Rural Finance Commission of Victoria.
The Rural Finance Commission makes loans solely in accordance with its own judgments and in accordance with guidelines determined by the Commission itself and in the case of natural disasters on guidelines determined by public agreement between governments.
The Commission has not done anything for the Beggs family that it would not do for others similarly placed.
I have received - the ‘ I ‘ obviously refers to Mr Morton- no representations from anybody in relation to these loans, and the Beggs family’s presentation of its affairs has been exemplary.
I read that last sentence again:
I have received no representations from anybody in relation to these loans, and the Beggs family’s presentation of its affairs has been exemplary. 1st March 1979
Some time ago I had some indication that the Australian Labor Party was seeking some information in relation to these matters. Of course, any plain, open and honest question to the Commission could have got an answer, and would have got the answer I have just given. The Chairman’s reputation in Victoria stands as high as that of any person in the Commonwealth of Australia. What has happened is typical of the Australian Labor Party and its peripheral politics, its digging around in the dirt. Its members have nothing else to do because they have no policies at all.
– How much did you get out ot it?
– What was the size of the loan?
-Even now the kind of interjection that is put forward indicates that there is no decency left in the Labor Party in this Parliament.
- Mr Deputy Speaker, I seek your indulgence to make a statement.
-Order! This House has been subjected to a rather unusual experience insomuch as during the period allocated for grievance debate the House was of a mind to grant leave to the Prime Minister to make a statement. That situation is acceptable. An indication was given to the Chair that there would be a request from a member of the Opposition for leave to make a brief explanation as to why the question referred to by the Prime Minister was posed. It is not strictly consistent with the normal procedures relating to a grievance debate, but if the House is of a mind to extend leave to the honourable member for Batman to make an explanation the Chair will countenance it. Otherwise the House will revert to the order of speaking for the grievance debate. As far as the Chair is concerned, the position is that the grievance debate is before the House. The question is: ‘That grievances be noted’. In the order of call, the call should go next to the honourable member for Denison. There has been -
- Mr Deputy Speaker -
-Order! The honourable member for Denison will resume his seat.
- Mr Deputy Speaker, I seek your indulgence to make a statement on the facts underlying the question.
-Order! I cannot give the call to the honourable member. The order now is for the honourable member for Denison to speak. The Prime Minister rose to speak because the call was to the right side of the House. Had he not spoken by leave, the next call would have been to my left. As leave was granted for the Prime Minister to speak, we now revert to the grievance debate and the order of call is for the honourable member -
– He is requesting to speak on the same matter. He is claiming misrepresentation of the facts.
-The honourable member for Batman is seeking leave of the House to make a statement. Is leave granted?
-The facts which underlie the series of questions which were asked in the House this morning are as follows: Under the States Grants (Rural Adjustment) Act 1976, the Commonwealth Government allocates to the States for rural reconstruction money for marginal farms. It was made quite clear -
- Mr Deputy Speaker, on a point of order, I was trying to listen to the honourable gentleman speaking but, because of interjections from his side of the House, I was not able to hear him. May I ask that he be given enough silence so that I can at least hear what he is trying to say?
-Order! The Standing Orders require the House to listen to honourable members in silence. The honourable member for Batman has the call by leave. I ask honourable members to be silent.
– I was saying that funds are made available by the Commonwealth to the States for purposes of assistance to marginal farmers. In 1977-78, $9.6m was made available to Victoria. Disbursement in Victoria is administered by the
Rural Finance and Settlement Commission, which was established under a 1961 Act of the Victorian Parliament. The Commission took over a number of early rural relief bodies, such as the Soldier Settlement Commission and the Rural Finance Corporation. The Commission is empowered to make loans to primary producers at an interest rate designed to cover the cost of borrowing and administration. Loans are usually made over the longer term. As at October last year, the interest rate was 9.5 per cent per annum and repayments were to be made over 20 years.
In administering funds provided under special arrangements, such as for flood, fire and drought relief, the Commission follows principles set out by government or follows terms of agreement between governments. Generally, the Commission does not see itself as being in competition with existing financial institutions serving Victoria. It is a businesslike, complementary lender, enjoying considerable rapport with and support from these institutions. For some funds limits are imposed without special approval from either State or Federal Ministers. For practical purposes, limitations are imposed on the quantity of funds made available and on the need to spend those funds as widely and equitably as possible. The Rural Finance Corporation Act 1958, which has wide objectives of improving country production, provides that ‘interest on any loan shall be as low as possible’ and, unless the Treasurer approves otherwise, the loan will be not greater than $20,000. We all know that the Treasurer of Victoria is the Victorian Premier, Mr Hamer. Loans made are secured by mortgage. The mortgage does not specify the amount of the loan or the interest rate as these matters are dealt with in a letter of offer from the Commission.
On 26 August 1977 two mortgages were entered into by the Commission over blocks of land totalling 4,000 acres. This is not a small farm to be consolidated; I think that honourable members would agree that a farm of 4,000 acres is a considerable property in the Western District. The proprietors of the land are Sandford Robert Beggs, Tamara Fraser, Eda Ritchie and Christina Hindhaugh, all daughters of Sandford Robert Beggs, Hugh Sandford Beggs, Margaret May Beggs, whose address is Bowral, New South Wales- I will come back to that- and Arthur Ricardo Beggs. The land is held in unequal proportions. The mortgage then is a mortgage between the Commission and those people. It is clearly a mortgage which has the approval of the State Treasurer. It is certainly a mortgage for a six-figure sum- we believe an amount of the order of $250,000.
The significance of these facts is clear. As the Minister for Primary Industry (Mr Sinclair) suggested this morning, the Commission is in the business not of supporting large landholders but of supporting poor and marginal farmers, of assisting with rural adjustment and of helping people whose farms have failed to get out. The Commission clearly lends its funds not at normal commercial interest rates but at special interest rates. So it should, because the prime objective of the legislation is not to help major landholders but to help poor and marginal farmers. The Prime Minister (Mr Malcolm Fraser) has repeatedly expressed his concern about the effects of interest rates on just such people. We believe that the facts of this situation reflect on the concern which the Prime Minister has often shown. We believe that the questions and the issues are relevant to the whole matter of pecuniary interests and not only are members of parliament involved but also are members of the families of members of parliament involved in such a way that it is possible that conflicts of interest might arise.
I draw the attention of honourable members to the fact that the loan to which I referred- a loan totalling a six-figure amount- has received the approval of the Premier of Victoria. This is not something which has simply been decided upon by the Commission, which is what the Prime Minister’s statement suggested; it involves a decision made by the Premier of Victoria. Finally, I shall quote, from the brochure which is issued by the Commission, the terms under which loans are to be made by the Commission. It states:
The borrower is required to reside on and work the property as a full time occupation, except in the case of an undeveloped farm, where it may be necessary in the initial stages to do some work off the farm.
Quite clearly, at least one but perhaps more of the people involved in this mortgage are not currently living in Victoria or are not likely to be in the situation described. So it would seem to me that these facts raise a number of questions which I do not not believe have been answered by the Prime Minister’s statement. They raise questions which touch on the credibility of this Government and on the credibility of the Prime Minister and which have quite serious implications concerning, for example, the Premier of Victoria. I thank you for your indulgence, Mr Deputy Speaker.
– I depart from what I intended to say simply to make the comment that once again we have seen an exhibition from the Opposition which brings no credit on it or on this Parliament. Any magistrate, any justice of the peace, upon hearing the honourable member for Batman (Mr Howe) would ask at the end of the honourable member’s diatribe: ‘What is your allegation? You have covered yourself under parliamentary privilege and have indulged in a scurrulous, unsubstantiated, portmanteau smear. What is your allegation?’ As the honourable member runs from the chamber to talk to the Press, I ask him: What is his allegation?
Last year I went on record, in giving evidence to the Bowen inquiry, indicating my attitude with respect to the attacks which were made upon the Deputy Leader of the Opposition (Mr Lionel Bowen) in relation to family trusts. I just ask all honourable members to contemplate what sort of service has been done to the Parliament of this country by that performance a few minutes ago. As I dissociated myself from the attacks on the Deputy Leader of the Opposition, so I dissociate myself entirely from the attacks which have just come from the honourable member for Batman. Mr Deputy Speaker, is it not a sad state of affairs when one prepares a speech which endeavours to bring a little bit of light and happiness into this Parliament and one has to spend the first three minutes of one’s speech to answer a rabbit such as the one who just spoke?
My grievance is that, whilst Australia is the greatest place in the world in which to live, it is a country in which far too few Australians realise and recognise that basic fact. We are the most splendidly gifted people and ours is the most richly endowed country in the world. We are the envy of millions of our fellow human beings on this earth. We have the resources. We have the means at our fingertips. All we need is the will to get up and to go. Australia on the move, Australia reaching its full potential, an Australia striding confidently through the 1980s and the 1990s on to the 21st century is my dream, my vision, and should be the aspiration of all Australians. Notwithstanding the filth that has just occurred in this place, let us as Australians in this forum, which is used all too frequently for petty politics, for once express our concern for the future of this great nation. Let us count our blessings and take stock of our achievements. Let us resolve to get the show well and truly on the road with an Australia on the move and an Australia with real determination to prosper and to succeed.
It is indisputable that we have the most beautiful country in the world. We are the most richly endowed with minerals and other natural wealth. In the panoply of the Western democracies, we are, I suggest, one of the most politically stable and well balanced of nations, notwithstanding the rabbits on the other side. We have a parliamentary democracy which recognises and preserves the rule of the law. Above all, the rights and freedoms of the Australian people are the most jealously guarded in the Western world and are the envy of many nations both near to and far from our shores. Despite all the predictions of gloom, doom and despair from the Luddite, flat earth and doctrinaire socialists who sit opposite, this nation in world terms is economically strong today and will be even stronger tomorrow.
Why are Australians their own worst enemies and this nation’s worst enemies? Why have we become a nation which has earned us the title of the ‘world’s greatest knockers’? Why does this capacity for self denigration and knocking permeate our entire community, from the highest levels of government to the sporting field? We knock, we criticise, we whinge and we moan. The bleatings of a Bellyache Bill or a Whinging Willie are reminiscent of Banjo Paterson ‘s classic poem Riders in the Stand, as are the multitudes who scream from their pockets and knock and condemn such a superb horseman as Roy Higgins if he gets beaten on the hot favourite in the last race at Flemington. Let us for once count our blessings. We are the great Australian family. We have a fine population enriched and enhanced by millions who have chosen to adopt Australia as their native land. In particular I refer to my colleague and friend the honourable member for Isaacs (Mr Burns) who typifies the quality of those who have come to this land and made it their adopted native land.
Despite the obvious social evil of unemployment, an evil recognised by and of great concern to this Government, we are still seeing encouraging economic indicators which I want to refer to briefly. Inflation in this country has been halved since March 1975. Under Labor it peaked at 1 7.5 per cent. The inflation rate last year was 7.8 per cent. Production has strengthened in the December quarter and the predictions are that it will continue to strengthen this year. Retail sales were up in December to the surprise and delight of the retail industry in Australia, the community as a whole and the Government. Private nondwelling investment was up by 6 per cent last year. These are indicators. Private dwelling approvals were up by 13 per cent in the December quarter. There is a massive rural recovery. If honourable members do not believe it they should go into the country areas and they will see.
Let me just mention some more indicators. Wheat production has doubled. World beef prices increased strongly last year and will continue to increase. Beef exports will rise again in 1979. Proceeds from wool sales were up by 9 per cent for 1978-79. My friend and colleague the honourable member for Franklin (Mr Goodluck) knows that we had a good fruit season last year and that we are going to have an even better one this year. Grain crops and sales have increased. Sheep and lamb slaughterings are up by 18 per cent. These indicators are matters of substance and you, Mr Deputy Speaker, being a man of the land, will know the truth of what I say. All this is summed up by the fact that farm incomes this financial year are expected to rise by 80 per cent on the 1977-78 levels. Whilst conceding that the 1977-78 levels were a low base, an 80 per cent increase can be described only as magnificent; and not just the weather but also the policies of this Government should be given credit for that achievement. The Australian people ought to know and ought to be delighted by the fact that investment in mining and manufacturing has increased by 33 per cent in the calendar year of 1978. 1 just pause to say in country terms that on those indicators alone one could not say that things are crook in Tallarook.
Whilst 7 per cent unemployment is too high and must be reduced, let us thank God that 93 per cent of the nation’s work force is in employment and that overtime has risen each month for the past seven months and now is at its highest level since 1974. Employment has risen in each of the five months to November 1978, for the first time in five years. If I can take my argument a little further, in the manufacturing sector employment has increased, again for the first time in five years. Profits are up. It does not please the Labor Party, but the fact is that profits are up and productivity is up. Exports are up by 17 per cent for the three months period to January 1 979 and manufacturing exports are up by 29 per cent in the December quarter compared with the same period in 1977.
Whilst this is good news, it can be better. Whilst Australia must get up and go, our home State of Tasmania must also get up and go. I endorse what has become known in our State as the Benjamin formula for the economic recovery of this nation. We must have lower interest rates and lower taxation. The entire income tax system must be reassessed. It is wrong. The harder we work, the harder we are hit. There are too many disincentives to increased effort and productivity.
This year our Government is saving the taxpayers of Australia $3,000m that they would have had to pay if the Whitlam tax scales had continued to apply, and our Government is still committed to even further tax reductions. By a reduction of income tax and a reduction of interest rates this country will get back on its feet.
I want to conclude with a plea, through the Minister for Finance (Mr Eric Robinson) who is at the table, to the Commonwealth Department of Education to apply its mind to the increasing use of offensive language in the newspapers of Australia. I am very concerned that the thousands of young people in Australia who read newspapers read offensive words in those newspapers. Their education will be grievously affected. I refer to page 7 of today’s Australian as an example of the sort of thing that is concerning me. Is it right for your children and mine to read offensive words? I refer to these words in the Australian:
If I can find any way to get that bastard Hayden, and have him replaced by you as leader, I will use it.
Even if the statement is true, it should not have been published in that form. It is completely and absolutely improper for the media of Australia to refer to the fact that Mr Hayden is a bastard. He may well be, but it is not right for thousands and thousands of young Australians who pick up that newspaper to read on page 7 of today’s Australian:
If I can find any way to get that bastard Hayden, and have him replaced by you as leader, I will use it.
– I take a point of order.
-I ask the Minister to take this matter up with the Press Council.
– I take a point of order.
– It should not be in the newspaper.
– Did not the Minister for Finance use a similar adjective in describing the Prime Minister in his recent resignation?
Order! There is no substance in the point of order. The honourable member’s time has expired.
– I would like to deal briefly with a couple of remarks made by my colleague on the other side of the House. He is known as Mike the Mouth and every time he opens his mouth the wind blows his tongue about. We have just heard as intelligent a contribution as we have come to expect from the honourable member for Denison (Mr Hodgman). If he could work half as hard as he talks he would be a world champion. He talked about his concern for youth and the bad language that they have been reading in the newspapers, but he repeated that language over the air, which shows the hypocrisy in which he deals. Another point that he made about being concerned for the youth of Australia was that we ought to thank God for the fact that 93 per cent were employed. That is all very well provided that one is not one of the 7 per cent who are not employed. It might be God’s day today, but it is not the Prime Minister’s.
– I take a point of order, Mr Deputy Speaker. I claim to have been misrepresented by this communist.
-Order! The Chair has not called the honourable member for Denison and if he continues to talk while the Chair is speaking he will be dealt with. I call the honourable member for Melbourne.
-The people on this side of the House, the Australian Labor Party people who are, as the honourable member for Port Adelaide (Mr Young) -
– I take a point of order.
-I warn the honourable member for Denison not to take a frivolous point of order.
– I raise the point of order that I have been misrepresented and I seek -
-The honourable member can claim to have been misrepresented at the appropriate time, and it is not when the honourable member for Melbourne is speaking. I call the honourable member for Melbourne.
– The issue of having some concern for youth ought to be taken seriously by people on the other side of the House. We have heard extravagant statements about the vile and detestable policies that flow from the Minister for Employment and Youth Affairs. It might well be that the Government could adopt some sentimental approach to the impositions and stresses that it has placed on young people whom it cannot find a job. The Government intends to place additional pressure on these young people by threatening to take their unemployment benefit if they are not prepared to leave their homes and travel hundreds of miles away to obtain work. The Government intends to treat these people in an ignominious fashion. They will be forced to take jobs in which they cannot use their expertise or educational qualifications.
Some of the special youth employment training schemes are an absolute farce. The scheme to which I have made reference is just a charade and I believe that the Minister ought to go back and have another look at it. The scheme, which is part of the National Employment and Training scheme, provides for people from 16 to 25 years to be employed so that they can develop skills. Young people are put into the work force and subsidised for 20 weeks. At the end of this period they will have developed skills and hence they are supposed to be employable. The Commonwealth Employment Service offers no expertise in this area. The employer draws up the training schedule, but facilities for developing the scheme are non-existent.
I would like to give an example of how the scheme operates. Mr Murray Brown works at Orosun Trading in Melbourne and he is paid under-award wages. The CES does not supervise his training or the level of wages he is paid. The Department of Employment and Youth Affairs expects this individual to learn in 26 weeks what an apprentice is expected to learn in three or four years. Brown is instructed to learn much more than assembly work. He is obligated to work with screws and staplers and to learn planing, drilling, routing, spray painting and cutting. But he is not taught assembly work skills. He is given only a limited number of weeks to learn to use sophisticated and very dangerous equipment. He has to work with machinery that is beyond the level of simple assembly work. The CES has breached awards by allowing employers to take on ineligible trainees. Only apprentices should be employed under the awards. When employers are told that they are breaking the law they say that they are doing this under the instruction of the Minister.
Another case I wish to raise concerns a curtain factory at Nunawading in Victoria. The award covering workers in this factory provides that only one junior be employed for every six adults or part thereof- namely, one to six, two to seven, two to twelve and three to thirteen. That is the order of the day. If union organisers inform an employer that he is breaking the law the person concerned says: ‘That is O.K., the CES sent them along and so far as I am concerned that organisation can take the responsibility’. Therefore under the formula provided by the CES employers are being encouraged to employ young folk under circumstances in which the impossible is expected from them. These young people are expected to pursue a certain career after only weeks of training. A young person who was able to undertake successfully a course and develop all the skills required over this short period of time- and as I indicated it is impossible to achieve this- would come out as a French polisher, a cabinet maker and a wood machinist, notwithstanding the fact that these trades each require four years of apprenticeship. What happens, of course, is that individuals who are trained under these schemes do not come out with any great skills at all. In the main they are exploited by the employer and at the end of their training period they are out in the cold hard world and are replaced by another trainee. It is only a case of recycling youth unemployment. This scheme does not create one single job.
The Commonwealth Employment Service is taking on people for 17 weeks. At the same time it is applying staff ceilings. If the Government wants to reduce the number of people in the Public Service what justification does it have for employing young people in the Public Service? This is just another example of recycling youth employment. The Minister advised us the other day that 1,000 young people will be taken on. I estimate that some 350 young people will be taken on by June. It has been suggested that pressure will be applied to Telecom to reduce its staff by 540 people. What sort of a joke is it? The morale of the Public Service is at rock bottom. Staff ceilings are being applied to a situation which I presented to the media just a few weeks ago in which CES employees are being forced to undertake work in an area in which they are not competent to operate. For instance, some people who are in the degrading position of not having a job are interviewed across the counter by junior officers. Notations are made on cards in respect of personal details, country of origin and other information which is totally irrelevant to whether or not a person can fit a job. This is not the fault of the CES staff or the public servants.
In many cases the first job given to a junior officer involves across the counter work. A senior officer conducts one interview with the junior who is then left on his own. He is given a manual which contains all the instructions to which I make reference. How can such an officer deal with a complicated and sophisticated type of inquiry that may come from an individual who is struggling to find a job so that he can support his family. Some young girls in Melbourne who want to find work are being placed in a situation of having to prostitute themselves to keep a roof over their heads. Anyone who wants to challenge what I am saying can come down to my electorate at any time and talk to some of the girls on the streets of Fitzroy and Collingwood. That is the sort of thing to which the Government has to apply its mind. We should not be subjected to the airy fairy schemes that the Minister for Employment and Youth Affairs presents as a facade to the House of Representatives day after day. The Minister’s youth schemes do not create one single job. All they do is recycle the young unemployed. When people employed under these schemes finish their training they go back into the dole queue. If they are not prepared to take a job hundreds of miles away their unemployment benefit will be cut off. This situation is a disgrace and the Government ought to be condemned for its policies.
Mr DEPUTY SPEAKER (Mr Drummond)Order! The honourable member’s time has expired. The honourable member for Denison wishes to make a personal explanation. Does the honourable member claim to have been misrepresented?
– I do, Mr Deputy Speaker.
-Just before the honourable member begins his explanation I ask him to keep his remarks brief as the time available for the grievance debate is limited.
– Yes, I will be very brief. If this is not a convenient time to make my personal explanation I will do it after the grievance debate has been concluded.
– Why doesn’t he do it after grievance time?
– It is not convenient because I want to speak.
Mr HODGMAN (Denison)-I claim to have been misrepresented on two bases by the honourable member for Melbourne (Mr Innes) who has just resumed his seat. First, as is his practice, he twisted and misrepresented my clearly expressed attitude with respect to unemployment. Secondly, sir, he misrepresented me in the manner in which once again he described me. Whilst I do not ask for a withdrawal I do ask for a ruling. If he continues to refer to me in this way, is it in order for me to refer to him as Red Ted, the only communist member of this House?
-Order! I call the honourable member for Darling Downs.
– He has to withdraw that, Mr Deputy Speaker.
– What the honourable member said is offensive to me. I have been opposed by communists throughout my political and industrial career. Once again our friend is prone to extravagant statements and I ask him to withdraw what he said.
-The remark is offensive to the honourable member for Melbourne and I ask the honourable member for Denison to withdraw it.
– On that basis, sir, I request him to withdraw the remarks that you permitted him to use about me.
-The honourable member for Denison has withdrawn those remarks.
– No, he has not.
-The honourable member for Denison has qualified the position by asking that the honourable member for Melbourne withdraw the remarks he made about the honourable member for Denison.
– An honourable member cannot qualify the withdrawal of certain words.
-The honourable member for Denison should have requested earlier that those remarks be withdrawn. The honourable member for Melbourne has asked the honourable member for Denison to withdraw the remarks that he made about him because they are offensive to the honourable member for Melbourne. I ask the honourable member for Denison to withdraw the remarks.
– Out of respect to you, Mr Deputy Speaker, I withdraw the words.
-On Tuesday of this week the Minister for National Development (Mr Newman) presented a document in this Parliament entitled ‘A Basis for Soil Conservation Policy in Australia’. It was refreshing to note that the journalists of the metropolitan Press saw fit to comment on the presentation of that document and also to note some of its salient points and features. It is good to see that these people can sieve the wheat from the chaff. Following the example that they have given in drawing the attention of Australia to the great problems that face us as a nation unless we do something about soil conservation, it appears to be appropriate in this grievance debate to further the emphasis contained in that document. It is also appropriate to point out that even though nations may war amongst themselves, in a final analysis nature will look after those who look after it.
The key to the future of Australia is not mining development or tourism, but rather the preservation of our land resources and water availability. It has been said in this Parliament that when a mine is finished it is nothing but a hole in the ground. Consequently it is absolutely essential, if we want to ensure that the marrow of the nation will not be eaten out by the diseases of soil infertility and water shortage, that we take the appropriate action. The statistics in that document reveal that 51 per cent of agricultural or pastoral land in Australia needs some form of soil containment work. The total value of affected land as assessed in 1974-75 prices amounts to a staggering $ 12 billion.
It is disappointing to note that a recent Queensland analysis indicated that in a heavy summer downpour as much as 200 tonnes of soil per hectare can be swept away. We must do something about preserving soil and ensuring that soil conservation works, which are necessary in 29 per cent of the total arable and pastoral lands in Australia, are commenced. It is necessary for someone to take the first step even in a journey of 1,000 miles. It is time Australia gave soil erosion and water storage methods the absolute pinnacle of attention that they so richly deserve. Soil conservation is necessary not only in rural areas. It is necessary also in mining areas, in forestry, in recreation, coastal and urban areas. It was estimated in the document that the total cost of containing the problem, expressed in 1975-76 prices, was a staggering $6 10m. Soil erosion causes damage in two ways: We lose our fertile topsoil and the soil deposited elsewhere creates problems on roadways and in silting up rivers and streams. How do we overcome the problem? It appears to me that a four-fold attack on the problem is needed. It is the responsibility of the Federal, State and local governments and Australia as a nation. How can these respective responsibilities be carried out? The Federal Government must take an interest in the matter. We have the responsibility for exports and an overriding responsibility for the social welfare of Australia. Of course, the Commonwealth has been the leader in the general area of research. I would not want to trespass on the hallowed ground of the State governments which, under their sovereign powers, have the responsibility to ensure that land is not tampered with.
Local governments have a very special role to play in respect of local zoning and in matters such as road and stream alignments. I emphasise that the ordinary people, the land owners or the lessees, have to be educated that they do not have a divine right to use land as they see fit. Rather, they have a very special responsibility to ensure that the fertility of the land is such when their day is done that future generations can enjoy the same standard of living and produce not only the same quantity of food but also the same quality of food. It is disappointing that the taxation policies of the Federal Government do not give this encouragement in the first instance.
I make a special plea to the Treasurer (Mr Howard) and the Minister for Finance (Mr Eric Robinson) to look at taxation legislation to ensure that where soil erosion works are done on new land prior to its cultivation, the cost of those works is written off against taxation in the first year of development. It appears to be an intolerably naive situation to say to a land owner that he can do what he likes with the land in the first instance but after he has destroyed it and done the damage we will give him an income tax concession in the year of expenditure for soil erosion works, the construction of embankments, et cetera. How much more sincere would we be in our approach to attacking the soil erosion problem if we said to the land owner, ‘Protect your land before you break it up and pull down the trees and that expenditure will become a taxation concession in the year of expenditure’?
The Federal Government can show a real and vital interest in this matter by ensuring that people who undertake university studies in civil engineering, urban development, mining and forestry have included as part and parcel of their courses training in soil conservation techniques. What better way would there be of assisting than by ensuring that post-graduate courses were available at colleges of tertiary education to enable people to specialise in soil conservation work. The States grant subsidies for work on soil conservation. In Queensland in 1974-75, 159 payments worth $75,921 were made. In 1975-76, 275 grants costing the Queensland Government $82,934 were made. I submit that my State is not doing anywhere near enough to carry out its responsibilities in soil conservation.
I regret very much that various State Ministers have adopted a certain tool in their criticism of the Federal Government. They conclude their remarks by saying that the State government would have done so much more if the people in Canberra gave it more money. I reject that approach totally. I suggest to those Ministers who barnstorm through rural Queensland in an endeavour to obtain cheap political praise that they would be better off examining their own consciences in this area! Is it right when they are the custodians of mineral royalties in their States to claim extra money from the Commonwealth when they will not increase the royalties on mineral exports from their State or increase freight rates? Why do they not adopt the attitude that has been adopted by countries such as Iran and Kuwait which have these vital resources? These countries tell the mining companies that they own the resources and that the companies must pay a fair price for them. I believe that this is an eminently feasible proposition to adopt.
In a spirit of constructive criticism, I suggest to the States that instead of asking Canberra for more money, and thus increase inflation, they look at their own situations. Local government is entitled to a special allocation from the Grants Commission in areas that are prone to soil erosion. It is interesting to note that in 1975-76 the Commonwealth Government has increased its allocation for soil erosion work by five times compared with the amount it expended in 1970-71 and that the States have only doubled their allocation. The owner is entitled to taxation concessions to encourage him to develop and use specialised machinery. Associated with the problem of soil erosion is the problem of water shortage. It would appear to me that in Australia we should have what might be termed water laws by which people are told what they can do with the water that is available. It is wrong that we do not have a situation of -
Mr DEPUTY SPEAKER (Mr Drummond)Order! The honourable member’s time has expired.
– I wish to deal further with a matter that I raised by way of a question to the Treasurer (Mr Howard) during Question Time today, namely, the visit to Australia from 13 to 16 March of a mission from the secretariat of the Organisation for Economic Co-operation and Development whose responsibility it is to discuss the state of the nation and the economy with the Treasury, other departments and also the Reserve Bank of Australia. I thank the Treasurer for his assurance that he will endeavour to arrange time for this mission to interview peak trade union organisations, interested representative groups of industry and commerce and spokesmen from the Opposition. All I hope is that he will make these arrangements long before the mission comes to Australia so that these people can be prepared to make submissions. So much for that side of my comments.
I want to deal mainly with the Treasurer’s misleading of this Parliament by making untruthful statements in this place to the effect that the Government does not interfere in any way whatsoever with the report that is prepared by the mission and published at a later date over the name of the OECD. First of all, I seek leave to incorporate in Hansard a cutting from the Melbourne Age of 4 August 1 978.
The document read as follows-
JOBS VIEW DOCTORED
OECD report toned down, pre-release draft shows
From Tony Thomas
Canberra- Forecasts of worsening unemployment were watered-down in a report on the Australian economy by the Organisation for Economic Co-operation and Development last April.
The changes, lessening the impact of the unemployment forecasts, were made between the OECD secretariat’s preparation of its draft report and publication of the final report.
The Government rejected allegations at the time that Treasury had censored the draft.
But whatever the explanation, the published version was much more palatable to the Fraser Government than the draft.
Paragraph 56 of the draft report forecast some further increase in unemployment ‘at least well into the second half of the year’.
The version published on April 27 forecast a ‘possible’ further increase in unemployment, ‘at least during the first half of the year’.
Later in the draft, the wording, ‘ the outlook for unemployment in 1978 is not good’ was altered for public consumption to ‘the outlook for the labour market in 1978 is not strong.’.
The Prime Minister, Mr Fraser, was asked in Paris in June whether Press reports that Treasury had censored the report, were correct.
Mr Fraser replied that it was insulting to other countries’ OECD representatives to suggest that they could be influenced in that way.
And a senior Treasury official added that ‘certain people ought to grow up’.
The Treasurer, Mr Howard, was asked last night to comment on the differences in the OECD draft and final reports.
He said he did not accept that the OECD ‘doctored’ its reports.
I think the report was an honest assessment by the OECD of things as they saw them at the time’, he said.
The consultative procedures with Australia about the draft were exactly the same as the procedures in previous years’.
Other variations included-
Draft: Employment would be unlikely to increase until sometime in the second half of the year. Published: Employment might grow only slowly.
Draft: The most that could probably be expected in 1978 is a flattening out of unemployment during the second half of the year following some rise in the first half. Published: 1978 may see some further rise in unemployment at least during the first half of the year.
Draft: Australia’s policies of reducing interest rates, controlling monetary growth and maintaining approximately the exchange rate ‘may be less that fully coherent’. Published: Could give rise to some conflict.
Draft: Net private capital outflow (presently) occurring. Published: Relatively small private capital inflow. This change was an accurate updating of the statistics.
The draft also took a stronger line against the Prime Minister’s emergency protection policies.
It said it was not clear what long-term benefit was being derived from them. This was omitted in the final version.
And it said the policies had caused ‘a noticeable upward effect’ on prices. This was changed to ‘some increases in cost and price pressures’.
-I thank the Minister for Finance (Mr Eric Robinson). I raised this question during a speech I made at the Parliament of Europe in Strasbourg on 3 October last year. Following my speech, I had a discussion with Mr Van Lennep, the Director-General of the OECD, and also important members of his staff who acknowledged to me that it was the custom and practice of these missions, when they came to a country to examine the economy of that country, to prepare a report. They told me that the discussions that they had with the government of the day did play a most important part in the framing of that report. This is stated in the article appearing in the Melbourne Age which has been incorporated in Hansard. The accusations which have been made that the Government does interfere have been confirmed by Mr Van Lennep and other members of his staff.
The part that concerns me is that after the OECD prepares and publishes a report, to all intents and purposes it becomes holy writ. The Government then quotes from it and says that this is what the OECD has said about the Government when in actual fact it is the Government’s own report that has been doctored by the Government and published by the OECD. Mr Van Lennep went so far as to say that he only stands by reports over his name, reports that he puts out. He does not vouch for the authenticity of reports that are put together by OECD missions that have been interfered with or tampered with by governments. This applies not only in Australia but also in other countries throughout the world. He explained to me that, unless the OECD prepares reports in line with government policies and in line with government thinking, it cannot get the information from governments. All I say is this: What is the use of putting these reports together unless they are authentic and not tampered with by governments? What is most objectionable of all occurs when the Treasurer comes in here and misleads this Parliament and the nation. He tells lies to the Parliament and should be dealt with accordingly.
-Order! It is now 1 5 minutes to one o’clock. In accordance with Standing Order 106, the debate is interrupted. I put the question:
That grievances be noted.
Question resolved in the affirmative.
-Mr Speaker has received letters from both the honourable member for Port Adelaide (Mr Young) and the honourable member for Indi (Mr Ewen Cameron) proposing that definite matters of public importance be submitted to the House for discussion today. As required by Standing Order 107, he has selected one matter, that is, that proposed by the honourable member for Port Adelaide, namely:
The gross inadequacies of the Government’s measures to assist the unemployed.
I, therefore, call upon those members who approve of the proposed discussion to rise in their places.
More than the number of members required by the Standing Orders having risen in their places-
– Yesterday we were given a very disdainful interpretation of what is occurring in regard to unemployment in Australia by the new Minister for Employment and Youth Affairs (Mr Viner). He used as the basis for his comments about unemployment in this country the fruits and wine industry in this country and stated that the major growing areas of Shepparton and Mildura were unable to obtain all the labour they required to harvest the fruit. This has been the situation for many years. It is not unusual at the peak of the harvest period for those centres not to be able to attract all the labour they require. But the Minister took it one step further yesterday and I am pleased to see reports in today’s Press that the Department of Employment and Youth Affairs knew nothing of the Minister’s intentions when he rose to answer the question.
Let me deal first with the mentality of this Government which attacks people who are out of jobs. Most of the people who are now unemployed have become unemployed since this Government came to power at the end of December 1975. Yesterday a question was asked of the Minister by Mr Baillieu, the honourable member for La Trobe. Mr Baillieu would never have had to live as an unemployed person has to live, nor would he have known very many people who have had to live in those circumstances. A glance at the Who’s Who in Australia would show that the Baillieu family, of which Mr Baillieu is a member, is one of the most privileged families in this country. No fewer than four columns of Who’s Who in Australia are taken up by the reference to the Baillieu family which shows all their connections with major Australian industries and the wealth and property that they own throughout this country. Mr Baillieu asked whether the work test should be extended so that perhaps people could be forced to go to work from areas a long way from their homes.
-Order! I remind the honourable member for Port Adelaide that he should not refer to the honourable member in those terms but that he should refer to him as the honourable member for La Trobe.
– To the astonishment and the amazement of everybody on this side of the House, the Minister for Employment and Youth Affairs, who has held that position for approximately three months, made the harshest statement about unemployment in this country than has been made in the three and a half years of this Government. He replaced the former Minister just three months ago and there can be absolutely no doubt now why the Minister has been given this position. It is to do a hatchet job on the unemployed of this country. Last year in the August Budget $794m was allocated for the payment of unemployment benefits in the 1978-79 financial year. Everybody on both sides of this Parliament knows that the payment for unemployment benefits will be at least $100m more than the amount allocated by the Government in the Budget of last year. Someone, somehow, acting with the backing of this Government has to take action to reduce that amount. This is the thinking of the Government.
Subsequently in his statement yesterday the Minister stated that the work test would be applied not only to the people who live in Mildura and Shepparton, the region where the work may be available- I will say a little more about that later- but also that it may be extended to Melbourne. I do not know why the Minister has looked only at the State borders or whether perhaps there will be a work test in Sydney and Adelaide to force people to go to work in those regions so far away from their homes. The Minister, according to the answer he gave in Parliament yesterday, seems to think that it is a fair thing that if these people are paid their expenses- he used the term very loosely- to go to these areas to work and they do not go, they refuse to go, the taxpayers should not have to contribute towards their unemployment benefit.
It is a rather amusing thing about this Government that when, approximately one hour ago, it came to light that part of the Prime Minister’s own very extremely wealthy family has been given a low interest loan of $250,000, the Labor Party is accused of muck-raking. But people who are legitimately out of work in Melbourne, who now refuse to go to Mildura to pick fruit, are going to be robbed of their unemployment benefit. According to this Government, they are dole bludgers, bludging on the taxpayers. But not the Prime Minister’s family! The pensioners of this country have to forgo $27m in pension payments. This year the Prime Minister spent the $27m on VIP aircraft. The people of Australia ought to look at this Government when it makes decisions like that.
There are a number of millionaires who sit on the front bench of the Government, and they make these decisions. We do not decry them their wealth. Perhaps we wish that everybody in Australia could share it so that we all could live in a privileged position similar to theirs. The honourable member for La Trobe, the Prime Minister, the Deputy Prime Minister (Mr Anthony) and so many of their colleagues have that privilege. We demand that some conscience be shown by them when they look at the problems of people who are out of work in this country. We demand that they understand that perhaps people in Melbourne who are unemployed- many of them newly arrived migrants- would not even know where Shepparton and Mildura are. They would have no idea of the work to be undertaken.
I can readily understand the problems, as I have spent six years organising workers in the Riverland fruit district of South Australia. I can readily understand the massive problems that are faced by the fruit growers of this country. But why is the Government bleeding for the fruitgrowers in March, when it imposed the excise on Australian made brandy six months ago? Ask the fruitgrowers about that decision. That is another matter that the Government sees as quite separate.
It was announced on the Australian Broadcasting Commission news in Shepparton less than one hour ago that the Shepparton Commonwealth Employment Service office does not want fruit pickers and that there are no vacancies for fruit pickers in Shepparton. That is according to the ABC news. We heard the Minister telling us yesterday that if people from Melbourne did not force themselves to go there they would lose their unemployment benefit and would have to live on absolutely nothing or hand-outs from a few friends. This is far too serious a question to be left to yesterday’s announcement. It is just another factor in the way in which this Government treats unemployed people.
I do not rely on my own knowledge of the industry or the fact that I have had something to do with it or perhaps rely on what was said in this Parliament yesterday. Today we have made inquiries of the union that covers the fruit growing industry, the Australian Workers Union. Yesterday Mr Viner told us that expenses would be paid to the people who travel to the district. Expenses are not paid. Our inquiries of the Department this morning revealed that a person would receive a second class rail fare. I do not think any person in his wildest dreams would declare that as being expenses.
As far as accommodation is concerned, if we shift thousands of people for hundreds of miles away into these districts there must be a lot of accommodation available for the people to take up, because they have got to leave their own homes. According to the people we talked to this morning, the accommodation is poor and virtually non-existent. The CES in its advertising campaign in Victoria at the moment says that people with their own accommodation, caravans, et cetera, are more than welcome’. Are all the unemployed people in Melbourne expected to buy a caravan for thousands of dollars so that they can work for six or seven weeks at Shepparton or Mildura? For how long will they be off the unemployment benefit when the job finishes and they return to Melbourne? They would have to wait another six weeks to receive their unemployment benefit.
The stance taken by the Minister is quite unreal. I asked the appropriate union what sort of pay these people would get if they did go into these industries. I am told that the payment in Victoria is a bin rate of $7 a bin; an experienced picker would do four bins a day. He would earn $28. If the picker is a novice he would be lucky to pick one bin a day. No one has any guarantee of permanency. It is a question of going to Shepparton and taking pot luck. It is trite to say that there are hundreds of jobs, when there is absolutely no guarantee of getting work, particularly when people are inexperienced.
Let us look at the unemployment benefit, according to the CES offices that we have contacted. If a picker were sacked because he was inexperienced and just could not do the work- I can assure honourable members, having seen the work being done, there are a lot of people in Australia who could not do the work- he would have to wait seven days before he could reapply for the unemployment benefit. If he left voluntarily because of intolerable working conditions he would have to wait another six weeks before he was eligible for the benefit. I have already explained the travel expenses, which amount to a second class train fare into the district in which the work may be available.
Let us look at the unemployed figures and the registered vacancies for last month in these districts. In Shepparton there were 3,495 people registered as unemployed. There were 64 registered vacancies. That is the situation in Shepparton according to the January figures. In Mildura 2,591 people were registered as unemployed. There were 1,700 registered vacancies at the height of the harvest. I have talked with the honourable member in whose electorate Mildura is. I believe him, because the same thing happens in Renmark, Loxton, Berri and Waikerie, when he says that people living locally, even people who do not normally work during the year, take on these positions. But they return to their homes and families every night.
What this Government fails to understand is that there are a lot of highly trained unemployed people in this country. The Government cannot say to them: ‘Irrespective of how much training you have done, your higher school certificate or tertiary education, you are going to leave your family, you are going to leave your home. Here is a second class train fare. You are going to Mildura to pick grapes’. We in this House need to have some understanding of the industry, the plight of the industry, what it needs and the labour force that is required at the height of the harvest. But more and more this Government should have a greater conscience about the plight of unemployed people.
Without this sort of attack occurring there are enough hurdles in the way of the recipients of unemployment benefits. They are financially worse off than many other people, for reasons that I will outline. They are not eligible for the supplementary rent allowance paid to other pensioners and those who have been on sickness benefits for more than six weeks. They or their spouses may not earn more than $6 a week without a dollar for dollar deduction from their benefit. Other pensioners can earn up to $20 a week without penalty. Allowances for dependent spouses and children of unemployment beneficiaries are taxable. They are not taxable for other pensioners and lone parents. They receive no fringe benefits. They have no telephone, travel, rates, pharmaceutical and other concessions. They have no pensioner health benefit card and are at the mercy of their doctors’ political and philosophical views.
They must produce proof of looking for work constantly, but can receive travel expenses only for jobs to which they are referred by the CES. All other expenses in looking for work must be borne personally. Unemployment benefit is withdrawn from persons whose dress is considered below an acceptable standard, necessitating constant expenditure on clothing. If an unemployment benefit is withdrawn and an appeal is lodged with the Social Security Appeals Tribunal, the unemployment benefit is not paid while the appeal is considered. For other pensioners, continuity of pension or benefit continues during consideration of the appeal.
There are many hurdles already in the way of people who are unemployed in this country. Their dignity has already been submerged below a line which we in the Labor Party find acceptable. It is about time the bunch of millionaires sitting on the front bench of the Liberal-National Country Party Government, with all the perks of office that they have, with the privileged position that they have given themselves over the years, took into consideration the plight of unemployed people in this country.
Sitting suspended from 1 to 2.15 p.m.
– I wish to reply to the honourable member for Port Adelaide (Mr Young) in the discussion of the matter of public importance which he proposed before the suspension of the sitting for lunch. I remind the House that the matter raised by the honourable member is:
The gross inadequacies of the Government’s measures to assist the unemployed.
From the speech of the honourable gentleman one could say, not unreasonably, that he forgot the matter which he proposed to this House as a matter of public importance. He sought to attack me as Minister and the Government because of what I said yesterday at Question Time concerning my request to the Department of Employment and Youth Affairs to report to me on the application of the work test in respect of work for casual fruit pickers which is available in the Shepparton and Mildura districts. I said then, and I say again, that I expect that many people in the community- taxpayers- ask themselves, properly, whether when work of this kind is available they should be paying, by way of tax, unemployment benefit to people who are fit and able to take that work but who decline to go to the place where the work is available. That report is coming to me from my department.
The honourable gentleman alleged that when I answered the question on this matter yesterday I had no information from my department on it. I assure the House that I had information- written material- from my department which I had requested some days before. I have been looking at this matter for some days, since the first Press reports about the situation at Mildura appeared. The honourable gentleman also accused the Government of taking the action that I spoke about yesterday because the Government expected that the Budget appropriation for unemployment benefits would be overspent by $100m. I assure the House that that is a completely false accusation.
I remind the House that during the years of the Whitlam regime the Labor Government considerably overspent against the Budget appropriation for unemployment benefit payments. I shall quickly run through the figures. In 1972-73 there was an over expenditure of $ 12.6m. In 1973-74 the figure was $16.9m. In 1974-75-a Labor year- the figure was $1 16.7m. In 1975- 76- predominantly a Labor year- the over expenditure was $ 184.8m. In 1976-77 the over expenditure was $16 1.1m and in 1977-78 it was $ 154.1m. In other words, there is a pattern of over expenditure against Budget appropriation. I seek leave to incorporate in Hansard a table which has been prepared by the Department of Social Security.
The table read as follows-
– I thank the House. I also point out to the House some relevant statistics concerning the character of beneficiaries of unemployment benefit payments. The honourable member for Port Adelaide sought to wring out the last drop of what he thought was blood from his argument. He alleged that it was most unreasonable for the community to expect people to travel to Mildura or Shepparton seeking casual work. A survey conducted by the Department of Social Security in December 1978 revealed that 74.7 per cent of all beneficiaries had no dependants. I think that speaks for itself.
I am surprised that this matter of public importance has been proposed for discussion today. Only last week the Opposition proposed a similar matter of public importance for discussion. I made clear then the origins of the current levels of employment. I cite again a few of the pertinent figures. In June of 1974 the registered unemployed figure stood at less than 80,000. Twelve months later registered unemployed had reached a quarter of a million. In 12 months the figure had risen to a quarter of a million under the then Labor Government. I shall narrow the figures down so that people may appreciate what happened during that time under that Government. In August 1974 there were 107,000 registered unemployed; in September, 121,000; in October, 150,000; in November, 190,000; in December, 267,000; and in January 1975 the figure was 312,000.
Last week I also made it clear that the Government believes that the only way to correct the severe disruption of the Australian economy which occurred as a result of the events of 1973-74 is by way of a prudent non-inflationary managed recovery. The most important contribution government can make to assist the community, to assist those seeking work and to take up the challenge ahead, is to maintain stability in economic management and economic policies. That is not to say that governments should be inflexible or unresponsive to changing circumstances. But for the benefit of investors, business and the work force it must be consistent and re- , liable in the pursuit of effective management of the economy. Undoubtedly the Fraser Government has reassured the business community on that and the condition of industry and the economy have improved markedly as a result. Since the last months of last year we have received the results of surveys and economic statistics which continuously show an improving economy and also an improving employment situation.
Today the Commonwealth Statistician released figures which show a substantial increase, in seasonally adjusted terms, in total employment during December. I think it is about time that this House started to pay attention to what is happening in the overall employment field rather than concentrating on unemployment to the exclusion of all other things. I say that not to detract from the significance of unemployment and what needs to be done by the Government and by the community as a whole for those people who at present cannot find the work they want. The significance of the Statistician ‘s figures is that the increase was no less than 20,000 for the month and follows upon an increase of 17,000 in November. It was the sixth successive month in which employment, in seasonally adjusted terms, had increased. The figure now stands at 57,000 more than the June 1978 figure. Manufacturing employment in seasonally adjusted terms increased for three successive months. Although this brought only a modest increase in employment of 1 1,000 it is an encouraging sign for manufacturing industry given all that has happened to it in recent years.
I turn to some of the other statistics. Civilian employment rose strongly in December 1978- by 20,400 persons. This was the sixth consecutive monthly increase and followed a similar strong rise of 16,900 persons in November. The number of civilian employees at December 1978 was 4,757,400. This is the highest seasonally adjusted figure since October 1974 when it was 4,766,000. The increase for the six months, June to December 1978, was 56,000. This was the largest increase since the six months, June to December 1973, when the figure was 135,000. The increase for the month of December 1978 is the largest increase since the month of December 1973. There is clear evidence that our policies, pursued since we won office in 1975, are bearing fruit not only in the economy generally but in the important area in which I must work- that is, in employment. Let me remind the honourable member for Port Adelaide what his present leader, when Treasurer, said in his Budget speech on 19 August 1975, which is recorded at page 53 in the relevant Hansard. He said:
Our present level of unemployment is too high. If we fail to control inflation unemployment will get worse.
That is what Mr Hayden said when he was the Labor Treasurer. Later in his speech he said:
In the context of an economy beginning to pick up, a deficit of the order initially projected would have been a prescription for accelerating inflation. Its acceptance would have been tantamount to abandoning concern with inflation, discarding our wages policies, condemning the corporate sector to an attack upon its profitability and threatening the future jobs of thousands of Australians- all at a time when the first signs of improvement in most of those respects are beginning to appear.
Bearing those words in mind, let us remind ourselves of the question asked this morning by the Leader of the Opposition (Mr Hayden) when he attacked the present level of profitability of Australian companies. How well does that stand in relation to the words which I have just quoted? I repeat what he said in 1 975:
Its acceptance -
That is, its acceptance of a deficit of an order initially projected- . . would have been tantamount to abandoning concern with inflation, discarding our wages policies, condemning the corporate sector to an attack upon its profitability . . .
The Leader of the Opposition knows, as we know, that healthy profits mean a healthy economy. That is borne out by the employment figures which I was able to announce just a moment ago. I would love to be able to incorporate in Hansard a recently published cartoon by Larry Pickering but I will read what is so graphically portrayed by Pickering. He shows a picture of the Leader of the Opposition saying:
Heavens! The economy is improving! Investment is up! Employers are taking on more staff! The stock market’s showing confidence. Retail figures are up! It’s imperative the Government alter its economic strategy now!
That is what Mr Hayden is shown as saying. Then there is a person in the background- it looks like the honourable member for Port Adelaide- with an Australian Labor Party briefcase in his hand, who is quoted as saying:
Or we’re done for.
How very true that is. How very much they realise that it is the economic policies and strategies of this Government which are producing the very thing for which the Leader of the Opposition called when he was Treasurer. But it is the voices in the background, the voices of the honourable member for Port Adelaide and others, which are pulling at the Labor leader to say: ‘Do not acknowledge the success of the Government’s policies because if you do, we the Opposition are done for.’
There is a wide range of programs supported by this Government which have been supported actively since we have been in office. I point out that expenditure on training programs under the present Government has risen from $8 7m in 1975-76 to $182m in the current financial year. That is an investment by this Government in people. It is an investment which matches the investment in plant that we provided industry through our investment allowance policies. I also remind honourable members of the undertaking given that these programs would not be constrained by funding within the limitations of our Budget. I will state briefly the number of people covered by training schemes. I refer to the number of trainees trained under the National Employment and Training scheme over the last four years. In 1975 the total was 20,800. In the calendar year 1976-77 to 1977-78, the number trained under NEAT was 270,000. There were 135,000 trainees under the Special Youth Employment Training Program, 95,000 on-the-job trainees and 45,000 formal course trainees. The estimated number of trainees under NEAT in 1978-79 is 1 12,000 of whom 90,000 will be training under SYETP. The latest survey of SYETP trainees indicates that 61 per cent of trainees were in employment three months after the end of their training period. This compares more than favourably with the similar type schemes overseas. I point out that our policies are adequate.
Mr DEPUTY SPEAKER (Mr Millar)Order! The Minister’s time has expired. The discussion is concluded.
Bill presented by Mr Killen, and read a first time.
– I move:
This Bill has its origin in some difficulties associated with the statutory interpretation of the statute to which the Bill refers, namely, the Defence Forces Retirement and Death Benefits Act. As I am sure the honourable member for Corio (Mr Scholes) would understand, it has no relationship whatsoever to the substantive provisions of the Act. lt seeks to settle some difficulties that have flowed from statutory consideration by both the Administrative Appeals Tribunal and the Federal Court. The provisions of the two Acts- the Defence Force Retirement Benefits Act and the Defence Force Retirement and Death Benefits Act- deal with the classification and reclassification of former members of the Defence Forces who have retired on grounds of invalidity or physical or mental incapacity to perform their duties. As part of its classification and reclassification responsibilities, the Defence Force Retirement and Death Benefits Authority determines in respect of each invalidity retiree a percentage of incapacity in relation to civil employment.
To determine the percentage of incapacity, the Authority, and the DFRB board that preceded it, have developed over more than thirty years a set of principles under the discretionary powers provided by the respective Acts. In short, there are three classifications and the classification into which a person retiring will move will depend on the judgment made in the past by the Authority.
These principles have attracted widespread understanding and acceptance. Indeed, they had the general support of the 1972 joint select committee on Defence Force Retirement Benefits legislation which I am sure is known to most honourable members as the Jess Committee. In essence, the principles are directed to the extent to which an invalidity retiree’s capacity to gain civilian employment commensurate with his skills and employment background, is affected by the disabilities that caused his retirement or by any subsequent causally connected disability.
A judgment handed down in August of last year by the Federal Court of Australia has disclosed an anomaly in the legislation which prevents these principles from being given proper effect. In short, the judgment showed that the legislation as it now stands can be interpreted to recognise for benefit purposes disabilities arising after separation from the Services that are in no way connected with Service membership and which therefore had nothing to do with a member’s retirement. Clearly, the assumption of an obligation to provide benefits from the DFRB and DFRDB schemes in these circumstances is well beyond the conceptual scope of the schemes and would, I suggest, be an untenable burden on public resources.
This Bill is designed to correct what the Government considers to be an anomaly. At the same time, the Government has decided that, given the significant part the whole body of principles plays in determining an invalidity retiree’s entitlements, it should be embodied in the law. The Bill has this additional purpose. I emphasise that the amendments do not change the long established principles followed by the Authority; rather, they are intended to confirm and ratify them in the law- I suppose I should emphasise the words ‘ratify them in statute form’- and not leave them to interpretation by any tribunal.
It should go without saying that there is no diminution of the right of persons affected by decisions of the Authority to seek review by the Administrative Appeals Tribunal. If a person feels aggrieved by a decision made by the Authority, he has a clear right of appeal to the Administrative Appeals Tribunal. I am sure that I would have the support of my friend, the honourable member for Corio (Mr Scholes) in saying that the Bill in no way interferes with the substantive rights of those who have access to the provisions of the two Acts. The questions of commutation and taxation do not arise. I only hope that the House accepts the Bill and provides it with a speedy passage.
Debate (on motion by Mr Scholes) adjourned.
Bill presented by Mr Fife, and read a first time.
– I move:
This Bill gives effect to the Government’s decisions, which I announced on 18 October 1978, to make certain changes to the operations of the Prices Justification Tribunal. In my statement outlining those changes, I referred to the opportunity that had been given for views to be put to the Government on this matter and to the consultations I had held with the trade unions, business and other sections of the community before the Government took its decision. Those views were fully considered by the Government.
The broad purpose of the Bill is to modify the operations of the PJT by reducing the emphasis on price notification and by broadening its inquiry function. The Bill replaces the present price notification requirements which are based upon the size of a company, with selective notification of price increases for a limited period by companies following public inquiry by the PJT. Companies which have been the subject of a public inquiry may be required to notify their price increases for up to 12 months at the discretion of the PJT or for a longer period if the Minister approves. This will enable the Tribunal to monitor a company’s pricing behaviour closely following a public inquiry. In anticipation of these changes, and at my request following my statement of 18 October last, the Tribunal used its exemption powers to release prescribed companies from the notification procedures. Companies involved at that time in public inquiries were not exempted.
The PJT will, in future, concentrate its resources in the areas of price surveillance and public inquiry. It is well equipped to carry out an ongoing surveillance role. The PJT will be able to draw upon its bank of information on the pricing behaviour of companies. The Tribunal will also utilise the regular channels of information such as representations by consumers and user industries, commercial information and official price indices and reports. Where necessary the PJT will also seek the co-operation of individual companies in providing particular pricing information. The Tribunal will retain its power to require any company to furnish information about its prices should this be necessary and will, therefore, be well placed to examine price movements and to maintain close surveillance over prices of particular significance to the economy.
Arising from its surveillance of prices the PJT will be able, at any time, to recommend a public inquiry into any company or group of companies. Public inquiries will underpin the Tribunal’s surveillance role and highlight areas needing further inquiry. Presently the Tribunal is limited in the course of its inquiries to determining whether prices charged or proposed to be charged by companies are justified. This function will remain. The Bill will allow the PJT to conduct public inquiries, which do not involve price justification. These inquiries will consider matters such as the structure of prices within industries and how they are established.
Turning to the way in which inquiries will be conducted and the procedures associated with this, a pre-inquiry procedure will be established in respect of prices justification inquiries initiated by the PJT. This will allow the Tribunal to obtain basic information and consult with the company or companies concerned as well as with other interested parties to determine whether a prima facie case exists for a public inquiry. The decision whether to proceed to a public inquiry will be subject to approval by the Minister in respect of inquiries initiated by the PJT. The capacity which exists for the Minister to refer for public inquiry matters arising from wage increases outside the wage indexation guidelines and allegations of excessive prices will be maintained. However, it will be open to the Minister to confine a reference to the industries to be covered by an inquiry, in which case it will be for the Tribunal to select the companies to be taken to inquiry.
The Bill amends the price freeze provisions of the Act to provide the Tribunal with a discretion to allow an interim price increase to a company under inquiry. The existing provisions are unduly restrictive and can prevent companies from recovering legitimate cost increases for up to 4 months in certain cases. These provisions will not apply in respect of inquiries initiated by the Minister which do not require the Tribunal to consider the justification of the prices under inquiry. Time limits for completion of inquiries by the PJT have been made more flexible by including provisions which allow the Minister to specify the time for completion of inquiries initiated by him, and which allow the Tribunal to extend the time for other inquiries with the consent of the company concerned. The Bill modifies the confidentiality provisions of the Act so that companies may claim confidentiality in respect of documents and submissions containing secret formulas or processes. If requested, the PJT will not disclose information which in its opinion would damage the competitive position of a company, unless the Tribunal considers it in the public interest to do so. A provision is included in the Bill to allow the Minister to issue general directions to the PJT as to any matter which should be given special consideration by it in the performance of its functions and the exercise of its powers. This provision will ensure that, notwithstanding its statutory independence to arrive at its own findings in particular cases, the Tribunal’s operations will be placed within the framework of Government policy.
The changes to the Prices Justification Act contained in this Bill demonstrate the Government’s concern that in its operations the PJT should not add unduly to business costs or inhibit investment. At the same time they will ensure adequate surveillance of prices and improve the capacity of the PJT to inquire into prices that need to be examined. The PJT will be better equipped to conduct comprehensive inquiries, as the need arises, into pricing practices within industries as distinct from companies; inquiries which range beyond the narrow confines of prices justification. The Government intends that the Tribunal be employed in this role as a support where appropriate for its policies and, in particular, its anti-inflation strategy. In this regard the PJT will undertake a program of inquiries into prices within industries which are major component groups of the consumer price index, or which have a significant impact upon the level of prices in other industries. These inquiries will be broadly similar to the inquiry presently being held by the Tribunal into the processed foods industry. Apart from its price surveillance role, the PJT will carry out a valuable function of advising the Government on the structure of prices in key areas of the economy. I am confident that the business community will recognise the importance of this function and respond accordingly. I commend the Bill to the House.
Debate (on motion by Mr Morris) adjourned.
Debate resumed from 23 November, on motion by Mr Howard:
That the Bill be now read a second time.
-The Bill currently before the House represents a further attempt by the Government to block off an incredibly extensive network of tax avoidance which poses a grave threat to the equity of the entire taxation system and to Government revenue. Accordingly, the Opposition does not oppose this legislation. This Bill gives effect to previous statements by the Treasurer (Mr Howard), the first dating from 19 April last year, a full 10 months ago, announcing measures to block off tax avoidance schemes involving the pre-payment of interest and rent, trust stripping and trust income derived from overseas. The first of these schemes, that involving pre-payment of interest and rent, aims at securing a tax deduction for a supposedly deductible business expense which, in fact, has been created in a highly artificial manner. For instance, a taxpayer enters a scheme whereby he obtains a loan of $1,000 from an accomplice in the scheme and immediately repays $700 as a pre-payment of interest on the loan. He then buys back the loan for $370 and has obtained a $700 tax deduction for a net outlay of $70, which was the fee to the accomplice in the scheme. Schemes involving the pre-payment of rent operate in a similar way. To overcome these schemes, the Bill will either disallow tax deductions for this type of outgoing or limit the deduction for any year to so much of the total amount as could reasonably be expected to be paid in that year.
Opposition is concerned that, although the Treasurer acknowledged in his second reading speech that variations of these schemes had been uncovered since his original Press statement, he has not acted to include those variations in this legislation. Instead, he proposes to introduce even more legislation during this session to deal with the new schemes. This seems to be a further example of the Government’s largely ineffective and ad hoc approach to this serious problem. By acting in this way the Treasurer is unnecessarily using up more of Parliament’s valuable time and giving the tax avoidance industry even more time to find new ways around the amendment.
The second scheme dealt with in this Bill involves trust stripping transactions. Division 6 of the Income Tax Assessment Act taxes trusts according to the principle that the beneficiaries of a trust are liable for tax on any of the trust income to which they are entitled, and if there is any part of the trust income to which no beneficiary is entitled, or if a beneficiary is under a legal disability, then the trustee is liable for tax on that income.Trust stripping schemes aim to remove tax liability from both the trustee and the beneficiary. The schemes rely on imposing a nominal non-taxable beneficiary, such as a charity or a loss company, between the trustee and the true beneficiary. This nominal beneficiary receives the income from the trust and, in exchange for a participation fee, passes it on to the intended beneficiary in a tax free form such as a collapsable loan’ which is a loan that is not intended to be repaid.
To overcome these schemes the legislation looks for the existence of some sort of reimbursement agreement whereby the nominal beneficiary receives a share of trust income in exchange for the provision of money, loans or any other benefit in return. In these circumstances the amount of trust income involved will be treated as if there is no beneficiary entitled to receive it and will be taxed to the trustee at the maximum rate of 6VA per cent. This type of scheme highlights a fact which the Opposition views with considerable alarm, and that is the increasing use of charitable organisations in tax avoidance schemes. It is appalling that these institutions should allow their tax exempt status to be used as vehicles for such schemes. The Treasurer has several times acknowledged that charities are allowing themselves to be used in this way and warned them against it. If these warnings are to be effective they must be backed up by strict action against any such group that abuses its tax exempt status by participating in these artificial and immoral schemes.
The third part of this Bill deals with the foreign source income of trusts. At present a trustee is not taxable on any accrued trust income which originates overseas. This is due to a High Court decision in the Union Fidelity case of 1969. Once again, the learned judges in the High Court acted to frustrate Parliament’s intentions in tax legislation and put their stamp of approval on the loss of a considerable amount of revenue. The non-taxability of foreign source income is due primarily to confusion over the residence of a trust. To overcome this problem, the legislation defines a ‘resident trust’ so that a trust can be treated in the same way as a ‘resident taxpayer’ and can be assessed on both foreign and Australian source income. Measures are included to ensure that beneficiaries are also taxed on both overseas and local income, that non-residents are only taxed on Australian income and that double taxation is avoided. However, these particular measures are stillborn. This is due totally to the Government’s unwillingness to introduce a foreign tax credit scheme for the taxing of foreign source income, despite the fact that it originally announced that it intended to introduce such a scheme.
Under sub-section 23 (9) of the Income Tax Assessment Act any foreign source income received by an Australian resident is exempt from Australian tax if it has been taxed at all, even at one per cent, overseas. So to overcome the proposed amendment a trustee merely has to arrange to have foreign income channelled through a company set up in a tax haven country where it will be taxed at low rates and then remitted to Australia exempt from further tax. Therefore, this amendment will be no more than a minor irritant to determined tax avoiders. The need for a foreign tax credit system was referred to by the Treasurer in his original statement on 8 June last year when he proposed this amendment. Now he conveniently ignores the consequences of not having that system. By capitulating to powerful business interests which lobbied against the tax credit proposal, which is certainly what happened, the Treasurer ensured that this proposed amendment would be ineffective and that a substantial area of tax avoidance could not be closed off.
The Opposition recognises the inequities and revenue losses which result from these types of tax avoidance schemes and it acknowledges the necessity for appropriate amendments to overcome them. However, whilst supporting the Government’s amendments, the Opposition doubts that they will have more than a superficial impact on the tax avoidance industry. Indeed, the industry is openly claiming that it has already defeated the amendments on foreign trust income and will probably soon be able to by-pass the other amendments. That is how effective these amendments are. Indeed, that is the story of most of the Government’s efforts to date to stop tax avoidance. No sooner is one scheme stopped when another takes its place. In our view, it is time that the Government made a concerted and effective attack on tax avoidance. As we have stressed in earlier debates on this subject, such a concerted attack must involve action in various areas which are currently not being utilised. Section 260 of the Act, the annihilation provision, on the face of it, declares tax avoidance schemes to be illegal but it has been interpreted in such a way by the High Court as to be meaningless. Surely it must be rewritten in an attempt to draw it in such a way that the High Court will have to uphold it and find tax avoidance schemes to be illegal.
Retrospectivity is another measure which we have advocated as a means which could be used to devastate the tax avoidance industry. Certainly, from our understanding of people in that industry, there is no doubt that this is something which they greatly fear. At the moment all we have is that the Treasurer announced a scheme on a certain day, apparently as soon as he found out that this scheme was causing loss of revenue, then at some later date he introduced legislation to block off the scheme which was causing the loss of revenue and he backdated the legislation to the date of his announcement. We have said that there is absolutely no reason why that retrospectivity of legislation should go back not just to the date of announcement but, indeed, to the beginning of the financial year involved. That seems to us to be an utterly defensible action for the Government to take. It does not involve drastic retrospectivity; it involves simply going back to the beginning of the financial year in which the income is being earned, on which tax is to be paid or avoided.
The third measure which we have mentioned previously as being important for the Government to undertake in this area is for it to ban the advertising of tax avoidance schemes. I repeat, this is something which ought to be done. Lately the papers are full of whole page advertisements by various people claiming to have tax avoidance schemes. These advertisements encourage people to get into the tax avoidance business. All these schemes are highly artificial. On the face of it, they should be banned under section 260 of the Income Tax Assessment Act. But, as I mentioned, that section is inoperative. So people are encouraged to get involved in these artificial schemes and the whole industry gathers impetus because of the advertisements which the Government continues to allow. It seems to us that it would be possible to ban the advertising of such tax avoidance schemes. That ought to be done.
However, . even if these measures were adopted, one major method of tax avoidance would still be available unless further action was taken to eliminate it. I refer to the use of trusts as a tax avoidance device. The fact is that, despite the provisions in this Bill in regard to trusts and despite earlier legislation aimed at reducing the effectiveness of trusts in tax avoidance, trusts remain a major means of avoiding personal and company tax. Trusts have long been a means of avoiding estate duty, but that will soon be unimportant following the cessation of estate duty as from the middle of this year. Substantial evidence of the increasing use of trusts for tax avoidance is available. I refer firstly to some statistics which show a rapid increase in the use of trusts. I seek leave to incorporate in Hansard a table which shows statistics for partnerships, trusts and taxable companies over recent years, which was taken from the taxation statistics of the Commissioner of Taxation.
The document read as follows-
-I thank the House. This table shows that between 1973-74 and 1975-76- unfortunately, that is the latest financial year for which statistics are available- the number of partnerships increased by 5.5 per cent, the number of taxable companies declined by 8.3 per cent, but the number of trusts increased by 16.9 per cent. So certainly the number of trusts increased at a much faster rate than did partnerships or companies. In regard to the net income of partnerships, trusts and companies, we find that for companies taxable income increased by 18.8 per cent in that 2-year period; for partnerships the taxable income increased by 15.4 per cent; but for trusts the increase in income in that 2-year period was 83.1 per cent. So not only was there a substantial increase in the number of trusts, particularly compared with partnerships and companies being formed at that time, but also when one looks at the income being channelled through trusts one sees that there was an absolute explosion of such income in that 2-year period. There is very good reason to presume that that trend has continued and that, in fact, the pace might even have quickened since 1975-76.
As evidence I refer honourable members to a memo which has come into my hands. It is a Treasury memo, headed ‘Income Tax: Tax Avoidance by the use of Inter- Vivos Trusts’. It is numbered J/78/239 Pt. 1 and is dated 3 November 1977. This memo, as its heading indicates, addresses itself to the whole issue of tax avoidance through the use of trusts. The first paragraph states:
This submission reviews the effectiveness of antiavoidance legislation as a means of preventing the alienation of income through the creation of inter-vivos trusts. The review has been divided into four main parts. Firstly, the most effective tax minimisation devices and tax-avoidance schemes utilising Division 6 of the Income Tax Assessment Act, 1 936 are identified. Particular regard is paid in this part to recent memoranda received from the various Deputy Commissioners.
That is, the Deputy Commissioners of Taxation in the various States. The memo continues:
The second part of this review outlines the taxation proposals contained in the 1977 Budget which have subsequently been embodied in the -
The memo then mentions various Bills. It continues:
Thirdly, an analysis of the effect of the 1977 amendments on the viability of inter-vivos trusts as a tax-minimisation device is attempted. And finally, bearing in mind the hypothosised effect of the 1 977 amendments, this submission identifies areas in which further legislative action will be required and recommends legislative amendments most likely to combat such tax avoidance schemes.
The memo then goes on to refer to comments made by the Deputy Commissioner of Taxation in Melbourne and the Deputy Commissioner of Taxation in Adelaide. Paragraph 3 of the memo states:
The Deputy Commissioner in Adelaide in a memorandum dated 3 August 1977 . . . drew attention to the growing practice of the use of Unit trusts and family settlements carrying on trading businesses. The Deputy Commissioner noted that a feature common to these arrangements is that the trustee is a limited liability company and produced evidence which suggests that the registration of these ‘nominee companies ‘ is increasing at an alarming rate.
Paragraph 4 states:
The Deputy Commissioner in Melbourne in a memorandum dated 14 July 1977 . . . listed three areas in which the creation of inter-vivos trusts were causing concern. The first was the acquisition of existing businesses by newly created inter-vivos trusts, the same area causing most concern in Adelaide. The second relates to the establishment of Charitable Trusts under Deed to provide funds for overseas public charitable purposes.
Further on, in paragraph 5 the memo states:
The third area causing concern in Melbourne is illustrated by the creation of 1 , 000 trusts under Codicils to wills-
The memo then mentions a particular case. It then refers to the types of trusts used for tax avoidance purposes, about which I will say more later. Having done that, the memo goes on, in paragraph 8, to state:
Having identified some of the types of schemes, it will be helpful to list the main reasons for the proliferation of discretionary inter-vivos trusts:
‘The introduction of the general concessional rebate’, to quote the Deputy Commissioner in Melbourne, 7 January 1977 . . ., ‘has given a real impetus to taxpayers in both small and large businesses, with or without asset backing, to create trading trusts . . . ‘
The flat50c in the $ rate under s. 99a is not regarded as a penal rate when compared with either individual rates of tax on substantial incomes or company primary tax plus individual tax on dividends.
I interpolate that that point has now been covered. The memo continues:
Those are the reasons that those Deputy Commissioners of Taxation see for the formation of so many trusts. Clearly, almost all of them relate to tax avoidance. The memo then goes on with two very important paragraphs. Paragraph 9 states:
The proliferation of the use of inter-vivos trusts for the purposes of tax avoidance prompted the Deputy Commissioner in Melbourne to say in his memorandum dated 7 January 1977,
The inability to deal with the problem of tax avoidance through the agency of trusts under the existing taxation laws is causing considerable concern in this office. The trust arrangements being entered into at an ever increasing rate are considered to be a negation of the intention of the law and completely nullify any equity as between individual taxpayers, particularly in regard to businessmen and salary and wage earners’.
Then the memorandum continues in paragraph 10:
The Deputy Commissioner’s observation of the proliferation of trading trusts is, of course, consistent with the information being obtained from other States and warrants immediate legislative action being taken.If the use of trading trusts continues to proliferate, it is inevitable that salary and wage earners will have to bear the burden of meeting theloss of revenue from partnership and private company sources. The effects of such a redistribution of the taxation burden would be extremely far-reaching in terms of overall consumption demand, would provide a disincentive to the salary and wage earner to earn higher wages, and, most importantly, would give the entrepreneur and businessman an unfair and inequitable tax advantage over the salary and wage earner.
Those are two tremendously important paragraphs. Both the Deputy Commissioner of Taxation in Melbourne, in his memo of January 1977, and the Treasury memo in November 1 977 say explicitly and clearly that while we continue to allow trusts, particularly trading trusts, to be used as a major tax avoidance device, an enormous inequity will be created in the tax system and wage and salary earners will be carrying a much larger share of the burden than would otherwise be the case. That is, of course, something about which we on this side of the House feel very strongly and about which we suggest the Government also should feel strongly. The fact that it has taken very little action in this area, acting only on the periphery rather than at the heart of the problem, means that it is not acting in a way which is being indicated to it by the Deputy Commissioners of Taxation and by the Treasury itself that it should act.
I will give some further evidence of the importance of what is being said there. If we look at what has happened to the amount of income tax revenue from pay-as-you-earn taxpayers, who are wage and salary earners, and from nonpayasyouearn taxpayers over the last two years we can see how the burden is shifting continuously onto wage and salary earners. In 1976-77 PA YE tax revenue was $8, 529m. It increased by 2 1 per cent over the next two years to $ 10,341m, which is the estimated figure for 1978-79. But for nonPAYE taxation the increase that is expected over that two-year period is 2.9 per cent. So the point that is being made in that Treasury memo is borne out by the statistics which are in front of us, that is, that the whole tax burden is being shifted inexorably over to wage and salary earners because of the failure of the Government to lop off the means of tax avoidance for nonPAYE taxpayers. This is something that is scandalous and about which there needs to be much greater community awareness and concern. Wage and salary earners generally should demand of this Government that it take the action necessary to stop this continuation of their bearing a higher portion of the tax burden and to restore equity in the tax system by making nonPAYE taxpayers pay their fair share of the tax.
The way in which trusts can be used to avoid tax is something to which I would like to refer very briefly. One way is simply by income splitting, by diverting one’s income through trusts towards children. There are great tax advantages to be had by distributing trust income in that way. As the law currently stands, any income of a child beneficiary up to a total of $16,608 is taxed at 33V4 per cent and at only 47V4 per cent up to $33,216. If the father is taxed at the maximum marginal rate of 6 1 te per cent, he can still save a lot of tax by putting his income through a trust for distribution to his children who then pay tax at a much lower rate. In this way he avoids substantial amounts of tax. Of course, the interesting point is that the parents can still utilise that income, perhaps to some degree by normal parental control over the financial affairs of their children but, if that is too blatant, the Australian Taxation Office can then demand that higher tax be paid. But there is a more sophisticated way around that. The children may lend the money back to the trusts- that is, another collapsible loan; one not intended for repayment- which increases the capital of the trusts. The parents can then demand repayment of their loan from the trust capital and such supposed repayments are then tax free. So the parents have channelled income to the children who have paid tax at a much lower rate and then the money comes back to the parents through the supposed repayments of the loan. In this way previously taxable income from an asset can be converted into nontaxable capital receipts, and nothing has been done to stop that.
Trading trusts, as I have mentioned, are responsible for the greatest loss of tax revenue through the avoidance of company tax. The manner in which this occurs is that a profitable business or family income is sold to a unit trust which has been set up to operate the business and receive all income. The beneficiaries are usually the shareholders of the former company or the owner and his wife and children. Generally a $2 company will be set up as a trustee with the previous owners as directors so that they will maintain control of the business. The beneficiaries receive the distributed profits of the business and are taxed at personal income tax rates. In this way normal company tax on company profits, that is, 46 per cent, is totally avoided. Of course, that makes trading trusts enormously attractive to businessmen who wish to avoid the payment of company tax, which presumably is most of them.
Service trusts have become a popular means of reducing tax liabilities by the alienation of professional income. In some cases a unit trust can be set up to take over a professional business which has previously been conducted as a partnership. The previous partners are then employed by the trust which runs the business and pays the profits to the discretionary family trusts of the partners. However, many professional practices cannot be run in this way because the ethics of the particular profession do not allow businesses to be conducted by a trust. In such cases the Commissioner of Taxation would disallow the use of trusts to reduce tax. However, to get around that problem many professional persons set up a service trust to carry on the non-professional activities of their practice. In one particular case the scheme involved a large firm of chartered accountants transferring the firms clerical and secretarial activities and staff to a unit trust which then provided the services back to the firm at commercial rates. The firm’s office furniture and equipment was also transferred to the trust and leased back to the firm. The firm obtained tax deductions under section 5 1 through payment to the trust for these services. The trust then declared dividends out of the profits from providing the services and paid them to its unit holders who were the partners’ families or family companies. This scheme was upheld by the Federal Court last year. Quite clearly that is a very convenient way in which professions can bring about a great avoidance of income tax.
To be fair, the Government has taken some action in regard to trusts, but it has fiddled around only at the edges of the problem despite the clear advice from the Australian Taxation Office and the Treasury that they are major and proliferating means of tax avoidance. For instance, section 99A of the Income Tax Assessment Act applies a penalty rate of tax to income accumulated in a trust where no beneficiary is presently entitled to a share of that trust income. This system was designed to prevent tax avoidance through trusts but left loopholes in that the penalty rate was only 50 per cent rather than the maximum rate of personal income tax of 6 1 te per cent, as it is now, and deceased estates were excluded from its coverage. Both these loopholes have been covered by amendments in recent years.
Similarly, under section 98 and section 99 taxation of trustees in respect of income for a beneficiary under 16 years of age has been increased somewhat, so reducing the scope for income splitting to some degree but by no means eliminating the advantages of income splitting. For high income people there is still a very great advantage to be obtained in channelling income to their children rather than earning it directly themselves and having to pay the maximum marginal rate of tax on it. The present legislation to overcome trust splitting schemes and nontaxability of foreign source income of trusts are further examples of the Government’s dealing with the problem at the periphery, and fairly innocuously at that, rather than tackling the whole problem head on.
The basic reason for the ineffectiveness of the present Act to prevent tax avoidance through trusts is the acceptance by the law that income splitting of profits and investment income is a permissible activity. So long as the law does not challenge that, trusts will be a major means of tax avoidance. I will come back to that later if there is time. Even within that basic assumption of the law there are grave deficiencies in the existing Act regarding provisions which are meant to limit or restrict the degree of income splitting that is feasible. In section 102 of Division 6 there was thought to be a major deterrent to tax avoidance through income splitting by providing for penalty tax to be paid where income is payable for the benefit of unmarried children under 21 from a trust created by the children’s parents. The penalty was an additional tax to raise the tax on that income to what it would have had it been added to the parents’ taxable income. This section has been largely ineffective for two reasons. Firstly, the High Court ruled in 1 957 that section 102 did not apply if a child was only contingently entitled to income from the trust, that is, if property was settled on the trust for an infant subject to his attaining, say, the age of 25 or marrying before that age. Any income accumulated in the trust in this case would not be taxable under section 102. Of course, trusts are now structured to get around that problem and to get around this section which was supposed to overcome tax avoidance in this way.
Also in 1970 the High Court in what is known as Truesdale’s Case also ruled that the section had no application if the trust is created by someone other than the parent or the child beneficiary. This would rule out the application of section 102 in the usual case- very much the usual case now- where a settler creates the trust with a nominal amount and the parent then transfers assets to the trust for the benefit of his own children. Of course, that is the way all trusts are created now. The section is utterly ineffective and a similar situation applies to section 99A.
What could the Government be doing about trusts? What it could be doing is paying more attention to what its advisers are saying. The following statement is made on page 7 of the Treasury memo, under the heading Recommendations ‘:
It is submitted that two distinct sets of legislative amendments are required in order to achieve more equitable taxation treatment under Division 6. The first is that more ‘cosmetic’ changes are required, along the lines of those introduced in the 1977 Budget . . .
And cosmetics are what we are about in this Bill before the House. The memo also stated:
The second rejects one of the basic assumptions upon which taxation liability under Division 6 is based- the acceptance of income-splitting by distributing profits to relatives whose services (if any) and/or capital or property contributions are not commensurate with the remuneration or share of profits received.
In other words, one should tackle trusts and the whole trusts problem head on. The memo goes on to recommend eight proposals through which this could be done. Only two of the eight recommendations in this Treasury memo have been given effect to and they are the most innocuous of those recommendations. The recommendations of Asprey have not been carried out. They are the recommendations which are also endorsed in this memo.
Mr DEPUTY SPEAKER (Dr Jenkins)Order! The honourable member’s time has expired.
-This legislation, of course, highlights the continuing effort by this Government in its fight against artificially contrived tax avoidance schemes. I am sure that the majority of people throughout Australia who honestly accept their tax obligations will welcome the Government’s effort in the continuing fight against tax avoidance.
I enjoyed many of the remarks made by the honourable member for Gellibrand (Mr Willis). The honourable member suggested that the Government should take the bit between its teeth and conduct a concerted and effective attack against tax avoidance. I agree with that. I point out to the honourable member that the attack on tax avoidance taken by this Government since it came to office in 1975 is greater than that of any other government since Federation. I think the Government is to be applauded for the way in which it has brought down legislation, sometimes unpopular legislation, to counteract this dreadful tax avoidance business.
The honourable member for Gellibrand also made mention of section 260 of the Income Tax Assessment Act. He said that perhaps we should do something about that section. I am sure that before the Parliament rises at the end of this session the honourable member will find that legislation will be introduced to rectify the problem about which he spoke. Section 260 needs to be strengthened. I am sure that the Government recognises that fact and that it will strengthen that part of the legislation.
– It should have been rewritten long ago.
– The Government of which the honourable gentleman was a supporter did nothing about it. The honourable member for Gellibrand spent much of his time on the subject of trusts. I must admit that I have great reservations about the genuine use of trusts. I dislike the use of trusts that are contrived purely for tax avoidance purposes. The Government recognises that this practice exists. However, we must remember that trusts may be formed in genuine circumstances and we must be careful that in our attack on tax avoidance schemes, and in particular our attack on trusts, we remember that genuine trusts have a very necessary and continuing place in our system today. When I speak of genuine trusts, I basically refer to those trusts that are formed following the death of a parent where minor children are involved or perhaps the death of a relation where a trust is formed to provide accommodation and living expenses for other relations. I could give many examples of the circumstances in which genuine trusts are very necessary. We must be very careful in our fight against tax avoidance and particularly trusts that we recognise this fact.
The honourable member for Gellibrand also mentioned the fact that we should ban advertising of tax avoidance schemes and, quite honestly, I think this is an excellent idea. It is perhaps something which could be followed up by the Government. I am sickened to see advertisements of this sort which are not used today to the extent they were some time ago. Two years ago one could pick up a certain newspaper that has an Australia-wide circulation and read hundreds of advertisements which put forward tax avoidance schemes. This sort of advertising is so demoralising to the people who genuinely pay tax. It is certainly sickening to have to put up with advertisements like this that just absolutely flout the tax laws and which are taken up usually by those people who can best afford to pay their fair share of tax. I think the suggestion put forward by the honourable member that these schemes be outlawed is an excellent one. I know from experience and from talking to people that advertisements such as these go a long way towards creating an idea in a person’s mind that he can go along to a professional person, pay a fee which is tax deductible in any case and take advantage of one of these schemes that does nothing else but rob the Australian taxpayer.
As I have said, already the Fraser Government has introduced legislation in this continuing war against tax avoidance schemes which will effectively bring to an end artificially created schemes. Already we have brought down legislation which deals with share trading losses. This legislation, which was introduced in June of last year, relates to what is commonly known as the Curran scheme. I am sure that members of the Opposition welcomed that legislation. We have already brought down legislation that deals with dividend stripping in an area where millions of dollars were being channelled away from government revenue. Of course, when money is channelled away from government revenue it has to be made up by the people- someone has to pay. Last year we dealt with the issue of tax free bonus snares. This practice had become a very common way for companies to distribute profits in a tax free manner. We rectified the exploitation of primary producer averaging by people who are not bona fide primary producers. We dealt with the reimbursement of dividends under which loan back arrangements are made. We also corrected anomalies in the sales tax scheme where sales tax was being avoided in the purchase of major capital items. We also rectified the abuse of gift provisions. When one looks at that list of achievements, it is very difficult for someone to stand up and say that this Government has been inactive in the tax avoidance area.
I would now like to refer to the legislation before the House. This Bill of course, is the result of a statement made by the Treasurer (Mr Howard) in April last year. The Treasurer has adopted the attitude of making a statement as soon as he identifies an avoidance scheme. Legislation is then introduced. People are given a warning of what is proposed and no one can cry about retrospectivity. The legislation we are now considering covers the prepayment of interest and rent. There have been tremendous opportunities in recent years for the prepayment of interest, particularly since 1974 when many companies engaged in property development crashed. At that time companies, especially finance companies, suffered big losses. People in business who suffer a loss have been able to secure a loan from a company and immediately pay the lot back in interest. This arrangement suited the company that had the large accumulated loss because the payment of tax was not involved. Also, a tax deduction was created for the person who was securing the loan. This practice has accelerated over recent years. I am pleased to say that this legislation proposes to rectify the situation. Therefore the Bill we have before us covers the prepayment of interest and the prepayment of rent. It also covers the situation in which a person manufactures a tax deduction. As I said, as often as not these prepayments are a tax deduction for something that really is an item of capital expenditure. I am pleased to be able to say that the legislation covering these matters will be back dated to 19 April 1978, the date on which the Treasurer (Mr Howard) made his statement.
The legislation also picks up other arranged schemes between associated enterprises in which a tax deduction is created for one party while at the same time the other party receives a monetary gain in a non-taxable form. This legislation goes a long way towards abolishing the known tax avoidance schemes that have been identified thus far by the Government. The second part of this Bill deals with the accumulation of trusts from profit derived from an overseas source. Honourable members will recall that the Government has already brought down legislation to deal with the return of profits from overseas sources. The legislation picks up the fact that trusts have been created to hold these profits that are derived from overseas sources in a tax free form. The High Court of Australia recently determined that foreign source income earned by an Australian resident could be accumulated in a trust without being liable for the payment of Australian tax. Tax would be payable if and when the income from such a trust was distributed to a resident beneficiary. However, often no distribution is necessary and consequently the payment is either delayed or never made. The Australian Government has been placed in a situation of not being able to get the tax which is rightfully due to it from such a source.
Clause 2 of the Bill will require that the net income of a trust be calculated on the same basis as if it were the income of a resident individual. This covers the situation of a trust that is accumulating money from an overseas source so that the same rights exist in respect of trusts as exist in respect of an individual who is accumulating profits from an overseas investment. Foreign income is still subject to measures that prevent the payment of double tax. They have been in operation for some time. Australia, quite correctly, has arrangements with other countries so that people are not placed in a situation of having to pay tax in the country where they have their investment and also pay tax at the full rate in Australia. There is an arrangement to cover double taxing so the total tax paid is equivalent to the maximum Australian tax rate.
As I have said, genuine business enterprises need not fear the Government’s drive against tax avoidance. In fact, the Government’s action in this area is necessary so it can continue with its promised reforms in taxation and eliminate tax avoidance schemes. The Government’s drive against the tax avoidance industry will allow it to go ahead with taxation reforms that will benefit all genuine Australian taxpayers who choose to pay tax in an honest manner. Honourable members will be aware that as from July 1976 we were able to introduce personal income tax indexation. It is a well known fact that the Labor Government refused to do this. As a result of our initiative Australian taxpayers are paying $3 billion less than they would have paid under the old scheme. Every year that we proceed with tax indexation, as a result of our drive against tax avoidance, we save the Australian taxpayer $1 billion.
Since the Government has been in power it has been able to increase the minimum income level which is exempt from tax. The annual income at which the exemption applies has been lifted from $1,000 to $3,893. We have also been successful in simplifying the tax scale from seven steps which existed when we came to power to the three simpler steps that apply now. I make this point because without a drive against tax avoidance and against those people who want to flout the tax rules, these reforms will not be possible. With the continuation of our drive against the tax avoidance industry and the affectiveness of a rewriting of section 260 of the Act later this year, hopefully these reforms will be continued and the genuine taxpayers of Australia will benefit.
The honourable member for Gellibrand cited some statistics which tended to show that the number of Australians paying personal income tax has increased at a far greater rate than the number of Australians paying company tax and other forms of taxation outside the personal income tax field. It is interesting to look at some taxation figures. They show that since this Government has been in power, the Australian people have been paying less tax than they previously paid. In 1973-74, 28.6 per cent more tax was collected than in the previous year. In 1974-75- our Government was not in power then- the total tax collected was 29.5 per cent over and above that collected in the previous year. In 1975-76, the increase in tax collected over that collected in the previous year dropped to 19.6 per cent. In 1976-77, when our tax reforms started to bite, the increase dropped to 16.9 per cent. I am proud to say that in 1977-78- the last full year for which we have figures- the increase in tax collection dropped to 8.7 per cent. The increase in total tax collections last year was only a quarter of the increase that occurred between 1972 and 1975 when the Labor Government was in power. It is important to note that the figures I have cited do not contain an adjustment for inflation. If we take into account an adjustment for inflation, total tax collections last year in real terms, as opposed to an increase in previous years, showed a decline of 0. 1 per cent. This Government, through its efforts to stop tax avoidance, has been able to carry on with these tax reforms which will benefit the Australian people. They will benefit the people who are honestly and sincerely operating businesses and paying their fair tax. I speak particularly of those people who by far represent the majority of the Australian people. I hope that our program to eliminate tax avoidance and our drive against tax avoidance do not strike fear and uncertainty into their hearts. In fact, these people should be heartened to know that they will be on a fair and competitive ground with those people who for so long have resorted to the use of tax avoidance schemes. I support the Bill.
-The Opposition does not oppose the provisions of the Income Tax Assessment Amendment Bill. However, we submit that they touch only the tip of the iceberg. There is a long way to go on the whole question of tax avoidance. As is mentioned in the explanatory memorandum to the Bill, this legislation contains three main provisions. The first concerns prepayment schemes under which taxpayers seek to achieve deductions in excess of net outlays on deductible items. The second provision is designed to overcome a decision by the High Court of Australia that the existing trust provisions in Division 6 of the Income Tax Assessment Act have application only to Australian sourced income from trusts. As the law now stands because of the High Court decision, people can defer or escape completely the payment of tax on foreign sourced income accumulated in trusts for their benefit.
The third set of provisions is designed to counter trust stripping schemes which attempt to pass income derived by trusts to beneficiaries in a tax free form. While on the question of the High Court, I draw attention to a minority judgment concerning the Commissioner of Taxation as appellant and South Australian Battery Makers Pty Ltd as respondent. It is a minority judgment by Mr Justice Murphy. I touch particularly on two statements that he makes within this judgment because I believe that the courts should take notice of the legislative will when it comes to tax avoidance. I think that it is generally accepted throughout the legal profession and in the Taxation Office itself that this minority judgment of Mr Justice Murphy is an outstanding judgment. He states:
Literal interpretations of the Act have allowed tax avoidance devices to succeed and have encouraged their growth. While the Act is read literally, no amount -
I ask honourable members to keep that in mind- of legislative amendment will be able to stem the proliferation of such devices which are inconsistent with the general legislative intent. The strictly literal approach departs from the traditional respect of the courts for the legislative will.
Mr Justice Murphy goes on to say:
Literal compliance with the terms of an Act is not enough if the real result is contrary to the general intention of the legislature. This approach should be taken to tax Acts.
Mr Justice Murphy concludes:
The appeal should be allowed.
Without a doubt time after time the High Court of Australia- there have been some quite worrying rumours as to the motives in some cases- has upheld the tax avoider against the Taxation Office. Of course in the ulitmate this means that the average wage and salary earner has to pay more tax so that the Government obtains revenue. I have quoted from that particular judgment because I think that it is very important. As I said, so far what the Government has introduced touches only upon this vast empire of tax avoidance which exists in this country.
This afternoon we heard the honourable member for Gellibrand (Mr Willis) quote from a document which I gather must have fallen off the back of a bus. It is a memorandum of the Australian Taxation Office itself. I will repeat first of all one particular section because I think it is very important. Later I will quote another section which was not quoted by the honourable member. The section to which he referred states:
The memorandum continues:
This is from a document prepared by the Taxation Office itself on this question of trusts and tax avoidance. Let us look at the recommendations which were made. The memorandum states:
Nothing has been done about that. The memorandum continues:
Nothing has been done about that. The memorandum continues:
Yes, that has been done. The memorandum continues:
Yes, something has been done on that. I ask honourable members to keep in mind that this document is dated 3 November 1977, which is not just a few weeks ago. It was prepared in 1 977. The memorandum continues:
Nothing has been done about that. The memorandum continues:
That was the fifth suggested amendment. Nothing has been done about that. The reason of course is that the Prime Minister (Mr Malcolm Fraser), the Deputy Prime Minister (Mr Anthony) and the Deputy Leader of the Liberal Party (Mr Lynch) are all doing just that. The memorandum continues:
Nothing has been done about that. The memorandum continues:
Nothing has been done about that Is it any wonder I say that what they have touched upon is only the beginning of this empire of tax avoidance. They have left the great mass of the empire alone because their own friends are involved.
The memorandum concludes:
Nothing has been done about that. Of eight recommendations, only two, which are virtually tied in together, have been implemented. As I said, this is a memorandum prepared by the Taxation Office itself on tax avoidance which makes recommendations, particularly in regard to what should be done about the question of trusts. The Government has virtually ignored it. Then the Government claims that it has a great policy so far as tax avoidance is concerned.
Let us look at the figures quoted by the honourable member for Gellibrand. In 1973-74 there were 447,461 partnerships rising to 471,871 in 1975-76, an increase of 5.5 per cent. Net income is up by 15.4 per cent. Let us look at trusts. In 1973-74 there was 123,618, rising in 1975-76 to 144,488. This is an increase between 1973-74 and 1975-76 of 16.9 per cent. Net income rose from $388. lm in 1973-74 to $7 10.4m in 1975-76, an increase in those years of 83.1 per cent. The number of taxable companies decreased by 8.3 per cent, with taxable income rising by 18.8 per cent. So, honourable members can see the impact, 83. 1 per cent as far as the net income of trusts is concerned. Now let us have a look at some of the statements which have been made by members of this Government. Honourable members will know that I have raised the question of trusts and particularly family trusts in this Parliament time and again. I have asked the Treasurer (Mr Howard) when he is going to close the loopholes in regard to family truststrusts generally- which are used as a means of tax avoidance. He denied that trusts were used for tax avoidance. He said that it was only tax minimisation, not tax avoidance. Is it any wonder that the recommendations of the Taxation Office have not been implemented. Once again I say that it is because it affects people in whom the Treasurer is interested, people he accepts his orders from in this Parliament- the
Prime Minister (Mr Malcolm Fraser), the Deputy Prime Minister (Mr Anthony) and the Deputy Leader of the Liberal Party (Mr Lynch).
During an interview in PM on 23 November 1 977 the Prime Minister said:
I think it is entirely appropriate for people to have family trusts . . .
That was the Prime Minister himself. The Deputy Prime Minister is quoted in the Sydney Morning Herald on 24 November 1977. The article states:
He told a Press conference the trust was intended to ease the burden of estate and death duties.
It is already stated that he was not seeking to evade tax through the maintenance of a family trust which he admitted; he was only wanting to avoid death duties, et cetera. He is reported as saying:
It is not a tax avoidance device, it is a device to enable your family to become part owners in your property.
What a way to try to twist the law and twist the facts. That was the Deputy Prime Minister. The Prime Minister in answer to me, as reported in Hansard of 27 September 1978, said:
Before the last election I never hid the fact that I had a family trust. I made it perfectly plain also that the purposes of family trusts have generally been to hold a family’s assets together.
He further states:
– No, it is not the complete result.
– This is the Prime Minister speaking. I am quoting from Hansard, quoting his own Prime Minister who said:
That is the general result of trusts. I do not know of any trust which has been established to look after the family interests which does not have that result.
The result is tax avoidance.
– I know some.
– The honourable member for Barton may not agree with the Prime Minister but they are the words of his own boss, bis own leader, who made that statement in Hansard on 27 September 1978. On 26 September 1978 in this place the Prime Minister said:
I admitted at the time of the last election that I have a family trust, and there is no reason why that should not stand.
In the Prime Minister’s electorate talk of 8 October 1 978 he stated:
Repressive and unfair taxation is the breeding ground for tax evasion. Punitive taxes forced many small businessmen and the farmers into a situation where they were obliged to make arrangements to ensure the continuity of their enterprises.
Further on he states:
Many of the complex arrangements which people entered over the years . . .
And believe me, his is complex-
I am quoting the Prime Minister. Like it or not, it is their own Prime Minister making these statements, one after the other. The honourable member for Batman (Mr Howe) this morning was speaking in this Parliament on the issue of the Rural Finance and Settlement Commission and its advance of something around $240,000- keeping in mind that the Premier of Victoria has to approve advances of more than $20,000, and that the Premier of Victoria is Mr Hamer.
-I invite the honourable member to return to the Bill.
– I am just making the point that there was a $240,000 advance to Narup Narup Pty Ltd by the Rural Finance and Settlement Commission. The Premier of Victoria, Mr Hamer, would have had to approve of the project. But that is not the point. I agree that it has nothing to do with this debate. But if you look at Nareen Pastoral Company, the Prime Minister’s own company, who do you find carrying on business under that business name: John Malcolm Fraser -
– I raise a point of order.
– Tamara Margaret Sandford Fraser -
– Sandford Robert Beggs -
-The honourable member for Chifley will resume his seat.
– And Rupert James Hamer himself.
-I call the honourable member for Denison on a point of order.
– The honourable member continued to speak after you called me on the point of order and he has now said the very thing on which I was raising the point of order. The point of order is that if he is making any imputation, the Standing Orders provide that it must be done by substantive motion and not in the course of debate.
-There is no point of order.
– I was making the point of who the people involved were. Of course, you see this in Fraser Properties Pty Ltd: John Malcolm Fraser, Una Arnold Fraser, the estate of the late John Neville Fraser, Tamara Margaret Sandford Fraser and Robert Sandford Beggs as trustee of the Nareen trust. These are the shareholders.
– I raise a point of order. I refer you to standing order 85 and ask you to ask the honourable member to discontinue his speech.
Mr DEPUTY SPEAKER (Dr Jenkins)There is no point of order.
– Whenever I raise this there is a big attempt to cover up and there are points of order to stop me speaking. This goes on every time this issue of the corruptness of this Government is raised. Of course, there is also L. J. W. Nominees Pty Ltd, and once again you have people such as the Beggs and so on. L. J. W. Nominees Pty Ltd is of course a part of the Nareen Pastoral Company. Time and again I have asked for the public record so that this whole issue can be brought into the light of day, so that there can be public inspection as there should be in this Parliament. The recommendations in the Riordan Committee’s report requiring members to declare their pecuniary interests should have been introduced. But in order that this matter can receive public inspection and there can be public understanding of just what this Government is about, how devious and how corrupt are some of its actions, I once again ask leave to table these documents.
-Is leave granted?
– No, leave is not granted.
– As I said before, it is a big cover-up. The Government pretends that it is doing something about tax avoidance, but it is an area which is costing the taxpayers of this country and the revenue of this Government God knows how many millions of dollars. It refuses to do anything about it because it would hurt Government members sitting on the front benches in this chamber, including the Prime Minister himself.
-We have just heard an incredible outburst from the honourable member for Chifley (Mr Armitage). I understand that earlier in his career he worked in a bank. I say with respect that on his performance here today he would be flat out holding down a job in a piggy bank. Frankly, I wonder how much of his remarks was relevant and how much he used this Bill not for the purpose of an intelligent debate but to make an underhand attack on persons not in the chamber, in respect of whom he has the Standing Orders to enable him to take action by means of a substantive motion.
– I raise a point of order. That is an offensive remark. It was not an underhand attack on a person not in this chamber. I brought this matter out -
-The honourable member for Chifley is now debating the subject. He knows very well that offensive remarks are ones designating him personally. He should not debate the point.
– I refer you to page 30 of the Parliamentary Handbook where, when dealing with the parliamentary career of the honourable member for Chifley, Mr John Lindsay Armitage, it is revealed that he was on the administrative staff of the Reserve Bank of Australia prior to 1961. 1 must say on his performance today that he has probably forgotten everything he learnt in that position, because he has used this debate not for the purpose of debating the Bill on the merits of the Bill but for other purposes. Once again the honourable member for Chifley and his colleagues on the other side of the House, with respect, have failed to appreciate the basic legal and fundamental points involved in the legislation before the chamber.
They cannot understand the difference between what is a well known concept to lawyers and accountants in the business world- on the one hand tax avoidance and on the other hand tax evasion. Not simply today but on previous occasions, they have repeatedly branded as criminals those who, protected by the law for many centuries, have legally used the provisions of the law for what is known as tax avoidance. It is even incredible, bearing in mind their political philosphy, that they fail to recognise that in the United Kingdom, which at least for the time being, has a Labour Government, the distinction is well recognised. For the record I refer to the basic point so that people know when they listen to the debate or read Hansard that there were some members, at least on this side of the chamber, who understood what the question was all about. I refer to the final report of the Royal Commission on the Taxation of Profits and Income published in England in 1955. Dealing with the difference between tax avoidance on the one hand and tax evasion on the other the report states:
The latter -
That is tax evasion-
I refer also to the speech in the House of Lords concerning the case of the Duke of Westminster v. Inland Revenue Commissioners, reported in 1936 appeal cases at page 19. Lord Tomlin made this statement and it is still the law in England, Australia and in most countries in the Western world. He said:
Every man is entitled if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result, then however unappreciative the Commissioners of Inland Revenue or his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay an increased tax.
Having referred specifically to the definitions, I say that I, and I believe other members on this side of the House, wish to voice our strong disapproval of members of the Australian Labor Party for casting a slur over thousands and thousands of taxpayers in this country who legitimately, after obtaining advice or indeed on their own initiative, to quote Lord Tomlin ‘order their affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be’. Are honourable members opposite going to tell me that if the speed limit- I am sorry to talk in miles per hour- is 30 miles per hour people ought to be pinned who drive at 29, 28 or 27 miles per hour? That was the gist of the speech of the honourable member for Chifley. Whether he intended it or not, he cast a slur over the entire accountancy profession, the entire income tax profession, the legal profession and the business community of Australia. I am sick and tired of people such as the honourable member for Chifley casting that smear in this chamber.
This Bill deals with tax evasion, in the main. I support it. Indeed, the very example given by the Treasurer (Mr Howard) on page 3 of his second reading speech is a classic example of tax evasion by means of pre-payment of rent and interest. I do not believe that there would be an honourable member in this chamber who would be prepared to stand up to support that sort of activity so clearly defined by the Treasurer on page 3. The spirit of the Bill has my support. The detail of the Bill has been a matter of some discussion. Fortunately in this Parliament and in the Government parties, honourable members who are concerned whether a result may be achieved by the passage of the legislation which might not be the result which was intended, have the opportunity in the party room or in the Parliament to raise these questions. There has been no intelligent debate on the questions of detail, with the greatest respect, from the other side of the chamber. Matters of detail have been raised which ought to be considered in this debate and may even need to be considered more minutely in some later proceedings.
I believe that most people interested in tax law would have read with some interest not only on the articles in the Australian Financial Review but also a letter to that newspaper from Mr A. P. Webb, Q.C. and Dr I. C. F. Spry, published on 20 February. Both Mr Webb and Dr Spry raised some fundamental questions which I hope the Treasurer, at the conclusion of the debate before the Bill passes from this chamber to another place, may be prepared to make some comment upon. I shall read three or four passages from the letter and then develop some of the matters which come to my mind which I believe are matters of substance which call for some comment, and indeed answers. In their letter Mr Webb, Q.C. and Dr Spry state:
Although it is appropriate that the Government should legislate in order to prevent loss of revenue through reliance by taxpayers upon arrangements depending upon weaknesses or defects in the Income Tax Assessment Act, amendments that are made should not be such as to obstruct and inhibit ordinary business transactions, as well as providing undue uncertainty and penalising persons acting in accordance with the law.
However, the provisions of the Income Tax Assessment Amendment Bill (No. 5) 1978 -
The one we are debating:
First, the definition of ‘tax avoidance agreement’ in section 82KH is so broad that it may arguably apply in a large number of ordinary commercial transactions, the tax implications of which are merely incidental.
Further section 82KJ is both broad and uncertain in its operation, and in particular it is calculated to operate by denying an entire deduction in certain circumstances where only a small benefit is obtained by the taxpayer or an associate, even although that benefit forms part of the taxpayer’s assessable income, for example.
The provision goes far beyond any need to remedy weaknesses in the Act and is likely-to give rise to substantial commercial uncertainty and hesitation. Any such provision should be clearly limited so that the relevant deduction is not disallowed in toto but only to the extent of any inadequacy.
Secondly, although the Treasurer has indicated that this legislation is intended to effect his proposals announced on April 19, -
That is, 1978: . . it goes far beyond those proposals.
The letter concludes by stating:
In its present form -
That is, the Bill: it casts doubts on the deductibility of expenses in a large number of situations and would, if enacted, inhibit commercial activity.
I say in all humility that I am in no position to make a final definitive judgment on the views expressed by Mr Webb and Dr Spry. But Mr Webb and Dr Spry are men of such eminence and standing that the comments they made not only should be the subject of discussion and debate but also indeed should be pursued to ascertain whether they are correct. If the comments are correct a result would be obtained by the passage of this legislation which would be contrary to the wishes of this Government. We on this side of the House, contrary to those on the other side of the House, believe in private enterprise. We believe in a situation in which there is certainty of the law as to taxation matters. We believe that it is wrong to legislate, as was once said, to use a sledge hammer to crack a peanut if that is going to be the end result. I do not present myself as one of those who say that is going to be the end result, but I do say there are matters of concern.
– Point well made.
– Indeed. I thank my friend, the honourable member for Tangney (Mr Shack), for his interjection. The point that I make is that there are more intelligent people than myself in the chamber who are more qualified than myself and who can perhaps answer these queries. I say this not by way of getting out from under before the honourable member for Hawker (Mr Jacobi) speaks, but perhaps he has looked at these provisions and considered the matters raised by Mr Webb and Dr Spry. He has not yet spoken in the debate. The comments I made about the previous speakers do not apply to him.
Having made that position quite clear, I say clearly and unequivocally that tax evasion must be stamped out because every dollar of tax evaded is an extra dollar which has to be raised from the non-evaders, if I might use that expression. I must say that I have sympathy for the argument, which I hear repeatedly in the community, that whilst some people are able to evade their tax obligations involving large amounts- which is of course illegal- the ordinary working man in the majority of cases is not in a position to avoid or evade. So we are on common ground in relation to that matter. The prepayment of rent and interest is a contrived means of evasion. It hides the real nature of the transaction, it has the nature of fraud behind it and in my view it must be stamped out.
The matters raised by both Mr Webb and Dr Spry in relation to the very substantial penalty which follows an assessment that there has been an evasion of tax, which is illegal under this Bill, should bring home the enormity of the problems facing large corporations. Some corporations might very well find that an enormous project involving millions of dollars and the welfare and livelihood of thousands of Australians could be placed in jeopardy because if a breach of section 82KH or section 82KJ of the Act were discovered the entire tax deductibility would disappear. The amount of tax evaded may be comparatively small and the total tax deduction available to the corporation could be 10, 20 or 50 times greater than the amount involved. The capacity is therefore of considerable importance because if that situation developed the company might very well become bankrupt overnight. It is therefore of the utmost importance that the tax lawswhich I submit are quasi-criminal to the extent that penalties of a very substantial nature are likely to be imposed in respect of breaches- must be clear and specific.
I can say only that I find it very difficult to understand with clarity and precision some of the drafting provisions of this Bill. What in fact is a ‘benefit’? I invite the honourable member for Hawker or any other member who can clearly explain this definition to me to do so. I do not believe that in certain areas of the Act the precision that ought to be is there. I repeat that I am not an expert; this is not a field in which I have practised at any stage of my life. I did not reach such heights. But those who do practise in the area say that there is a very great need for clarity and precision because if a person offends that person must pay the penalty. The penalty could be very substantial indeed.
It has been drawn to my attention that a mining company for example, might spend $lm developing an ore body and producing copper concentrate. It would be entitled to expect some deduction for the expenditure. It might come to an agreement with a subsidiary to market the concentrate for a fee. Unless the fee is in line with market practices it becomes part of the property passing back as it is paid to an associate. But here is the slug: The company will or could lose its entire Sim development deduction even if the fee charged was only $100. 1 understand that the Mount Newman Mining Company Pty Ltd makes payments to Amax Exploration (Australia) Inc., for marketing, to the Broken Hill Pty Co. Ltd for operating and to the CSR Co. Ltd for Canberra liaison. If the Australian Taxation Office ruled that the transaction came within section 82KJ of the Act, the Mount Newman Co. could lose every tax deduction to which it would otherwise be entitled particularly as the legislation is retrospective to 19 April 1978. What would the effect of that be? The effect of that might well be to bankrupt the company and put hundreds of Australians out of jobs.
I simply use that as an example. My colleague from Western Australia who interjected earlier will know what I am talking about. The implications for major companies in Australia, should they make a mistake under this law, could be very substantial indeed. I repeat that I am not opposing the legislation. I am simply expressing the need for absolute clarity and precision. Many agreements made between companies and their employees could endanger the whole enterprise. It is critical that the precise details, the precise implications of the legislation should be clearly stated and clearly debated, if not in this House, in the Senate, if not in the Senate, before a legislation committee. It is a matter about which I believe there is some genuine concern by many people. I am not referring to tax evaders, or crooks, but to many decent members of the community who would like to have the exact details spelled out chapter and verse so that there is no risk of injustice occurring and in particular no risk of any damage being done to the economic situation of this country. I refer particularly to the area of employment where we are dealing with major employers and large corporations.
The ordinary man in the street will probably wonder what the devil we have been talking about this afternoon. The fact is that this legislation is not going to apply to the ordinary man in the street. This Bill has little if any practical application to probably 96 per cent of the Australian population. That figure could even be 99 per cent.
– Because he has no means to exploit it anyhow.
– The point that the honourable member for Hawker has made is a point which I have conceded. I have made the point and I will repeat it. It is a question of concern for governments of any political colour that if there is tax evasion, which we all agree is wrong and must be stamped out, every dollar evaded has to be collected from somewhere else. The honourable member for Hawker makes the point, with which I completely agree, that the ordinary man in the street does not get into a situation of being able to engage in either tax avoidance, which is legal, because he does not get the necessary advice; or tax evasion, which is illegal. The little people in Australia would have to pay the bill for money which has been robbed from the Treasury coffers on a large scale by the tax evaders. I have no sympathy for them.
Let us stamp out the tax evaders, but let us not blithely use a sledge hammer to crush a peanut and in the process bring into jeopardy many people who properly and decently have acted within the law and who are now to be placed in a situation of doubt which could inhibit development and which could inhibit the entire private enterprise sector of the economy. That is my plea. I know it is consistent with the Government’s philosophy. I trust that when the ‘Bill finally passes through Parliament it will be in such a form that the objections and queries raised by Mr Webb, Q.C, and Dr Spry and the many others who have expressed them, have been well and truly answered. I support the Bill.
– I support this Income Tax Assessment Amendment BUI. However, I do so with a deep sense of cynicism. Last March, in speaking in the Address-in-Reply debate I made the following remarks:
Who in the community is carrying the greatest share of the income tax burden? It is certainly not the rich or the welloff .. . They are not, according to the report of the Taxation Commissioner for the last financial year, 1976-77. If we take income as a percentage of the tax return, we find that net group tax instalments by wage and salary earners and company directors totalled 60 per cent while companies paid 20 per cent . . . Trusts . . . professionals, partners, small business and property owners paid around 19 per cent tax, and witholding tax represented 1 per cent. It is obvious that wage and salary earners have practically no avenue to evade their share of the tax burden but the same cannot be said of people who are well off.
The other thing to which I draw the attention of the House is that there was a very important report tabled in the British Parliament in the latter part of 1977. It is a disturbing report, because it clearly indicates that in Britain there is a greater and greater aggregation of wealth in fewer and fewer hands. Many of the decisions of this Government in relation to death duties, succession duties and so forth do nothing more than create that position in Australia. As long as the Government’s policies in this area continue, that aggregation wil happen in this country. As a layman it seems to me to be a case of bad drafting or lack of foresight on the part of the Government or its advisers.
One gains the impression that piecemeal legislation to protect the revenue from dividend strippers and other forms of tax dodging is never ending. Regrettably, the organisers of tax dodging schemes always seem to be one step ahead of the Commissioner of Taxation. In these days of staff ceilings this situation is inevitable; the Commissioner of Taxation simply does not have the investigators and other necessary staff available to fight tax avoidance schemes. This Government stands condemned on that ground alone; I do not condemn the Commissioner of Taxation or his staff. As a result of this Government’s frugality, hundreds of millions of dollars are being lost and the Taxation Office is fighting a losing battle with one hand tied behind its back.
Even if staff were readily available to combat these attacks on the revenue the Commissioner would still frequently lag behind in the discovery of such schemes. It would not be unusual for a scheme to remain undiscovered until, as I understand it, an assessor in the ordinary course of his duties noticed an unusual claim for a deduction in a return of income. This discovery could take place as long as 18 months or even longer after the scheme was first implemented. In these circumstances, by the time the loophole is closed by legislative action, as much as three years could have elapsed since the tax dodging arrangement was first utilised. On the other hand, if staff were readily available outside inquiries could be made constantly in professional quarters and professional journals could be examined to find out what new schemes were being sold by vendors of tax dodging arrangements.
I feel that one answer to this problem is the strengthening of a blanket provision such as section 260. If such action were practicable, and I do not see why it would not be, the tax dodger would always have something to fear if he engaged in outlandish tax dodging arrangements. Honourable members wil possibly recall the time when section 260 had some teeth, and, even if it was not always 100 per cent effective, it still represented a substantial threat. Honourable members Will recall that in a recent speech I pointed out that over recent years section 260 had been completely denigrated by the High Court under Sir Garfield Barwick, and I make no apology for that statement. This has been apparent for some years but the situation has worsened in recent times. It ought to be remembered that the Chief Justice practised as a leader of the Sydney Bar and, beyond question, built up a reputation for giving final approval to tax dodging schemes submitted by solicitors -
Mr DEPUTY SPEAKER (Mr Jarman)Order! I remind the honourable member that it is the practice of the House not to reflect on the judiciary.
– I am not reflecting on the judiciary. All I am indicating is an established fact.
-Order! I do not wish to restrict in any way the honourable member’s right to express his view freely, but I remind him of that practice.
– I will observe your ruling. I want to repeat what I have said on a number of occasions in this House. The rot really set in when the High Court delivered its decision in the recent case of Slustzkin v. The Commissioner of Taxation. It reversed the decision of the New South Wales Supreme Court and decided that a dividend stripper was not taxable on a realisation of shares which related to accumulated profits. The dividend strip followed the familiar pattern of getting out profits to a shareholder in the guise of capital profit. In essence, that case differed little from cases such as the Newton, Bell, Hancock and Mayfield cases in which the High Court of the day had no difficulty in deciding that, despite the electorate facade which the taxpayers had erected around the relevant transactions, the dividend strips constituted schemes for the avoidance of tax and were caught by section 260. That provision has not been altered since it was placed in the statute book. The only change has been in the interpretation of the High Court. The High Court in Slustzkin ‘s case completely ignored the cases which I have mentioned, and the three judges, Barwick, Stephen and Aickin did not even go to the trouble of distinguishing between these cases in any way.
In the technical journal New Zealand Current Taxation of May 1977, a contributor was most critical of the Slustzkin decision. I might add that this journal is a legal publication for taxation accountants and lawyers, is completely independent, and has no association with any government body. I propose to quote freely from the contributor’s comments as they are particularly relevant to the High Court interpretation of section 260. Honourable members opposite, and particularly the Government, ought to take this into account. The writer of the article pointed out that the facts of the case clearly indicate that the whole of the exercise constituted a dividend stripping arrangement and that the Supreme Court judge in the first instance so found. Slustzkin, the taxpayer, was closely associated with one Rosenblum who was a director of the company which performed the dividend strip. The whole scheme was effected at the same time, shares were transferred, consideration paid and assets stripped by the stripping company, Cadez. Cheques were exchanged between the parties and banked simultaneously. In view of this evidence the Supreme Court judge had no hesitation in finding against the taxpayer Slustzkin. The writer of the article I have mentioned stated:
The trial court held that there was a dividend stripping arrangement- see the ‘New Zealand Current Taxation’, Volume 21 No. 5, page 25. The learned Judge relied on voluminous evidence to support his view. The High Court of Australia reversed the decision. It is submitted that the reasoning in so doing cannot be sustained.
After discussing the Privy Council decision in the case of Europa Oil (New Zealand) Limited (1976), reported in INZ LLR546, the writer refers specifically to the reliance placed on this decision by the High Court in Slustzkin ‘s case and went on to say, and this is particularly relevant:
There is a basic area in both of these statements. The Europa Oil case certainly rejected the doctrine of substance but they did so in relation to deductions. In the passage quoted by Barwick in Europa Oil No. 1 Lord Wilberforce made it clear that Section 108 (the New Zealand equivalent of Section 260) allowed the Commissioner to disregard legal form. That is, the function of the section. Accordingly the learned Judges in the High Court misdirected themselves by applying the incorrect analysis of the Europa Oil No. 2 cases and for this reason Slustzkin cannot be regarded as authoritative in New Zealand.
The writer of the article then went on to discuss the High Court’s preoccupation with the doctrine of choice, that is, basically, that if any other section of the Income Tax Assessment Act gives the taxpayer a choice of action, then section 260 has no application. The writer of the article criticised the fallacy of this view when he said:
Its conceptual basis is doubtful because it rests on an interpretation which overlooks the plain language of the Section and the purpose of it as explained in the decided cases.
The writer went on to say:
Slustzkin is an unsatisfactory decision. Much of the reasoning can be challenged.
Honourable members ought to observe that extremely strong language. It is not very often that a writer in a technical or legal journal is so critical of a court decision. Very rarely does that occur. However, I submit that this time it is justified because the decision of the High Court is so diametrically opposed to all dividend stripping precedents set by the High Court in the preBarwick days. I suggest that the so-called doctrine of choice could be nullified if section 260 were amended in order to deny the High Court the right to adopt this fallacious reasoning. As a layman it seems to me that this objective could be achieved by adding to section 260 a provision to the effect that no other section in the Income Tax Assessment Act will affect the operation of section 260. The section as it stands seems clear and unequivocal and in theory will catch any taxpayer who attempts to avoid such tax.
I appreciate that the courts are normally conservative and tend to write down blanket provisions of the type found in section 260. 1 accept that. As I understand the position, for many years the courts refused to apply section 260 if a transaction could be explained as relating to ordinary business or family dealings. In my view, this constitutes a reasonable approach to this question and sets out a basic test that a taxpayer’s legal advisers must consider before they advise the taxpayer to enter into a particular scheme. It is my understanding that this test has been completely abandoned by the current High Court, which apparently takes the view that tax dodging is a virtue and is to be encouraged at all costs. This seems to be completely in conflict with the New Zealand Court and the High Court of the United Kingdom. I feel sure that judges such as Lord Denning must shudder when they read the tax decisions of the Australian High Court. Of course, that is if they bother to read them.
– Ha, ha!
– Does the honourable member find that rather humorous? As I recall it, Lord Denning was the judge who wrote the Privy Council decision in the Newton case. That decision laid down principles which the Australian High Court followed for many years until the current Chief Justice presided. We ought to meditate upon that. Will the Treasurer (Mr Howard) consider the proposition that an ordinary business or family dealing test be written into section 260, and that the question of whether a transaction is an ordinary business or family dealing be finally determined by a panel of lay persons, not judges, with the taxpayer able to provide relevant evidence not to be banned by technical rules of evidence? If a panel agrees that it is ordinary business, then all is well. Otherwise section 260 strikes it down. I consider that to be a reasonable approach. What about a short burst on permitting the courts and /or boards of review to have regard to the substance or ultimate economic effect of a transaction in determining whether it is a contract or an arrangement for the avoidance of tax contrary to section 260? I would like some comments from the other side of the House, particularly from the Minister, on that proposition.
One notes the article in the National Times of the 17 June last year, by Mr P. P. McGuiness, headed ‘How the High Court Helps Tax Dodgers’. He makes the same assertion that I have made from the start, that the Slustzkin case has legalised all the more or less shifty deals which can be cooked up. Obviously, it has. It is the natural flow on from that case. The article also refers to the proposal advanced by Professor Sawer. I raised this matter in an earlier debate, suggesting the setting up of a non-judicial tribunal to deal with tax dodgers. I suggest to the Minister that it might be much more efficient and effective to do so. I ask the Minister when amendments to section 260 are to be introduced to close the existing gap. I also ask the Minister to refer to Mr McGuiness or to talk to the Commissioner of Taxation so that he may consider the matter with a view to taking another Slustzkin scheme to the High Court. That is what this Government ought to do. It ought to empower the Commissioner of Taxation to do so. This might be legitimate in the light of the High Court’s mistakes and misconceptions described in this excellent article.
In conclusion, I repeat what I have said before when dealing with the estimates of the AttorneyGeneral’s Department. What my old dad said to me many years ago typifies the attitude of honourable members opposite on this type of legislation. He said: ‘Ralph, never let it bother you. As you go through the concourse of life you will find plenty of Sheriffs of Nottingham but very few Robin Hoods. The former they give knighthoods to and the latter they hang’.
-In speaking to this Bill, I do not intend to deal to any great extent with the methods of tax abuse which have been mentioned or which will be overcome by this legislation. Suffice it to say that the legislation was flagged by the Treasurer (Mr Howard) in 1978. It follows other endeavours by the Government to remove the abuse schemes. This is evidenced by the fact that this Bill is the fifth in a series of Bills introduced during 1978 to amend the Income Tax Assessment Act. This would indicate that much was done in that year. That is not to say there is not more yet to be done. Section 260 was mentioned by the honourable member for Hawker (Mr Jacobi) and other honourable members during this debate. I do not think the interpretation of this section reflects on the current High Court of Australia just because of the personalities involved. It is a known fact that, for the last 15 years, section 260 has had no teeth. It is significant that during those 15 years the Australian Labor Party was in office for three years. I might ask what exactly it did about the matter.
The solution is not so simple as one might imagine. When the alternative section is formulated we have to make sure that it is something that will stick and the judiciary will take note of it. Certainly, many of the decisions that have been handed down by the High Court are ones that make people in the street and in the accounting profession wonder about the legality of section 260. Curran ‘s case is one example. I have never seen such a lopsided decision as the one in that case. If that case was presented again on a different basis the result could be quite different. Whilst we have hopes that section 260 will be changed, let us hope that when it is changed it will have the teeth and significance that we want it to have.
Certainly, as I have mentioned in previous debates on this legislation, the volume of the Act is growing at an alarming rate. It will continue to grow at such a rate while we, as parliamentarians, taxpayers and people in business, do not give any credence to, or shy away from, the discretions given to the Commissioner of Taxation. That might seem contrary to many of the thoughts of other people but I see nothing wrong in discretions, provided those affected may appeal to a board of review and have an inexpensive hearing provided they have further access to the courts. That is an alternative to the great volume of legislation Parliament has been putting through to amend the Income Tax Assessment Act. A discretion here and there is not so bad as some people would suggest. It should always be kept in mind that people should have the right of appeal to a board of review and to the courts.
The Bill is a substantial one, and it is intended as a deterrent against not only the schemes that have been practised up to now but also those of the future. I note that on one occasion when making an announcement about closing loopholes in the legislation the Treasurer has commented that the date from which the legislation would be effective would be applicable to future schemes which sought to avoid tax in the same way.
During the grievance debate today and during the present debate, some honourable members have criticised the amount of tax that the Australian taxpayer is paying. I am not saying it is small; I am saying it is substantial. Australian tax rates are not the largest in the world today, but I do not believe that we are tackling the problem from the right end. The problem is not the rate of tax but the growing expenditure on health, welfare and education with which the Government and the country are faced today. We ought to be tackling the problem from the other end by reducing the commitments we have in these areas.
I emphasise this point by presenting a few statistics to the House. In 1967-68, ten years ago, this Government had a total commitment to health, education and social security and welfare of $ 1,571m. In 1977-78, it had grown to $ 12,543m. It is estimated that figure will grow again during the current year. The expenditure has increased eight times in those 10 years, and yet the tax in that period has increased only 5.6 times, from $2, 177m to $12,129m. So, the rate of taxation is not keeping pace with the amount of expenditure in these welfare areas. In 1967-68 the expenditure on those three items of health, education and welfare represented 72 per cent of personal income tax collections. In 1977-78 it represented 103 per cent of those collections. So whilst I agree with honourable members who come into this chamber and state that the tax rates are a deterrent to earning and productivity, the answer to the problem does not lie in reducing those rates but in reducing those expenditures.
On reading through the report of the Australian Taxation Office and associating it with social security payments and other such expenditures, I found that in 1978-79, of every dollar that the Commonwealth collects in excise, indirect taxation and other sources of revenue, 42c will be spent on health and welfare and 23c will go to the States and local government. So on Budget day, before we can sneeze, the Government is locked into a situation of having 65c in every dollar collected being committed already to certain expenditures. I invite honourable members who decry the present tax rates to look at the other side of the picture. Certainly we should stop the abuse of the system and we should try to stop the evasion of taxation, but also we should look very carefully at trimming our commitments. There are ways in which that can be done. I invite honourable members who complain about the insufficiency of welfare commitments compared with commitments to other government initiatives to look at the fact that if we do not have a healthy economy, if we do not have incentives for taxpayers to get out and earn money productively, we will have no support for the standard of living which we currently enjoycertainly we will have no income from which to make welfare payments to enable recipients of welfare benefits to continue to enjoy that standard of living.
I believe that honourable members who extol the theory that lower tax rates would reduce the incidence of evasion of tax do so with their heads stuck firmly in the sand. A generation of tax avoiders was created in the 1970s. It has become fashionable for the average taxpayer to take every advantage, legally or illegally, and to take a chance against detection in his taxation affairs. Whilst the advisers in the tax avoidance industry are a cancer in our society and parasites within our community, they are here to stay. The only way we will be able to cramp their style will be to keep hitting them and hitting them, as we do when attacking a weed with a mower: This way eventually we might get the weed out of the ground; let us hope that we will be able to get rid of the tax avoidance industry that way also.
There are abuses in the taxation area, but there are also abuses in the social security area. I believe we have to match these abuses. It is unfortunate that today the average Australian will take advantage of the social security system and will take his chances as far as taxation is concerned. Because of this, with a Budget deficit we have an expanding gap, with less taxation revenue being received and higher commitments being undertaken. In speaking prior to me in this debate, the honourable member for Hawker (Mr Jacobi) mentioned that the Taxation Office would find it impossible to have the revenue that would be required for the necessary number of investigators to carry on a proper tax evasion purge. I believe that this is so and I do not know whether we can correct the situation.
I certainly feel that in this computer age, when the processing of tax returns is so highly computerised, as is the situation in other areas, such as health, social security, et cetera, what we are fast requiring in this country is an identification number for every taxpayer and every citizen. Some honourable members might say that this could offend aspects of civil liberties and the rights of the individual. Those people who would decry such a system might protect their civil liberties but, in doing so, they certainly allow infringement of the civil liberties of the providers within this community. As surely as night follows day, unless something is done those providers are going to be lost or disillusioned. I believe that an identification number for every Australian, for social security, health and every other area in which he is in contact with the government, is an absolute necessity. Computerisation could carry this through.
This Bill deals with those aspects of tax avoidance which are totally artificial. The prepayment of rental and of interest is an artificial device. The Treasurer flagged this on 8 June 1978. Through the Treasurer’s earlier announcements he has been able to prevent much of this type of avoidance. Within the past nine months announcements have been made concerning trusts, partnerships, overseas incomes and trust stripping schemes. The aspect of tax exempt beneficiaries is one which I believe needed correction. They have been written into family trusts for quite a while. I remind members of the Opposition who talk in terms of trusts being the great means of tax avoidance in this country that if they were to read their 1976 Budget Papers they would realise what massive penalties have been imposed on trust distributions during the term of this Government- penalties which were not imposed when the Opposition has the opportunity to do so during its three years in government. This is what the issue gets back to: Are we as an opposition and a government going to act together to root out these abuses, or are we just going to sit here and every time this legislation is debated make the same type of speeches? I am quite prepared to write the speech of the honourable member for Chifley (Mr Armitage) for him because every time this matter is debated his speech is exactly the same.
I believe that what has been achieved in the area of tax avoidance is to the credit of this Government. We can look forward to see what still needs to be done. There will always be those people within the community with the imagination and the sense of intrigue to try to circumvent the intentions of the legislators, particularly in the tax field. This Government is applying constant pressure to make sure that avoidance schemes are outlawed as soon as they come to its notice. As I said, the Labor Opposition ought to remember that we can work in harness. It ought to remember that it created the tax avoidance industry through its high rates of taxation in the 1970s and it had the opportunity in its three years in government to do something about the problem.
It has been mentioned that in tackling tax evasion we are tackling the 4 per cent who are able to afford avoidance schemes and to take advantage of them. I do not believe this House should think for a moment that the tax avoidance and evasion industry in Australia is confined to that 4 per cent. I invite any honourable member here to state that in his lifetime of lodging tax returns he has never evaded a single dollar of taxation. If he does claim that, he is probably the only Australian guaranteed a place up above because Australians have developed the habit of doing this. The honourable member for Chifley, who is so free with his advice to other honourable members on the opposite side of the chamber, ought to consider this issue and ought to probe his conscience. There are many ways in which tax avoidance could occur, even with parliamentarians. I will not mention them here although I am tempted to do so.
What we need to do is to look at evasion in the areas known to us, such as the situation of subcontractors who were once employees working for carpenters and the like. I suggest that at least 50 per cent of earnings made in this way never come to the light of day as far as taxation is concerned. I refer to those fly-by-nighters who come to the cities, build up partnerships overnight, tear them down the next day, then move to somewhere else. I refer to people in cash businesses. I do not know exactly what we can do with those people unless we mark the coins that change hands. I refer also to people who have their hands in the till all the time. It is not easy to get to the bottom of the trouble there. I refer to people who receive second incomes but do not disclose them. I refer to the pensioners who have the advantage of the pension but receive a further income from a part-time or casual job. I refer to the interest received from various investments throughout Australia. Whilst records on interest are computerised and are put into areas where detection could be more likely, I often wonder whether notice is taken of these records.
Whilst the purpose of this Bill is to close certain avoidance areas, I would like to speak in terms of areas in which tax equity is also involved. I suggest to the Treasurer and to the Government that one particular area in which tax equity does not exist is the area of the spouse rebate. I believe that one of the main causes of income splitting and tax evasion is the fact that in the separation of income between husband and wife or between parents and children the ceiling of $3,893 is enjoyed not by just one person in the family but by many members of the family. I would suggest that, if this Government is genuine in wanting to give equity to the spouse who stays at home and looks after the family and the house while the lone income earner is out working, that spouse should be given greater recompense; and this could be indexed almost to the tax ceiling arrangement. One alternative is for a husband and wife who are now able to enjoy two tax ceilings to be allowed only one tax ceiling and taxed as from zero on the balance of their joint income. That might be one suggestion. It will certainly be a means of generating income where it is not a matter of an expenditure or an allowance. But this proposal has difficulties in that more couples might live in sin but still under the same roof. The other alternative is for the rebate for the dependent spouse to be lifted to a figure equal to the present second ceiling. At the moment that second ceiling is $3,893 which when taxed at 33.5c in the dollar gives $1,304. If we add to that amount the $595 that is already allowed to the spouse for additional expenditure and housekeeping, we get the figure of $1,899.
– Round it up and make it an even $2,000.
– I think that $2,000 could be used as a rounded up figure. Just keeping to the mathematics of the matter, I would recommend that either there be no second ceiling for a double income family or that the spouse rebate be lifted to $ 1 ,899. 1 believe that this is equitable. It would be seen by the electorate to be equitable and it would prevent many of the income splitting and tax evasion arrangements which we have at the moment.
Let us look also at superannuation for the selfemployed. Why is it that parliamentarians, public servants and employees can get the benefit of very good pensions and superannuation arrangements and yet we deny these benefits to selfemployed persons? I feel that the provision of such benefits would be an incentive to these people to keep in employment. This is one of the problems. The self-employed people of the 1970s are the employees of today, which is why pay-as-you-earn taxation receipts are up. The bankruptcy of businesses which Labor caused in 1972 and 1975 and which is continuing as a result of its policies is the reason for this situation. But I believe that those in employment should be given the same benefit of a deduction up to a certain amount against their income. We should also consider the basis of full and true disclosure. I believe that there should be some equity in this regard for a taxpayer who believes that he has fully and truly disclosed his income. There should be some type of ruling which would prevent the Australian Taxation Office, through an audit section, going back too far to consider such matters.
A solution has not been found to section 26(e) but equity demands that we go back to the old basis of taxing those people who are deliberately avoiding taxation on the value of rented premises. This should not be a penalty for those people in decentralised or country areas. Taxation rebates on rents used to attract people to a job in such areas should not be used as a penalty and full taxation should not apply. Until last year the Australian Taxation Office recognised a token rental, and this was all right. I believe we should go back to that. With regard to the zone allowance, I would like to remind this House that those people who live in the 40 per cent of the continent which is represented in this House by only five per cent of its members require equity to compensate them for the additional costs of freight, sales tax on freight, transport, groceries and so on. If $3,893 is an indication of the amount required to sustain an individual in a capital city, the figure for those who live in rural northern Australia should be at least $6,000 per year which, on the basis of a tax rate of 33te per cent, would yield a minimum allowance of $670 per annum.
As the officials from the Australian Taxation Office are here, I would like to mention that there is a misconception in the community that the cost of collecting taxation is great. I invite anybody to look at the 1978 report of the Commissioner for Taxation which indicates that the cost of collection was $ 1 63m or 0.94 lc of every $ 1 collected. I believe that the Australian Taxation Office does a great job in spite of the greater burdens that are imposed upon it and the greater responsibilities that it has. It has a great responsibility to protect and to gather revenue for this Government to expend. I give great credit to it. Finally, I would like to congratulate the Treasurer on abandoning the idea of a retail turnover tax because I believe that this would not have served any useful purpose.
Mr DEPUTY SPEAKER (Mr Jarman)Order! The honourable member’s time has expired.
-This legislation continues the interminable series of Bills designed to plug the tax avoidance schemes with which this Government is plagued. It is a little like the boy with his finger in the dyke or perhaps like Horatio defending Rome against the Barbarians. Perhaps the Treasurer (Mr Howard) sees himself as a valiant defender of the Treasury against those who would assault the Federal revenues. In his second reading speech he said that it was the Government’s intention that income tax avoidance legislation should be retrospective to the date of the announcement. Then he said that he was convinced, however, that this was the right way to take action against what, in most instances, were blatantly contrived and artificial arrangements. If he wants to be even more effective, I advise him to accept our suggestion that all income tax avoidance legislation be retrospective to the beginning of the current year. More to the point, when will he undertake the task of rewriting section 260 of the Act to simplify the whole procedure? I know that that task will be like cleaning out the Aegean stables, but the longer he postpones this Herculean but vitally necessary task, the longer we in this place will be subjected to these interminable piecemeal attempts to stop the tax cheats.
How cunning they are. This legislation prevents the schemers from securing income tax deductions for pre-payments of expenditure which involve payouts of sums which are substantially less than claimed. It is staggering to see the Treasurer of the Australian Government describing in this Parliament a scheme whereby a taxpayer can obtain a loan, immediately pay back most of it as an interest-free payment, buy back the right of the loan for a much smaller amount and then claim the so-called interest payment as a full tax deduction.
How much longer do we have to fight a defensive battle against this sort of thing? Why is the ordinary wage earner harassed through the courts when, say, an incorrect deduction for a working wife is made but no punitive action is taken against these high income frauds? I could refer to a case I encountered recently where a low income worker inadvertently over-claimed for his working wife. She had earned the magnificent sum of $1,500 for the year. He was summonsed at short notice before the New South Wales court, even though the $370-odd involved was immediately offered to the Commissioner. What a contrast with the lenient treatment of the quasi-legal tax frauds. At least the Treasurer now seems to be spared the waitings of those in his own party who would oppose retrospective legislation as a means of combating these fraudulent machinations.
During the consideration of the recent Bill to outlaw the Curran scheme, I, like many others, received a veritable barrage of letters urging such things as the application of the rule of Roman law. A former Liberal Prime Minister was a leading exponent of this argument, but it was always a question of the use of legislative power in the common interest- not law but power. The people who use the retrospectivity argument to support the tax dodgers use legislative power unhesitatingly to attack people such as pensioners. So why do they shrink from the use of power to prevent these raids on the national exchequer? One can support the decision to tax income from overseas sources that is paid into and then derived from a trust or partnership. It seems that once again the High Court of Australia decided, on a strictly legal interpretation of tax laws, to benefit tax avoidance. As the law stands, people can escape being taxed on an income earned overseas and accumulated in domestic trusts. Certainly it is time that this matter was attended to.
But what about the use of family trusts here in Australia as an income splitting tax avoidance measure? These schemes are used by the very people who can afford to pay tax. They are practically not available to ordinary people. In their simplest form they involve the distribution of profits to beneficiaries being included in total taxable income, and only normal personal income tax is paid. As an example, $50,000 distributed to five beneficiaries would raise a total tax of only $10,225. If the full amount had been taxed $22,470 would have been raised. So $12,245 has been avoided in that hypothetical exercise. Let us see what could be done. Company tax of 46 per cent could be applied to trust incomes before distribution and then sums distributed to beneficiaries should be included as taxable income. This would give a total tax payable in this exercise of $25,520 or over $15,000 more than is currently payable by anyone using these trusts to avoid their legitimate tax obligations. Is the Prime Minister (Mr Malcolm Fraser) using such a simple family trust as this? When will he release details of his own tax avoidance?
What about the broken pledge to tax foreign dividends received by Australian companies which are now totally free of Australian company tax? I remind the House how in June last year the Treasurer (Mr Howard) said this was an intolerable position and would be cleaned up. But on 25 October last year he cravenly informed us that such legislation would not proceed. Why was this decision made? The fair taxing of overseas earnings of Australian companies is overdue for two reasons: Firstly, because of the revenue involved; and, secondly, to prevent Australian companies deliberately relocating overseas to take advantage of low tax structures and tax havens. In the research report of the Bureau of Industry Economics entitled ‘Industrialisation in Asia- Some Implications for Australian Industry’, we see the following statement:
The developing Asian economies are attractive for off shore investment for reasons additional to the availability of relatively low priced labour. Most of the countries offer a generous set of incentives for the establishment of industries, companies tax holidays- and a disciplined labour force.
A good many Australian companies have already taken advantage of these attractions. What is the Government going to do about taxing their earnings? As the Australian Financial Review says, about 25 per cent of a sample of 120 Australian companies have subsidiaries operating in Hong Kong or other tax havens, among them the Broken Hill Proprietary Co. Ltd, Acmil Ltd, Bradmill Industries Ltd, Comalco Industries Pty Ltd, Dunlop Rubber Australia Ltd, Elder Smith Goldsbrough Mort Ltd and a number of smaller manufacturers.
There is a rapid fall in employment in the Australian manufacturing sector. The Australian Manufacturing Council reports that employment in Australian manufacturing is currently down about 200,000 persons on the peak reached five years ago. The Council also says that 91,500 jobs have been lost in the last year. It predicts a further 80,000 people a year will be unable to get jobs in manufacturing from now until 1986. We should consider very seriously whether Australian manufacturers should be encouraged to re-locate in South East Asia simply to enjoy a tax holiday’. As we hear so often, the Australian services sector has been the big growth area in the last two decades. Now new technology will reduce employment there too- particularly in banking finance. One reads that employment in banking will decline by 40 per cent in the next 10 years.
The Commonwealth Employment Service document entitled ‘School Leaver Survey in NSW and the ACT’ presents a generally gloomy picture of overall employment prospects for young people in the years ahead in the retailing, manufacturing, finance, insurance and construction industries. The Melbourne Institute of Applied Economic and Social Research estimates only a 2.3 per cent growth rate in the non-farm sector this year. It says that at least a 4 per cent growth rate is required if unemployment is not to worsen. So unemployment will continue to increase.
It is against this worrying background that the Government refuses to discourage the haemorrhage of Australian investment funds overseas. During the controversy over this proposed tax on off-shore earnings last year it was said by the Australian Financial Review that ‘Australia was taking the first steps on the international tax gathering road’. The United States of America and other nations already implement this tax on foreign company dividends. Because of the Treasurer’s craven refusal to proceed with this tax, Australia will not now take even the first timid step.
The Treasurer is implementing this income tax legislation for one reason- the Government needs the money. It will need to do more if it wants to contain the 1978-79 Budget deficit to the Budget figure of $2,8 13m. For instance, the Budget estimate of $785m for expenditure on unemployment benefit will be well exceeded. It will be more like $950m. Now that the Government has renounced a retail turnover tax or value added tax, we can expect the Treasurer to be looking for other means to raise income besides just plugging tax avoidance schemes. What will happen to the 1.5c in the dollar income tax surcharge the Government is committed to discontinue in the next financial year? Will it be tempted to retain the surcharge and thus add another broken promise to its already long list? The great temptation to implement a VAT stemmed from the perceived need to abolish or reduce State payroll taxes which I agree can be portrayed as a tax on employment. But how to recompense the States for the $ 1,500m so forgone was the $64 question.
The rationale for a broad indirect tax on consumption was ill considered, but there is a need to raise extra revenues without raising income tax on low and average wage and salary earners. The Government should now consider other forms of taxes as an alternative to the value added tax. We are possibly, despite what the Prime Minister tried to put over today, the only advanced Western industrialised nation without any tax at all on capital. The United States has levied a capital gains tax since 1913. Short term capital gains are taxed at normal rates, while longer term gains are taxed at 50 per cent of the net gain at normal rates or on a special rate of 25 per cent on the first $50,000 and 35 per cent thereafter. The United Kingdom also imposes a capital gains tax at 50 per cent of the full taxation rate for the first £5,000 of gain and the full rate thereafter or at an alternative flat rate of 30 per cent. Such countries- this is important with regard to what the Prime Minister said todayhave general exemptions for principal private residences, personal goods and chattels, such as cars and so on. That is obviously what we ought to be doing in Australia.
Perhaps also there is a very strong case for the imposition of a wealth tax, because in Australia one per cent of our people own 22 per cent of accumulated wealth and the top 5 per cent own 46 per cent of all accumulated wealth. Some of these are the very people whom the Treasurer is now seeking to prevent from avoiding tax. Simply speaking, the Australian Government could tax 46 per cent of Australia’s privately accumulated wealth by taxing only the richest 5 per cent. It is difficult to calculate the appropriate threshold level at which this tax could be imposed in such an exercise, but my guess is that the threshold level would be no less than $100,000. So why is it that the Prime Minister deliberately seeks to mislead this House and the Australian people when he says that capital gains taxes will affect ordinary people’s homes or that the Opposition would levy wealth taxes on workers’ savings? He is misleading the nation and misleading this House.
The Prime Minister has referred in his so called ‘state of the nation’ speech to a range of possible capital investments in Australia. He does not say that his optimistic, euphemistic assessments almost totally involve the exploitation, and in some cases the processing, of our precious non-renewable mineral and energy resources. It cannot be said that these projects will be labour intensive. It can be said that there is a need for a resources tax to tax adequately the rapid exploitation of non-renewable energy reserves. The diminution of these reserves can be just as real through the use of massive amounts of Australian energy in the upgrading of raw materials such as bauxite to alumina and aluminium as through the export or domestic use of the actual raw energy. The refusal of this Government to implement a resources rent tax on a company by company or development by development basis at an appropriate and acceptable threshold level of profits, expressed as a percentage of capital investment, amounts to the allowance of tax avoidance on the grandest of scales.
Let us take the case of the Utah Development Corporation. Certainly, its profits fell from $ 1 5 8m to $ 1 3 8m last year.
– That was after tax.
– Yes, that was after paying tax. But the decision to impose a branch profit tax of 5 per cent on dividends remitted overseas raised only a miserable $13m. A resources tax would have raised at least four times that amount. The profit for Broken Hill Pty Co. Ltd, based on normal accounting methods, was $ 161m for the last six months of 1978. The majority of that profit came from the company’s oil and gas division. This raises the spectre of the Government’s misguided crude oil policies. We know that the present import parity policy will return $700m this year to the Federal Treasury. But this return will decline as the percentage of old oil returning full parity prices to Esso-BHP phases up year by year until it reaches 100 per cent. So in this case, Esso-BHP stands to make a yearly windfall profit ranging from $300m this year to $700m in 1980-81. There is no adequate tax mechanism. The Esso-BHP consortium is making these millions of dollars of profit solely as the result of a Government decision. There is no adequate tax mechanism for the years ahead. The $3 per barrel levy will be insufficient when the 1977 policy is phased up to full maturity. Honourable members opposite cannot deny that. In addition, there are no guarantees that any of these ad hoc measures will result in conservation of oil or that the majority of the windfall gains will be used for oil exploration. Aside from Bass Strait, only $143m has been allocated -
Mr DEPUTY SPEAKER (Mr Millar)Order! The honourable member’s remarks are not altogether relevant to the matter before the House.
-I take your point, Mr Deputy Speaker. However, I ask you to take my point also. I am arguing that the lack of an appropriate taxation mechanism on oil profits which results from a Government decision has led to the most massive tax avoidance. At any rate, I accept your ruling and I will continue with my remarks. The oil companies tell me that the oil exploration dollar is a mobile dollar -
-Order! The honourable member has not made it immediately apparent that he is observing my ruling. I ask him to direct his remarks to the matter before the House.
-Mr Deputy Speaker, I thought that this was a wide-ranging debate. I accept your ruling. However, let me conclude that part of my speech. Australia is being ripped off because there is no adequate tax mechanism for the years ahead on oil profits which will be derived because of the Government’s decision. Let me now summarise the points that I have made: The Government should make this type of legislation retrospective to the beginning of the financial year. Secondly, dividends paid in Australia to shareholders of companies which are located offshore should be taxed here in Australia. Thirdly, the Government, instead of rubbishing the Opposition’s attempts to explore new tax mechanisms, should seriously consider the implementation of a capital gains tax with appropriate exemptions. It should also implement a resources rent tax on the mining and export of nonrenewable energy reserves. It should rewrite section 260 of the Income Tax Assessment Act because only then will this House be spared this interminable series of Bills.
-Order! The honourable member’s time has expired.
– If anyone had any doubts about the intentions of the Australian Labor Party with respect to the introduction of a capital gains tax before the honourable member for Cunningham (Mr West) spoke in the debate, those doubts must now be put at rest. The honourable member made it plain- I give him full marks for his open and candid concession- that a Labor Government would introduce a substantial capital gains tax at the earliest opportunity. As one reason for that he advanced the fact that the United Kingdom has a capital gains tax. I would have thought that that was a good reason for not introducing a capital gains tax. We should look at the way in which incentive has been taxed so heavily in that country with the consequent economic difficulties that face it. This much must be clear now: The intention of the Labor Party is to introduce a capital gains tax. The only additional remark I make about that subject is that although the Leader of the Opposition (Mr Hayden) seems to have been saying that the tax would start at a capital gain of about $200,000, the honourable member who has just spoken in the debate has cut that figure in half and has said that the capital gains tax would start at $ 100,000. Presumably, the amount will come down. The Australian people should be warned at this early stage that if the Labor Party ever came to government in this country again, there would be a very real risk that it would seek to introduce a capital gains tax.
I return to the subject matter of the Bill which is presently before the Parliament. The first point that strikes me about the debate we have had today is that there has been such an air of piety and righteousness about it that honourable members could be excused for thinking that they were in church rather than in the national Parliament. It seems that everyone hates what we call the tax dodger. Everyone hates those people who arrange their affairs in such a way within the law to lessen the incidence of taxation falling on them. Let us look at the realities of the matter. Of course, there are people who will and doprobably they always will- arrange their affairs in such a way within the law that the incidence of taxation falls on them more lightly than it otherwise would. But instead of abusing them, instead of abusing the system and instead of calling for the banning of things such as advertisements for tax avoidance schemes, we would much more profitably spend our time if we asked: Why is it that so many of the best brains in the country and so much of the effort of professional people in this country are put into schemes which are designed to lessen the incidence of their income and company tax? The reason for it is plain. The rates of taxation are so high that many people are forced into a position in which they must take steps that they would otherwise not take to lessen the burden of taxation imposed on them.
There are so many people in the community today- professional people, business people and ordinary average wage earners such as skilled tradesmen- who are bearing such a heavy burden of taxation that they are forced to adopt what are in many cases devices and in other cases quite legitimate re-arrangements of their affairs to reduce the burden of taxation on them. They do this because if they did not embark upon such a course they would be crippled financially. There are many professional and business people who now do not work a full week. There are many people who will not invest in businesses, who will not expand their businesses, who will not take on new employees and generally will not contribute to the expansion of commerce and industry in this country because there are no longer rewards for them in doing that. The reason there is no reward or a very slight reward is mainly the taxation system.
I put it to the House that instead of pointing the finger at people who re-arrange their affairs so that the burden of tax imposed on them is lower than it otherwise would have been, we should recognise that the reason so much effort goes into schemes designed to lessen the tax burden today and so many brains are directed at this objective is due to the heavy burden of taxation. This Government itself has sought to lessen the burden of taxation and I commend it for that, but our continuous objective should be to reduce substantially the burden of tax in this country. I believe that it is a reasonable expectation that a lot of the effort that presently goes into tax avoidance and tax lessening schemes would evaporate as the tax rate was reduced. I should like to direct some remarks to the Bill which is presently before the House. I do not want to go into a detailed analysis of some of the complex and intricate provisions contained in this Bill. I do want however to try -
– You don’t understand them anyway.
-I beg your pardon.
Mr DEPUTY SPEAKER (Mr Jarman)Order! The honourable member will address the Chair.
-Honourable members will recall that earlier in this debate the honourable member for Denison (Mr Hodgman) referred to a letter that appeared in the Financial Review of 20 February written by Mr A. P. Webb, Q.C. and Dr I. C. F. Spry. That letter pointed to a number of problems with respect to this Bill. It pointed to a number of provisions in this Bill which the authors of the letter suggested should be looked at again and altered and improved. The honourable member for Denison read out half of the letter and that, of course, appears in Hansard. If I may I want to read the additional few paragraphs of the letter because it goes on to point out some additional problems with respect to the drafting of this Bill which I would hope the Treasurer (Mr Howard) would take account of. I hope also that the Commissioner of Taxation, when he is administering the Bill when it becomes an Act, will also bear in mind the remarks that have been made. Mr Webb and Dr Spry continue their comments by saying:
Thirdly, the provisions of ss. 99b and 99c would, if enacted, enable multiple assessments of income to take place in certain circumstances, so that several taxpayers could in the one situation be assessed cumulatively in regard to the same trust income.
Accordingly, particular trust income could bear substantially more than 100 per cent tax in varying situations.
Fourthly, the definition of ‘reimbursement agreement’ in s. 100a is unreasonably wide, and this provision would if enacted penalise taxpayers in a large number of situations where no attempt is made to rely upon witnesses in the Act.
Inadequate protection is given by sub-s. (13), since that sub-section does not apply to, for example, commercial dealing which is not ‘ordinary’.
That word ‘ordinary ‘ is taken from the Bill itself. They continue:
It is impossible to avoid the conclusion that the provisions of the Bill have not been given sufficient consideration or scrutiny and that it should not be proceeded with in its present form.
I would not go so far as to say that the Bill should not be proceeded with in its present form. I merely draw the attention of the House- as did the honourable member for Denison- to the fact that there are what would appear to be defects in the drafting of the legislation. I believe that the Treasurer should have regard to those defects. They are, at least in one case which I will mention in a moment, defects which may well defeat the revenue. In other words, the Government may not achieve what it hopes to achieve by this Bill. So in fact we are doing the Government a favour in drawing its attention to errors in the legislation that perhaps could be rectified to ensure that these particular tax avoidance schemes are blocked.
To direct a few brief remarks to some of the specific matters referred to by Mr Webb and Dr Spry, may I refer initially to proposed new section 82KJ. That seems to contain a particular problem as far as I can see. That problem is that proposed new section 82KJ, which is endeavouring to stop the device related to pre-payments of interest and pre-payments of rent and other outgoings, states in part:
When legislation contains a provision like that I think a warning light should be flashed. What it means in this case is that the Commissioner or Deputy Commissioner of Taxation will make assessments of what a particular loss or outgoing should have been. When public servants and particularly the Commissioner of Taxation have the opportunty to make their own assessments of commercial transactions, in effect to rewrite commercial transactions and dealings between citizens, that is a situation we should be wary of. I am not suggesting for the moment that this legislation should not proceed because it gives a wide discretionary power to the Commissioner. I am merely drawing attention to the fact that we continue to pass legislation which increases the discretionary power given to the Commissioner of Taxation and that that is something that we should be very wary of.
The second point to note about new section 82KJ is that it would appear that it is the whole of the loss or outgoing that is disallowed and not only the excessive part- if one likes to call it that- which arises by virtue of there being a tax avoidance agreement. I suppose some people might say: ‘Well, you should not have too much sympathy for people engaging in this activity which is after all a form of avoiding income tax.’ To some extent that view is correct. But I put it that if the objective of the exercise is to prevent an excessive loss or outgoing being allowed as a taxation deduction, really the only reasonable position to take is that it should only be that excessive part of the loss or outgoing which should be disallowed and not the whole of the loss or outgoing. In other words, the excessive claim that comes as a result of taking part in a tax avoidance agreement should be disallowed but not the entire loss or outgoing. That is something to which I hope the Treasurer will have regard now that it has been drawn to his attention.
Without taking any time to discuss it, the second matter at which I hope the Treasurer would have another look at some stage is proposed new section 100a. I hope in particular that he would look at the definition of ‘reimbursement agreement’ and then the definition of ‘agreement’ itself. I might say that it is a strange form of drafting to have a definition of reimbursement agreement and subsequent to that a definition of agreement but I leave the peculiarity of the drafting to one side and say merely that the provisions which are contained in this Bill, because of the very broad definitions that are given there, are such that they may well have to be re-examined at a later stage. I merely draw attention to those definitions and to the comments made by Mr Webb and Dr Spry in their letter with respect to those definitions.
Thirdly, I emphasise that there is once again a danger in increasing the discretionary power which is given to the Commissioner of Taxation. It is a discretion which has to be exercised properly and one would hope that it is a discretion that would be exercised widely. But we must make sure that the law is clear and that the taxpayers know the limits of the law to which they can go to organise their affairs to reduce the burden of income tax on them, if that is their objective. They are the only specific matters to which I wanted to refer but I want to return very briefly to the initial point I made. This seems to apply not only to Australia but is something which is quite common in most countries with which we like to compare ourselves. I refer to the continuous taxation burden on productive people in the community and the effect that taxation burden has on the expansion of industry and commerce and on the contribution of people who can make a real contribution to the community. Incentive is undoubtedly being sapped by the present taxation burden. I venture to suggest as I have before that the solution to many of the Government’s economic problems is to reduce the taxation burden very substantially indeed; not only would that have the result of taking away the need of people to engage in activities designed to reduce their level of income tax, but also it would act as a positive incentive to people to go out and to invest, to start businesses, to expand businesses, to employ people and to contribute to the overall wealth of the country.
-Block tax avoidance schemes are involved in this particular Income Tax Assessment Bill, the purpose of which is to block tax avoidance schemes such as prepayment schemes, trust incomes derived outside of Australia and trust stripping. The background of this Bill is that the Treasurer (Mr Howard) announced in a Press statement on 19 April 1978 that the first category of schemes involving prepayments would be legislated against, effective from 20 April of that year. These schemes involved the taxpayer obtaining a tax deduction for prepayments of interest on a loan which is artificial in that it is then effectively cancelled by the taxpayer buying back the rights in it. Clause 6 of the Bill inserts a new section in the Act, section 82KJ so as to disallow any deductions for outgoings incurred as a result of a tax avoidance agreement where the outgoing exceeds the amount that might reasonably be expected to have been incurred at the time in respect of the related benefits, for example, due to prepayment, and when property is acquired by the taxpayer or an associate and the consideration payable for the acquisition of the property is less than what might have been reasonably incurred if the outgoing had no* been incurred.
Clause 6 of this Bill also inserts new section 82KK. Sub-section 1 specifies certain types of losses or outgoings to which the section applies under arrangements between associated parties for the purposes of securing that one party will obtain a deduction while the other will not bear tax on a matching amount in the same year of income. Sub-sections 2 and 3 will deny a deduction for such outgoings where they were incurred as part of an arrangement for deferring tax on the amount receivable by the associate.
The second broad category which was covered by a Press statement of 8 June 1978, relates to avoidance of tax on income derived outside Australia through a trust or partnership. Clause 1 1 inserts new sub-section 95 ( 1 ) whereby the net income of a trust estate will be calculated broadly as if the trustee was a resident taxpayer. The effect of this will be to extend its assessable income to include income from outside Australia. There are other clauses, but a particular clause, clause 14 in the Bill, which inserts new subsections 99 (2) and (3) to similarly extend tax to the ex-Australia component of accumulating income in resident trust estates, in respect of which no beneficiary is presently entitled. New subsections 99 (4) and (5) cover non-resident trust estates and will require the taxation only of Australian source income. I would point out that clause 15 makes similar amendments to section 99A which imposes a special tax rate which is 61.5 per cent for 1978-79 on trusts that are involved in tax avoidance arrangements.
A further category involving trust stripping was covered by the Treasurer’s statement of 11 June 1978. Here, the trustee avoids tax by directing income to the trust beneficiary who is presently entitled to a share of the income and not under any legal disability, and where the beneficiary also is tax exempt for some reason, and there is a reimbursement agreement under which the beneficiary redirects the benefit of the trust income to the trustee. Clause 18 inserts new sub-section 100A (1) which provides that, in certain cases involving tax avoidance arrangements which I have referred to, the beneficiary will be regarded as not being presently entitled to the income so that it will be taxed in the hands of the trustee under section 99A instead of as at present section 97. This amendment is to operate from 11 June 1978. Basically, what I have said is the purpose of this Bill.
I have made statements in this House previously and I will make them again. The statements I have made were very pertinent to the attitude of the present Government towards tax avoidance schemes. I have previously spoken on this matter. I will repeat what I have said so that everybody will know and will have it on the record once again. On 5 May 1978, 1 said:
On previous occasions I have used harsh words about tax avoiders and have said that they are bludging on the rest of the community. Indeed, that is what they are doing. The tax avoider is completely lacking in any morality because the additional tax burden is invariably thrust upon some other person who is financially less capable of carrying that burden. Unfortunately the question of financial morality never seems to receive due consideration by the courts which seem to be concerned only with a legalistic approach. The courts seek to put a blessing on tax avoidance as distinct from tax evasion. The dictum of Lord Tomlin is often quoted in support of that distinction. In the case Inland Revenue Commissioner v. Duke of Westminster, . . . which is a United Kingdom case:
Lord Tomlin said:
Every man is entitled if he car. to order his affairs so that the tax attaching under the appropriate Acts is less than it otherwise would be. If he succeeds in ordering them so as to secure this result then however unappreciative his fellow taxpayers may be of his ingenuity, he cannot be compelled to pay the increased tax.
To my mind that is putting a blessing on tax avoidance. It certainly does not class tax avoidance in the eyes of the learned justice as something that should be frowned upon, nor does it suggest that the person who does avoid tax should be frowned upon for making someone else carry his burden. The learned justice called it an ingenious trick, and said, however unappreciative his fellow taxpayers may be of his ingenuity’. In other words, he is saying that it is an ingenious trick and he sort of compliments him for it.
I say advisedly that while ever we have this attitude in the judiciary it does not lead to a serious example of honesty because it is certainly not an honest practice to expect other people to force someone else to pay their share of the tax burden.
Perhaps the tax avoider cannot be compelled to pay increased tax, but surely there must be some question of morality in this whole issue. To my mind there is no difference between tax avoidance schemes and tax evasion schemes, other than legalistic difference. They are both morally wrong and destroy any equity in the payment of taxation. I used a simple example when I made reference to tax avoidance in this House on 5 May 1978. 1 think it applies equally today. To my mind it is the same as a homicidal maniac saying: ‘I did not murder that man, I only put him out of his misery’, and then seeking to justify his murderous action in that way.
I put the same distinction between the act of a homicidal maniac and the act of a tax evader or tax avoider, whatever we like to call him. I wonder just how sincere the Government is in its statements regarding its attempts to close off the various tax avoidance schemes which are presently in existence. They will undoubtedly be in existence in the future. Of course, the main supporters of the Government are those people who have a vested interest in tax avoidance schemes or in tax evasion. They are the only ones with sufficiently high earnings to be able to engage skilled lawyers and skilled accountants to help them in their nefarious schemes. Honourable members will notice that these tax avoidance schemes are not practised by the ordinary working man- the man on wages. He does not have the opportunity. He might try to chisel a little on some concessional deductions, but that is only peanuts in the general scheme of things. The ones who are robbing this country right and left are those whom I call the big people of the country.
– What about cash for bricklayers?
– When the honourable member for St George mentions cash for bricklayers it reminds me of a story which was told in this House today by the honourable member for Hawker (Mr Jacobi). It is a very well known maxim and it has application even today: In this world there are very few sheriffs of Nottingham and there are very many Robin Hoods. Experience of past events has shown that the sheriffs of Nottingham were knighted and that the Robin Hoods were hanged. The same applies today. The crooks of this world get knighted and the goodies, the Robin Hoods, unfortunately are caught in the net of the Taxation Commissioner at the behest of this Government. The honourable member for St George mentioned bricklayers avoiding tax. The amount of tax they avoid is peanuts compared to the amount of tax which is avoided by large companies.
– Or lawyers:
-I am glad that the honourable member for Sydney has reminded me that the lawyers, the professional men, the doctors and certain taxation avoidance accountants are the ones who are getting away with millions of dollars. It is those people whom the Government should be setting out to catch. I compliment the Treasurer on the actions which he has taken. I must admit that I have been criticised in some of my own Australian Labor Party branches for complimenting him on the actions which he has taken. I have been criticised on the basis that there is no such thing as a good Liberal. But there are some good Liberals. I am not saying that the Treasurer is in that class. But there are some good Liberals, the same as there are good Christians and bad Christians.
In recent times the Treasurer made a statement that he was seeking to flush out the tax avoiders. But I think, if I heard accurately what was said in the House today, it was said that a paper fell off the back of a truck. Many trucks are roaming round Canberra these days with paper falling off them. The paper which fell off the truck contained some fairly confidential information consisting of recommendations from either the Treasury or the Taxation Office- I know not which- to the Government on which tax avoidance schemes and loopholes should be closed off. I think the honourable member for Gellibrand (Mr Willis) mentioned this in his speech and the honourable member for Chiefly (Mr Armitage) followed it up in his speech. The point which was made previously on this issue is equally valid now. Certain recommendations which are made to this Government by the skilled experts in the Taxation Office and the taxation section of the Treasury are not implemented.
There are reasons for the non-implementation of certain of those recommendations. There are a few guilty consciences not only amongst members of the present Liberal-National Country Party Government but also amongst a few members of the judiciary. I shall not name those with the guilty consciences. I would not reflect on the judiciary in any shape or form because I think members of the judiciary are all honest men. It could be said that certain people, honest men, do take advantage of tax avoidance schemes through family trusts and so on. I would not denigrate the actions which they take. Presumably they are honest men, otherwise they would not be appointed to the judiciary. Be that as it may, it is a fact that people in high places, even within this Parliament, have practiced tax avoidance schemes.
– Even in this Parliament?
– As the honourable member for Lalor has said, there are people even in this Parliament who practise tax avoidance schemes.
– I was expressing amazement.
– The honourable member was amazed. To my mind, these schemes are tax evasion measures. I will not name the honourable members in this Parliament who have practised these schemes. The honourable member for Chifley has already dropped the bucket, if I may use that term. The honourable member is often dropping the bucket and there is usually a lot of water in the bucket. But the water seems to drip off the shoulders of the persons to whom he is referring.
I often wonder why the hands of the Treasurer and the Cabinet apparently are tied and why they are not able to bring forward details of these further tax avoidance schemes which should be stopped but which are not being stopped. Certainly the present Treasurer is making his best endeavours to do so, but he seems to have some restraining influences on him. I do not know whether he is restrained by a tall fellow; he is only a little fellow himself. Maybe he is restrained by a big fellow about six foot two, but I do not know. I admire his integrity. I would not denigrate the Treasurer’s integrity in any shape or form because he is a good Christian man and I admire him. I quote again from the Treasurer’s second reading speech on the Income Tax Assessment Amendment Bill (No. 2) 1978 [No. 2]. He stated:
As I said in my Budget Speech ‘the time is long passed when governments or the community should tolerate the blatant, artificial and contrived means whereby certain sections of the community seek to pay little or no tax to the detriment of the general body of the taxpayers and the equity of the tax system’. The pressure against tax avoidance will be resolutely maintained this financial year.
In some part the Treasurer was right. He stated further
As new forms of tax avoidance are identified, announcements indicating the appropriate legislation to be introduced will be made and that legislation will be effective from the date of such announcements.
However, there is much more to be done in this field of tax avoidance. I seek leave to incorporate in Hansard a question and answer which appeared in the Senate Hansard of 21 February 1979. The question was asked by Senator Evans of Senator Carrick, the Minister representing the Treasurer.
The document read as follows-
Australian Taxation Office: Investigating Officers (Question No. 1119)
Senator Evans asked the Minister representing the Treasurer, upon notice, on 24 November 1 978:
Senator Carrick; The Treasurer has provided the following answer to the honourable senator’s question:
– I thank the House. I refer to the table contained in the question. Senator Evans asked the Minister representing the Treasurer to provide a table showing for each financial year from 1973-74 to 1977-78 and to the end of Nevember 1978, the average annual employment in the Australian Taxation Office of officers whose main function was to investigate taxation returns. Senator Evans asked that the Department provide information as to the number of officers investigating taxation returns on pay-as-you-earn taxpayers and returns by companies, business and professional persons including primary producers. There are still vast avenues for alleged Pitt Street farmers to evade taxation and probably there always will be.
Senator Evans asked for details of returns, of the time spent by investigators on returns involving investment and property income returns and returns from trust estates and partnerships. Unfortunately for the senator the departmental statistics were not sufficient to enable an answer to all those questions, but a few pertinent points stand out. I shall put them on the record. In 1973-74- our year in government- there were only 545 taxation investigators in the income tax field. In 1974-75 our Government increased the number to 599- certainly not enough. In 1975-76 after much prodding the present Government increased the number to 679. In 1976-77 the number decreased by one. Somebody must have died or got sick of the place and left. In 1977-78 the number was reduced by one. Somebody must have become further disenchanted and dropped out. The Government could not give us up-to-date figures from July 1978 to November 1978.
But the break-up of the time which has been spent on company investigations is the eye opener. In the period 1974-75, during the Labor Party regime, 23.8 per cent of income tax investigators’ time was spent on the investigation of companies and 76.2 per cent of their time was spent on the investigation of the little man. In 1975-76 the percentage of time spent on companies decreased to 23.2 per cent and the percentage of time spent on the little man increased to 76.8 per cent. In 1976-77 the percentage of time spent on companies was 23.2 per cent and the percentage spent on the little man was again 76.8 per cent. In addition to that the Government has appointed what it calls ‘field audit officers’. These field audit officers do not touch companies. They concentrate on the little man. In other words, the taxation officers concerned- I do not know whether this is policy but I think it must be- have a clear direction from this Government to concentrate on the little man and let the big man go, whether it is referring to a company or what have you This Government must stand condemned for its attitudes on this matter.
-Order! The honourable gentleman’s time has expired.
– in reply- I always enjoy a debate on this subject. I always enjoy listening to the honourable member for Banks (Mr Martin) and I always enjoy hearing the remarks of the honourable member for Gellibrand (Mr Willis), who really exhibits all the signs of somebody trying to get in on an act about which his own Government when in office did precious little. I welcome the support of the Opposition for this measure. I shall respond in broad terms to the points that have been raised. I invite any honourable members who doubt that the Government is continuing in its campaign against blatant tax avoidance to come back after the suspension of the sitting because I have another announcement to make on the subject which they might be interested to hear. There is one thing of a semipersonal character that I would like to say in this debate. I really think it is appalling on the part of the Opposition constantly to make specific allegations of tax avoidance against honourable members on this side of the House. I think it is a state of affairs that does not do credit to the importance of the matter which is under discussion. I can say unequivocally to the Opposition and to all honourable members in this House that the campaign that has been undertaken by this Government against tax avoidance has the very strong support of the entire Cabinet and indeed of the overwhelming majority of my own parliamentary colleagues.
– It is not unanimous.
– It is unanimous. I make it very clear that there is unanimous support for the campaign so far as the Government is concerned.
– That is not what you said.
– I concede that in the course of a debate on a Bill last year some of my colleagues who were not in the Ministry voted against a particular provision. I make that clear. There is no secret about that. At least within our party we are able to have a rational debate on matters of principle without affecting the overall result.
I shall reply to the specific points that have been raised. Naturally, the Opposition raised the question of section 260 of the Act. Of course, if an effective section 260 could be put into the Act that would make a very great change to the cam- .paign against tax avoidance. It is the expressed intention of the Government- I have indicated this on numerous occasions- that if possible section 260 should be re-written. The honourable member for Gellibrand knows as well as everybody else in this House that we cannot rewrite section 260 overnight and that the Government has been engaged internally for some time in examining the possibility of effectively rewriting section 260. That work is proceeding and if a satisfactory result can be produced a proposal for action will come before the Government and be considered. Let me make it clear that there is no back tracking on the part of the Government in looking at the possibility of rewriting section 260. The honourable member knows from his study of the interpretations of the existing section 260 by the High Court of Australia that that is no easy matter. He said that there should be greater use of retrospective legislation. The Government has a view on that subject which is different from the view of the Opposition. It does generally support the view that retrospective legislation should not be used. There are exceptions. They have been alluded to in previous debates in this House and I will not weary the House by recapitulating them.
The honourable member argues in favour of one superficially attractive proposition. That is that the advertising of tax avoidance schemes should be banned. Whilst I can understand some people feeling that way I think it raises a conceptual difficulty, one that I certainly have and which I am sure my colleagues on this side of the House have. Irrespective of the distaste which some people have for the advertising of tax avoidance schemes it is a fairly serious step for any government to prohibit the advertising of something which is not per se illegal. I know that there are always exceptions to those sorts of rules, but on balance I could not support the approach of banning the advertising of tax avoidance services, however much I might be unhappy with the services that are being provided. In the course of this debate it has been suggested that the amending legislation goes far beyond its intentions. I understand that one or two of my own colleagues raised a couple of problems with the legislation.
The honourable member for Denison (Mr Hodgman) suggested that a mining company could lose deductions for development expenditure, for example Sim where it has an agreement with an associate to market the mine concentrate for a fee of $100- less than an arm’s length fee. The comment I make on that suggestion is that for the legislation directed against prepayment schemes- that is the legislation before the House- to apply, the first requirement is that the expenditure must be incurred as part of a tax avoidance arrangement. From the example given there is no suggestion that there is a tax avoidance purpose behind the development expenditure of $lm by the mining comany. I say further that the second requirement of the legislation is that there must be a prepayment, that is, that the expenditure must be greater than might, in the absence of tax avoidance, reasonably be expected to be incurred at the time when it was incurred. Again, there is no suggestion that the $ 1 m would not have been expended when in fact it is expended. In other words there is no suggestion that it is a prepayment. Thirdly, there is a requirement in the legislation that the property is acquired by the taxpayer or an associate as part of the tax avoidance arrangement for an amount that is less than might reasonably have been expected to be payable but for, in the given case, the amount spent on development. There is no suggestion that the non-arm’s length marketing fee is connected in any way with the quantum of expenditure on development. In any event, neither the taxpayer nor the associate requires ownership of that property by payment of the marketing fee.
I understand also that a document which the honourable member for Banks euphemistically said had been ‘dropped from a truck’ was referred to during the debate. My understanding is that that particular document was an internal paper of the Australian Taxation Office addressed by an officer to his supervisor and had not been directed to the Government. Of the eight matters mentioned, some were alternatives, some had been attended to in one way or another and others were not entirely practical solutions having regard to the complexities of the subjects to which they were related. I think the point has to be made that not every trust is set up for tax avoidance purposes. I think the point also has to be made that the changes made in the Budget of my immediate predecessor to the taxation of trusts reduced significantly some of the tax advantages of arrangements through trusts, but it is generally not correct to say that all trusts are set up for tax avoidance purposes. The other point that I make specifically in reply to the honourable member for Banks is that I have given a standing request to the Commissioner of Taxation to bring to my attention as soon as possible details of the nature of any tax avoidance scheme that comes to his notice.
I think it is correct for me to say that in the time I have occupied this position most tax avoidance proposals that have come before me have been implemented. Some are still in the pipeline; others are under consideration. I know that the honourable member for Gellibrand is entitled to say that the Government did not proceed with the foreign tax credit system. I acknowledge that. One reason for bringing that proposal forward in the first place was related to tax avoidance, but the greater reason for bringing it forward was to effect an improvement in the taxation system as the Government then saw it. The Government subsequently decided, I think quite validly, that many broader economic and commercial considerations suggested that we ought to leave the system as it is. To suggest that there is any reluctance on my part or on the part of the Government to act when evidence of tax avoidance schemes is produced is to misunderstand completely the nature of the instructions which the Commissioner of Taxation has received. It is the continuing intention of this Government to act against tax avoidance practices as soon as sufficient evidence is produced to enable announcements to be made and legislation to be introduced.
The Government does take, as I acknowledge members of the Opposition do, a very strong view of the level of tax avoidance which has been practised in this country over recent years. It is not a case, as the honourable member for Banks suggested, of concentrating on the little man. By the very nature of the schemes involved and by the very nature pf the dimensions of income involved, the effectiveness of the legislation has covered people on very large incomes. The very simple principle involved is that tax avoidance is a threat to the overall equity of the tax system. It is an affront not only to people on low incomes who have no capacity and less incentive to avoid taxation but also to many hundreds of thousands of citizens in Australia on large incomes who have the incentive, the opportunity and the facilities to engage in these types of schemes but quite deliberately choose not to engage in them.
I can give the House the assurance that the legislation now before it will in due course be followed by further legislation proscribing additional tax avoidance schemes. I hope that it will be possible to re-write section 26(5 of the Act effectively but, for the reasons I have mentioned, it does pose a very significant number of difficulties. I thank those who have participated in the debate and I thank the Opposition for its support of this legislation. I commend it to the House.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr Howard) read a third time.
Sitting suspended from 5.59 to 8 p.m.
-by leave- I wish to inform the House of a further step in the Government’s ongoing program of curbing tax avoidance practices. In doing so, I emphasise to the Parliament the determination of this Government to maintain maximum pressure against such practices. In my statement of 24 September 1978, I foreshadowed amendments to the income tax law to deny deductions for specified types of expenditure incurred as part of tax avoidance schemes or arrangements that involve the effective recoupment of the expenditure so that no real deductible loss or outgoing is suffered by the taxpayer. In addition to saying that the amendments specifically foreshadowed in my statement of 24 September were to apply from that date where the relevant expenditure is incurred in discharging a mortgage, in the acquisition of trading stock or by way of interest or rent, I gave a clear warning to tax avoidance promoters that the proposed amendments would be made to apply, also with effect from 24 September, to any further schemes exhibiting similar recoupment features. It has now come to the attention of the Government that, despite this warning, expenditure recoupment schemes claimed to produce deductions for expenditure in borrowing money to be used to produce assessable income are being marketed. These schemes exploit the provisions of section 67 of the Income Tax Assessment Act, which authorises deductions for procuration fees or other expenditures incurred by a taxpayer in borrowing money used for the purpose of producing assessable income. Stated broadly, deductions are spread over the period of the loan, or over 5 years, whichever is the lesser.
By way of example of the complicated schemes developed to exploit this special provision, I mention a scheme under which a tax avoidance promoter undertakes, for a fee of 1 5 per cent of the tax deduction sought, to arrange a loan of $185,000 for a taxpayer for a period of 6 months for a purported ‘procuration fee’ of $100,000. The loan of $185,000 is made from a trust controlled by the promoter. It is this fee of $100,000, $85,000 of which is effectively recouped to the taxpayer that is claimed to be a deductible expense in terms of section 67 of the Act. The $185,000 borrowed is in turn invested by the taxpayer in a second trust which on-lends the money to a company controlled by the first trust. The first trust then lends the taxpayer a further $185,000 for a 30-year term and the initial loan is repaid out of this. The effect of the circular loans and repayments effected by round-robins’ of cheques is that the $185,000 liability of the taxpayer to the first trust is matched by the liability of the company controlled by that trust to the second trust which is in turn liable to the taxpayer for that amount. The result of these complex arrangements is that it is possible for the liabilities in respect of each loan to be forgiven at a future date without adverse consequences for any of the parties. Because the procuration fee of $100,000 is claimed to be payable in respect of the original 6-month loan, the taxpayer claims that the fee is fully deductible in one year.
The arrangements are made in such a way that the bulk of the procuration fee is recouped by the taxpayer by the provision of a loan that is never intended to be repaid. This is achieved by the first trust lending to the taxpayer, in addition to the other loans, $85,000 interest free and nominally repayable at call. However, because the tax avoidance promoter invests the $ 100,000 procuration fee with that trust in the form of redeemable units that the trust subsequently redeems for $15,000, the $85,000 loan is effectively recouped by the trust with the result that it is then able to forgive the taxpayer’s liability in respect of the loan without any effective loss to itself. The taxpayer thus claims to be entitled to a deduction for income tax purposes in respect of a $100,000 procuration fee. Of that amount he effectively outlays only $15,000, and that represents the fee payable to the tax avoidance promoter. The amendments dealing with recoupment schemes foreshadowed in my statement of 24 September are to be made applicable to deductions claimed in respect of borrowing expenses under these tax avoiding arrangements. The Government is thereby giving substance to the clear warning that had been extended to tax avoidance promoters against implementing substitute recoupment schemes.
The amendments will mean that a deduction will not be available for expenditure incurred after 24 September 1978 in respect of the borrowing of money where that expenditure is incurred as part of a tax avoidance scheme or arrangement that involves the receipt by a taxpayer, or an associate, of a compensating benefit the value of which, when added to the tax benefit or advantage, effectively recoups the taxpayer for the expenditure so that no real deductible loss or outgoing is suffered. Legislation to give effect to the Government’s latest proposals will be introduced this session. The action taken by the Government in the present case should spell out in the clearest possible terms the Government’s resolve to prevent the marketing of any further ‘expenditure recoupment’ schemes. Should this not be the result of this further announcement, the Government will not hesitate to act again to amend the income tax law to counter any other schemes exhibiting similar features. Any further necessary amendments would, as with the amendments in the present case, and in accordance with my earlier warning, apply to losses or outgoings incurred after 24 September 1978.I commend the statement to the House.
Message received from the Senate intimating that the Senate had agreed to the changes recommended by the House of Representatives to the terms of appointment of the following committees:
Joint Committee on the Australian Capital Territory.
Joint Select Committee on the Family Law Act.
Joint Committee on Foreign Affairs and Defence.
Joint Committee on the New and Permanent Parliament House.
Bill returned from the Senate without amendment.
Bill received from the Senate, and read a first time.
– I move:
That the Bill be now read a second time
The purpose of this Bill is to provide for certain antitrust judgments of foreign courts not to be recognised and not to be enforceable in Australia. This is not the first occasion that efforts to enforce the antitrust laws of other countries have led to the introduction of a Bill into this Parliament. Honourable members will recall that in 1976 the Foreign Proceedings (Prohibition of Certain Evidence) Act was passed to prevent Australian-based evidence from being used in foreign legal proceedings to which there was objection from the Australian point of view. That Act is not confined, as the present Bill is, to antitrust proceedings. However, as the then Attorney-General, Mr Ellicott, explained in introducing the 1976 Bill, the need for it had arisen out of legal proceedings that were being taken in the United States of America under the antitrust legislation of that country.
Those proceedings related to arrangements alleged to have been made in 1972 for the marketing of uranium. The proceedings included a grand jury inquiry and civil proceedings by the Westinghouse Electric Corporation claiming some $7 billion from 29 United States and foreign uranium producers, including 4 Australian companies. Mr Ellicott ‘s second reading speech in relation to the Foreign Proceedings (Prohibition of Certain Evidence) Bill also explained that in the proceedings I have just mentioned claims were being made that the antitrust and related laws of the United States had a greater extra-territorial operation than that generally conceded in international law, and beyond what other countries were prepared to concede in the proceedings. That was the reason for the enactment of the Foreign Proceedings (Prohibition of Certain Evidence) Act 1976, under which orders may be made on the basis of noncompliance by a foreign court with international law or comity, or on a need to protect our national interest.
Two orders were made under the Act and remade following the enactment of certain amendments to the Act. Both the orders related to the uranium marketing arrangements I have mentioned above and were based on the need to protect our national interest. The orders have been effective in preventing the Australian-based evidence from being used for the purpose of the United States proceedings. I am pleased to be able to inform the House, moreover, that the grand jury inquiry into the uranium marketing arrangements has been concluded and that no proceedings by the United States Justice Department have been instituted against any Australian company in consequence of that inquiry.
The civil proceedings in which the Westinghouse Electric Corporation was claiming treble damages from the uranium producers are, however, still pending. In those proceedings nine non-United States defendants declined to enter appearances. They did this because they considered there were jurisdictional objections to the proceedings against them and that they might be taken to have waived those objections if they were to enter appearances. The effect of their not entering appearances has been the entry by the United States court of a default judgment against them. The amount of the judgment still has to be determined, but there are indications that that could be done in the near future. It can be assumed that the Westinghouse Electric Corporation will then take whatever action is available to it to enforce the judgment.
Whether a judgment of a foreign court is entitled to be recognised and enforced in Australia is, of course, a matter for Australian law. In general, two procedures for this are available: One is provided in the common law; the other is the subject of State and Territory legislation. At common law a foreign judgment cannot be directly enforced by execution but, subject to certain qualifications, it may be recognised and found an action which could result in a judgment able to be so enforced. For that purpose, there is no requirement of reciprocal rights in the foreign country in respect of Australian judgments.
Under the State and Territory legislation certain classes of foreign judgments may be registered in the State or Territory and then directly enforced as if they were judgments of the local supreme court. However, with the exception of the South Australian legislation, the applicability of their provisions in relation to a judgment of a particular country is dependent on an order in council being made upon satisfaction that substantial reciprocity is assured from that country and that no such order in council has been made in respect of the United States of America. The South Australian legislation provides for the court of a foreign country to be proclaimed as a court of reciprocal jurisdiction, but such a proclamation is not essential to the operation of the legislation, which is based rather on the rules of private international law and comity.
Whether at common law or under the State or Territory legislation, the recognition and enforcement rights for foreign judgments are not unlimited. For example, judgments in proceedings in which the foreign court did not have jurisdiction are not recognised; nor are judgments that are contrary to public policy or of a penal nature. It would, however, be unsatisfactory that the defendants to the Westinghouse treble damages judgment should have to rely on those grounds in order to resist enforcement of that judgment. By the action the Government has already taken under the Foreign Proceedings (Prohibition of Certain Evidence) Act 1976, it has made clear its views that the Westinghouse proceedings are against our national interest. That being the position, it is desirable that legislative and executive action be taken which will leave no doubt that the judgment will not be recognised or enforced in Australia.
Whilst the immediate need for the present Bill arises out of the default judgment the Westinghouse Electric Corporation has obtained, the Bill does not in terms refer to that judgment. As in the case of the Foreign Proceedings (Prohibition of Certain Evidence) Act, the Bill provides for the making by the Attorney-General of orders. Such orders are to be in respect of particular antitrust judgments, and before making an order the Attorney-General is to be satisfied that there has been inconsistency with international law or comity or that his action is desirable to protect the national interest. I inform the House that when the Bill has become law it is the intention of the Attorney-General (Senator Durack) to make an order in respect of the default judgment of the Westinghouse Electric Corporation to which I have referred and to do so on the ground that such action is desirable to protect the national interest. Any order that is made under the proposed legislation will have to be tabled and it will be subject to disallowance by either House of Parliament.
On 14 September last year, in answer to a question by Senator Young, the AttorneyGeneral reported on the outcome of certain consultations that had just been held in Washington with the United States Attorney-General and representatives of his Department concerning the extra-territorial application of antitrust laws. In the Attorney-General’s answer he indicated that the consultations had covered civil as well as criminal proceedings and that he was looking forward with some optimism to the prospect of an agreement being reached within six months. That allowed for a period during which the heads of agreement on which the consultations took place could be considered in detail by the Department of Justice and other United States departments involved. The present position in relation to those consultations is that we are still awaiting the response of the United States authorities on the proposed heads of agreement. It is expected that a response will be received very soon. The response will not, however, render the present Bill unnecessary because the proposals we are exploring with the United States authorities will be applicable only in respect of future marketing arrangements. They will not be applicable to the Westinghouse proceedings.
It is to be hoped that it will prove possible to obtain a better understanding with the United States authorities in relation to the enforcement of their antitrust laws. For its part, the Government will certainly be pursuing that objective. In the meantime, however, there is a clear need for us to take whatever steps are available to us to protect the Australian national interest. That is the essential purpose of the present Bill. I therefore commend the Bill to the House.
Debate (on motion by Mr Willis) adjourned.
Bill presented by Mr Adermann, and read a first time.
– I move:
The purpose of this Bill is to give effect to the Government’s proposals for the reform of the repatriation appeal system. Honourable members will remember that, early in 1977, the then Minister for Veterans’ Affairs, Senator the Honourable Peter Durack, announced that the Government had decided to transfer the functions of the existing repatriation appeal tribunals to the Administrative Appeals Tribunal. Subsequent detailed examination revealed substantial practical problems in giving effect to this decision. The Government has therefore decided to establish, with effect from 1 July 1979, a separate and independent Repatriation Review Tribunal which will combine the functions of the present war pensions entitlement appeal tribunals and the assessment appeal tribunals. The concept of an independent tribunal, combining the functions of both of the current repatriation tribunals was proposed by Mr Justice Toose in his Independent Inquiry into the Repatriation System.
The present repatriation appeals system has now been in operation for just under 50 years. It was established by the Australian Soldiers’ Repatriation Act 1929, which came into operation on 1 June 1929. The first sitting of an appeal tribunal under that Act was held on 5 June 1929. It is interesting to note that the basic provisions inserted into the Repatriation Act by this 1929 amendment remain intact today, subject only to a few amendments. For example, the rights of unsuccessful appellants to seek reopening of their cases by presentation of further evidence and the right of appellants to have access to information in the records relating to their case were inserted in the 1929 Act. Like other basic provisions in the legislation, these remain in force today. I am sure that the clause dealing with the applicant’s right to have access to information from his records must have seemed revolutionary in 1929.
The last decade has seen major developments in the field of administrative law, leading to the passage through this Parliament of significant legislative enactments such as the Administrative Appeals Tribunal Act. The purpose of the Bill now before the House is to reform the repatriation appeal tribunal system so that it accords with modern principles of administrative law.
The proposed Repatriation Review Tribunal is modelled in many respects on the Administrative Appeals Tribunal and will function in a somewhat similar manner. Its role will be to review decisions which are the subject of applications before it, rather than to rehear claims or applications as is done in the existing repatriation appeal system.
Under the existing repatriation appeal system there are four Entitlement Appeal Tribunals and four Assessment Appeal Tribunals. Each of these Tribunals is a separate, independent, final authority, with nothing to ensure consistency as between tribunals in their decisions or in their interpretations of the law. The establishment of the proposed single Repatriation Review Tribunal will strengthen the administration of the appeal system and facillitate the development of just and consistent decision-making.
One of the deficiencies of the present system is the absence of a specific right for parties to obtain access to a court of law to seek clarification of issues of law. The Bill provides for a right of access to the Federal Court of Australia on questions of law. The Tribunal may, of its own motion, or at the request of an applicant or the Repatriation Commission, refer a question of law arising in proceedings before it to the Federal Court. Additionally, there will be a right of appeal to the Federal Court of Australia on a question of law after a case has been decided by the Tribunal. This right may be exercised by either the applicant or the Repatriation Commission.
Provision is also made to assist financially applicants who may be involved in a proceeding before the Federal Court. Where the President of the Tribunal, of his own volition or on the application of one of the parties, refers a question of law to the Federal Court of Australia, the costs of the applicant will be met by the Commonwealth. If the Repatriation Commission appeals to the Federal Court on a question of law, the applicant’s costs will also be met by the Commonwealth. While the Bill provides a discretion in the Federal Court of Australia as to costs where an unsuccessful applicant before the Tribunal pursues an appeal to the Federal Court on a question of law, provision is made for an applicant to apply to the Attorney-General for assistance.
In addition to providing a right of access to the Federal Court of” Australia on questions of law, the Bill also contains a special provision which will enable certain matters before the Repatriation Review Tribunal involving issues of important principle of general application under the Repatriation Act to be referred to the Administrative Appeals Tribunal. This recognises the central nature of that Tribunal within the Commonwealth’s sphere of administrative law.
While incorporating these present day principles for the review of administrative decisions, the Bill seeks to retain the best elements of the existing system- in particular those elements which confer upon applicants special rights and privileges. For example, the Bill retains the concept embodied in the existing appeal system that an unsuccessful applicant who subsequently collects further evidence which was not placed before the Tribunal at an earlier hearing may have his case reopened by submitting such further evidence. Similarly, the right of the Repatriation Commission to reopen a case decided unfavourably to an applicant is retained.
On the other hand, the Bill limits the powers of the Repatriation Commission in reviewing cases under section 3 1 of the principal Act. It spells out legislatively the limitations on the Commission’s powers which have developed as a result of interpretations given, over the years, on the existing provisions of the Act. For example, as a result of these amendments, the Commission will be unable to review under section 31 an entitlement which has arisen as a result of a successful application by a person to the Tribunal. The fact that these limitations will now be spelled out in the legislation rather than depend upon interpretation is a major improvement in the legislation.
For the benefit of honourable members, I have distributed an explanatory memorandum on the provisions of the Bill. Honourable members will note in the schedule to that memorandum a comparative list of the existing provisions and the equivalent provisions which are incorporated in the Bill.
I turn now, Mr Deputy Speaker, to the more important provisions of this Bill. The Bill provides for the repeal, with effect from 1 July 1979, of Divisions 2 to 4 inclusive of Part III of the principal Act which make provision for the present tribunals and deal with appeals to those tribunals. Clause 26 inserts in the Act a new Part IIIA dealing with the Repatriation Review Tribunal and proceedings before it, a new Part IIIB dealing with references to the Administrative Appeals Tribunal and a new Part IIIC dealing with references and appeals to the Federal Court of Australia.
The right to apply to the new Tribunal for review of a decision is set out in the proposed section 107 VC in respect of entitlement matters, the proposed section 107VD in respect of assessment matters and the proposed section 107VE in respect of a refusal to grant a service pension on the grounds of permanent unemployability. These provisions mirror the present sub-sections 64 ( 1 ), 67 ( 1 ) and 70 ( 1 ) of the Act.
There will be no formalities in the method of applying for a review. The proposed section 107VF simply requires that an application shall be in writing; set out a statement of the reasons for the application; and be lodged with the Secretary, Department of Veterans’ Affairs. The procedure will be the same as has been successfully operated for the last 50 years, in that the applicant will forward his application for review to the Department in the same way as he has lodged his original claim and his appeal to the Commission. He does not have to search out the Tribunal or a proper authority, such as a registrar, to lodge his application. The Secretary will be required, under the proposed section 107VF, to notify the President of the Tribunal of the lodgement of the application, and subsequently forward to the President all the appropriate documents and records. The provisions in the Bill relating to applications for review on entitlement matters are identical, in effect, to those contained in the present Act.
Under the Bill, the procedure in an assessment hearing will now be the same as that which has been successful in the entitlement area. In the past, the appellant would appear before an Assessment Appeal Tribunal where his case would be reheard in terms of evidence produced, supplemented usually with an ‘on the spot’ medical examination by the medical members of the Tribunal. Under the legislation proposed in this Bill, the Repatriation Review Tribunal will be required to review the decision of the Board and either affirm that decision or set it aside. If it sets the decision aside, the Tribunal will substitute a decision it considers to be in accordance with the Act.
The Bill provides for the Tribunal to consist of a president, a number of deputy presidents and a number of members. The President will be responsible for the efficient operation of the Tribunal. He will be empowered to give directions for the purpose of increasing the efficiency of the operations of the Tribunal and as to the arrangement of its business. He will be required to give directions from time to time as to the persons who are to constitute the Tribunal for the purpose of conducting reviews in pursuance of applications for reviews. In hearing an application for review of a decision, the Tribunal shall consist of the President or a deputy president, a Services member and one other man. When a matter before the Tribunal relates to an application for review of an assessment decision the third member will be a medical practitioner. Services members will be members who are appointed by the Governor-General from lists of names submitted by organisations representing returned soldiers.
The procedures of the Tribunal will be informal, as they now are, and the President will be empowered to give directions as to procedures. In the absence of a particular direction, the presiding member in a particular proceeding may give direction as to the procedures to be followed. I draw the attention of honourable members, however, to the provisions of the proposed sub-section 107W(3) which requires the President or the presiding member in a particular case, when giving direction as to procedures, to have regard to the need for the proceedings before the Tribunal to be conducted with as little formality and technicality and with as much expedition as the requirements of the Repatriation Act and a proper consideration of the matters before the Tribunal permit. This is an important principle, as it spells out in the legislation the requirement that formal proceedings and technical concepts are to be avoided.
The hearing of a proceeding will be in private, as are the hearings of the present Repatriation Appeal Tribunals. However, the Bill provides that a presiding member at a hearing may permit the hearing or a part of the hearing to take place in public if so requested by the applicant. This is an important departure from the current tribunal arrangements.
The amendment of the principal Act to insert these new provisions in respect of the new Tribunal has necessitated a number of consequential amendments of the Repatriation Act and associated Acts. I have already referred to the amendment of section 3 1 of the principal Act to specify legislatively the limitations on the Repatriation Commission’s power to review decisions. There are some other consequential amendments including amendments to section 47 of the principal Act which is, of course, an important provision specifying the principles upon which determining authorities under the Repatriation Act are to reach their decisions. The amendments which have been made to this section are only necessary in order to encompass the new Tribunal within their framework and require the new Tribunal to apply the same principles as are applied by the other determining authorities under the Act. The amendments do not in any way change the original concepts underlying section 47.
Similarly, section 47A of the principal Act has been amended. This section has provided authority for the making of regulations requiring prescribed determining authorities to give reasons for their decisions. With the enactment of this legislation, all determining authorities under the Repatriation Act, repatriation boards, the Repatriation Commission and the Repatriation Review Tribunal will, from 1 July 1979, be required to give reasons for their decisions in all entitlement and assessment cases.
The Act provides for the proposed new Part IIIA constituting the Tribunal to come into operation on the date of assent, while other amendments contained in this Bill will come into operation on 1 July 1979. This will enable appointments to be made to the new Tribunal and members to take up duty so that the Tribunal will be ready to commence operation on 1 July 1979. This will be the date from which applications for review of decisions by the Tribunal may be made. In the meantime, the present provisions in the principal Act relating to Entitlement Appeal Tribunals and Assessment Appeal Tribunals remain in operation. The existing Tribunals will continue hearing and disposing of appeals under the Act until 30 June 1979.
The transitional provisions of the Bill provide that any appeal to the existing Tribunals lodged before 1 July 1979 which has not been disposed of by that date shall be treated as an application to the new Repatriation Review Tribunal for a review of a decision. The Tribunal will be empowered to hear and dispose of those applications without the need for the applicant himself to take any action to preserve his rights.
The provisions of this Bill contain major reforms within an area of Commonwealth responsibility which directly affects many thousands of Australians. In the year 1977-78, 9,772 appeals were lodged with the present Repatriation Appeal Tribunals. I emphasise once again that the system is being reformed to take account of current-day practices and principles in the field of administrative law. But I also emphasise that the essential principles of the repatriation appeals system- those that have protected appellants and conferred upon them rights to ensure that every opportunity is given to them to achieve justice- are being retained. As I mentioned earlier, most of these were contained in the original Act of 1929 which introduced the present tribunal system, over four decades before those same principles became accepted generally by this Parliament. I pay tribute to the farsighted men of 1929 who developed such an appellate scheme. I wish also to pay tribute to the many men of calibre who over the years have held appointments to the existing Tribunals. Their contribution over 50 years speaks for itself. I am sure that those who are appointed to the new Repatriation Review Tribunal will similarly fill their roles with distinction and honour. I commend the Bill to the House.
Debate (on motion by Dr Klugman) adjourned.
Debate resumed from 2 1 February, on motion by Mr Howard:
That the Bill be now read a second time.
– I am pleased to support this Bill on behalf of the Opposition. However, I must say that the business people of Canberra will support it in the way that a poor man would accept crumbs from a rich man’s table because that is about the effect it will have on the business people of Canberra. The raising of the exemption limit will in fact be very acceptable to small businesses. Businesses which pay wages or salaries of less than $1,250 a week will be exempt from payroll tax. I anticipate that this legislation will apply to many businesses which employ relatively small numbers of people- in the five to eight people bracket. I am sure that it will be very acceptable to a large number of businesses. I understand that something like 80 per cent of businesses in Canberra are what we would call small businesses and they will get some very marginal benefit from the Bill before us.
In acknowledging this very marginal benefit I think it is only fair to point out to the House and to the public at large the very critical situation that has developed in Canberra. Some people and many members of Parliament are still unaware of the unemployment position and the position of business generally in Canberra. At the end of January Canberra had an unemployment rate of 9.6 per cent, which was the highest in the Commonwealth. I have no doubt that the rate is now over 10 per cent. This means in fact that about 8,000 people are unemployed in Canberra. The number of people unemployed in November 1975 was 2,000. So there has been a 400 per cent increase in the number of people unemployed since the end of the fateful days of the Labor Government.
The most disturbing element in the latest unemployment figures is the massive increase in the number of unemployed adult males. This means that unemployment is biting quite deeply into the breadwinner section of the employment sector. In fact the figures show an increase of a little over 100 adult males in December. However, the number leapt up to 450 in January which is a massive increase. There was an unfortunate but expected increase in unemployed junior males and females for this period due to a seasonal factor. But the massive increase in adult male unemployment was unexpected and very deplorable.
I am afraid the old growth rates of around 10 per cent are something of the past. The National Capital Development Commission and the Department of the Capital Territory talk about continuing growth rates of two per cent or three per cent. However, I think even those growth rates are now at risk. The Government always talks about improvements to our major cities. However, measures to achieve this objective never quite eventuate. I believe that the employment situation will merely encourage people to leave Canberra and that the two per cent to three per cent growth rate could disappear altogether. We could finish up with a net loss of population in Canberra in the next few years. This would be a very dismal prospect for the business people here. It is interesting to quote from the debate that took place on this same topic in November 1976. My colleague, the honourable member for Canberra (Mr Haslem), made a very good speech. I do not think that he will mind me quoting what he had to say, although I think he ex: pressed these views as a pious hope rather than as an expectation. On that occasion he said:
The long haul back to economic sanity is progressing well. The legislative and other measures to broaden the economic base of Canberra which are being introduced by the Government recognise the advantages of sound economic planning and a sound economic base for the Australian Capital Territory as it approaches maturity.
That was in 1976. Of course, now the Australian Capital Territory has not only matured; it has become overripe. In fact, it has gone bad. To put it crudely, we could say that the economic and unemployment situation in Canberra stinks. It has really gone bad. It has really matured and come good. The honourable member for Canberra went on to say:
I would think that all in all Canberra is becoming pleased with the measures being introduced by this Government.
– Who said that?
– The honourable member for Canberra said that. I do not want to embarrass him but I know that he must be very disappointed that his expectations were not fulfilled. He made a very good speech at the time but, as I say, Canberra has gone bad. We have seen the sound economic planning that my colleague was talking about in the Australian Capital Territory reflected in Public Service staff ceilings, lack of employment opportunities for young people, departments left with inadequate staff to carry out essential functions and facilities to provide the amenities needed in Canberra. We have seen heavy cuts in the budget of the National Capital Development Commission which have completely wrecked the building industry. Businesses have gone broke. They have gone into liquidation. Tradesmen have left Canberra by the thousands. There have been massive rent increases which have resulted in about 500 empty residential units owned by the Government in Canberra at this time. During the last six months there have been between 400 and 500 empty flats. They have been empty not because people do not want them but because they cannot afford to pay the excessive rents which this Government has imposed on them in Canberra. That is the sort of good economic planning and management to which the honourable member for Canberra was looking forward.
We have also seen the savage cuts in funds for loans supplied by the Commissioner for Housing. There have been gross distortions due to staff ceilings. I was told today that one worker was paid for 198 hours work in a two week period. That situation has been created by the staff ceilings. This took place in the Department of the Capital Territory. One man worked 21 days straight. He had his first weekend off recently since Christmas. In the Australian Capital Territory 8,000 people are out of work. This is a disgusting situation. The Minister for the Capital Territory (Mr Ellicott) must take some responsibility for this position. People are required to do the work of two or three men while other people are out of work. We hear talk about inflation taking another man’s job. In Canberra, staff ceilings take another man’s job. They have grossly distorted the situation. I hope the Minister will look at the matter and do something about it. I can give him some more details on it if he is interested.
There has also been a rash of liquidations in the business world. Many shops are empty. Only a couple of days ago one man had to move the stock from his two shops into one shop. He had to close down one shop because the overheads were too high and the turnover was not sufficient to keep two shops open. He had to consolidate and put off staff. The owners of small family businesses have been working extremely long hours and receiving no return just to keep the doors open. It is a pathetic situation. It is a disgrace for any government to have these sorts of conditions in the national capital of Australia. This Government has been quite unsympathetic and has done nothing to relieve the situation. Most of the time the Government does not even acknowledge that the position exists.
I have checked around to see how businesses are doing. It seems to me that the only businesses that are thriving in the Australian Capital Territory- I do not know this from personal experience- are those associated with call girls, escort services and massage parlours. They are all doing very well and they are being advertised in Sydney. I do not know what this means. I know that it does not help the local people. It has been suggested that perhaps it reflects the great need for recreation under a government whose credibility is under great strain. They are the only businesses that are doing well in Canberra at the moment. Although this amending Bill gives some relief in respect of payroll tax, it must still be seen as an iniquitous burden on business. It is a tax on labour. It is a disincentive to employ people. It encourages the replacement of people by machines. It favours imports by increasing the cost of production. It discriminates against labour-intensive industries. Of course, the problem in the Australian Capital Territory is that payroll tax is of no benefit to the community because the money does not come back to the local administration. It goes into Consolidated Revenue. The States receive some benefit from payroll tax. The Australian Capital Territory does not except in a very indirect way. The tax serves to perpetuate this myth that Canberra people do not pay for themselves. Canberra people pay for themselves very well indeed. It is the Commonwealth which does not pay its way in Canberra because it does not pay payroll tax and land rates. People should acknowledge this fact. Indeed, the Government should acknowledge it. No direct benefit flows to Canberra from the collection of payroll tax in the Australian Capital Territory.
The Opposition welcomes the introduction of this Bill because it provides slight relief to a very hard pressed business community. But it makes no significant contribution to resolving the very deep problems that affect business and the community in Canberra. The Government has been insensitive to our problems. It has not lifted a finger to relieve the situation. It has failed to supply adequate staff to the bureaucracy to carry out the important functions and responsibilities it has in Canberra. I can assure the House and the Government that it will take much more than a marginal adjustment to payroll tax for business people and the community at large to forget the shabby treatment they have received at the hands of this Government.
-I am certainly very pleased to have the opportunity tonight to lead for the Government in this debate on the Pay-roll Tax (Territories) Assessment Amendment Bill. Honourable members will be aware that the objective of this Bill is to bring the payroll tax scheme applicable in the Australian
Capital Territory into line with that which operates in New South Wales. The honourable member for Fraser (Mr Fry), who I am always very pleased to follow in a debate, has concentrated on the woes of Canberra. I point out to the House and to his constituents who are listening to the debate that his electorate has prospered in the last three years. When I was elected as the member for Canberra there were shortages all over Canberra. None of these shortages were more apparent than in Belconnen and the north of Canberra.
I presume that tomorrow the honourable member for Fraser will go to the opening of a beautiful hospital, a hospital which is not needed in Canberra, a hospital which cost the taxpayers of Australia many tens of millions of dollars. He has a shopping centre in his electorate which is boasted about around Australia as the most modern shopping centre in the southern hemisphere. It really is the most modern shopping centre in the southern hemisphere. In fact, it is so beautiful that I am sure people from Disneyland will buy cheap air tickets to come to see it. He has a fruit market in his electorate. Run down Government flats in his area have been upgraded. He has the best sports centres in Australia- a private enterprise one which opened a few weeks ago and the beautiful Bruce National Stadium. In other words, under the Government which he has just criticised, his electorate- a wilderness- has been turned into a garden.
This Bill will enact legislation to assist the small businessman. It does so by increasing the exemption from payroll tax on annual payrolls from $60,000 to $66,000 in any one year. Above that annual figure, payroll tax is phased in so that there is no exemption when annual payrolls reach $165,000 a year. It goes without saying that the Government wishes to assist small businesses. Small businesses are the staff of life in Australia and the staff of life of our free enterprise system. In the national capital the vast bulk of employers in the private sector are small businesses. We do not have many large businesses in the Capital Territory. We have some large interstate firms such as Woolworths Ltd, G. J. Coles and Co. Ltd, David Jones (Canberra) Pty Ltd and Myer Canberra, but predominantly the employers of people in Canberra are small businessmen.
It would be less than frank of me tonight to suggest that I am completely happy with this Bill. I am in fact quite upset that it has taken so long to be introduced. Delays in getting this relatively simple piece of legislation into the House have meant that it now has to be administered in a quite clumsy manner. The new exemption dates back to 1 January of this year but returns will need to be lodged on the old basis for the rest of this financial year with a refund being made at the end of the financial year. As the honourable member for Fraser pointed out quite correctly, things are not good for small businessmen in the national capital. Why should small businessmen be giving the Government an interest free loan for the next four or five months of this year. It will be very interesting to see how quickly refund cheques flow out at the end of the financial year. I hope that the Treasurer (Mr Howard) will give an undertaking that a much speedier mechanism will be developed so that when New South Wales introduces exemptions in its payroll tax, exemptions which we must match, we will be able to fall into line more quickly than has happened on this occasion.
I would like to take the opportunity tonight to discuss the matter of small business in the Capital Territory. As honourable members would know the major employment sectors in the Australian Capital Territory are the Public Service, the building and construction industries and the service industries related to retailing and tourism. We do not have many farmers or many miners and hardly any manufacturers other that those related to the building industry. Any analysis of the economy of the Australian Capital Terrritory leads to the conclusion that it is far from doing well. At first glance this would surprise many people. There is no doubt at all that Canberra is an area of very high savings, an area of the highest average earnings in the nation, an area of a high standard of education, beautiful and expensive community facilities, beautiful natural resources and apparent prosperity. That applies for a good proportion of our population. However, the casual observer should realise that something very significant has happened to the economic structure of this city. The change is necessary and will we hope be good for us all in the long run. However it is a very painful experience for a significant number of people at this time.
The Capital Territory went through the 1950s, the 1 960s and the early 1 970s with a fairly steady and high rate of growth. During the period of office of the Labor Government, we had a disruptive boom and then a bust with the Hayden Budget in 1975. Growth plunged from an overheated 10 per cent with inflation running at close to 20 per cent with the cost of a family home- the honourable member for Wills (Mr
Bryant) as a former Minister would know thisjumping from approximately $16,000 to over $30,000 in three short years. There were shortages of building materials, shortages of land, schools and shops; in fact there was a shortage of everything. Putting it rather crudely it was a period of monumental cock-up. Fortunately the people of Canberra recognised this and decided to change the Government. Also fortunately for me they elected a new member for the electorate of Canberra.
Now that I have been in this place for over three years, my political opponents have decided that they had better do some work to get rid of me and win back the seat of Canberra. So last weekend the campaign started with a particularly puerile pamphlet blaming me for all the ills that they see in the present Government. However, let me say as a member of the national Parliament, speaking tonight to the wider world and not just to my myopic Labor opponents in Canberra, that I would like to analyse just what has happened in the national capital over the last four years. I say four years because it is necessary to go back to the Hayden Budget of 1975 which recognised the havoc and the economic vandalism that the Whitlam years had wrought on Canberra. The 1975 Labor Budget decided to cut Canberra back to size. However in the judgment of the new Government, it did not go quite far enough in getting the uncontrolled growth of the Public Service in hand. Here lies the nub of our present problems in the national capital. As I speak to a wider audience than just my constituents tonight, I repeat by way of explanation that Canberra does have problems. They may be inevitable; they may be problems that we would have had to face no matter which party was in power but for a good percentage of people in Canberra they are most serious problems.
One major criticism of Canberra by the rest of the people of Australia is that it is remote, that our very dedicated public servants are just a little removed from the real life of the slums, smoke and soot of our great cities, such as Sydney, Newcastle and Wollongong and perhaps also the area from which the honourable member for Wills comes. I will never forget, before coming into Parliament, that I had occasion to make representations to him in his office in Electricity House when he was Minister for the Capital Territory. He taught me a great lesson on that day. He took me to the window and said: ‘What are all you people from Canberra complaining about? Just look out there. Oh, I wish that that was my electorate.’ That statement is still true. Most of us recognise that we in Canberra are people and I hope that the rest of Australia realises that we have families and that we aspire to improve our own lot in life but more importantly that the people of the national capital aspire to improve the way of life of all Australians.
In November 1975 88,000 people were employed in Canberra. In November 1978 only 86,800 were employed, that is, a reduction of 1,200. We must add to that 10,000 people who were not in work. ‘Hurrah’, say the people of Australia. ‘There are fewer public servants to support with our taxes. ‘ But this is not the case. Certainly the growth in the Public Service is well under control. One has only to ask any Public Service union representative or the honourable member for Fraser or any other member of the Labor Party. We have repressive staff ceilings. To them, we in the Fraser Government are crude and repressive. However, the fact is that, whereas Public Service employment declined in 1976 and 1977, it is now back to slightly more than the level of 1975 at 54,600. But what of private enterprise in the national capital? What of the people whom this Government is supposed to support? In November 1975, the private sector employed 33,900 people. Now it employs only 32,100. That is a decline of 1,800 in the private sector. For those people who support a more realistic Canberra, this must be a disaster. We need a strong and viable private sector in Canberra to leaven the bread of a bureaucratic capital. It is necessary when we have a slower growth rate that the building industry should decline, just as it is necessary and inevitable that employment in the Pilbara should contract in the construction industry when the railroads have been constructed, the mines developed and the ports built.
However, there are special reasons to encourage an increase in employment in the private sector in the national capital. Firstly, it has a very young population. It has one of the youngest populations in Australia and that young population is very highly educated. It has the best education system in Australia and probably one of the best in the world. It has an enormous investment in its young people. Anyone in Canberra, whether he comes from this city or other parts of Australia does not want it just to be a company town. We in Canberra need diversification and sophistication in our city to encourage realistic attitudes from our own bureaucracy. We have, as the honourable member for Fraser pointed out, Australia’s highest unemployment rate. This would be surprising to many people around Australia and around this House. There are almost 10,000 people looking for jobs in Canberra as we stand in this national Parliament tonight. That is not a large number compared with the rest of Australia, but in a city which is supposed to be a monument to Australia’s achievements that is a very serious and depressing number.
It is necessary that adjustments and shake-outs have to take place. Growth is slow, but it has now stabilised. We have many extra facilities in Canberra now, compared with 1975. Our schools have caught up with the needs of students. We now have hospitals which are in excess of supply. There are schools. There are houses. There are parks. There are gardens. There are super highways. People have criticised the Government for allowing facilities to go beyond Canberra’s needs. In fact, the honourable member for Fraser has been quietly critical of some of the facets of the Administration- the Government which I represent.
When one talks to the people of Belconnen, the housewife in Tuggeranong or the school teacher in Weston, one finds that none of those people would agree that the facilities that have been constructed under sound administration are not appreciated. The real casualties of the stabilisation of growth in Canberra have been the people in the public sector. This is a double tragedy because the people who show enterprise in our society are being affected and a wider economic base is being denied to the national capital. The real question that faces us now is this: How do we get over this? Can we as a government do something to revitalise the private sector of Canberra to give the national capital more balance.
I am pleased that this evening the Minister for the Capital Territory (Mr Ellicott), who is widely respected I think in both the Government and the Opposition as a man of principle and integrity, is here to hear my few words. I have spoken with him on many occasions late at night about what we can do. We face the inevitability of government policy, which I support; a policy which will make inflation come down, which in the long run will improve the lot of the unemployed, which will make Australia a stable and vibrant country. But the real problem in Canberra is this: How do we diversify our society and employment opportunities? I think the Minister has put his finger right on the spot on a number of occasions. He looks towards pragmatic development in Canberra.
There are two areas in which we can do something that the rest of Australia will appreciate, and from which the people of Canberra will also benefit. The areas are tourism and sport. We already have a strong tourist industry in Canberra, but few people realise that if we could get each of the tourists who come to Canberra to stay one extra day it could mean as much as $60m a year to Canberra ‘s economy. So, it is very necessary for Canberra as the national capital to become an important tourist centre. Its people must have the spirit of enterprise which we are trying to achieve in Australia. There must be the spirit to develop facilities for people to come to Canberra to make them proud of this nation. Whether we have a Labor government or a Liberal government this should be the focus of the aspirations of our society. It should be the focus of the aspirations of all those people who want to make a better life for those whom we bring up- our children. After all, that is what most people are on about.
The second area is sport. Why should the national capital not be the sports centre for the nation? Why should we not have an international rowing course on Lake Burley Griffin, where oarsmen can come from all over Australia and perhaps from all over the world to compete on a neutral course? Why should we not have an international tennis centre? Why should we not develop our quite expensive Bruce Stadium into a centre where our young athletes can train before they go overseas for international competitions? Why should we not make this a place where our young people can compete, strive and achieve for international recognition in sporting areas? To put it in one phrase, things is crook in Canberra. But we shall put a great deal of thought into the future. We have confidence that Canberra will become Australia’s great capital. With the honourable member for Fraser and I continuing to be the local members for a long while to come- the people of Australia can see that both the Labor Party and the Liberal Party are represented in the national capital- we will have a very strong and vibrant capital. It will be a multi-cultural capital. It will be a sporting capital. It will be a tourist capital. It will be a capital for bureaucracy and of course a nice place for my fellow members of Parliament to come to for three days a week every now and again.
– I think the honourable member for Canberra (Mr Haslem) made a fair effort of defending the indefensible, but I am afraid the defendant, that is the Government, will have to be found guilty and convicted just the same. What did the honourable member mean by some of the statements he made? He said that the Public Service had now been brought well under control. Just what on earth does that mean from a person who lives in a capital city which is controlled and has been developed by the Public Service? The Public Service is always under control. This Government may have a policy of reducing the Public Service or expanding the Public Service, but the system by which it develops is a tightly controlled one as any of us who have been in government can testify.
Of course, what we heard from the honourable member was a fine exposure of the fallacy behind the economic policies of his Government. He was elected on the policy of reduction of the Public Service and reduction of public expenditure. They were two major features of the speeches and the policies of the Treasurer (Mr Howard) and the Prime Minister (Mr Malcolm Fraser)- or the caretaker Treasurer and the caretaker Prime Minister back in 1975. I cannot understand how every person in Canberra did not see that the present Government’s policies were poison to Canberra. One could possibly sell those policies to people in Melbourne, but in Canberra the policies were the signposts of destruction and stagnation. That is the policy on which the honourable member was elected. What is the use of complaining now? I understand and have sympathy for his feelings for the people of Canberra. If this Government reduces public expenditure in Canberra and reduces the Public Service it does all of the things of which he complains.
The honourable member for Fadden (Mr Donald Cameron)- perhaps it was he who interjected a moment ago or he was just -waking up- and other honourable members might say: What do you mean by that?’ The point that is being espoused is of course the theory behind the present Government’s policies, which is that if one reduces expenditure in the public sector, the money one saves will be almost automatically transferred to some sort of economic dynamism in the private sector. Of course, that has not happened. In this city there has been a reduction not only in the Public Service but also a partial collapse in the private sector as well. It is a total exposure. I agree with the honourable member. It was a rather muted statement but he did say that the Public Service of Canberra is important to the welfare of Australia. I assert that emphatically. There is too much attack upon the Public Service and the public servant. There is too much criticism of the person who is called a bureaucrat in a derogatory sense. We have to refute that. I do not see any future for Australia unless we recognise that the public sector- I mean wider things than the Public Service in that term- is fundamental to the future economic health of
Australia. There can be little expansion of the private sector unless it is initiated by the dynamics of the public sector. Canberra is a classic example of that. I know that that does not fall sweetly on the ears of honourable members opposite. They do not believe it. I know that many people do not believe it. But we have to examine that matter as thoroughly as possible.
– They go hand in hand.
– I do not know that they do. I think that the private sector is more dependent upon the public sector, particularly in the construction industry and such things. Of course in this country the public sector supplies most of the backbone and background of industry. Most transport, almost all the major communications systems, most of the power, gas, water, wharf services and all the rest that goes to make the background of a nation’s industry we rely upon the public sector in Australia to provide.
I repeat some of the things that were said here. My colleague from Fraser (Mr Fry) pointed out that since 1975 unemployment had increased by four times. I could take up many of the issues that the honourable member raised in his speech. I shall say something about payroll tax in a moment or two. I thank the honourable member for paying a tribute to one of the early Ministers for the Capital Territory, the honourable member for Wills. He mentioned some of the things that had turned Belconnen from a wilderness into a garden. The shopping centre at Belconnen was sent on its way during the golden age, 1972-75. It would not have been developed if we had not been in government.
- Senator Withers could have stopped it.
– I suppose that it is something, that Senator Withers could have stopped it and he did not. I think that ought to go in the record in golden words. The fruit market and sports centre were also initiated in that period. I suppose it is reasonable at this time to say that in the discussions on the sports centre in 1975 there were many debates about whether we should proceed with such a project.
– The Government tried to stop it.
-Order! The honourable member will address the Chair.
-Mr Deputy Speaker, the previous Government managed to get the project under way and by some mysterious alchemy of politics the present Government did not stop it.
The same situation applies to the Calvary Hospital. All these things which made Canberra what it is were put on the tracks long before this Government came into office. Some projects which we inherited were put into action long before we came into office. We are all the heirs of the forethought and planning of the people who built Canberra.
Tonight we are talking about a very minor effort by the Government to do something about perhaps increasing the capacity of small business in this town to increase employment. I do not think that is what the Government is attempting to do at all; it is in fact simply in lock step with the New South Wales Government on payroll tax. Because New South Wales has taken this step the Federal Government is also. I will say this for New South Wales: It has one of the few governments in the world for which I would vote. Let us examine payroll tax. We do not actually support this piece of legislation. We will not try to stop it. We are glad it has been introduced but support’ is too good a word to apply to such a miserable piece of legislation to do with payroll tax.
– Don’t be harsh.
– It incorporates two bad principles. Of course this might make it attractive to honourable members opposite. The worse the principle the more they are likely to support it. Firstly, payroll tax is an indirect tax. It is an inflationary tax. I think we would all agree on that. In the present financial situation it is a financial irrelevancy. The other point is that this legislation is a piece of parliamentary puppetry. Why has it been introduced? Did the honourable member for Canberra initiate this by his pressure on the Government? Was it is his pleadings in the party room or his letters to the Treasurer?
-He says that it was. Good. Those representations must have floated to Sydney first. New South Wales introduced this measure first and we are doing it second. I think it is a very bad principle to lock ourselves in to another legislative body, even if it is one of the better ones in the country. That is not what we are about. This legislation represents two bad principles- a bad form of taxation and, as I call it, parliamentary puppetry. If somebody else makes a decision then the Government will follow. If somebody in Detroit makes a decision about motor cars we will follow. If the members of the Organisation of Petroleum Exporting Countries make a decision about the price of oil we will follow. What kind of situation is that? I think that we should reject the principle, even if in this case there will be some benefit from the legislation.
The general application of payroll tax to Canberra and the ACT is an infliction on the ACT of a piece of mythology- Canberra is too well off; the citizens here must be made to pay. This is not my belief but I am stating the kind of things which we have all heard over the years. It is said that if somebody else does something we ought to do it too. People ask how can people in Canberra be allowed to get away with something. If something is done in Victoria, South Australia or Queensland, in legislation which puts a tax on cheques, receipts, housing transfers- there is a multitude of these- it is said that this should be done in the ACT. It happened year after year before we came into government. I say, sotto voce, that we inflicted some of it ourselves. We followed. I think that is a totally bad principle. It is totally bad government. If witches started being burned in Queanbeyan it would not be long before we had a few before the stake in front of Parliament House.
I think payroll tax ought to be abolished. It represents nearly everything that is incorrect about taxation principles. What do we get for it here? I understand that in Canberra payroll tax raises $16m a year. Much of this money will come from small businesses. It is true that in general principle the Commonwealth does not pay. But as I understand it those instrumentalities that for some mysterious reason belong to the Commonwealth but try to look as though they do not -or the Government tries to make it look as though they do not- such as the Australian Capital Territory Schools Authority, are the biggest contributors to payroll tax. I am informed from a fairly reliable authority- I did not have time to pursue the matter to be sure- that this instrumentality of the Commonwealth Government as such has to pay payroll tax. It would be an interesting study to see how many such instrumentalities pay payroll tax. I know that this happens throughout other parts of Australia. This legislation is a piece of nonsense so far as it has effect in that regard. It is an Alice in Wonderland financial system. Even if the ACT Schools Authority is not paying payroll tax some of the other instrumentalities that get their funds from the Commonwealth are. So we magnify some of our own problems by the kind of taxation system we have. What does this payroll tax do? Firstly it creates cash difficulties for the small business. A business does not have to have many employees before it has to pay payroll tax. There are not many businesses around these days that have the kind of cash which enables them to afford to do as the honourable member suggested- he deplored it- subsidise the Government for a while or wait for the repayment of excess taxation payments.
Payroll tax is a burden on all business. It is a particularly heavy burden on small business. It bears no relationship to profitability. It is totally inequitable and unjust and it is a bad taxation principle. As I read in one article, indirectly it discriminates against Australian manufacturers in favour of overseas manufacturers because overseas manufacturers probably do not pay that kind of tax and of course would have to pay tax on low incomes anyhow if they did. I think it is time that we examined the taxation structure of Australia from the beginning to end and recast the principles upon which we levy taxation. First of all, the ability to pay ought to be the principal consideration. We should ask: ‘What is your ability to pay?’ The ability to pay depends on one’s income and one’s general wealth. There are great difficulties connected with collecting wealth taxes. A person who owns a farm may sell it for $250,000 to buy another farm for $250,000. That person must pay tax on that suddenly acquired sum of $250,000. Obviously he cannot get back into business in the same strength. The same happens of course with the transfer of farms through inheritance and with businesses. It seems to me that it is time that we applied ourselves to this question of the transfer of wealth and at what point the tax ought to be levied and so on. That is the first point.
The next point is that it is time we started to get rid of all nuisance taxes- taxes on cheques, taxes on sales, taxes on receipts and taxes on the transfer of houses, particularly at a time when people are short of money, down to their last dollar, and are being squeezed to try to meet the commitment on their houses. I think legislation was introduced in this Parliament- it originated in one of the States- to impose a tax on hire purchase agreements. If we do not use it in the Australian Capital Territory we certainly do it in some of the States. I think these are nuisance taxes. They are very unjust. They are inequitable. They are simply escape hatches for Treasurers to try to create the appearance that heavy taxes are not being imposed on the unlucky victims. Now, of course, there is the departure tax which has been generated I think by a standing committee of this House. If there is anything of greater nuisance value than that tax, I would like to meet it; somebody else can pay it, though. I recall what happened to the unhappy Charles I when he got around to imposing hearth taxes, ship money, window taxes and all the rest. His head was chopped off. I do not believe in capital punishment except perhaps for governments of the opposite persuasion. Capital punishment, of course, is defeat at the election ballot.
I remind the House that unemployment in the Australian Capital Territory has risen to four times its level in 1975. Canberra relies absolutely on the Government. But the Government has deserted its responsibility to Canberra. The honourable member for Canberra said something about the economic situation in 1975. What was it? He mentioned the cost of houses. For instance, at a rough calculation on the figures he quoted, it took 160 to 170 weeks to buy a house from the average weekly earnings in 1972 and it took about the same number of weeks in 1975.
– What about the tax part?
-The honourable member can work out the taxes after that. The same principle applied to many other things. I have before me a schedule that I once worked out showing the number of loaves of bread one could buy and so on. I just happened to find it in my archives today as I was looking over material that I had produced to refute the things the honourable member opposite had said. I will not inflict them on the House tonight. But if one wanted to live off bread alone, in 1972 one could buy 372 2 lb loaves of bread with average weekly earnings. One could buy 420 loaves at the end of 1975, but at the end of 1977 we could buy only 374 loaves. The same principle applies to the number of weeks needed to buy the cheapest car on the market. We are not going to resolve the problems of the nation unless we first of all consider the economic implications of everything that we do. I believed in 1975 that it was totally wrong for people to pursue a policy of reducing the public sector. I believe that the public sector in Australia is fundamental to both the industrial base and the economic health of the country. I believe that the manufacturing sector cannot possibly take up all the people who are presently unemployed even if we stop all importing. The manufacturing sector has become almost totally automated in some areas and the number of employment opportunities available is diminishing. lt is the public sector which will supply the economic base for a full employment policy. That is an enormous challenge to Western societies. We have to find a new way of financing things. I do not know what the answer is but we will have to turn our minds in an inventive way rather than in a theoretically stagnant way as we are doing now. I remind the House of what my friend the honourable member for Fraser had to say about the happenings in this city since the honourable member opposite became the member for half of it. There has been a quadrupling of unemployment. There has been a collapse of the building industry. There are empty houses in Canberra, there has been a collapse of businesses and a rash of liquidations, to use that term. There has been much investment in unused facilities. I agree that it is better for them to be there now than to have to wait for them in years to come, but it is sad to see so much valuable investment unused in this city. There has been a destruction of the sense of security and purpose.
I think this legislation is a very poor piece of legislation because it represents most of the errors of government and some of the sorts of philosophies that all of us have pursued at various times. I hope that, when we next get around to looking at the question of payroll tax, we will examine means by which we can abolish it altogether. I think altogether $ 1,600m has been collected in the States in payroll taxes. What that is doing to costs and what it is doing to small business is beyond any method of computation. Insofar as it is any use appealing to the Treasurer (Mr Howard) on these matters, I hope that he will start to take the House into his confidence and place before it the opportunity in the future to abolish payroll tax altogether.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr MacKellar) read a third time.
Debate resumed from 2 1 February, on motion by Mr Sinclair:
That the Bill be now read a second time.
-I seek the indulgence of the House to raise a point of procedure on this legislation. Before the debate on this Bill is resumed, I suggest that it may suit the convenience of the House to have a general debate covering this Bill and the Poultry Industry Assistance Amendment (No. 2) 1979, as they are associated measures. Separate questions will of course be put on each of the Bills at the conclusion of the debate. I suggest therefore, Mr Deputy Speaker, that you permit the subject matter of both Bills to be discussed in this debate.
-Is it the wish of the House to have a general debate covering both measures? There being no objection, I shall allow that course to be followed.
-The Opposition supports these two Bills because we think that whilst there is grave doubt that there will be any benefit for consumers resulting from their enactment, they do lead to a higher level of stability within the industry and are in the interests of producers. The Bills in themselves raise a number of serious questions with which I shall deal. The Council of Egg Marketing Authorities of Australia levy with which the Bill is concerned is a levy which is collected to offset losses on exports of surplus production of eggs. If we had the well organised and well controlled industry that we have been trying to attain for many years there would not be a significant export surplus hanging around the neck of the industry because the surplus production which is sold for export is sold at a much lower rate of return than the domestic price. As is the custom with our primary industries, the Australian consumer has to pay extra to subsidise the export loss. This problem could be overcome of course if we could harmonise our production exactly to consumption. Unfortunately it is very difficult to do that with any agricultural products, including eggs. Of course there are times of the year when there is necessarily a surplus. The birds do not always harmonise their peaks of production with the peaks of demand by the Australian public. So at times there will be shortages and at other times there will be surpluses.
Despite that, over the last few years the various State boards and State governments have been endeavouring to reduce the export loss by a system of licensing or hen quotas. If this system had been adhered to more rigidly and had not been subject to so much political pressure, the situation of production equalling domestic demand would have been reached much sooner. Unfortunately, that was not the case, and we have had an unnecessary surplus production for which the Australian consumer has had to pay and is continuing to pay. That is the contradiction in this Bill. The egg outlook is good on paper. It is said that production is likely to be down and that the exportable surplus also will be down. If we took only those factors into consideration there would be no need to increase the
CEMAA levy, but what the Bill is doing is doubling the levy from $ 1 to $2 per bird. The Government said that that will be offset by the State boards reducing their pool charges. I hope that takes place because if it does the extra CEMAA levy will not be reflected in domestic prices. However, if the boards do not reduce their charges accordingly, the consumer will be paying more to offset the export loss.
I am at a loss to understand why that should be so when the indications are that the percentage of the total product to be exported will be down and there are prospects that the return on exports may be increased. Most of the exports go to Japan. Some go to Iran but I do not know what the position will be in Iran this year. Australia may be a bit light on for export opportunities there. Nevertheless, the overall situation is that there will be a surplus, we will sell at a loss and the Australian public will have to pay for it in one way or another. That is not good news for the local consumers but it is good news for the producers. They support this Bill which will help to stabilise their industry.
Other worrying features of the industry are the way in which hen quotas have become transferable and this inevitable process of having fewer farms, with the little producers going out of the industry, and more of the larger farms because of economies of scale. This is an inevitable process which applies in the poultry and other agricultural industries just as it applies in the manufacturing industries. Indeed, agricultural industries can be compared in many ways with the manufacturing industries. To give some indication of the change, in the last 10 years the percentage of farms with over 5,000 birds has increased from 3 per cent to 18 per cent. This has been the trend year after year. The big are getting bigger and the small are dropping out. They are able to transfer their quotas which have some considerable goodwill value, and we have heard of some quite fantastic prices being paid for hen quotas.
I want to refer now to the second Bill which provides for the CEMAA levy to be refunded to producers in the Australian Capital Territory. This is very commendable, but I seek some clarification of precisely what it means because the Minister for Primary Industry (Mr Sinclair) in the second reading speech was not very clear about it. It should be understood that the Australian Capital Territory does not produce sufficient eggs to fulfil the local demand. Canberra has something like 150,000 hens but at least 200,000 are needed to meet the local demand. I think that this is a very unfair situation. The industry in the Australian Capital Territory does not contribute in any way to the export surplus and does not contribute to the loss, but it has to pay out the CEMAA levy. Over the years Canberra consumers have paid out something like $800,000 in CEMAA levies and there has been nothing received in return apart from the advantage of having a stabilised industry. I suppose that is fair enough, but as Canberra grows it is only fair that the quotas of local producers be increased so that they can meet the whole of the local demand.
Unfortunately, a parochial attitude has been adopted by the State Ministers for Agriculture on the Australian Agricultural Council. They are the people who control the quotas and they have been quite bloody-minded about it. They have not given the Minister for the Capital Territory a fair go on the Council and they have stubbornly refused to increase the quotas of producers in the Australian Capital Territory so that they can dump their surplus eggs in Canberra. That is precisely what is happening. At the moment the Victorian Egg Board is selling eggs in Canberra. It has something like 20 per cent of the market. An injunction had to be taken out against the Board to stop it giving special discounts to retailers, but it is still selling eggs here at a lower price, with a lower return to producers in Victoria than it is selling them on the Victorian domestic market. The Victorian Board is dumping eggs in Canberra and it says that it would rather sell them here at a loss than put them in the export pool where it would lose more. This is a very unsatisfactory situation as far as Canberra is concerned. People here want fresh eggs, and if there are local producers who can sell them at a cheaper price than eggs which are handled through the State boards, they should be able to do so.
The Bill provides for the levy to be refunded to Australian Capital Territory producers but it does not say whether that applies to the new levy or the whole levy. I understand that in the States the refund represents something like 75 per cent of the total levy. I should like the Minister to clarify that point to establish whether this levy is going to be refunded to the extent of 75 per cent because if it is the price to the consumer could be reduced. If it is not going to be refunded to that extent it means that the consumer in Canberra, as will consumers in other States, will have to pay more.
I have made the point that Canberra producers have not had a fair go in relation to eggs. They do not want any favours. They want to be able to produce eggs and sell them to the people in Canberra. We do not want to be dependent on imports from the surpluses in the States, and the local producers do not want to contribute to the surplus. We want to meet the market and pay our way, and I think by the same token that the State Ministers for Agriculture should do their job to see that hen quotas are reduced to manageable levels so that the exportable surplus is reduced still further. If that happens, not only will the remaining producers benefit but also the consumers of Australia will cease having to pay 4c, 5c, or 10c a dozen extra in order to subsidise losses on surpluses exportable overseas. This is a situation which has been prevalent in many primary industries in Australia for many years. Fortunately, it is one problem with which the Government is now very belatedly coming to grips and trying to do something about.
-The honourable member for Fraser (Mr Fry) suggested that all egg producers throughout Australia support this 100 per cent increase in the levy.
– I said the industry did.
-The industry does. The honourable member for Fraser obviously is the spokesman for the industry and not so much the spokesman for the producer. I would like to make some comments this evening on behalf of the producer. In recent months I have discovered that in my new electorate I have quite a number of egg producers, and recently a representative of that group came to me and drew my attention to the fact that the producers are far from happy about the way in which the marketing procedures are being handled. In his second reading speech the Minister for Primary Industry (Mr Sinclair) said:
Some producer opposition has been expressed in Tasmania as well as in Northern and Central Queensland on the grounds that they do not contribute to the egg surplus.
Let me add that there is also opposition in southern Queensland to the forced contribution to egg surpluses. The Minister continued:
The State agricultural Ministers have, however, accepted that it was their responsibility to settle any areas of difficulty in the industry within their States in connection with the increase in the maximum rate of the hen levy.
I find it rather strange that the Federal Parliament is imposing a 100 per cent increase on what are better known and more easily recognised by the description ‘egg farmers’. Until recently they were forced to pay $1 a bird. This figure is to increase to $2 a bird, so the egg producer is faced with an increase of exactly 100 per cent. Yet, in introducing this 100 per cent increase, the Commonwealth Government, says, ‘Well, we will do it, and because the State Agriculture Ministers have said it is their responsibility to settle any areas of difficulty in the industry, we will not worry further’.
I want to make a submission to the Minister assisting the Minister for Primary Industry (Mr Adermann), who is a National Country Party Minister and who has a rural background. He lives in the town Nambour in Queensland and I understand that he has a great understanding of this industry. I say to the Minister so that he can convey to the Minister for Primary Industry (Mr Sinclair) that there is a belief held by at least one member in this chamber that, if the Commonwealth Government is to increase the levy by 100 per cent, it has an obligation to be sure and certain that there is a justified hike and not simply accept some assurances from various Agriculture Ministers that they will recognise it as ‘their responsibility to settle any areas of difficulty’.
The matter of the hen levy is one which has gone before the High Court of Australia. Indeed, my learned and esteemed colleague, the honourable member for Moreton and Minister for Defence (Mr Killen), has in the past in his legal capacity expressed the view that there is a certain amount of illegality about the whole imposition of this levy. The producers I represent recognise that there are costs incurred in the marketing of eggs. At least some of those producers are totally opposed to all the levy being collected by the Commonwealth and handed to the egg boards, and these egg boards then using their powers to utilise money for areas outside marketing.
I do not profess to have the deep understanding and knowledge of this subject that perhaps the honourable member for Fraser and the Minister for Defence have, but I do believe that all in the farmhouse is not well and that the cackles that are heard should not be dismissed; that the industry, or the producers, are uneasy about this 100 per cent increase. Further, I believe that this Federal Parliament and honourable members on both sides of the House support this Bill. Indeed, I was rather taken aback by the honourable member for Fraser, speaking on behalf of the Opposition, when he said that the Opposition supported this Bill. The Opposition was so removed from the actual feelings of the egg producer that it is unaware of the discontent which exists. That does not surprise me. The Opposition members come either from Sydney or the inner city area of Melbourne, and there is one from Canberra. So, they really have very little contact with the people involved.
– I take a point of order, Mr Deputy Speaker. That is a falsity. The honourable member for Fraser has collected more eggs than the honourable member for Moreton.
– That is no point of order. Be reasonable.
Mr DEPUTY SPEAKER (Mr Armitage)Order! The honourable member for Hotham will remain silent. I am in the chair and I will decide whether there is a point of order. I have not heard it yet. What is the point of order?
– The point of order is that the honourable member for Fadden is reflecting on the honourable member for Fraser and myself. I bet we have collected more eggs in our day than he has.
-That is not a point of order.
-The honourable member who raised that point of order has collected the eggs on his coat and face during political rallies as the angered crowds have pelted him. I do not think he really knows that much about this subject. Whilst I have no intention of starting a revolt or a revolution over the imposition of the increase in this levy I do present the case on behalf of some of my egg producers that we should not simply sit by and watch some of these rural matters pass through the House unchallenged. Many a matter, particularly an increase of this size, will really serve to cause great hardship in the industry. I wonder in how many other industries or areas of production in this country the manufacturer or producer is levied to offset losses when products or manufactured items are sold at a loss price overseas or, in other words, are dumped- there is no other word for it. Surely no other industry is so affected. I conclude with a question. Why should those who produce eggs be so affected?
-I think it is quite significant that I should follow the honourable member for Fadden (Mr Donald Cameron) in this debate on the poultry industry because who above the honourable member for Fadden in this House would have more regard for a nest egg? He is not of the domestic type of fowl but of the cuckoo type, which has been known to value the golden eggs in someone else’s nest, about which the Press has been able to tell us in the last couple of days. I thought the only knowledge he had of eggs was from the amount of egg he gets on his face on occasions.
Before I launch into the Bills it is worth pointing out to those in the House or those who might be listening the almost total absence of National Country Party members from the House when we are debating an agricultural Bill. The important exception is the member for Dawson (Mr Braithwaite)- I would like that noted. The Minister Assisting the Minister for Primary Industry (Mr Adermann) is here also. Apart from them, National Country Party members are conspicuous by their absence. Where are the rest of them? If the House is debating a uranium Bill, if the dollar signs are ticking around, the National Country Party members are here en masse. But when we are debating an agricultural Bill- a Bill which will be to the benefit of the people whom the National Country Party members are supposed to represent, namely, the little farmers of Australia- where are the members of the once great National Country Party? They are out feathering their nests somewhere else while the responsible members of the Australian Labor Party from city electorates are here doing their best to support those farmers.
– Three out of 37.
-No, 38. The bills before the House relate to different aspects of the poultry industry, but both Bills represent an attempt to improve the conditions of the industry. The Opposition therefore supports the Bills.
I turn to the first of the Bills, the Poultry Industry Levy Amendment Bill. This Bill seeks to increase the maximum rate of the Commonwealth hen levy from the present $1 to $2 a hen per annum. The Federal hen levy is being raised basically to meet losses on export sales by equalising domestic-export market returns to poultry farmers in each State. The export market in eggs and egg products absorbs excess domestic consumption. In 1977-78 this excess represented some 15 per cent of total egg production. However, returns from exports are significantly lower than returns from the domestic market. In fact, they represent less than 10 per cent of the total gross value of production.
The current hen levy of $ 1 a hen per annum has been unchanged since the Council of Egg Marketing Authorities of Australia scheme came into operation in July 1965. Obviously, inflation since that time has eroded the value of the levy and has forced the State Egg Board to impose additional levies. It is thus necessary to update the figure to a more realistic level. I would like to review the current state of the poultry industry and the outlook for 1977-78 as forecast by the Bureau of Agricultural Economics.
-Yes. 1978-79. I thank the honourable member for his correction. In recent years the poultry industry has been undergoing a period of restructuring and consolidation. Small poultry farms have decreased in number very significantly and the trend has favoured those with large holdings and efficient production methods. For example, in 1977-78 the number of poultry farms declined by 360- almost one farm a day- bringing the figure to a quarter of those existing 10 years previously. However, whilst the number of farms has declined, the size of flocks has increased due to the need to utilise quotas most effectively. For example, in 1967-68, which is only 1 1 years ago, only 3 per cent of poultry farms had flocks greater than 5,000 birds. Ten years later this figure had risen to 18 per cent This situation has been brought about by a combination of economic trends and the introduction of a hen quota system in 1975, which restricts domestic production to a level comparable with domestic consumption. Figures available for the egg industry in the 1977-78 financial year show that commercial egg production increased by 11 million dozen to 192 million dozen as a result of increased hen yields brought about by better utilisation of hen quotas and the solving of problems associated with the vaccination for marek ‘s disease.
Prices rose on both the domestic and export markets for eggs and egg products. On the domestic market the average annual retail price for eggs maintained the upward trend which was established in 1972-73. Australia’s greatest customer for egg products on the export market is Japan, which takes almost the entire quantity of available egg pulp. A substantial increase in the revenue from exports in 1977-78, coupled with higher returns on the domestic market, produced an increase of 7 per cent in average net returns for egg producers over the 1 976-77 level. We on this side of the House do not cavil with that because we believe that a prosperous agricultural industry is vital to the backbone of the Australian economy. The egg industry therefore fared quite well last financial year and the forecast of the Bureau of Agricultural Economics for 1978-79 is also favourable.
– What about coccidiosis?
-I do not know about that; the honourable member will have to talk about that. One does not have to lay an egg to be a judge of an omelette. We do not have to know every obscure egg disease and poultry disease in order to be able to speak on this Bill. We are here to support the farmers whom honourable members from the National Country Party are supposed to support. We want the poultry farmers of Australia to know that the Labor Party is greatly in their corner.
– You will have a job to convince them of that.
-I do not know about that. Rising domestic prices for eggs are likely to account for an increase of 8 per cent on average unit returns to producers in 1978-79, whilst a reduction of the proportion of eggs available on the lower priced export market is likely to increase returns from this source as the eggs available will be sold on better priced markets. However, whilst the situation at present favours producers, the industry does face problems. We would like to be cognisant of them.
Perhaps the major problem facing the poultry industry is the continuing decline in domestic egg consumption. Demand for eggs is influenced most greatly by population size and, with a declining population growth rate, the Bureau of Agricultural Economics predicts that consumption of commercially produced eggs this year will be only marginally above that of last year. To counter this trend, a $250,000 ‘hard sell’- I stress that it is ‘hard sell’ and not ‘hard shell’advertising campaign was announced in November last year to promote eggs and egg dishes in a similar way to the campaign undertaken by the dairy industry. It is to be hoped that the results for the poultry industry will be just as successful. Last night, when debating the Dairy Produce Sales Promotion Amendment Bill, I mentioned that the film Last Tango in Paris did wonders for the butter industry in Europe. I wonder whether we might introduce again on the commercial market the old film The Egg and I. That might do something similar for the poultry industry in Australia. But the future appears to augur somewhat better for poultry meat. The BAE expects poultry to consolidate its position as second to beef in the Australian meat diet because of higher beef prices. It predicts rather confidently that poultry consumption will rise by 9 per cent in 1979. This increase in consumption has been assisted by the growth of the fast food industry, a significant proportion of which is devoted to take-away chicken dishes. I am not going to give a free plug for Kentucky Fried Chicken, but obviously there being an outlet on almost every street corner has been a help to the industry.
One very favourable indication of an upturn in the poultry industry and an example of an initiative which could be emulated by others in the industry was the announcement in December last year of the signing of a $6m contract by the Great Sincere Co. for the establishment of poultry farms in China. This project aims to emcompass the entire scope of poultry farming by supplying both buildings and breeding stock and will, I suggest, make a valuable contribution to the industry. Given development such as this and a favourable outlook for 1979, the poultry industry appears to be consolidating its position in the economy, and we are very pleased about that.
The Poultry Industry Assistance Amendment Bill seeks to increase the level of funds available for poultry research by raising the current limit of a maximum of $200,000 by 50 per cent to $300,000. The money allocated for poultry research is provided from a levy imposed on hens over six months of age in commercial flocks exceeding 20 birds. I have referred already to the current state of the poultry industry and to some of the problems which face it. Research into the industry is of vital importance in overcoming these problems. Research is a very practical tool with which to assist the industry. It produces solutions to problems which beset an industry and ultimately it makes that industry more efficient and profitable. For those reasons, the Opposition is very pleased to support the Bills.
– I think the House should realise the limitations on the time allowed for debate on the Bills before us, namely, the Poultry Industry Levy Amendment Bill and the Poultry Industry Assistance Amendment Bill. I feel sure that I speak on behalf of my four colleagues from the National Country Party who are here and also on behalf of my colleagues who would have liked to have been here but are otherwise obligated. Certainly I would suggest that the National Country Party, along with other parties represented in this House, would want to see a viable poultry industry and a viable export market. Perhaps that is what the levy is all about. Like so many of our other exports, the export prices for poultry products are not what we would like them to be. This bears analogy with the recent recession that the beef industry went through but from which it is now picking up. The sugar industry recently went through a similar recession in which untied sales on export markets were certainly made at prices below the cost of production.
The Bills we are debating tonight are the result of a resolution passed by the Australian Agricultural Council, comprising the State Ministers for Agriculture. Therefore, the legislation would have the blessing of all State Ministers. The various State Egg Marketing Boards and the Federal Council of Poultry Farmers Association of Australia would be in support of the legislation. However, I believe, as the honourable member for Fadden (Mr Donald Cameron) said, that when we speak of an industry and of that industry’s support for legislation we must speak also on behalf of the minority which is not advantaged by that legislation. Certainly that minority in the poultry industry is not advantaged by this legislation. The Bills seek to increase the levy from $ 1 to $2 per hen, the production of which is already fixed by quotas. Of course, depending on how and when this increase is applied, it will have the ability to double the expense of the levy in the hands of each domestic producer. In addition to this, the State egg marketing boards also charge a levy, and most of the egg producers of Australia are encompassed by these boards. The purpose of the levy charged federally, amongst other things, is to avoid the charging of a levy of a different amount by egg marketing boards in the States, which levy is then an incentive for a person on one side of a State border with a high levy to sell across the border in another State. Of course, this is authorised by the Constitution. The figures that are mentioned vary considerably but in the case of only two egg marketing boards is the levy any less than the levy of $1 per hen which the Commonwealth charges at the moment and which works out at about 6c per dozen eggs. The levy, of course, is meant to make up for costs and losses suffered by the boards over and above those losses suffered in respect of their own promotions and so on. It comes about really because of an excess production of eggs which then have to be pulped and sold at a consequent loss on what in the beef market might be called the dirty market.
It is apparent from various representations that I and the honourable member for Fadden (Mr Donald Cameron) have had that every producer is not in favour of this increase in the levy. In fact I would go further than that and say that quite a few of them are not in favour of the present $1 levy per hen, let alone any increase in it. The arrangement agreed to by the State Ministers needs Federal legislation to bind them. We are advised that any dispute between individuals within a State is the responsibility of the particular State Minister. I think that this is a little shortsighted. If we are going to legislate we should take into account the opinions of the persons who are in favour of the levy as well as those who are not in favour of it.
As I said previously, the levy is to subsidise unprofitable exports to low priced markets and local producers are called upon to pay their share of something to which perhaps they do not contribute because the whole industry is regulated by quotas. As mentioned by the honourable member for Fraser (Mr Fry), the amending legislation puts particular emphasis on the Australian Capital Territory because of the difficulty being experienced here whereby, because of quotas, eggs are coming across the State line. I mentioned that there are people who dissent from this increase in the levy. I would say that producers in north Queensland, being outside an egg marketing board area, would be an example of such people. The particular reason that they are not in favour of it is that they are outside an egg marketing board area and produce only for the local market. In spite of their desire to produce more they are restricted by quotas and as a result many other eggs and egg products are coming in from the south. I want to take Mackay as an example. There are approximately four producers in Mackay and they are restricted by quotas. They supply approximately 28 per cent of Mackay ‘s needs. The balance is supplied from the south.
Over the period prior to the implementation of quotas some producers went out of production. However, the remaining producers were not given the advantage of getting extra quotas equivalent to those which would have been forfeited by the old producers, although there was certainly a desire to expand and to take up what were then notional quotas. They were not allowed to do so. Whilst acknowledging that quotas are a necessary discipline on the whole industry, local producers feel that it is inequitable that, through quotas, they are denied the opportunity of supplying more of the local needs. They want to do so but they cannot. In fact through the levy they contribute apparently to the losses of boards which import the balance of the need into the area from the south. No doubt those losses cover freight charges of producers who are operating with quotas in excess of those necessary for similar local production.
Being outside a board’s jurisdiction, the local producers arrange for and meet all costs of their production, marketing and promotion on a local basis without any assistance from the present hen levy that they pay, which is now $1 per hen and will go to $2. They do all this at their own expense. The present levy is thus inequitable to those isolated people. Any increase beyond the $ 1 per hen will not only compound the inequity but also reduce them to marginal producers because they will share in an expense which could be doubled within a certain period of time. This fact will be well received in the south because if local producers go out of production, southern producers will be given a promise to supply extra northern markets as producers drop out and quotas to the local areas are lost. Encouragement must be given to local suppliers as this is the only avenue for the supply of top quality eggs to the local market. Consumers must benefit to the extent of the greater percentage produced locally because there is no freight cost to be included and the product is undoubtedly fresher and placed sooner in the consumers’ hands.
The north Queensland producers are not represented on any of the statutory boards. They have only one member on the Queensland Hen Quota Committee and apparently have no political representation to bring their own grievances and concerns to the notice of the authorities, mainly on a State basis. There is now a call for a pro rata reduction in the quotas and such a call will only compound the present inequity and allow a greater percentage access from the southern markets to the local markets. If the hen levy is to provide funds for losses created by egg boards through their own bureaucracies subsidising unprofitable exports and their own inefficiencies, producers outside board areas supplying only local needs should not be asked to contribute to other producers’ inefficiencies and particularly board inefficiencies. The promise that State levies be used within States, whilst being preferable to the present national application of the levy, is useless unless written into legislation and unless the levy reimbursement be applicable to all producers and not just to those supplying boards, which is the case at the moment. I understand that any refund of the levy will not be paid to producers outside board areas. I see no evidence of this intention to use State levies within States or to pass any refunds on to all producers being written into the Poultry Industry Levy Amendment Bill. I would hope and recommend to the Minister for Primary Industry (Mr Sinclair) that this protection be written in to the principal Act. It may extend refunds beyond the statutory boards to all producers. I would suggest that preferably in any legislation that might be amended in the future there be a provision that the producers I represent in the
Mackay and the Dawson areas and through north Queensland be exempt from the levy because they are outside board control, or that perhaps exemptions be granted from the increase in the levy so that the injustice is not compounded. Whatever viability the industry in north Queensland presently has will be lost by any further imposition.
I said that I do not speak for the majority of producers. I speak for the producers in my area and particularly those supplying local needs. They are only a minority but they certainly have a right to equity in this regard. I bring these matters to the attention of the Minister and the Department as very real and just complaints. In spite of that I feel that I must support the Bill because its purpose is to regulate a very vital rural industry in Australia. I ask that the matters I have raised be taken up quickly so that they can be adjusted on either a Federal or a State basis.
-At the outset I would like to rebut the accusations by the honourable member for Fadden (Mr Donald Cameron) that none of us on the Labor Party side have had anything to do with the egg industry because we are from city electorates. From city electorates we may be, but the city electorate of Werriwa has probably had more laying hens in it than any other electorate in New South Wales has had for a very long time. Further to that, I grew up on a poultry farm where I lived for the first 33 years of my life. We had some 20,000 or 25,000 chooks for quite a while. The honourable member for Fraser (Mr Fry) also had 20,000 hens. So it is a bit of a nonsense to say that we have had no experience with the egg industry. Apart from that, I would like to say that I agreed very much with some of the matters the honourable member for Fadden raised inasmuch as he said there was opposition in some areas of the egg industry to this move to increase the Council of Egg Marketing Authorities of Australia levy from $ 1 to $2. 1 was on the executive of the Associated Poultry Farmers of Australia for a period and members of that association from New South Wales have contacted me as they represent now the smaller farmers. They have some misgivings and would put forward some qualifications to this Bill which I would hope to touch upon.
I think honourable members were appreciative and understanding of the points raised by the honourable member for Dawson (Mr Braithwaite). There is a minority of producers in north Queensland. I would think that the Government, its advisers and the Minister could look at the question of exemptions in that area in the future. Hopefully this will be the last increase. But, from what the honourable member for Dawson says, we have here a very special case; and I think something needs to be done about it.
The Minister’s second reading speech set out the reasons for the legislation. The Opposition, as has been already indicated, does not oppose it. We have already said that at the organisational level the poultry industry by and large goes along with it. The honourable member for Fraser has pointed out the situation in the Australian Capital Territory. Perhaps I could give some background to the poultry industry legislation. At present the Poultry Industry Levy Act, the Poultry Industry Levy Collection Act and the Poultry Industry Assistance Act which came into operation on 1 July 1965 embody a scheme which is designed to give the Australian egg industry an opportunity to achieve a reasonable degree of stability. The scheme is in effect an extension of the States egg marketing arrangements which have been established for many years to a single Australian marketing plan.
Within the framework of this scheme, the State egg marketing boards remain autonomous and perform their normal functions of marketing the eggs placed under their control. These boards also act in concert to ensure that the scheme operates with equity for the benefit of the whole of the poultry industry throughout Australia, and this co-ordination and liaison is achieved through the Council of Egg Marketing Authorities of Australia whose membership comprises all the members of all State egg marketing boards. As the honourable member for Dawson has pointed out, the farmers in his area have no representation.
The Poultry Industry Levy Act is the one that imposes a levy in respect of hens in excess of 20 kept for commercial purposes and which are over six months of age. The levy is imposed on a prescribed day each fortnight and payment is due within 14 days of the day on which it is imposed. The maximum levy was $ 1 a hen. It has now gone up to $2 a hen. The Poultry Industry Levy Collection Act provides for the collection of this levy. It includes provisions whereby the Commonwealth Government may enter into an arrangement with a State with respect to the collection of the levy in that State on behalf of the Commonwealth by the egg board for that State. The Poultry Industry Assistance Act establishes the Poultry Industry Trust Fund in which are appropriated amounts equal to the amounts collected by way of levy under the Poultry Industry Levy Collection Act. The other main provisions in the Act cover the distribution of the money in the Fund by grants to the States for the financial assistance of the poultry industry and by expenditure on research. We debated amendments to that Act at the end of last year.
There is no need to go too much into the mechanisms to any great extent but perhaps we can spend some time on what the Council of Egg Marketing Authorities of Australia does. The three Acts that I have already spoken about are in effect the Australian egg marketing scheme which is now embodied in this legislation which was drawn up by the Council of Egg Marketing Authorities of Australia. This is the organisation mentioned in the legislation and this scheme is commonly known as the CEMAA scheme. The Council was formed in 1962 by all of the statutory State egg marketing boards to enable the egg industry to act as one body rather than as many separate identities and to speak with one voice on behalf of the egg industry. The Council is comprised of all members of all the State egg marketing boards and 26 of the 40 members of the Council are producers. The Council is recognised by the Commonwealth and State governments as the principal producer organisation representing the Australian egg industry.
Under the CEMAA scheme, the State egg marketing boards co-operate in respect of marketing the whole of Australia’s commercial egg production. Revenue collected from the federal hen levy is designed to enable producers in all States to share equitably in the cost of the disposal of egg surpluses. As an aside, one may say that there are some distortions in terms of the equity. The scheme has provided a framework within which the Council has guided the industry through periods of record production and by means of budgeting by its constituent boards it has been able to a large extent to dampen down excessively high or low producer and consumer prices. Price levels in 1977-78 were generally higher than in 1 976-77. According to figures supplied by the State egg marketing boards the average net price which Australian producers obtained for their eggs in 1977-78 was 70.73c a dozen, an increase of 4.4c a dozen when compared with the previous year’s return. Returns were higher in all States except Tasmania where an increase in production resulted in an export surplus. Tasmania normally has little or no export surplus and the influence of the low export price forced down returns to Tasmanian producers.
The egg industry has always been selffinancing regarding the question of subsidies.
However, this legislation refers to the equalisation arrangement whereby export losses are shared supposedly equitably and so that producers receive an average rate of return per dozen or dozen equivalent. The effective equalisation of gross returns has meant that domestic prices have been able to be maintained at a level above export prices. Hence, there has been a consumer transfer which can be regarded as a form of subsidisation. In the past this calculated measure of production has been quite high and higher than at present, as the levels of exports have now declined to some degree. However, while exports and equalisation exist consumers will pay more for eggs in this country than they need to without the farmers themselves necessarily getting any benefit for it.
As other honourable members have said in this debate, producers pay for the marketing of their eggs in three ways. They pay the CEMAA levy that we are discussing. They pay State egg board charges and pools, and I believe that some of the pools recently have gone from 4c to 12c a dozen as a result of the fact that the CEMAA levy is not coping with the export losses. The Australian egg board levies a charge for exports which is deducted via the State boards under the Egg Export Charges Act 1 947.
As I have said, CEMAA was set up to stop interstate trading and this legislation again refers to that factor. The legislation sets out to circumvent section 92 of the Constitution. Interstate trading had to be stopped so that producers could share equally in the export losses and not simply sell their eggs interstate. The device of putting a charge on hens was the way to get around the business whereby previously egg boards put a levy or struck a pool on eggs. Once CEMAA was set up, the States were able to introduce various forms of licensing. This has been a reasonably slow process, but now I think all States have various forms of licensing and quotas.
The rationale for lifting the CEMAA levy from $ 1 to $2 a bird as a maximum- I have been told that it looks like being something like $1.80 a bird immediately- is that this is really an inflationary adjustment. A moment ago I said that the net return on marketing charges for eggs was something like 70.73c a dozen in 1977-78. When this charge was introduced in 1965 at $1 a bird the comparative return was something like 25c to 30c a dozen. So, it can be fairly said that it is an inflationary adjustment. Also, it will prevent pool charges by the State boards going up or it will at least allow the boards, we hope, to take some of the charges off. This inflationary adjustment would be very simple except that exports as a proportion of total production have dropped quite a bit. So we are dealing with an equation in how to find a sum which will equalise export losses and at the same time to establish to what extent that is simply an adjustment for inflation given the production levels and the amount that is exported. Exports at present are about 14 per cent of total production. They have been up to 30 per cent since the establishment of CEMAA. However, at present there are shortages of some grades of eggs and this is causing concern. It is calculated that if there were to be no shortage of eggs we would need approximately a 20 per cent production excess based on domestic consumption, not the 15 per cent that we are presently aiming at. The situation must be stated quite clearly. It will always be difficult to have 60 gram-a-dozen eggs available at all times throughout the year. If we are to avoid shortages in those grades of eggs, we will need a production margin of about 20 per cent.
An anomaly that has occurred with CEMAA is that New South Wales and Victoria between them produce about 78 per cent of the eggs for export. Queensland produces another 10 per cent of the eggs for export. So producers in other States have been paying this $ 1 a bird hen levy to equalise export losses and have not been contributing to the exports themselves. The Minister for Primary Industry (Mr Sinclair) referred to that matter in his second reading speech. A concern I also have about the egg industry, apart from these inequities- the judgment lies in the balance between the amount to take account of the inflationary change in money values and the quantities of eggs that we export- is that we seem to have now somewhat of a permanent bureaucracy imposed on the egg industry while the producers as a group are experiencing a rapid decline and a rapid turnover in their numbers. For example, the number of egg producers in New South Wales has dropped to 924 out of 3,370 producers in Australia. That is a rather dramatic decline on what the figure was a few years ago. However, there has been an enormous move towards larger flocks. In New South Wales, 39 of the remaining farms now have over 36 per cent of all the laying hens. On an Australia-wide basis, some 96 farms have over one-third of the total laying flock. The movement is towards larger and larger units. This is just a factor of technology being applied to the industry. There is not a great deal that can be done about it. However, it is a matter that causes the remaining smaller egg producers in the industry a great deal of concern. It is a concern that the Opposition shares.
Although production controls have been introduced, the 1977-78 production has increased on the 1976-77 production by approximately 6. 1 1 per cent. As I have already said, even with the controls, exports have shown some tapering off. Way back in 1967-68 the shell egg equivalent was about 30 million dozen eggs exported. The peak was in 1972-73 with 58,550,000 dozen eggs exported. The figure declined in the intervening two years. In 1975-76 it went up again to some 40,000,000 dozen eggs exported. In 1976-77 some 29,000,000 dozen eggs were exported and in 1977-78 again nearly 29,000,000 dozen eggs were exported. It concerns me that with the introduction of licensing arrangements and quotas we are building in and capitalising the protection given to the egg industry. I was told recently that 1 5,000 birds swapped hands in New South Wales for $13 a bird egg quota.
A quota is transferable and this explains to some extent the way in which the industry is centring in fewer and fewer hands. In Queensland, the egg quota is tied to the farm. This is possibly a better system. In Western Australia, the maximum number of hens that can be held under a licence is 30,000. Although it was thought that that quota would be circumvented and that many small farms with 30,000 birds would be set up under different names, apparently that has not occurred. But even in Western Australia I understand that licences for hens have changed hands for $15 a bird. In Victoria I have heard mention of a figure of about $10 to $ 1 1 a bird. This is a matter of great concern to the industry. It might be a nice way to get out of the industry but it is centring the industry in fewer and fewer hands. It is capitalising a monopoly into the hands of a few people. Entry to the industry is effectively barred now unless the people concerned have quite a deal of funds in hand. There needs to be some sort of investigation as to what extent and how much we need this son of permanent bureaucracy imposed on the egg industry. It appears that the industry cannot operate on a margin of much less than 12 per cent to 1 5 per cent of exports to guarantee that there will always be eggs supplied on the domestic market, apart from that qualification I added that sometimes inevitably it will not be possible to buy 60 gram-a-dozen eggs. We have the CEMAA scheme which is administered by the State egg boards. We also have the Australian Egg Board and some administrative mechanisms for collecting this money. I suppose that the State boards provide that administration. We are building on top of this administrative system which is imposed on the industry in which there are fewer and fewer producers. In addition, we are building in this system of quotas and licences as a result of CEMAA and capitalising and in many ways imposing distortions on the industry. The New South Wales Minister for Agriculture, Mr Day, has said that he will do something to stop this. Indeed, his Government acted with respect to the dairying industry in which milk quotas were being sold for higher and higher amounts. In my area, many producers objected rather strongly about that because there was no compensation for the capitalisation that had taken place. People felt that they had been robbed, particularly people who had bought a dairy quota and suddenly found that it was valueless. If Mr Day can do something about the problem in the egg industry, he will have our respect because it is a very difficult problem. As the egg industry does not receive any direct subsidisation or direct assistance from the Commonwealth Government, except for the money put into the research grants, it would seem that it is not an industry whose problems can be readily referred to the Industries Assistance Commission. But it is an industry that requires more investigation particularly of what I have described as bureaucratic encumbrance and the amount of money that is being built up in the licences imposed on the industry.
– I am conscious of the lateness of the hour. I want to make some remarks but I will not make them at any length. A couple of questions were raised which I should try to answer briefly. A question was asked by the honourable member for Fraser (Mr Fry). I state in reply to him that we envisage that the payments to the Australian Capital Territory egg producers will be in line with the payments made to New South Wales producers as egg payments in the Australian Capital Territory are essentially based on the New South Wales price structure. I will refer the other questions which the honourable member has raised to the Minister for Primary Industry (Mr Sinclair) and they will be answered. The honourable member for Fraser also asked a question about the use of the levy money by the State egg boards for their own purposes. This will not happen as any money not used for equalisation purposes will be returned direct to producers on a per hen basis. Some questions were raised by the honourable member for Dawson (Mr Braithwaite) which I would have liked to comment on. However, I do not want to truncate the adjournment debate unnecessarily. So we will arrange for an answer to be supplied to the honourable member as quickly as possible.
Question resolved in the affirmative.
Bill read a second time.
Leave granted for the third reading to be moved forthwith.
Bill (on motion by Mr Adermann) read a third time.
Consideration resumed from 2 1 February, on motion by Mr Sinclair:
That the Bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr Adermann) read a third time.
-It being 10.30 p.m., I propose the question:
That the House do now adjourn.
-Tonight I want to raise two matters which refer directly to the electorate of Werriwa. Since I became the member for Werriwa all sorts of accusations have been hurled at the Liverpool Women’s Health Centre in my electorate. The centre is under some attack in terms of the amount of funding going into it. I do not want to quote too many figures, but the Commonwealth Government has allocated only $73,000 to the centre this year compared to the sum of almost $126,000 which it spent last year. So the centre is under some sort of attack with respect to funding. Even more importantly, there are always a lot of questions raised about this centre. I have heard it described as an abortion clinic and that it is run by radical Marxist lesbians, et cetera. Accordingly, I arranged for a professional welfare person from an outside organisation to approach this centre to request a breakdown of the reasons why women visit the centre. The co-operative that conducts the centre agreed that the files could be examined provided a guarantee of anonymity was given. The people there are very conscious of the need to preserve the integrity and confidentiality of the files.
Eventually this was arranged and the professional person, who is a specialist in mental retardation, was allowed to look at those files. In view of the fact that we will eventually be debating the matter of abortion in this House, I thought that honourable members may be interested in a sample of 1 , 000 files taken from one point onwards. The files covered a period of some four months. Of these 1,000 visits, 47 per cent of the women were aged between 20 and 40 years; some 45 per cent were below 20 years of age; and 8 per cent were over 40 years of age. Of the 1,000 visits, migrant women comprised about a quarter of the sample. Of these visits 392 were for contraceptive advice; 122 were for general medical problems; 1 18 were for pregnancy counselling; 64 were for vaginal infections; and 55 were for abortion referrals. From that point the figures taper down. I will not go into them all. However, 47 visits were for pap smears, 25 for menstrual problems and 23 for sex education. The figures show quite clearly that the first four categories, contraceptive advice, general medical problems, pregnancy counselling and vaginal infections, represented over 70 per cent of the visits and in fact abortion referrals represented only 5.5 per cent of the sample looked at. So it cannot really be maintained that the Liverpool Women’s Health Centre is an abortion clinic.
The second matter to which I wish to refer- I am glad that the Minister for Post and Telecommunications (Mr Staley) is at the table- concerns telephone charging in most of my electorate of Werriwa. This area is classified as an outer Sydney zone. Hence we have the ridiculous situation of one half of a factory being in the Sydney zone while the other half is in the outer zone and telephone calls are at trunk rates. Telecom Australia persists with the fiction that the centre of Sydney is the General Post Office. As Telecom has just earned a profit of $84.5m I think we need to end this fiction. If one looks at the inner telephone zone for Sydney one finds that some 36.5 per cent of that area is over water. This is because the General Post Office is supposedly the centre of that zone. If one looks at the outer metropolitan zone one finds that something like 50 per cent of that telephone charging area again is over water. It seems to be a nonsense to continue with the proposition that the GPO is the centre of the Sydney telephone district when the outer suburbs stretch right down to Campbelltown, in the electorate of the honourable member for Chifley (Mr Armitage), and to the electorate of the honourable member for Mitchell (Mr Cadman). He probably experiences the same situation where people are charged at trunk rates when they are part of the Sydney metropolitan area. I believe that this fiction that the GPO is the centre of the Sydney telephone district should cease.
-A few days ago an Australian Labor Party member of the New South Wales Legislative Council, Mr Jim Kaldis, claimed that the Government’s immigration policy was discriminatory and in particular that it discriminated against people coming to Australia from Greece. Mr Kaldis took the figures for the last financial year, as published in the report of the Department of Immigration and Ethnic Affairs, and claimed that these figures showed that the new points system that has operated from 1 January was discriminatory. The first point I want to make is that obviously Mr Kaldis was either incompetent or dishonest in taking the figures for the last financial year and claiming that they proved that a system introduced on 1 January of this year was discriminatory. Regrettably the newspapers in Sydney gave this some prominence without realising that obviously his figures could not support his argument.
Mr Kaldis is a new member of the New South Wales Legislative Council and I would hope that he does not degenerate to the same level as some of his Labor colleagues who exercise deceit, deception and distortion in their public statements and who attempt to mislead the Australian public. I hope he improves his performance. The facts are these: The Numerical Multifactor Assessment System which started on 1 January has hardly had a real chance to be assessed. The first migrant to come to Australia under this system has been chosen and he will arrive in the near future. He is a gentleman from Italy. The claims of Mr Kaldis, based on figures available for the last financial year, must be put in proper perspective. He talks about the difficulties experienced by persons from Greece. It is perfectly plain when one looks at the figures that there has been a particular family reunion rate applicable to Greece which is higher than that for many other areas. I point out that Mr Kaldis was complaining about family reunions. The fact is that 77 per cent of Greek migrants in the last year were approved on a family reunion basis compared to 31.6 per cent for Italian migrants, 15 per cent for South African migrants, 24 per cent for Rhodesian migrants and a higher level of 64 per cent for migrants from Turkey. He said that our policy discriminated particularly against people from Mediterranean and Middle Eastern countries. But I point out that the two highest figures were 77 per cent for Greek migrants and 64 per cent for Turkish migrants.
Over the past seven months, to the end of January 1979, the proportion of all applications from South Africa which have been approved was 54 per cent; 5 1 per cent of applications from Greece were approved. So there is not much difference there. The rate for Italy was 46 per cent, for Rhodesia 28 per cent, for Turkey 28 per cent, for the United Kingdom 40 per cent, for the United States 35 per cent and for France 13 per cent. It is very difficult to imagine how Mr Kaldis could claim that the figures that are available show a discrimination against Mediterranean and Middle Eastern people in favour of people from the United Kingdom or other places such as South Africa.
The other point that he has left out is that the number of people applying to come to Australia from Greece has gone down significantly. There is not all that much that the Australian Government can do about that. One must bear in mind the fact that Greece has a population of about nine million and that the Greek Government itself has recently expressed concern about Greece’s failure to increase its own population. There are only about 100 people per month applying to come here from Greece. They may have heard about some of our difficulties with the employment situation here. Nonetheless only about 100 per month apply to come here. I would be delighted if more Greek people liked to come. There are many Greek persons in the St George electorate and the more Greek migrants who come here under the points system the better- and that includes family reunions.
I point out that members of Parliament on both sides of the House and in other States should not mislead the public, should use the figures properly and should give NUMAS a chance to run until we can assess properly how it is working.
Mr FitzPATRICK (Riverina) (10.40)-Last week I asked the Minister for Primary Industry (Mr Sinclair) a question as to when the Government was going to make a firm decision on the
Industrial Assistance Commission’s recommendation concerning tariffs on imported citrus juices. I put it to the House that any delay in this decision will affect the viability of the citrus industry, not only because it will delay decisions on the replacement of necessary machinery and fixtures but also the very level of production in future years. Citrus trees, after planting, take from 8 to 10 years to produce a satisfactory crop and the life of a tree is from 50 to 60 years. Therefore, if a grower wishes to maintain his level of production and thereby his viability, he must commit himself to expenses at the present time.
Some honourable members in this House, after hearing the reply of the Minister for Primary Industry, might have wondered why some of the growers in my electorate are worrying about the level of the tariff. It is because Brazil supplies about 80 per cent of the orange juice on the world market and that the Brazilian price really controls the world price. This season the orange crop in Brazil has finished and been sold so there is not an over supply of juice available. So irrespective of the level of tariff at the present time it would not make any difference. I point out that next year Brazil expects to have a normal crop and Valencia orange juice will be available next season at about 13 cents to 14 cents a litre. The 65 per cent tariff will mean that growers will still only be paid about $90 per tonne for their fruit. This would allow the finished product of juice concentrate to remain competitive with that available to the chilled juice trade from overseas sources.
With the Australian cost structure citrus juice cannot be produced under that cost. It must be remembered that the factory door fruit cost is only 34 per cent of the retail price and only 15 per cent of the retail price of orange juice drinks. I point out that it is not only the Australian citrus growers who are concerned about competition from this low cost and government subsidised Brazilian citrus juice. I refer the House to the Florida Citrus Industry Magazine of November 1978. Under the heading ‘Tariff structure vital . . . to survival of Florida’s citrus industry ‘it is stated:
If we lost our tariff structure today, we’d lose an industry.
This is an article dealing with the problem of the importation of subsidised citrus juice from Brazil. It further states:
The primary concern of the Florida industry is, of course, Brazil; citrus men who have been in Brazil over the past several years say that the Brazilian citrus industry, heavily subsidised by its Government, is geared up to match Florida’s production by the end of this century. Notwithstanding the fact that Florida processors have been using Brazilian juice as a pool to draw from in the past two seasons of short supply the South American country is obviously perfectly witling and ready to compete directly in the domestic market as well as abroad, should the price of Florida OJ go high enough to offset the cost of Brazilian concentrate plus the tariff, now 35 cents.
That figure relates to gallons and works out to 9 cents per litre of reconstituted Australian citrus juice. I want to point out to the House that the Government should give this matter serious consideration and bring in a system of floating quotas to take up the slack between the production of the Australian crop and imported juices.
– I wish to bring to the notice of the House a matter of some importance concerning a publication circulating within my electorate. I believe that there is at this time an attempt being made to defraud householders and extract money from them in my electorate on the pretext of promising membership to a Discount Shoppers Club. The operation which has been brought to my attention goes under the name of Carlingford Discount Shopper, but I understand that it is also active in other Sydney suburbs including St Ives, Epping and Ryde.
Householders receive a roneoed letter bearing the signature ‘N. Phillips’ advising them that by sending $ 10 to a Gordon post office box number within 14 days of their receiving the letter, they may become members of the club and eligible to purchase many items at discount prices. The club’s ability to purchase at less than cost is explained as resulting from its ability to bulk buy due to its 4,000 strong membership. Householders are informed, and I quote from the brochure: in 1978 club members collectively purchased $3m worth of supplies and saved over $ 1 m.
It is implied in the pamphlet that Grace Bros Pty Ltd and Email Ltd are amongst the list of companies supplying goods. The fact, as I understand it, is that the only involvement these companies have had with the club has been to supply price details in a routine response to an inquiry.
The New South Wales Department of Consumer Affairs is currently investigating Mr N. Phillips’ activities and is advising anyone inquiring not to send money. I understand also that the Trade Practices Commission and the Fraud Squad in New South Wales are also considering investigation. I have brought the matter to the attention of the Minister for Business and Consumer Affairs (Mr Fife) tonight and he has promised to make a full and complete investigation into these serious matters. It would seem from information I have received that this is not the only dubious venture in which N. Phillips has been involved. In the 1 976-77 report of the New South Wales Department of Consumer Affairs, N. Phillips was revealed as a proprietor, along with a Mr and Mrs Green of Green and Sons, of a building steam cleaning firm based at Wahroonga. The company claimed to have a revolutionary cleaning process for walls which would last for 20 years. Not only did the process not last the distance but also it caused deterioration of the walls in some cases. No satisfaction has been achieved from complaints and the Department has not been able to establish contact with the firm’s proprietors. Again, only a post office box number was available.
I understand that this unscrupulous operator may be behind a further distressing attempt to defraud using the name ‘Old Windsor Enterprises’, supposedly a personalised letter goods manufacturing firm. Calls have recently been made to bereaved families notifying them of orders for goods allegedly placed by the deceased. The caller apologises for the delay in delivery, but assures that the goods will be dispatched promptly upon receipt of payment and follows this up by sending a bill. Coming as it does at a time of distress and sadness this approach often results in the grieving family honouring the supposed debt. Naturally no goods are received. This obvious misuse of published death notices to deliberately defraud is diabolical. I would just like to alert honourable members to be vigilant in this matter. It may be that there are similar operators having in mind an operation within their electorate. Certainly in Sydney there are a number of honourable members who ought to be alerted to the possibility of a discount shopper named after one of their suburbs setting up operation. It is a matter to which they ought to be alert and in respect of which they should be willing to alert their constituents.
-I rise in particular to make a reference to a great financial crash, but I am compelled, although time does not really permit me, to make some reference to the speech of the cliffhanging honourable member for St George (Mr Neil). Since the last State elections in New South Wales he has emerged as the great protector of the Greek community. Mr Deputy Speaker, even with your great learning you might not be aware of this fact. Following the last State elections in New South Wales, there was a tremendous swing in one part of the St George electorate. The honourable member for St George, being a cliffhanger, was so sensitive about this swing that he wrote to the Prime Minister to state that he had lost the Greek vote. Since then he has emerged as the great protector of the Greek community. Is it any wonder that the Government recently dropped the criminal charges against certain Greek people over their alleged frauds. It is another scandal. On Nationwide tonight we heard about the Beggs scandal involving the Fraser family.
Every time there is a scandal or financial crash in Australia one has only to look at who are the pillars of or the backbone behind the organisation involved in that crash to see that, irrespective of what firm is involved, they are usually arch Liberals. Honourable members opposite may laugh. I refer to the crash of Patrick Partners, H. G. Palmer Pty Ltd, Cambridge Credit Corporation Ltd, Latec Investments Ltd and the Testro Group. Always the backbone of the company in the crash are the pillars of the Liberal Party. Recently in the Associated Securities Ltd crash- the greatest financial crash in Australia’s history- over $100m was defrauded from the shareholders. Who are the pillars of society involved in this crash? They are none other than the former Liberal Premier of Victoria, Sir Henry Bolte, Sir Reginald Ansett and Sir Cecil Looker, the former Chairman of the Melbourne Stock Exchange.
I have always told my humble constituents of Hunter that there is no law for the rich and law for the poor; there is only administration of the law for the rich and the law for the poor. We should be reminded also that, in the crash of the H. G. Palmer organisation, the Mutual Life and Citizens’ Assurance Co. Ltd recommended that people invest in H. G. Palmer. One person who received advice to invest in H. G. Palmer was one of Australia’s most brilliant and eminent Queen’s Counsel, Mr Clive Evatt. After his savings were defrauded in the H. G. Palmer crash on the recommendation of the MLC, he went to court to get justice in Australia. But the Australian courts being so politically orientated, he could not get a verdict in his favour. So he went to the Privy Council in England. Honourable members opposite may laugh. He got a verdict for $110,000 against H. G. Palmer. One would expect that the honourable member for St George, a barrister, should be making the speech that I am making. The New South Wales Attorney-General, Mr Walker, is the only person who has advised investors in ASL- of which many were employees of Sir Reginald Ansett who advised his employees to invest in ASLthat they should seek legal advice with a view to getting legal justice as Clive Evatt did.
Mr DEPUTY SPEAKER (Mr Millar)Order! The honourable member’s time has expired.
– I draw the attention of the House to the front page of the Illawarra Mercury of today’s date, which circulates in my electorate- at both ends of my electorate. The Australian Labor Party has suspended for 12 months, says the newspaper, a Shellharbour party member for alleged activities associated with the Communist Party. The suspended member is Mrs Beverley Fleet, secretary of the Cunningham Federal Electorate Council and the Treasurer of the Shellharbour branch. The Labor Party’s administrative committee has informed senior ALP officials in the Shellharbour area- which is within my electorate by the way- of the decision to suspend Mrs Fleet. Supporters of Mrs Fleet are believed to be circulating a petition which seeks her reinstatement.
I submit to this House very strongly that Labor members of Parliament, in particular the honourable member for Cunningham (Mr West) in this House and the honourable member for Illawarra in the New South Wales House, should state exactly where they stand in the Shellharbour dispute over communist association. In view of the widespread suggestions that the honourable member for Cunningham and Mr Peterson, the honourable member for Illawarra, have signed a petition seeking Mrs Fleet’s reinstatement in the Labor Party the voting public in the area has a right to know whether these two parliamentarians condone this involvement of a senior Labor Party official with the Communist Party. I have no desire to become involved in internal Labor Party disagreements and have avoided commenting whatsoever on the longstanding battles within the Labor Party in the Shellharbour branch. However, the situation is no longer an internal one when members of parliament become involved in activities which fly in the face of the stated Labor Party policy on which they were elected by the people of the area.
The Labor Party properly has dissociated itself from involvement with communists and I have always believed it wrong for Liberal politicians to ‘kick the communist can’ with respect to the Labor Party. But if Labor members of Parliament are supporters of a senior Labor Party official who has been found guilty by that party of distributing copies of the Communist Party newspaper, Tribune, at ALP meetings, of marching with communists during May Day celebrations and successfully moving a motion for a Labor branch to make a donation to an appeal to send a young communist to a Cuba conference, it appears that they do not support the Labor Party rule prohibiting any member from associating with the Communist Party.
Voters in the area must be told whether these two Labor MPs are in favour of allowing the sort of association with the Communist Party of which Mrs Fleet has been found guilty. Overall, I regret to see the evident swing to the extreme left that appears to be taking place in some Labor branches in the area. The problems in the Shellharbour branch are now being followed by the sacking of the Dapto branch secretaryDapto is also in my electorate- who has also pulled out of the Labor preselection battle to become the unsuccessful candidate for Macarthur at the next Federal election.
-The question is: That the House do now adjourn.
– The House should adjourn. The Labor members have all walked out.
-Order! The House will come to order. Is the honourable member for Bendigo raising a point of order?
– Yes, I am, Mr Deputy Speaker. I think we ought to adjourn because I think it is absolutely atrocious that -
-Order! There is no point of order. The honourable member for Bendigo will resume his seat.
Question resolved in the affirmative.
House adjourned at 10.58 p.m.
The following answers to questions upon notice were circulated:
asked the Minister for Finance, upon notice, on 22 August 1978:
– The answer to the honourable member’s question is as follows:
I refer the honourable member to the answer to Question No. 1794 asked of the Minister for Productivity (Hansard, 23 and 24 November 1978, page 3389).
Use of Concorde Aircraft (Question No. 2914)
asked the Minister for Finance, on notice, on 2 1 November 1978:
– The answer to the honourable member’s question is as follows:
asked the Prime Minister, upon notice, on 2 1 November 1978:
– The answer to the honourable member’s question is as follows:
asked the Treasurer, upon notice, on 24 November 1978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Finance, upon notice, on 24 November 1 978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Health, upon notice, on 27 February 1979:
-The answer to the honourable member’s question is as follows:
asked the Minister for Health, upon notice, on 27 February 1979:
-The answer to the honourable member’s question is as follows:
Item 6469 covering evacuation of the contents of the gravid uterus by curettage or suction curettage was introduced into the Schedule from 22 April 1974 as part of the recommendations of the Medical Fees Tribunal 1973 which was under the chairmanship of Mr Justice J. T. Ludeke. This item formed part of the Australian Medical Association’s submission to the Tribunal and was included in the Association’s List of Medical Services and Fees 1973.
Cite as: Australia, House of Representatives, Debates, 1 March 1979, viewed 22 October 2017, <http://historichansard.net/hofreps/1979/19790301_reps_31_hor113/>.