1 * ÃÂ«

Jj. AUSTRALIA .t.1 " EMBARGO: 7 .0 0  p.m .

PRIME MINISTER

FOR PRESS 29 OCTOBER 1978

ELECTORATE TALK

T h is  G o v e rn m e n t's r e c o r d  o f  t a x  r e f o r m  - a t a x  re fo rm  t h a t  i s

s o u n d ly  b a s e d  - i s  s e c o n d - t o - n o n e . I t  s t a n d s  any s t r u c t i n y .

I t  p a s s e s  any t e s t .

F o r many y e a r s  A u s t r a l i a n  t a x p a y e r s  h a v e  b e e n  h i t  t o  l e g  b e c a u s e

i n f l a t i o n  p u s h e d  them  i n t o  h i g h e r  t a x  b r a c k e t s . T h is  c u t t h e i r

e a r n i n g s  an d  b o o s te d  t h e  t a x  flo w  to  C a n b e rra .

T h a t s i t u a t i o n  was n o t  a c c e p t a b l e  to  t h e  C o a l i t i o n  G overnm ent.

W ith in  m onths o f  g a in i n g  o f f i c e , we a c t e d  d e c i s i v e l y  t o  end

L a b o u r 's  t a x  r i p - o f f .  We a c t e d  to  s to p  t h e  u n l e g i s l a t e d  t a x

g ra b  b y  C a n b e rra .

We i n t r o d u c e d  t a x  i n d e x a t i o n . T h is  i s  a d e v ic e  t h a t  a u t o m a t i c a l l y

p r o t e c t s  incom es a g a i n s t  t a x  i n c r e a s e s  c a u s e d  b y  i n f l a t i o n .

L a s t y e a r  we w e n t f u r t h e r .  We i n tr o d u c e d  w h a t h a s b e e n  d e s c r i b e d

a s  t h e  m o st s i g n i f i c a n t  t a x  re fo rm  i n  A u s t r a l i a 's  h i s t o r y .

We c u t  th e  t a x  r a t e s  and i n tr o d u c e d  a new an d  s i m p l i f i e d

t h r e e - t i e r  t a x  s c a l e .  Now, f o r  t h e  f i r s t  tim e  i n  10 y e a r s , th e

p e r s o n a l  incom e t a x  c o l l e c t e d  by t h e  G overnm ent w i l l  f a l l  i n  r e a l

t e r m s .

The G o v e rn m e n t's t a x  re fo rm s  h av e made s u r e  t h a t , ta x p a y e r s  to d a y

p a y  l e s s  th a n  th e y  w o u ld  b e  p a y in g  i f  L ab o r h a d  re m a in e d  i n  o f f i c e .

Even a llo w in g  f o r  t h e  im p a c t o f  th e  1 .5  p e r c e n t  s u r c h a r g e  t h a t

w i l l  come i n t o  e f f e c t  t h i s  w eek, u n t i l  Ju n e  30 n e x t  y e a r  -

t a x p a y e r s  a r e  s t i l l  p a y in g  l e s s  t a x  th a n  th e y  w o u ld  b e  i f  t h e

s o - c a l l e d  Hayden t a x  s c a l e s  s t i l l  a p p l i e d . B u t on to p  o f  t h a t ,

ta x p a y e r s  a l s o  b e n e f i t  fro m  th e  s i m p l i f i e d  h e a l t h  a rra n g e m e n ts

t h a t  a l s o  s t a r t  from  t h i s  w eek. T h ese h a v e  r e s u l t e d  i n  lo w e r

h e a l t h  i n s u r a n c e  c o n t r i b u t i o n s .

The f a c t s  a r e  c l e a r .  L e t 's  lo o k  a t  a ta x p a y e r  w ith  a sp o u s e  and

d e p e n d e n t c h i l d  on a v e ra g e  w e e k ly  e a r n i n g s  o f  $ 2 2 0 .3 8 .

U nder L a b o r 's  1975 B u d g et t a x  s c a l e s ,  i n  J a n u a r y  n e x t  y e a r ,  t h a t

t a x p a y e r  w o u ld  b e p a y in g  t a x  o f  $ 4 9 .8 5  p e r  w e e k . U nder t h i s

G overnm ent., he w i l l  b e  p a y in g  o n ly  $ 4 0 .8 5  a w eek - and t h i s

i n c l u d e s  th e  1 .5  p e r c e n t  te m p o ra ry  t a x  s u r c h a r g e .

A c c o r d in g ly , d e s p i t e  t h e  s u r c h a r g e , th e  ta x p a y e r  on a v e ra g e  w e e k ly

e a r n i n g s  i s  $9 a w eek b e t t e r  o f f  b e c a u s e  o f  t h i s  G o v e rn m e n t's t a x

r e f o r m s . T h is f i g u r e  ta k e s  n o  a c c o u n t o f  t h e  f a m ily  a llo w a n c e

schem e w h ich  p r o v id e s  m o th e rs w ith  s i g n i f i c a n t l y  h i g h e r  b e n e f i t s

th a n  t h e  o ld  c h i l d  endow m ent.

. . . / 2

2.

The G o v e rn m e n t's t a x  re fo rm s  - e v en  w ith  th e  s u r c h a r g e  - b e n e f i t

ta x p a y e r s  on a l l  l e v e l s  o f  in co m e. A n o n - le v y  t a x p a y e r  w rth

d e p e n d e n t s p o u s e  e a r n i n g  $100 a w eek was p a y in g  $ 7 .8 5  a week

i d  J a n u a r y  1976 when L a b o r 's  t a x  s c a l e s  w e re  s t i l l  o p e r a t i n g .

Now, th e . ta x p a y e r  on $100 a week p a y s no t a x .  The same ta x p a y e r

e a r n i n g  $150 a w eek i n  J a n u a r y  1976, was p a y in g  $ 2 5 .6 0  a week i n

t a x .  Now, h e  p a y s $ 1 6 .3 0  a w eek. T h a t 's  a d i f f e r e n c e  o f

$ 4 8 3 .6 0  a y e a r . The same ta x p a y e r  e a r n i n g  $200 i n  J a n u a r y  1976

was p a y in g  $ 4 4 .5 0 . Now h e  p a y s o n ly  $ 3 3 .8 5 . T h a t 's  a d i f f e r e n c e

o f  $ 5 5 3 .8 0  a y e a r .  T h a t ta x p a y e r  e a r n i n g  $300 i n  J a n u a r y  1976

was p a y in g  $ 9 1 .7 0  i n  t a x .  Now h e  p a y s o n ly  $ 6 8 .9 5 . T h a t 's  a

d i f f e r e n c e  o f  $ 1 ,1 8 3  a y e a r .

The s i g n i f i c a n c e  o f  t h i s  G o v e rn m e n t's t a x  p o l i c i e s  and econom ic

s t r a t e g y  i s  h i g h l i g h t e d  b y  c o m p a ris o n s w i t h  t h e  t a x  g ra b  made

d u r i n g  t h e  h ig h  i n f l a t i o n  p e r i o d  o f  th e  l a s t  F e d e r a l  L ab o r

G o v e rn m e n t. In  1 9 7 2 -7 3 , t h e  L ab o r G overnm ent c o l l e c t e d

$ 4 ,0 8 9  m i l l i o n  i n  incom e t a x  fro m  a l l  A u s t r a l i a n s .

The f o l lo w in g  f i n a n c i a l  y e a r  t h i s  r o s e  t o  $ 5 ,4 9 0  m i l l i o n  - a m a s s iv e

2 0 .1  p e r c e n t  i n c r e a s e  i n  r e a l  te r m s . In  1974-75 - s t i l l  u n d e r L a b o r

t h e  t a x  g ra b  r o s e  t o  $ 7 ,7 1 4  m i l l i o n  - a f u r t h e r  1 9 .9  p e r c e n t  i n c r e a s

i n  r e a l  t e r m s .

W hat a s t a r k  p i c t u r e . I t  r e p r e s e n t s  an 89 p e r c e n t  i n c r e a s e  i n  t a x

c o l l e c t e d  by L ab o r i n  two y e a r s  - o r  44 p e r c e n t  i n  r e a l  te r m s .

T h is  y e a r ,  t h e  G overnm ent h a s  r e v e r s e d  t h a t  d i s a s t r o u s  t r e n d  and

i s  a c t u a l l y  r e d u c i n g  o u r t a k i n g s  by 0 .3  p e r c e n t  i n  r e a l  term s -

th is  i s  e q u i v a l e n t  to  $36 m i l l i o n .

N e x t W ednesday, when t h e  te m p o ra ry  t a x  s u r c h a r g e  comes i n t o  e f f e c t ,

A u s t r a l i a n s  a l s o  w i l l  b e  c o v e re d  u n d e r a new h e a l t h  c a r e  a rra n g e m e n t

T h e r e 's  n o  d o u b t t h a t  o u r d e c i s i o n  t o  s i m p l i f y  h e a l t h  c a re

a rra n g e m e n ts  w i l l  p r o v i d e  r e a l  b e n e f i t  th r o u g h o u t t h e  com m unity.

I t  i s  a fu n d a m e n ta l aim  o f  t h e  G overnm ent t o  p r o v id e  a h ig h  s t a n d a r d

o f  h e a l t h  c a r e ,  f o r  a l l  A u s t r a l i a n s  - and a t  r e a s o n a b l e  c o s t .

I t ' s  w o rth  r e c a l l i n g  how t h e  o r i g i n a l  M edibank schem e -

M edibank Mark I  - w o rk e d . In  e s s e n c e  th e  o r i g i n a l  L a b o r schem e

w o rk e d  on t h e  p r i n c i p l e  o f  p r o v i d i n g  h e a l t h  s e r v i c e s  to  e v e ry o n e ,

w i t h o u t  c h a r g e . I n  p r a c t i c e ,  i t  i s  n o t  t h a t  s im p le . Â·

By p r o v i d i n g  a l l  s e r v i c e s  w i t h o u t  c h a rg e  - o r  a t  a n o m in a l c h a rg e  -

G overnm ent e x p e n d i t u r e s  i n c r e a s e  d r a m a t i c a l l y .  To f i n a n c e  t h e s e

s e r v i c e s  i n  a n o n - i n f l a t i o n a r y  m a n n e r, i t  i s  n e c e s s a r y  t o  e i t h e r

i n c r e a s e  t a x e s  o r  r e s t r i c t  s p e n d in g  i n  o t h e r  a r e a s .  The p o i n t  i s

w o rth  d w e llin g  o n . The m a jo r b e n e f i c i a r i e s  o f  M edibank Mark I

w e re  n o t  t h e  p o o r . P e n s io n e r s  and t h e i r  d e p e n d e n ts  w ere a l r e a d y

e l i g i b l e  f o r  f r e e  h e a l t h  c a r e . P o o r e r  f a m i l i e s  h a d  t h e i r  h e a l t h

i n s u r a n c e  prem ium s s u b s i d i s e d . f The b e n e f i c i a r i e s  w e re  t h e  b e t t e r

o f f  m em bers o f  t h e  com m unity who n o  lo n g e r  n e e d e d  t o  pay  in s u r a n c e

p re m iu m s. Â· ,

When we came to  G o v ern m en t, l a t e  i n  1 9 7 5 , t h e  i n c r e a s i n g  c o s t  o f

M edibank was c l e a r .  I f  so m e th in g  h a d  n o t  b e e n  done we w o u ld  h a v e  haÂ·

to  e i t h e r  i n c r e a s e  t a x a t i o n  o r  c u t  b a c k  i n  o t h e r  h e a l t h  an d

w e l f a r e  p ro g ra m m e s.

. . . / 3

3.

-4

I n  o t h e r  w o r d s , t h e  g a in s  o f  M edibank Mark I  t o  th e  b e t t e r  o f f

w o u ld  h a v e  b e e n  f i n a n c e d  a t  t h e  e x p e n s e  o f  t h e  p o o r e s t  s e c t i o n s

o f  t h e  com m unity. We w ere n o t  p r e p a r e d  to  s e e  t h a t  h a p p e n .

We m o d if ie d  M e d ib an k , slo w e d  t h e  e s c a l a t i o n  i n  o v e r a l l  h e a l t h

c a r e  c o s t s  - and p r o t e c t e d  t h a t  s e c t i o n  o f  t h e  com m unity n o t

a s  w e l l  o f f . The l a t e s t  c h an g e s b u i l t  on t h i s  a c h ie v e m e n t.

Ihey c o n tin u e  t o  p r o t e c t  th e  d is a d v a n ta g e d . They p r o t e c t  a l l

A u s t r a l i a n s  a g a i n s t  t h e  c o s t s  o f  s e r i o u s  i l l n e s s , and th e y

s i m p l i f y  p r e s e n t  a r r a n g e m e n ts . A t t h e  same t i m e , th e y  r e q u i r e

t h o s e  b e t t e r  o f f  i n  th e  com m unity t o  ta k e  a g r e a t e r  d e g re e  o f

p e r s o n a l  r e s p o n s i b i l i t y  f o r  t h e  c o s t s  o f  t h e i r  h e a l t h  s e r v i c e s .

T hrough o u r  t a x a t i o n  re fo rm s  - and we h a v e  p ro v e d  we a r e  a t a x

r e f o r m  G overnm ent - and o u r h e a l t h  c a r e  program m e, t h i s

G overnm ent c o n tin u e s  to  d e m o n s tra te  i t s  c o n c e rn  f o r  .th e  w e l f a r e

o f  a l l  A u s t r a l i a n s .

