On September 13, 1981 the Sunday Independent newspaper published an open letter from myself to then Federal Treasurer John Howard. My remarks were based on comments I made to him in person at the Perth Chamber of Commerce.
The other evening Mr Howard, I used the word “rapacious” to describe your latest Canberra Budget.
Later, on checking the dictionary to see if in using the work “rapacious” I had done you and your colleagues an injustice, I was delighted to find just how apt the definition seems: “Given to plunder and extortion. A grasping predator subsisting on prey seized alive.”
It was certainly not my intention to be disrespectful by using the word but simply that we have noted that the Budget increases Canberra’s tax take by 22 per cent and that you will now be collecting a higher proportion in personal taxes than any previous Australian Government.
That is serious enough, but the real failure of this budget is that nowhere does it encourage economic growth, productivity, or employment.
A correct tax strategy would put first things first.
Economic growth must come first, not because it is inherently more important than other personal and social goals, but because without growth, without increasing productivity, progress towards one goal can only be achieved by impoverishing something or someone else.
Government cannot distribute goods that are not produced, nor can it tax activities that do not take place.
In the past decade, government-created inflation has combined with “progressive” tax rates to produce a growing penalty on initiative, risk, saving and investment. More and more people have been pushed into higher and higher tax brackets with little or no increase in real income.
Without added earnings there can be no added production, and without added production there can be no growth.
Real growth is a matter of individuals responding to incentives. This Federal Budget gives us no such incentive.
Australians have two complementary desires. They want an open-ended ladder of opportunity. And they want a safety net of social services to catch and comfort those less fortunate than themselves and in genuine need.
Yet because people want this safety net in place, it doesn’t follow that they therefore want it filled up with sufferers. Least of all do they want their assistance to seduce others into habits of dependency.
A vibrant economy can afford to leave the safety net in place and at the same time ensure that the net is as empty as possible.
In a stagnant, unstable economy, the demand for social services grows as the economy’s ability to pay for social services contracts.
We cannot progress society by using government to diminish one another. The only way we can all have more is by producing more, not by bickering over how to share less.
Economic growth must come first.
The Budget raises the question of how much more will the taxpayers put up with before we see the real tax revolt take shape.
I wonder how the small businessman will feel after their first year’s experience as unpaid tax-collectors for this new sales tax.
I wonder whether they will just meekly struggle on, their calculators in one hand most of the time, calculating the 2.5 per cent on this item or that, then sending off the money to Canberra a month or so before they actually receive payment themselves.
I wonder how our country people will feel about not only paying this sales tax but also paying the sales tax on the freight charges.
I wonder how many small mines in outback Australia with plans for re-opening will now find that the sales tax increment on their means of production will again tilt the scales and force their plans into limbo for another decade or so.
If there is something complimentary to be said for this Budget, it is that it is a more honest Budget than some we have seen in past years. I say that on the basis that it is more honest to steal money from people by taxation than to steal it by inflation.
At least this way we will be aware of having less of our own dollars to spend rather than seeing the transfer to government achieved by stealth through government-created inflation.
However, the central problem is the continued growth in the size of government. The difficulties experienced in meeting your government’s 1975 election promises of “smaller government” are compounded whilst State and local government also continue their growth unchecked.
It is obvious that the symptom of big government, with its big appetite, has created problems that only fools would expect governments to solve.
Governments at all levels have grown and grown, they have expanded their role and it is becoming increasingly apparent to all of us that they don’t appear to have achieved their objectives.
The well-meaning objectives of a paternalist government that will take from some to benefit others has turned out to produce very disappointing results and for very understandable reasons.
Originally published in the Sunday Independent, September 13, 1981
