Page 3884 - Week 12 - Wednesday, 19 October 2005

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community services play an important role in preventing and reducing unemployment. They assist people to manage difficult transitions that might otherwise result in long-term unemployment. They also facilitate people’s access to other services and resources that they need to overcome labour market disadvantage, for example, childcare facilitating education; they overcome access barriers, for example, for people with a disability; and they combat discouragement. In doing so, community services facilitate and support participation in the labour market, enable economic independence and minimise the social and economic costs of unemployment. Finally, the community services work force provides diverse ACT employment opportunities.

As for taxes, there is an opportunity in the ACT to roll back to some degree high effective marginal tax rates, enticing people to enter the work force. One method by which the ACT could do this is via the payroll tax. The current system sets a rate of 6.85 per cent, with businesses exempt if they have a payroll below $1.25 million a year. So a boutique consultancy probably does not pay payroll tax when it takes on a $200,000 consultant, but a big company like McDonalds pays payroll tax for every minimum wage worker it hires. This motion calls on the government to investigate ways of making the payroll tax more progressive and to report to the Assembly by March next year. Such an investigation can create some debate about ways that the government can redirect its taxes to enhance positive social externalities rather than prevent them.

In closing, I would like to welcome the debate about how we can improve the lives of those ACT residents living on low incomes or working with a low level of skills. While the ACT Labor government rightfully protests the changes being made to the labour market at a federal level, it does have a responsibility to ensure that its residents do not live in poverty.

MRS DUNNE (Ginninderra) (4.55): This is a very important issue. Poverty is something that we as legislators should be most concerned about. As we are involved in serving our community, we should spend a considerable effort in serving those least able to serve themselves. However, I suppose there is always going to be something that might be likened to an ideological divide in this place when we talk about poverty.

I welcome Dr Foskey’s motion, but I think that first and foremost we must be aware of the fact of just how limited the scope of government is in this, as in many other public policy issues. Often governments involve themselves in public policy issues, often with the best intentions, but the dead hand of government usually militates against the improvement of policy rather than in favour of it.

Towards the end of her speech Dr Foskey talked about a review of the payroll tax system to ensure that it is more progressive. When we talk about progressive payroll taxes, people think that it means that it is better because it is progressive, and they use the other term “regressive”. But progressive means that the government progressively takes more and more money from the hands of the people who earn it and from businesses. The important message that the Liberal opposition would like to give today is that the most important thing that we can do to address poverty is to ensure employment.

Employment is the greatest antidote to poverty that we in the ACT can provide, and the alleviation of poverty through employment is first and foremost generated by economic growth, not redistribution. We know that growth depends on the quality of the economic


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