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Tuesday, 1 February 1994
Page: 11

Mr DOWNER —I refer the Treasurer to today's increase in petrol tax, which will mean that since 1983 the average Australian motorist has paid an additional $9.80 per week for unleaded petrol and $10.20 per week for leaded petrol. Why is the government targeting low income earners in particular who have been struggling financially throughout the recession to pay an increasing share of Australia's petrol tax bill? Why is the government so at ease with exploiting its true believers?

Mr WILLIS —You must be joking! This government has been most concerned, from the time it got into office, to look after the low income earners of this country. We have introduced a whole raft of reforms—in social security and other ways—which have been designed to look after lower income people. If the honourable member were being honest with the parliament, he would know that there has been great improvement to the lot of many people on low incomes, particularly low income earners with families and those on social security.

  In looking after low income earners that does not mean that everything that is done cannot have some effect on them. Clearly, when we look to increase any indirect taxes, they are by their nature somewhat inequitable in the sense that they impose the same monetary cost for the purchase of an item, regardless of the income of the earner.

  A proposal was put forward by the opposition at the last election for a vast hike in indirect taxes or a new indirect tax of large proportions, which would have put up the inflation rate by some five per cent or more. The CPI effects of the petrol price increases, which are coming into effect today through the petrol excise increases, are 0.09 per cent. Those opposite were prepared to put up inflation by five per cent or more through their goods and services tax at a time when we had just got the inflation psychology of the nation down to a low inflation psychology—a most important change in the thinking of the nation. At that time those opposite would have pushed inflation rates right up again, back towards double-digit inflation and obviously changed that whole low inflation mentality. It would have been a disastrous development for this nation.

  We will not be doing anything like that, I assure you. But from time to time obviously there have to be some increases in indirect taxes. The petrol excise increases, which are coming into effect today, are part of the changes which were brought in at the time of the last budget. They still mean that we have the third lowest petrol prices in the Western world and that the price of petrol today in real terms is less than it was a decade ago.

  I also draw to the attention of the honourable member for Mayo that a factor in our low inflation rate at the present time is, as I said earlier, the falls in petrol prices. Crude oil prices are falling on the world scene, and that has been reflected in prices in this country. Increased discounting has caused prices to fall below 60c a litre in a number of our capital cities. With those sorts of factors applying, levels of petrol prices are far below the rates which were contemplated at the time we made those tax decisions. So petrol prices are being kept at relatively low levels. The impact of the decisions in the budget both today and in six months time when there will be a further set of increases will have a minimal effect on the CPI.

  The major impact of the changes is that an additional tax is imposed on leaded petrol. The reason for doing that through the tax system is simply to give some additional incentive to people to switch from leaded petrol to unleaded petrol, for health reasons. Many of them can switch from leaded petrol to unleaded petrol; they simply need to be informed about that, and my colleague the Minister for the Environment, Sport and Territories is in charge of a program to ensure that people do understand what they can do in that regard. I believe that something like one million motorists can change from leaded to unleaded petrol with relatively little cost. We have to deal with the issue of leaded petrol. It is a health problem. We do need to get the lead content of our petrol down and, by encouraging people through the tax system to switch to unleaded petrol, we are helping the health of the nation.