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Monday, 31 May 1999
Page: 5519


Mr PROSSER —Mr Speaker, my question is directed to the Treasurer. Can the Treasurer advise the House of the adequacy of the government's compensation arrangements offered as part of the new tax system? How does this compare to that which was offered in order to offset the effects of the increase in the wholesale sales tax rates in 1993?


Mr COSTELLO (Treasurer) —I thank the honourable member for his question. One of the things that the government will be doing as part of the new tax system is broadening the indirect tax base, radically reducing income taxes, increasing family allowances and improving Commonwealth-state relations. As a result of tax reform, people who are receiving pensions and allowances will get a real increase in their income. Those people trying to defeat tax reform—let us say it plainly—are trying to defeat real increases in pensions for the aged. If the tax reform goes through, the aged get real increases in their pensions.

If tax reform does not go through, you will still get 25 per cent of male total average weekly earnings, but you will not get the four per cent supplement on top of it. If tax reform does not go through, you will still get allowances indexed to the CPI, but you will not get the four per cent increase and the two per cent real. From the government's point of view, to be able to reform the tax system and improve the lot of pensioners and allowees shows you what you can do with social policy on a better economic base.

What is the alternative to no tax reform? We know that the Australian Labor Party wants the wholesale sales tax of the 1930s and the rates of 10, 12, 17, 22, 32, 41, 45—you name it, there is a rate of some description. We know that Labor's policy is the same now as it was in 1993. In 1993, because they had a declining—Mr Speaker, he does not like being reminded of his record.


Mr Beazley —Mr Speaker, I raise a point of order. He constantly makes the point about the 1930s tax, then defends his 1940s tax. But he defends it irrelevantly, because his question was not on Labor policy; it was on his own intentions.


Mr SPEAKER —The Leader of the Opposition needs to note that the Treasurer is being entirely relevant and was asked to make a comparison.


Mr COSTELLO —Yes, Mr Speaker, I was asked whether or not there have been times in Australia's history when indirect taxes were increased without compensation. The answer is there have been.


Mr Beazley —And look at the rates you are increasing.


Mr COSTELLO —Although the Leader of the Opposition is interjecting again very loudly, the fact is in 1993 the Australian Labor Party increased the rates of all wholesale sales taxes—every single one of them. There was a rate of 10, and the Australian Labor Party took it to 12. There was a rate of 15, and the Australian Labor Party took it to 17. There was a rate of 20, and the Australian Labor Party took it to 22. There was a rate of 30, and the Australian Labor Party took it 32. How much compensation did they introduce? How much compensation did the Australian Labor Party give to pensioners? I see the member for Werriwa is smiling up the back. He knows.

How much compensation did the Australian Labor Party give to pensioners when it increased all rates of the regressive wholesale sales tax? Not only did they decide to give no compensation but, just for good measure, they decided to increase income taxes as well. They took away the income tax cuts that they had promised. Actually, they were not a promise; those income tax cuts were l-a-w. They took them away. They gave no compensation. They increased wholesale sales tax rates. This is the government which is broadening the indirect tax base, increasing compensation, reducing income taxes, giving a new tax system for a new century. Leaderless, directionless, chained to negativity because they cannot put forward a positive idea on anything, guess who is opposing it? None other than the reactionary party of Australian politics, the Australian Labor Party.