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Wednesday, 31 May 2000
Page: 16683


Mr TIM FISCHER (2:48 PM) —My question is directed to the Treasurer and it relates to different OECD matters. On this day when the Prime Minister, a former OECD delegate, passes the period of service of Paul Keating, I ask: would the Treasurer inform the House of the OECD's latest report on the world economic outlook. What are the OECD's projections for the Australian and world economies?


Mr COSTELLO (Treasurer) —I thank the honourable member for Farrer for his question and, on behalf of the government, I too add my congratulations to the Prime Minister for passing the period of time of the prime ministership of Mr Keating. May I say that Australia is much better for his prime ministership. Interest rates are lower, the budget is in surplus, unemployment has fallen, and many more Australians have been given an opportunity under the prime ministership of Mr John Howard.

As the member for Farrer has reported, the OECD released its latest report on the world economic outlook. Members of perhaps both sides of the House will be pleased to know that it has revised up its projection for economic growth in Australia. I am sure the Labor Party would welcome the fact that Australia's growth prospects have been revised up. The OECD has revised up the expectation of growth in the year 2000 to 3.9 per cent and in 2001 to 3.7 per cent. I am sure both sides of parliament would welcome the fact that the OECD has projected the unemployment rate to continue to decline to 6.4 per cent in 2001. That would be the lowest unemployment rate in a decade and, if it should go through six per cent, we would have the lowest unemployment rate in 25 years. I think all members of the House would welcome the fact that unemployment in Australia has fallen. The OECD also states that increase in the CPI due to the introduction of the GST is not expected to become embedded into core inflation. Again I say to trade unions and employee organisations that there is no need to seek wage claims to compensate for GST, because you have received tax cuts.


Mr Tanner —How long will they last?


Mr COSTELLO —I am interested that the Labor Party interjects, because it was a point that the Labor Party made in 1985. I will get the quotes, if the House wants them, of when the Labor Party supported the GST. In 1985 it made it clear to unions that it did not expect wage claims to chase the CPI. In fact, the point was made by the then president of the ACTU. When the Labor Party supported the GST—let us put this on the record—they made it entirely clear that employees should not chase wage increases on the basis of those price changes. There was no stronger supporter of the consumption tax in the Labor Party cabinet than the now Leader of the Opposition—as appears in the memoirs: supported through the cabinet by the Leader of the Opposition and, as I recall, the then member for Holt. In those days, the Labor Party had leadership, and he was a good follower. Today, he is still a good follower. The trouble is that it has no leadership. If he had any ability to lead, he would stand down there and join with us and say that tax reform is something that this country has missed out on for the last 20 years and it has to be done now. They have the idea that they are going to try to skate through the next 30 days, fill in 10 questions a day and attack the goods and services tax and then, on 1 July, they are going to say, `That campaign that nourished us for two years is all over. We, the Labor Party, are so opposed to the GST that we are going to keep it.'

This is a cheap, populist campaign against change by people who have no capacity to lead, only to follow. And, as has famously been said, the backbench may follow you, but only out of curiosity. The OECD also said that the budget will be in structural surplus in 2000 for the third time—1998, 1999, 2000—and will be again in 2001. So the OECD has independently confirmed a strengthening economy. Australia will be better off, will be stronger, for accomplishing tax reform. Notwithstanding the campaign of the Labor Party, they have failed. They have failed to defeat the introduction of a new tax system. Now all they hope to do is to benefit from it.