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Tuesday, 27 June 2000
Page: 18298

Mrs VALE (2:19 PM) —My question is addressed to the Minister for Finance and Administration representing the Treasurer. Would the Acting Treasurer detail to the House any new analysis which confirms the benefits of the new tax system for the Australian economy?

Mr FAHEY (Minister for Finance and Administration) —Members of the House and, I am sure, the honourable member for Hughes would be aware that many organisations have identified the significant benefits to Australia which result from the taxation reforms—benefits such as improving our indirect taxation arrangements and cutting company tax, capital gains tax and income tax. Access Economics has, for example, estimated that the government's reforms will grow the economy and create nearly 200,000 new jobs. Moody's Investors Service last week stated that:

Australian tax changes, scheduled to begin in July, will stimulate growth.

Their sovereign analyst for Australia said:

I think the tax reform which will come into place in July is a positive step. It is positive in terms of economic efficiency. ... a tax structure which should encourage growth. In addition, the removal of the wholesale sales tax in July will lower the cost of exports and boost our export competitiveness.

Other international bodies have also endorsed the government's tax reform package. The OECD, in its survey of the Australian economy which it released last December, stated:

Tax security will be better assured by a GST than by the indirect taxes it replaces.


The reduction in marginal income tax rates and marginal effective tax rates will improve work and saving incentives.

That report concluded:

The introduction of a more efficient tax system in July should help to consolidate the productivity gains that are now being seen ...

Last week a new report released by Citibank and Salomon Smith Barney also confirmed the significant benefits of tax reform which will flow to Australian consumers and businesses. The report estimates that the level of economic growth is expected to increase by around 1.6 per cent in the longer term as a result of the government's reforms. The report also predicts that the reforms will boost exports and investment—and we know that increased economic growth, increased exports and higher investment mean more jobs for Australians. In particular, the report notes that the indirect tax reforms will boost GDP through having more efficient indirect taxes, rather than the narrow and inefficient taxes such as the wholesale sales tax, bed taxes and financial institution duty. It also notes that indirect tax reforms will have the effect of lowering the cost of new business investment as a result, boosting the long run level of business investment. This report goes on to say that the government's business tax reforms will also boost growth by treating entities, industries and assets more evenly for taxation purposes. Again the report states:

This more level playing field should improve the quality of investment decisions and lead to a more effective use of capital. In addition, lower compliance costs are expected to flow from the reforms.

So, all in all, this report once again demonstrates the benefits of the government's tax plan for all Australians.