Senator SANDY MACDONALD (3:18 PM) —The ALP are hopelessly confused about their response to tax and their approach to tax reform. They know what we have done is right and they know what we have done with tax reform has been correct public policy. They dislike the GST so much that they are going to keep it. Every day in the Senate the ALP criticise some aspect of the GST without telling the Australian people what the official Labor Party policy is. They are hopelessly confused on any policy reform. We had the famous quote last week of the opposition leader, Mr Beazley, saying that if you do not have any policies, the issue of how you can afford them does not really come up. The opposition leader also says that he is going to roll back the GST. Well, let us wait and see, let us see the colour of his eyes, because Labor have committed themselves to a GST roll-back and the question is: what, where, when and how? If you roll back the GST it can only provide more complexity and it will mean that personal rates of tax can only be higher.

Labor have also promised that they are going to pay small business to collect the GST, they are going to hand back bracket creep, there is going to be more spending on education, more spending on health, more spending on training, more spending on regional infrastructure and increased funding for the states. The states already get the GST. The question is: how will Labor fund these promises and, at the same time, maintain the surplus? There is absolutely no possibility that they can. Labor can only do this by increasing taxes or running up the deficit and debts, as they did between 1992 and 1996 when the Commonwealth debt trebled from around $30 billion to $96 billion. The coalition government has substantially reduced that public debt—around $50 billion of it has been reduced. That has meant that interest rates have been lower and that the government has been able to spend our taxes in a way that has improved the economy and has helped people much more than high interest rates could ever do.

The government acknowledged that the introduction of the GST would be associated with a bring forward in housing construction and a consequent lull in activity after the GST's introduction. However, this lull is expected to be only transitional. As forecast in the government's 2000-01 Midyear Economic and Fiscal Outlook, dwelling investment is expected to decline in 2000-01 following a very strong growth over the last three years. The key factor underlying this forecast is the unwinding of the bring forward of building activity ahead of the GST in 1999-2000. More moderate population growth is also expected to exert a negative growth influence on new dwelling construction. To maintain home affordability, the government has required the states and territories to assist home buyers through the introduction of the First Home Owners Scheme as a condition of receiving GST revenues. This, of course, has now been extended, and any real estate agent will tell you it is already having a very substantial impact in the pick-up of the real estate industry. This announcement was made on 9 July and the stimulus will build on the positive confidence effects arising from recent reductions of official interest rates, with indications that further interest rate falls will be coming. The First Home Owners Scheme is encouraging first home buyers into the market and is cushioning the building sector's present downturn.

The housing affordability index rose 25 per cent for the September quarter. The report also notes that the loan repayment needed on a typical first home mortgage fell from $1,248 a month to $1,088 a month—nearly $200 a month. As 80 percent of Australians earn less than $50,000 a year, that is a very substantial monthly gain. The Australian Financial Review today indicated:

Following very strong rises in mid-1999, leading indicators of housing activity declined considerably—(Time expired)