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Wednesday, 25 February 1987
Page: 690

Mr JENKINS —Can the Treasurer inform the House of the extent to which the tax reform package's revenue measures underpin the Government's fiscal policy?

Mr KEATING —The base broadening measures of the Government's tax reform proposals account for about $1.5 billion of the $4.5 billion of tax cuts which the Government is currently putting into effect. The remaining $3 billion is being paid for by natural growth in revenue and cuts to government outlays. In other words, they are provided by bringing down the Commonwealth Budget deficits. Yesterday, again, the Leader of the Opposition made clear that he would repeal those base broadening measures in respect of capital gains and fringe benefits and also repeal the lump sum measures, plus other measures, which of course would remove most of the $1,500m of the base broadening measures which we have. But in a remarkable uncharacteristic burst of candour, the Leader of the Opposition, when asked how quickly he could cut personal income tax rates, said: `As quickly as economic circumstances permit it'. In other words, he said: `Look, we know all of this talk about tax cuts is phoney and that the nation cannot afford them, that its income is going down', and when the question about tax cuts is put the answer is: `As quickly as economic circumstances permit it'.

Mr Spender —Madam Speaker, I take a point of order. The question directed to the Treasurer was about the Government's tax policies and how they underpin the Government's fiscal policy. What he is now saying has nothing to do with that question. In accordance with the ruling that you have given before, Madam Speaker, he should be directed to be relevant.

Madam SPEAKER —The Treasurer will be relevant to the question.

Mr Keating —I will speak to the point of order, Madam Speaker. The relevance is that, with the nation's national income going down via the terms of trade, any talk in the nation from any quarter about a higher living standard from tax cuts that the nation cannot afford affects the Government, government policy and the nation.

Mr Spender —On a point of order, Madam Speaker--

Madam SPEAKER —Order! The Treasurer is speaking to a point of order. The honourable member for North Sydney will resume his seat.

Mr Keating —Madam Speaker, I have no intention of being gagged by a frightened Leader of the Opposition or his lieutenants on this question of his irresponsibility on tax.

Mr Spender —On a point of order, Madam Speaker: In the first place you made a ruling, quite rightly, that the Treasurer should be relevant. In the second place, therefore, it is not open to the Treasurer to canvass that ruling, and in the third place what he was then saying was once again utterly irrelevant. He was, as well, indulging in the usual kind of personal abuse for which he has become notorious.

Madam SPEAKER —The honourable member for North Sydney will resume his seat. The Chair made a statement that the Treasurer should be relevant to the question.

Mr KEATING —All of us in this Parliament know that, with our national income having been cut so seriously in the way in which it has, it is arrant irresponsibility for any party to be wandering around saying `We will give you a rapid increase in living standards via tax cuts', which we know could not be paid for, given the fact that there is a shopping list around in the hands of the Opposition of $14 billion. Also, yesterday the Leader of the Opposition was indecent enough to say of me that my claims were figments of my imagination.

Mr Spender —I rise on a point of order.

Madam SPEAKER —Order! I find the Treasurer relevant to date, if that is what the point of order is. I am listening to the Treasurer. Before the Treasurer resumes, may I say to the House that in answering or asking questions or in debate in this House there is a certain amount of flexibility allowed to paint a background, as the Leader of the National Party will know he was given this morning.

Opposition members interjecting-

Madam SPEAKER —In debate.

Mr Sinclair —I did not speak this morning.

Madam SPEAKER —I said `and in debate'. The right honourable gentleman was not listening to me.

Mr Sinclair —You meant my Deputy, Madam Speaker.

Madam SPEAKER —I did say `Deputy'.

Mr KEATING —Last week when I referred explicitly to each explicit reference of the Leader of the Opposition's tax policies, I presented to the House a list of them with the references. I now invite the Leader of the Opposition to take a copy of the references and to reply to me in writing where I misrepresented him. Be honest, Honest John. Give us a reply. Tell us where the lies are, where the distortions are. You are being trapped, aren't you? You are being trapped.

Mr Howard —You are the one who is being trapped.

Mr KEATING —No, I am asking you. You called me a liar. Tell me where the lies are there. Let me know where the imagination is. It is interesting that when Mr Howard was Treasurer the 60 per cent rate stayed there for five years. There was $3 billion out of Bass Strait, there were no cuts in tax; but now the Opposition is all overcome with the question that there must be lower tax. If there must be lower tax, tell us where the $14 billion of outlays cuts will come. The Leader of the Opposition made quite clear yesterday that after an election he would introduce a mini-Budget to pay for tax cuts, $6.6 billion on the scale that the Opposition has published. He made it quite clear yesterday in his statement that there is a commitment to income splitting, $3 billion.

Mr Spender —I rise on a point of order. I remind you, Madam Speaker, that the question was directed to tax and the extent to which the Government's tax policies underpin its fiscal policy. What the Treasurer is now saying can on no view of relevance be regarded as relevant, and I ask you so to rule.

Madam SPEAKER —To my mind, the Treasurer is painting the background. I expect him to be relevant.

Mr KEATING —Again I refer to the background. The background is that if the Leader of the Opposition can get a tax auction block going for this country, if he were to get to the position of trying to force the Government into the kind of irresponsible tax promises he is now putting, this nation's economic credibility and prosperity would be massively injured as our exchange rate collapsed and our interest rates drove us into recession. That is the fact of the matter.

Yesterday, again we had a commitment by the Leader of the Opposition to income splitting and child care rebates, $3 billion; repeal of the fringe benefits tax, capital gains tax, lump sum superannuation, $860m; so that is $3,860m. He then talked about expenses incurred in earning income being deductible, negative gearing and entertainment, $420m; that is $4.2 billion; plus the tax cuts of $6.6 billion. He was still talking about $10 billion yesterday. He has politely forgotten all the references by the Deputy Leader of the National Party a week earlier.

The fact of the matter is: How can any person who has been Treasurer of this country parade such irresponsibility simply to get his political skin over the line in an election? How can he, knowingly and wantonly, put the nation's economic credentials and security at risk just to get himself elected? That is what it amounts to. He is not saying: `Look, the Government is right, the Government is doing the right thing, the Government is pulling the fiscal policy down, the Government is paying for tax cuts which it knows the nation can afford. The Government is making people who have not paid tax pay it for the first time'. No, he is saying: `What we will do is offer bribes that we know will wreck this country, but who cares as long as we are the government?'. That is where the Opposition stands. That is the new honesty of the Opposition in 1987, from a former Treasurer.

I conclude by saying that now that on two occasions my statements in documenting the Opposition's policy have been referred to as lies, distortions, figments of my imagination, I invite the Leader of the Opposition to tell me which reference is wrong and what the right reference should be. Secondly, I invite him to reflect once again--

Mr Cadman —I rise on a point of order. There are indications that the Treasurer is concluding his answer, but I draw your attention to standing order 85. We have listened to this argument, exactly the same argument day after day.

Madam SPEAKER —Order! The Treasurer is concluding his remarks.

Mr KEATING —I again invite the Leader of the Opposition, a former Treasurer, and his front bench to ponder this nation's true economic circumstances and ponder what they are trying to do, and the auction block in tax they are trying to create which would tear this nation apart and ram it into recession.