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Thursday, 10 December 1998
Page: 1865


Mr CREAN —I direct my question again to the Treasurer. In the light of his comments on the work of Econtech, has he seen the modelling by Econtech on the effect of the government's tax plan on the housing indus try? I ask whether he is aware that the report states:

Housing investment is likely to be higher initially and then sharply lower. Further out . . . housing investment will be 2% lower than it would otherwise be for the indefinite future.

Treasurer, how many economists will it take before you admit that your new 10 per cent tax on almost everything will destroy jobs and send important industries backwards?


Mr COSTELLO (Treasurer) —I have probably already told the House that, if you reform Australia's tax system and you take taxes off exports, you give exports a great boost. That is a great thing. If you take the burden of wholesale sales tax off the motor car industry, you are going to get a much more vibrant motor car industry in this country. I do not know why former ACTU officials would be opposed to that. If you broaden the indirect tax base from just manufactured goods to goods and services, you take the tax burden off the manufacturing base and you create much more equity in that growing part of the economy. All in all, and for the reasons that the Labor Party said in 1985 when it supported tax reform—


Mr Crean —Mr Speaker, on a point of order: this was a specific question about modelling that he referred to and now wants to duck. I am asking you, on relevance, Mr Speaker: will you ask him to address the question properly and relevantly?


Mr SPEAKER —The answer has been entirely relevant.


Mr Crean —Oh, you're a joke.


Mr SPEAKER —I heard what the member for Hotham said, and I made a presumption—and I will give him the benefit of the doubt—that his remarks were not addressed to me.


Mr Crean —It was addressed to him—he is a joke.


Mr SPEAKER —The member for Hotham now runs the risk of me taking action against him.


Mr COSTELLO —The reasons that the Labor Party gave in 1985 when it had the leadership were:

The government's preferred approach would mean a switch in the tax system, with more tax paid at the time income is spent, but less tax paid at the time income is earned. This will reduce the level of tax avoidance and evasion because many of the ways income tax is avoided will be directly removed by new laws. There will be bigger cuts in income tax than increases in consumption tax.

That is the policy that was supported by Kim Beazley and Gareth Evans and the Labor Party in their document on tax reform in July 1985. They were right then, and they are wrong now. I have finished.


Mr Crean —He has finished, and he hasn't defended his tax package—he has talked about Labor's.


Mr SPEAKER —I had presumed, I have to say, that the Treasurer had not finished and was going to refer to the housing industry. That is why I allowed him to continue.