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Monday, 2 June 2003
Page: 15584


Mr HUNT (2:21 PM) —My question is to the Treasurer. Would the Treasurer advise the House of the findings of the OECD's recent report on comparative tax rates? How does Australia compare with other OECD countries, and is the Treasurer aware of any alternative policy approaches?


Mr COSTELLO (Treasurer) —When I was looking at the media yesterday, my eye was attracted to an article in the SundayAge. I thank the member for Flinders for asking me a question in relation to it. The Sunday Age reported that, on the basis of the OECD revenue statistics, including social security contributions, Australia is the sixth lowest taxed country in the OECD. In fact, the countries that have lower rates are the United States, Mexico, Korea, Japan and Ireland, marginally below Australia. Above Australia in terms of the tax to GDP ratio, according to the OECD, are countries like New Zealand, Switzerland, Canada, the United Kingdom, Norway, the Netherlands, France, Austria, Belgium, Germany and, of course, all of the Nordic states. According to the OECD, Australia is sixth from the bottom, with some countries which do not have social security systems anything like Australia's, such as Mexico and Korea, the only ones that are below it. That confirms Australia's position as a low tax to GDP country.

After reporting that, the Sunday Age reported something else even more interesting. It reported Labor's pledge to cut tax and to spend. This apparently was a speech given to the Fabian Society by none other than the member for Fraser. I have heard of Labor's plans to spend more, because Labor claims more should be spent on Medicare, Labor claims more should be spent on health care agreements, Labor claims more should be spent on pharmaceutical benefits and Labor claims more should be spent in relation to higher education. Labor claims more should be spent in relation to practically every area of government activity. What I did not understand was that Labor plans to increase spending in all of those areas by cutting taxes. I thought to myself, `Why haven't we thought of that before? All you have to do to spend more is to cut taxes.'

So I read very carefully as to how this was all going to be done down at the Fabian Society from the member for Fraser—his first big economic outing on how he is going to spend more by cutting taxes. I thought I would get some idea of the taxes he was going to cut, because we all know he thought the tax cuts in the budget Tuesday a fortnight ago were not large enough. Alas, there was no idea at all about how to cut taxes. There was just a grab bag of promises which are unfunded to spend more and cut less. And, of course, we should not leave the third leg of the trifecta out—the promise we had from the member for Hotham. Remember that, BS? BS: bigger surplus Crean. We tax less, spend more and have bigger surpluses—Labor's plan for the economy.

I do want to say in defence of the Fabian Society that they did have one person down there who decided that it was time to call Labor's policy for what it was. Dr Keating—not the Keating who was a onetime Treasurer but Dr Michael Keating, former head of the finance department as well as of the Prime Minister's department—slated Labor for criticising Treasurer Peter Costello on the grounds of tax. He said that Labor should instead be considering increasing taxation. He said:

Taxation can't be divorced from expenditure needs, and expenditure needs are likely to rise in future ...

Dr Michael Keating knows what everybody in Australia knows—that every time the Labor Party promise to spend more, behind it is a promise of increased taxation. They have not changed their spots. They are high tax, high spend, high budget deficit and high interest rates. When it all comes back down at the Fabian Society they stand absolutely exposed on that front.