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Wednesday, 24 October 1984
Page: 2322

Senator MAGUIRE —Is the Leader of the Government in the Senate aware that the former Treasurer and now preferred Opposition Leader, Mr Howard, said in his March 1981 taxation statement that it was not possible to raise sufficient additional indirect taxation to provide noticeable personal income tax relief without adding to the consumer price index in a major way? Has anything changed since then to make this statement untrue? Is the Liberals so-called tax policy highly inflationary?

Senator BUTTON —I am aware of that statement made by Mr Howard in 1981. It has been drawn to my attention in the context of the recent discussion of these matters. Nothing in particular has changed. The policy of the Liberal Party of Australia-if we can take such a vague statement at its face value-is highly inflationary.

Senator Chaney —You haven't got a policy. What are you talking about?

Senator BUTTON —The policy of this Government is not highly inflationary compared with Senator Chaney's policy. People will rely on the record to see that. On Mr Howard's own admission, on 1981 figures each $500m raised in indirect taxes causes a one per cent rise in the consumer price index. At Mr Howard's launch of the taxation policy the other day he said that inflation is lower now and that therefore this is a better time to act than it was in 1981. I guess we can agree that it is a better time for most Australians. However, that argument is spurious. Inflation is lower now-no thanks to the Liberal Party-but a one per cent increase is just that, no matter what the inflation rate is. In fact at a lower rate one per cent represents a greater proportion of any increase. Mr Howard, as an example, said that a drop of 5c in the dollar across the personal income tax scale would need a rise of $3 billion in indirect taxes.

Senator Chaney —I thought you wanted a sensible taxation debate.

Senator BUTTON —I am getting interjections concerning a sensible taxation debate . I am quoting from what Mr Howard said. If Senator Chaney, in pursuit of his ratings in the opinion poll, is saying that Mr Howard is incorrect and that is not a sensible contribution, I will stop quoting Mr Howard. This additional $3 billion would raise the consumer price index by 6 percentage points. We would be back again on the old treadmill of Liberal-National Party government. Mr Howard went on to say there would be additional flow-on consequences for the consumer price index through the wage system and that these additional flow-on consequences are hard to quantify. Therefore, the Opposition's policy is inflationary. If the $2.2 billion cost to revenue of income-splitting is to be met an alternative government would have to raise indirect taxes, as of course it has said it would do. It would do this over a series of Budgets, thus building in inflation. As I said, we would be back to the same old discredited round of the past.

In referring to the cost of income splitting proposals, I make the point that insofar as the $18,000 cut-off figure is concerned Senator Chaney said yesterday in the Senate, in relying on a costing for that, that the costing was $650m as estimated by Mr Eric Risstrom. He chided me for giving a higher costing than $ 650m. He relied yesterday on a costing provided by Mr Eric Risstrom of the Taxpayers Association of Australia. However, Mr John Howard, the former Treasurer of this country, in 1981 estimated the cost of that program to be $1.1 billion. The cost of the same proposal-

Senator Chaney —You are on different proposals and different tax rates.

Senator BUTTON —Yesterday, in the course of the debate, the Opposition reduced the figure in respect of the same proposal. That just shows that the tax policy, which according to Mr Peacock on Monday has been 12 months in preparation, really has not had much preparation at all.