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Tuesday, 7 May 1985
Page: 1416


Senator PETER RAE —My question is directed to the Minister for Finance. I ask the Minister whether he recalls having said on 20 March that a move towards greater emphasis on indirect taxation ought not to be contemplated unless there was agreement that any effects on the consumer price index would not be passed on to wages through indexation. I refer him to the published comments of Mr Joe Thompson which were made either in his capacity as President of the Labor Council of New South Wales or as a representative of the Vehicle Builders Employees Federation, or in both capacities. When referring to the prospect of a new consumption tax, he stated:

It should be made perfectly clear that in no circumstances will the trade union movement accept any discounting of the consumer price index.

Does the Minister believe that it is possible to achieve the movement which seems to be favoured by most senior Ministers when such a senior union official totally rejects the pre-condition which the Minister has required?


Senator WALSH —I do recall saying on 20 March or thereabouts something at least very similar to that which Senator Rae has attributed to me. I think that anybody who seriously thinks about this question would come to a very similar, if not identical, conclusion. As for Mr Thompson, I was vaguely aware of his statements but frankly I did not bother to read them because I doubted whether it was worth the time it would take to do so. Mr Thompson and I have had differences of opinion. They have not been public differences of opinion. I have disagreed with many of the statements and assertions that Mr Thompson has made in the past. For example, he has made some extremely wild statements about the likely level of employment in the car industry which have now been shown to be wildly wrong. Indeed, in total, about the only people I can think of off the top of my head whose economic forecasts have been as erroneous as Mr Thompson's are the discredited former Treasurer and possibly, one might even say, the former Treasury Secretary.

Obviously, Senator Rae has drawn attention to a very serious question, and that is that it would be quite catastrophic-I do not think this is overstating the case-if a cosmetic change in the consumer price index caused by a change in the taxation system were to feed back into wages, thereby sustaining a very much higher level of inflation. What significant people in the trade union movement say about that is, I think, terribly important. However, given Mr Thompson's record, and I think the general perceptions about him, I do not think anybody in the Government would be unduly worried about what he has said.