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Wednesday, 18 February 1987
Page: 168

Senator GILES —My question is directed to the Minister representing the Treasurer. Has his attention been drawn to an article in the West Australian on Monday reporting the results of a survey by the Australian Chamber of Commerce and the National Australia Bank covering the response of business to the fringe benefits tax? What conclusions can be drawn from the survey results? Do those results support the contentions of the shadow Treasurer, Mr Carlton, who was reported in the article as saying that the fringe benefits tax was a big contributor to Australia's `raging' inflation and that the tax was nothing more than a new tax impost on businesses?

Senator WALSH —I have seen the report to which Senator Giles referred. The most important single fact to come out of it is that only 6 per cent of the businesses surveyed passed on the cost of the fringe benefits tax, which clearly makes nonsense of the wild assertions by the present shadow Treasurer that the fringe benefits tax would have a significant inflationary effect. What would have a very significant inflationary effect is the consumption tax, the value added tax, which the Liberal Party proposed to bring in until it was vetoed by the National Party. That tax would have added more than 4 per cent to the consumer price index; but it has now been vetoed by the National Party, as we know. We know that the Leader of the Opposition is in exile in Kingaroy. He calls the shots not only for members of his own Party but also for the Liberal Party.

I turn finally to the reference to Mr Carlton's comment that Australia has a raging inflation rate. It is certainly true, as the Treasurer, the Prime Minister and a number of other people in the Government and the Australian Labor Party have acknowledged, that our inflation rate is higher than any sensible person would like it to be. It is also true that the cause of the recent increase in our inflation rate has not been wages; it has been the effect of or the flow-on from the devaluation of the Australian dollar. I think it ought to be noted, and in particular Mr Carlton's attention should be drawn to the fact, that the inflation rate is nowhere near as high as it was when he was last in government and when John Howard was Treasurer. Indeed, one of the ironies of the Opposition's comment on an inflation rate for the year ending December which was higher than any sensible person would like is that that was the highest figure we have had since John Howard was Treasurer. That is something which should not be forgotten.