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Thursday, 19 March 1987
Page: 982

Senator MAGUIRE —My question is directed to the Minister representing the Treasurer. Has the Minister's attention been drawn to a transcript of an interview last night by the National Party member for the Victorian seat of Gippsland, Mr McGauran? It reads:

For the time being remaining in Coalition will serve the anti-Labor cause best, although something like the consumption tax may, at a later date, provide the catalyst to end the Coalition.

As the consumption tax is clearly on the present Opposition leadership's political agenda, can the Minister provide an assessment of the economic implications if such a tax were implemented? Does the fact that wholesale sales tax collections rose 66 per cent in the last two Budgets in 1981 and 1982 suggest very strongly that consumption taxes are still on the Liberal agenda?

Senator Chaney —Mr President, I raise a point of order. I take the same point of order as I have taken with respect to a number of questions asked over the recent weeks of sitting. Once again I think the question is clearly out of order because it raises hypothetical questions about policies which are quite undefined in the question and to which any range of meanings could therefore be given. I would ask you to rule the question out of order.

The PRESIDENT —A Minister cannot be responsible for, or comment on, what the Opposition's policies are supposed to be, but if the Minister confines his remarks to that part of the question that relates to his portfolio, I will allow the question.

Senator WALSH —Certainly, Mr President. I think the matter is more within the portfolio of the Treasurer rather than mine.

Senator Chaney —I rise with respect to the ruling that you have given, Mr President, to seek clarification, because it seems to me that the whole question is predicated on the reference to the Opposition's policy-or what the honourable senator claims to be the Opposition's policy-in a very broad way. It is hard to see how there could be any severance of the opening of the question from the rest of it. I would ask you, Mr President, to consider clarifying your direction and indicating what part of the question escapes the defect from which you admit the question suffers.

The PRESIDENT —I will allow the question to go through. I will closely listen to the Minister's answer. If I believe the Minister's answer is out of order, I will pull him up.

Senator WALSH —Mr President, the first question which was asked was whether my attention had been drawn to a transcript taken from a statement made by Mr McGauran on the Australian Broadcasting Corporation television news last night. To refresh the memories of honourable senators, after the series of delaying tactics, I repeat what Mr McGauran said:

For the time being remaining in Coalition will serve the anti-Labor cause best, although something like the consumption tax may, at a later date, provide the catalyst to end the Coalition.

So it is very clear what Mr McGauran's assessment of the Liberal Party's taxation intentions is. In normal circumstances I do not think Mr McGauran would be reported by the ABC on that or indeed any other subject. But I suppose that when the Federal National Party is split 14 to 12, what any one member of the National Party, particularly if he is in that group of 14, says or does is certainly a matter of considerable political importance. Therefore, like one or two other members of the parliamentary National Party in the last two weeks, Mr McGauran has had greatness and importance thrust upon him. Of course, the answer to the question about a consumption tax and the economic effects of a consumption tax, a value added tax or for that matter a major widening and deepening of the existing wholesale tax system depends on the size of the change that is made. But in general any tax of that type, be it VAT, a consumption tax or a major widening and deepening of the wholesale sales tax base, would increase the consumer price index by something less-but not too much less-than the percentage increase in the rate of tax. We have some experience from New Zealand--

Senator Chaney —I take a point of order, Mr President. My point of order is that the answer that has just been given by the Minister demonstrates the impossibility of his answering the question in the terms asked by the South Australian senator. When the Government put forward a proposal for a broad-based tax, the particular proposal put forward by the Treasurer, Mr Keating, involved an increase in the consumer price index of about half of the amount of the tax that the Treasurer was suggesting would be put forward. My point of order quite simply is that the answer that the Minister has given, saying that the amount of the CPI change would be close to the amount of any indirect tax, is quite obviously not true in the case of the indirect tax that was proposed by Mr Keating, and would not be true of any indirect tax proposal that included, for example, a removal of the wholesale tax. My point is that the Minister has already got to the stage in his answer where it is quite clear that he cannot give a sensible answer in terms of the question that was asked.

The PRESIDENT —I uphold the point of order and I ask the Minister to conclude his answer as quickly as possible.

Senator WALSH —Certainly, Mr President. Any changes to taxation which raise more revenue from indirect taxes would increase the consumer price index. Of course, the precise extent of that increase in the consumer price index would depend on the amount of additional revenue raised. In the case of New Zealand, where this has been done, the last report that I saw was that New Zealand had an annual rate of increase in the consumer price index of 18 per cent. Basically, the choice, if Mr Howard were to become Prime Minister, would be between a deficit of $14 billion or $16 billion or the imposition of a massive consumption tax, which would have a very severe impact on the consumer price index.