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Friday, 20 March 1987
Page: 1090

Senator BLACK —Can the Minister representing the Treasurer provide the Senate with an estimate of the cost to revenue if a system to provide for income splitting were implemented?

Senator WALSH —I am not sure whether I heard the question properly but I think it was on income splitting. The Treasurer put out a statement earlier this year which said that the cost to revenue of income splitting would be of the order of $2.85 billion. It was, of course, the policy of the Opposition, as Senator Messner pointed out in a letter to the Australian Financial Review of 2 March.

Senator Messner —Not the one you are talking about.

Senator WALSH —I am referring to Senator Messner's letter in which he said that the policy put during the 1984 election campaign is still, up until this point, the policy of the Opposition and that that policy is for income splitting.

Senator Chaney —I raise a point of order, Mr President. Senator Black's question was in order, but the Minister is now straying into areas where he is choosing to misquote the Opposition's policy. Instead of answering a perfectly sensible and straightforward question in a perfectly sensible and straightforward way, he is trying to politicise it. I am surprised that the Minister should stoop to such depths in this chamber. Mr President, you should ask the Minister to answer the question and not to enter into realms of speculation. I stress that it is speculation because he is misquoting the policy of the Opposition at the last election.

The PRESIDENT —Senator Chaney is correct; the question was in order. However, I ask the Minister to answer the question within the areas of his own responsibility only.

Senator WALSH —Certainly, Mr President. My responsibilities, of course, include representing the Treasurer in the Senate on taxation matters. Senator Messner raised the question by way of interjection, and I have here a copy of Senator Messner's letter. It says:

It must be stated that the commitment we undertook before the 1984 election is current Liberal/National Parties' tax policy. It remains our commitment to introduce a system of income-splitting for tax purposes and also for the progressive introduction of tax rebates for child care expenses.

The cost of income splitting, which is what Senator Black asked me about, is $2.85 billion or thereabouts. In other words, if income splitting were to be introduced and no other changes were made, the Budget deficit would blow out by another $3 billion. When one looks at the totality of ideas that have been floated by the Opposition, or the quasi policies or ideas advanced tentatively, pending veto by the National Party--

Senator Chaney —On a point of order, Mr President: The Minister is clearly debating the question. He has misquoted the Opposition policy, which was for the phased introduction of income splitting. There was never a policy before the 1984 election. However, my point of order is that the Minister is now debating the question.

The PRESIDENT —I am listening to the Minister's answer carefully. It is a difficult area. I will allow him to continue his answer, but I would remind him again to limit his remarks to that area of his responsibility only.

Senator WALSH —Certainly, Mr President. Since I have been accused by the Leader of the Opposition of misquoting Opposition tax policy-I think that was the term he used-I table a copy of the letter from the Australian Financial Review of 2 March from Senator Messner, shadow Minister for Finance and Taxation, Parliament House, Canberra. I have quoted verbatim the second and middle paragraph of that letter. If Senator Chaney does not like that, it is something he had better have out with Senator Messner and not with me.

Senator Walters —Now you have said it all, sit down.

Senator WALSH —I have not said it all; I could go on for ages if the honourable senator really wants me to. The central point, and much more important than whatever squabbles there may be between the Liberal Party and the National Party over what is policy, is the fact that income splitting would cost the revenue near $3 billion. In the absence of offsetting changes it would blow out the Budget deficit by $3 billion and, when it is put together in the totality of the idea that has been suggested, blow rates up to something like 30 or 40 per cent before the dollar crashed and hyper-inflation took over.