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Thursday, 12 May 1994
Page: 751


Senator SHORT —My question is directed to the Leader of the Government in the Senate. I remind the minister of the Prime Minister's promise before the last election to return bracket creep to taxpayers when he said:

. . . we will return to tax payers the impact of inflation, even low inflation, on the tax system.

I ask: why has the Labor government broken this tax promise, too, in this budget, which will see bracket creep of over $4 billion to $6 billion in this and the next couple of years ripped off personal taxpayers? This is another one of the string of Labor's broken tax promises. Could he also inform the Senate how many more of the government's pre-election promises remain to be broken?


Senator GARETH EVANS —The important thing to do in these situations is to look at the total context. Part of that total context is that the government actually brought forward the first round of tax cuts in the last budget against the projected timing of those cuts, representing in the process a significant gain to the great majority of the work force. Those tax cuts which were brought forward last year were targeted to the majority of the full-time work force on low to middle incomes.

  In addition, of course, we saw the last budget bring in a new tax rebate for low-income earners which ensured that all taxpayers received at least $150 from the personal income tax cuts in a full year. Taken together, those measures delivered substantially more to taxpayers from the first round of tax cuts than was promised before the election. That is the first part of the context.

  The second part of the context is that, of course, there is going to be some element of bracket creep in any situation where there is any inflation rate at all above zero and no adjustment to the actual tax scales. But the level of bracket creep that can be anticipated over the years ahead is going to be very much less than the levels of bracket creep that we have become accustomed to in this country over many years with many successive governments, simply because for so many of those years we have been living with inflation rates that are very much higher than those that we are looking at now and can expect to sustain in the period ahead.

  So the degree of the bracket creep that is involved, as compared with the total size of the income tax take, is really very much smaller than has been a familiar part of the fiscal landscape for very many years under an opposition government as well as ours. The third point to make in reply to all this is that the government has not in any way reneged on its promised tax cuts for the future. They will be delivered in full. The timing, of course, was deferred last year—


Senator Short —Why weren't they referred to in this budget?


Senator GARETH EVANS —There was no need to refer to it because we made our position clear in our last budget last year. Those tax cuts will be delivered, as has been said by the Prime Minister and by the Treasurer, around about 1998. That is our expectation. That particular deferral has been on the record for the best part of a year—since the last budget. It is a reasonable deal for Australian taxpayers to have some deferral of the next round of tax cuts in an environment where the bracket creep factor is going to be much less, as I have said, than it has been in the past, and in an environment where the last round of tax cuts are only just coming through to them, but they were in fact brought forward from that which was originally anticipated.

  What makes it a very good deal in total for Australian taxpayers is that the condition of the economy—opposition members can eat their hearts out—is much better than it has been for a very long time, and every single aspect of that economy, every single economic fundamental, is looking good at the moment. Every time it looks good, those opposite talk it down, they weep and they moan, because obviously the political dynamics of that are not to their taste and not to their satisfaction.

  But those opposite should ask the community what it thinks about this particular budget, ask the business community, ask the international finance sector, ask everyone making judgments about the Australian economy—they are full of confidence and optimism, and they are entitled to be so.


Senator SHORT —Mr President, I ask a supplementary question. Once again, the Leader of the Government in the Senate has disclosed his total lack of knowledge of the government's tax promises—


Senator Cook —Mr President, I raise a point of order. We sit through this all the time. Question time is for questions. We have now a statement being entered into by Senator Short. There is no question there, and if he does not have a question he should be sat down immediately.


The PRESIDENT —Just as before, it is a bit early for me to tell whether it is a statement or a question, but I would ask you to keep it to a question. You do not have too much time, anyway.


Senator SHORT —I hope that the time taken by the point of order is added to my time.


The PRESIDENT —Just get on with the question.


Senator SHORT —In prefacing my supplementary question, I point out to Senator Evans that the tax cuts that were made last year had nothing at all to do with the Prime Minister's pre-election promise on handing back bracket creep; they were part of tax cuts announced before the additional bracket creep promise was made. So I repeat my question to him: did the Prime Minister promise to return bracket creep? Has he done so? If not, when will he do so? Senator Evans knows he has not done so. Why not?


Senator GARETH EVANS —Rather than tracking over the same ground again as Senator Short just did in his supplementary question, I suggest that Senator Short would be much better occupied devoting his attention to explaining to the Australian public how exactly he and his side of politics are going to square the circle that they have created for themselves. By talking in terms of a $3 billion cut in the deficit—


Senator Panizza —Mr President, I raise a point of order. I direct you to direct this minister to answer the question. This policy of the coalition has nothing to do with answering the question and it is time that you brought those ministers back into line.


The PRESIDENT —You are not in a position to direct me to do anything, but I would ask Senator Evans to keep to the point.


Senator GARETH EVANS —Rather than talking to us about tax cuts, those opposite ought to ask themselves something. If they are opposed to anything in the nature of tax increases, but at the same time want us to secure a $3 billion reduction in the deficit—and every one of their shadow ministers who opens his or her mouth on this subject wants us to spend an extra $100, $200, $300 or $400 million on some particular program—they are in deep trouble when it comes to their own credibility. They were in deep trouble when they started making predictions about what we were going to do in this budget; they are in deep trouble with their analysis of it; they are in deep trouble because they are phonies—intellectually, morally, politically and every other way. They are missing in action, and they are phonies.