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Tuesday, 20 April 1999
Page: 3849


Senator COOK —My question is to the Minister representing the Prime Minister, Senator Alston. In view of the minister's unwillingness to come to grips with this issue at question time yesterday, I now ask: if, as Treasury anticipates, wages continue to increase at a greater rate than the consumer price index and, if as a consequence the existing pension benchmark of 25 per cent of average male weekly earnings overtakes the GST compensation benchmark of CPI plus 1.5 per cent, won't pensioners be left exactly where they would have been without the GST, that is, on 25 per cent of average male weekly earnings, but without any compensation for the 10 per cent GST?


Senator ALSTON (Communications, Information Technology and the Arts) —It is unfortunate that Senator Cook does not want to follow the detail, but presumably he is referring to comments that have been made by Neil Warren. Presumably he is the high watermark of your case. He said:

It is now generally accepted that, with the passage of time, if MTAWE rises faster than CPI, which is historically the case, then ultimately pensioners will get nothing more after the introduction of ANTS than they would have got before.

But that is not to say, Madam President, that they will be worse off. In fact, it acknowledges that either way pensioners will be better off.

Pensions rise by four per cent before any price rise. Then if prices rise, the tax package maintains pensions at 1.5 per cent above CPI. So, if wages rise faster than prices, pensions are already indexed to MTAWE, so pensions will rise further in front of prices. So, pensioners will be even better off if the pension becomes driven by wages rather than prices. Madam President, this is a double protection measure. The two promises do not erode one another and, under all scenarios, pensioners are better off, notwithstanding the price effect of a GST.

I think I pointed out yesterday when quoting from Mr Costello's piece in the Financial Review that Professor Neil Warren did not purport to point to anyone being worse off. This is the same old story of relativities. You have tried it time and again. Why don't you face up to the fact that what we are debating here is an historic attempt to reform an out-of-date 1930s tax package?

It is tragic that someone like Senator Cook can allow Mr Crean's office to write the entire committee report, to simply vacate the field, when even Mr Crean's brother, the Tasmanian Treasurer, signed off on the tax package.

Opposition senators interjecting


The PRESIDENT —Order! There are too many interjections.


Senator ALSTON —In other words, anyone who looks at this issue for a moment will know that this is an historic opportunity to reform the tax package to ensure that people are not worse off, and that in fact they are a lot better off and there are a lot more opportunities and incentives arising from massive taxation reductions, which you of course do not believe in at all. You much prefer the system of you handing it out and getting back political thankyou notes.

That time has past. We are in the business of sensible reform. We have ensured that those at the lower end of the income scale are properly protected. It is a fair package and, the sooner you acknowledge that and take John Della Bosca's advice, the better.


Senator COOK —Madam President, I ask a supplementary question. I remind the minister that it was Mr Geoff Carmody of Access Economics, the modellers of Fightback, who first put this proposal. Professor Neil Warren, John Hewson and Professor Ann Harding have put it as well and Treasury confirmed it in hearings of the Senate committee. In view of the foregoing, can the minister answer this simple question: will pensioners always be better off with a GST than they would have been without it?


Senator ALSTON (Communications, Information Technology and the Arts) —The short answer is that pensioners are like anyone else; they will not be worse off. They will in fact be better off. And if you want to refer to Professor Neil Warren, just remember what he said: that on average there appear to be no groups who are losers from a new tax system. Pensioners happen to be a group in the community. Why don't you face up to the fact that what pensioners like everyone else are getting is an historic opportunity for a new tax system?