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Fischer fails economics



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N E W S • Ft E L E A S E

23 February 1993

FISCHER FAILS ECONOMICS

"Mr Fischer's suggestion that changing petrol prices would not affect demand for fuel and not increase pollution, is nothing short of absurd", the Federal Minister for Resources, Mr Alan Griffiths said today.

"Mr Fischer's comments raised serious questions about his economic literacy." Mr Griffiths added.

Mr Griffiths was commenting on recent statements by the National Party leader that proposed price changes would not affect petrol demand.

"The Liberals and Nationals continue to peddle an irresponsible policy line that they will reduce fuel prices -- a claim that will end up like Malcolm Fraser's line "A Fistful of Dollars" --.that is, conveniently forgotten after the election. The Coalition simply can't deliver," Mr Griffiths said.

"The Coalition is quick to cite New Zealand as the model for a GST. In fact, the New Zealand experience is very instructive on fuel taxes, because when the GST was introduced, six new taxes appeared, including a road . user fee, and then the GST went in on top of that--seven taxes in all. The result is that New Zealanders pay more for their petrol than we do," Mr Griffiths .said.

"But", Mr Griffiths added, "Mr Fischer's , comments on the impact of their tax proposal defy any logic. The Government's own independent economic adviser, the Australian Bureau of Agricultural and Resource Economics, estimates that the Coalition's tax policies would cause oil demand to rise about 20 per cent. The Bureau of Transport Economics predicts a similar increase.".

"Oil imports will double, even under these conservative forecasts, with an obvious effect on our balance of payments" Mr Griffiths said.

"The Coalition also claims it will reduce LPG prices. How? By putting a tax on! The thriving LPG industry has publicly said that their most rapidly growing business would basically disappear under a Coalition's GST, repudiating Mr Fischer's bizarre claim," Mr Griffiths said.

"Currently, under Labor, abundant local LPG is tax free, and Labor has promised to keep. it tax free for five years: Under-Labor, LPG provides a valuable part of our transport fuel needs. Under a GST, this would disappear, replaced by expensive and insecure oil imports-imports we can ill afford."

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Ps i . L , M E NT ,E,

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"Make no mistake. The coalition policies,, if they were ever implemented, would increase petrol demand as LPG disappears, reduce demand for public transport, and- destroy the incentive to use fuel responsibly," Mr Griffiths

concluded..

"But, in the final analysis, its clear that the massive holes in the Coalition's GST' funding package mean that they simply won't be able to deliver on lower fuel prices. What we will see is the New Zealand experience on fuel prices revisited in Australia," Mr Griffiths concluded.

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