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One nation tax cuts undeliverable: access economics



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Peter Reith

DEPUTY LEADER of the OPPOSITION SHADOW TREASURER

EMBARGO: 6.00 PM,. 12 AUGUST 1992

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ONE NATION TAX CUTS UNDELIVERABLE: ACCESS ECONOMICS

A detailed analysis of the Government's budgetary position by Canberra-based consultants Access Economics confirm that the One Nation income tax cuts are not deliverable.

The extent of the budget deterioration planned under Labor, makes it more certain by the day that if the worst were to happen and Labor won the next election they would introduce a GST in their first budget.

Access Economics have a good forecasting track record which is more than you can say about the Commonwealth Treasury. They successfully predicted a budget deficit of over $9 billion for 1991-92 and at the time of the prediction were publicly attacked

by Government Ministers.

In their latest issue of Budget Monitor, released today. Access Economics review the possibilities for next week's budget and conclude that:

. the starting point budget deficit for 1992-93 is $13.2

billion and nearly $11.5 billion for 1993-94;

. the budget collapse is more than double the size of the

deterioration recorded during the 1982-83 recession;

. that "a growing portion of the deficit has been due to new

policy measures, notably those in the One Nation

statement", and not cyclical factors caused by the

-i: recession;

. the One Nation budgetary timetable (ie a surplus by the

year 1995-96), "is unattainable unless the planned personal tax cuts are dropped, or financed by raising other taxes or cutting spending";

inflation is forecast to accelerate from about 2 per cent in 1991-92 to 4.75 per cent in 1993/94;

the Australian economy will grow by only 3 per cent in

1992-93 and the unemployment rate holding above 10 per cent until the middle of 1993;

the current account deficit is forecast to nearly double, from $11.8 billion in 1991-92 to over $21 billion in 1993­ 94.

COM M ONW EALTH

PARLIAMENTARY LIBRARY fvUCAH

The Coalition has repeatedly claimed that the statements made by Ministers about returning to surplus in 1995/96 are blatantly false. The Access Economics work simply backs up our position.

The Government's economic strategy is in tatters.

The proposed wage increase will cost up to 70,000 jobs and the budget deficit blow-out could mean anywhere up to $50 billion more in public sector debt by the year 1995-96. This will mean higher interest rates and higher taxes.

The Government is almost certainly going to announce a rise in the Medicare levy in next week's budget. That will be only the first of what can be expected to be a series of tax increases under a future ALP government.

12 August 1992 Hastings

Contacts David Turnbull (06) 277 4277 D118/92