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Fightback! stands



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John Hewson Leader of the Opposition M e d ia R e l e a s e

54/92 5 March 1992

FIGHTBACK! STANDS

Today in Question Time the Prime Minister predicted that I would amend Fightback! t o :

. blow out the deficit;

. cut government spending by more than $10 billion;

. bribe voters with even more tax cuts.

These are Mr Keating's standards not mine:

. he has blown out the deficit to an estimated (Access

Economics) $9 billion this year. His 'One Nation' package promises another $12-13 billion above this;

. he will be forced to cut government spending to pay for

some of his package;

. he is bribing voters with unfunded tax cuts which he knows he can't responsibly deliver.

Fightback! will not be amended. It stands firm.

Fightback! will be extended over the next few months by new policy initiatives to rebuild and reform our economy.

We are absolutely committed to dramatic and extensive reform of our economy. None of Mr Keating's cheap political stunts, bribes or shots will dissuade us from this task.

A copy of my Press Club transcript is attached.

It states clearly that:

. the actual dollar amount of the Fightback! tax cuts will be bigger than those identified in Fightback! as they are specified in 1990/91 prices and will be delivered in

1994/95;

. on the Government's optimistic growth assumptions, revenue would be higher and we would have even more money to pay as tax cuts. oooOOOooo

For further information contact: 06/277 4022 _

. I PARLIAMENTARY ubrauv 1

Excerpt from Questions and Answers National Press Club Luncheon

4 March 1992

Robert Garran (Australian Financial Review):

You have explained what you said was Treasury's fundamental conceptual error in analysing the Fightback! package, that this was the way they have adjusted the value of tax cuts to take

account of inflation between 1993 and 1996 . I will just note in passing, that it seems to me that this difference in approach remains whether you use an inflation rate of 3.5 per cent or 6.5 per cent.

You have responded previously to this similar criticism by saying that your tax cuts are illustrative and that you would make up for this effective inflation by giving bigger tax cuts than what is detailed in Fightback! My first question is, will those

bigger tax cuts be one of the new initiatives you mentioned early today, the turning up the notch. And secondly, how will you pay for those extra tax cuts, especially if as seems likely, revenue from bracket creep is less than what will be needed to fully

compensate for the effects of inflation.

Hewson:

Well we aren't, just to be clear, when I say I am going to turn up the notch, I am talking about turning up the notch in a reform sense - not in terms of trying to buy additional electoral

support. And if there are tax changes and improvements that flow from reform, we are always happy to pass those on, but I don't want you to misconstrued the fact that we are going to try buy our way back into Government in any sense and that will be

another sharp comparison between ourselves and the Prime Minister. Because I have no doubt that in the next Budget, that is exactly what he is going to try and do and pick up the bits

that he didn't do this time, if he is still there to make those choices.

On bracket creep and the tax reform, well, what that Treasury analysis shows y o u , an easy way to answer your point, is that you get a lot more revenue if you have more growth or have more

inflation. Now, let's assume we get the growth that they say will flow through by 1995-96. We will be able to deliver all of Fightback! and all of One Nation and still have a few billion dollars in the bottom line. And on that basis we have scope,

obviously, to do more.

The second point I would make is that we use 1990-91 prices in doing our calculations as if the economy was in 1990-91 in a sense. Now clearly, the actual dollar numbers will be bigger for tax cuts when you get to the middle 1994-95, the period through which we would implement our change and that is another way of

answering the question.

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The third point I would emphasis and I didn't in my remarks, simply because I forgot. But one point that was raised in your newspaper today is that we didn't re-commit to hand back bracket creep. Well we are totally committed to handing back bracket creep and as we have said, as you go on beyond 1996, each year

in each Budget, we will identify how much bracket creep was collected in the previous 12 months and you will be told how it will be handed back. It will become a focal point, if you like, of the Budget, although hopefully, with inflation under control,

they won't be big numbers but the process will be there.

And that is a very sharp contrast between ourselves and the

Government. Here they are attacking us over what we have said about bracket creep and how we used bracket creep as part of the funding of our package. Yet they are not prepared to make a

commitment to hand it back and despite what Mr Dawkins said yesterday in the Parliament, they have collected something like $22 billion net in the last eight or nine years which they

haven't handed back.

So, when they want to have bona fide in this debate, let's see them commit to hand it back and tell us how they are going to do it .

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