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Government should consider abolition of investment allowance



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press release*■ THE HON. PHILLIP LYNCH, M.P.FO R IMMEDIATE RELEA SE NOVEMBER 23, 1973.D esp ite an a p p a re n t re c o v e ry in e x p en d itu re on new c a p ita l equipm ent, th e D eputy L e a d e r of th e O pposition, M r. P h illip L ynch, b e lie v e s th e G o v ern m en t should re c o n s id e r its d e c isio n to a b o lish th e in v e stm e n t allow ance.Speaking in Sydney today, M r. L ynch, s a id th e fig u re s fo r spending on new c a p ita l a s s e ts in th e S ep tem b er q u a rte r affo rd ed th e G o v ern m en t no ju stific a tio n fo r rem o v in g the in v estm en t allow ance.He s a id P riv a te in v e stm e n t in c a p ita l a s s e ts su c h a s m a c h in e ry , equipm ent and in d u s tria l p lant h as b een one of th e eco n o m y 's w eak est a r e a s in r e c e n t y e a r s . A stro n g re c o v e ry is a v ita l fa c to r in p ro d u ctiv ity grow th."B ut c u rr e n t n et new in v e stm e n t in p lan t and quipm ent h a s not kept pace with the r e p la c e ­m en t of o b so lete s t o c k ."M r. L ynch, who is th e L ib e ra l P a r t y 's fe d e ra l sp o k e sm a n on econom ic edKairs, s a id th a t in the f i r s t nine m onths of th is y e a r e x p en d itu re on new c a p ita l equipm ent - o th e r th an new buildings and se a s o n a lly a d ju sted - w as 7.4% down on th e sa m e p e rio d of l a s t y e a r ."And th e fall off would be even m o re sig n ific a n t if in v e stm e n t fig u re s w e re a d ju ste d fo r in f la tio n ," he s a id ."By rem o v in g th e in v e stm e n t allow ance, the G ov ern m en t w ill e n su re th a t a n y re c o v e ry in e x p en d itu re on new c a p ita l equipm ent is sh o rtliv e d ."Its a c tio n w ill have s e rio u s e ffe c ts on the eco n o m y ’s r e s o u r c e s , a lre a d y o v e r -s tre tc h e d a s a r e s u lt of th e B udget."Although th e fu ll e ffe c ts of th e abolitio n of the in v e stm e n t allow ance w ill be e s s e n tia lly lo n g -te rm b e c a u se of th e tim e -la g effect i t h a s a lre a d y a d v e rse ly effected b u sin e ss c o n fid e n c e ."The D eputy O pposition L e a d e r sa id dem and r e s t r a i n t w as needed, but it should b e a im ed a t c u rr e n t ex p en d itu re, not at in v estm en t in equipm ent. A bolishing the allow ance would s e rio u s ly im pede the e co n o m y 's c a p a c ity to m e e t dem and.M r. L ynch sa id the G o v e rn m e n t's actio n on in te r e s t r a t e s would f u rth e r e x a c e rb a te the situ a tio n ."T he d e c isio n to a b o lish the in v e stm e n t allow ance r e f le c ts ag ain th e L a b o r G o v e rn m e n t's unbalanced and u n c o -o rd in a te d ap p ro ach to econom ic m an ag em en t, " he sa id ." it w ill in ev itab ly add to c o s t p r e s s u r e s and th e re fo re to in fla tio n , and w ill in c re a s e the s e rio u s n e s s of com m odity s h o rta g e s now a p p e a rin g . "M r. L ynch is in Sydney fo r a m eetin g of th e L ib e ra l P a r t y 's F e d e ra l P la tfo rm R eview C o m m itte e .* * * * * * * * * * * *