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Labor's silence on where the money is coming from

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The Labor Party, two days before the end of this election campaign, has

still to spell out how it would fund its expenditure program, if elected,

Barely one year ago, Mr Hayden had a list of revenue measures which he

claimed would raise at least an additional $1,500 million. At the same

time, he admitted that a larger domestic defecit would still be necessary

to fund his program notwithstanding this additional revenue. .

But in his policy speech, he made it quite clear that with an even .

larger expenditure program he would be raising little or no additional


He nominated three new revenue raising measures which were to raise $950 million, namely, a crack-down on tax avoidance, abolition of the .

iwesvinert allowance and introduction uf a resources tax.

At.the same time, however, he promised to .introduce personal tax. cuts worth $900 million in a full year.

In other words, he is proposing to raise only $50 million additional revenue to cover commitments worth in excess of $2,500 million. ,

This falls far short of the $1,500 million which he had previously .

proposed to raise. '

It was for this reason that on the night of Mr Hayden's policy speech

I said that his policies were even more inflationary than I had previous!

thought likely. ■ . ' · '

It is for this reason that I have argued that Mr Hayden will have to look for alternative revenue sources and have to look toward the


. capital gains tax which a few months ago was at the top of his list of

revenue raising measures.

Mr Willis' recent statements that, if he were Treasurer, he would

relax monetary policy give further reason for my fears about the conduc

of economic policy under a Labor Government. '

I make these comments even accepting that the additional revenue Mr Hayden proposes to raise can, in fact, be raised. However, that is

far from true. .

It is highly unlikely that Mr Hayden, even with retrospective legislatic

would be able to raise $600 million through a crack-down on tax avoidanc

Tax avoiders would continue to dispute any such legislation in the court

and it would be some time, if ever, before such revenue could be collect

This is to say nothing of Mr Chipp’s threat to block this legislation

in the Senate if he were to have the ability to do so. ,

The lag in company tax collections also means that it would be some time

before the revenue impact of abolition of the investment allowance and

the introduction of a resources tax would have any effect.

In short, Mr Hayden does not have a Credible budgetary strategy.

He is committed to increasing expenditure. He says that he will reduce

taxes. He says he will control interest rates. He says he will also

reduce inflation. . .

It is simply not possible to do all these simultaneously.

Either he will eventually have to find alternative revenue sources or he

will have to sell more Government securities - with the inevitable impac

that would have on interest rates - or he would have to resort to the inflationary process of printing money. Perhaps we would have all three

That is the reality of Mr Hayden's alternative budgetary strategy.

SYDNEY 16 October 1980