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Tuesday, 31 October 1989
Page: 2134

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Mr KEATING» (Treasurer)(3.18) —We have just had a motion moved by the shadow Treasurer, the honourable member for Wentworth (Dr Hewson), who could not sustain the debate. It was the limpest performance I have ever seen. Seven minutes into the speech he could not sustain it. It was like being flogged with a «warm» «lettuce» . It was like being mauled by a dead sheep. He had the hide to ask us where our fiscal responsibility was.

This is a government which has taken a 7 per cent deficit in the public sector borrowing requirement and turned it into a surplus of 1 1/4 per cent and cut outlays by 7 per cent of gross domestic product (GDP). And the honourable member for Wentworth has the gall to ask us where our fiscal responsibility is. Those opposite went to the last election with their former Leader offering $7.8 billion worth of unfunded tax cuts and we went with a $400m package which was fully paid for. And the honourable member asks us where our fiscal responsibility is. Last week he had the gall to say that the Opposition would have a fiscal policy which was lower than ours as a proportion of GDP; that is, absconding with all our work over seven years-all those months in the Expenditure Review Committee meetings cutting down public outlays from nearly 31 per cent of GDP to 23 per cent, and copping the Opposition's criticism for nearly every one of them, one after the other. Finally, we bring down a Budget with outlays to GDP just above 22 per cent in a year or two, and those opposite say they will knock $140m off it and that it is all theirs. We have built the structure of fiscal policy. As I said, it is like building the Empire State Building and those opposite us jumping into the lift, rushing to the top, putting a brick on top and saying, `Look what I have built'. It is a joke that they talk about fiscal responsibility. As I said today, in talking about economic policy--

Mr Shack —It is an absolute disgrace.

Mr «KEATING» —The honourable member for Wentworth was heard in silence and we expect the same treatment. Last week the shadow Treasurer stated, `We are moving across the board into my different sort of world'. Imagine if I stood up as Treasurer of this country and said, `Look, economic policy will now be conducted in a different kind of world'. The press would beat me to a pulp, and they would be entitled to. The honourable member for Wentworth says, `We are not going to have any rising unemployment; we are going to have a weak fiscal policy, wage mayhem with enterprise bargaining, sole reliance on monetary policy, but we are not going to have any higher unemployment because we are moving into a different kind of world'. He said, `If you move decisively and quickly enough you do not have any significant employment effects'. What twaddle. As if anyone with any self-respect, with a view about economics, would put that kind of stuff across and hope to get away with it.

If we go back to the Economic Action Plan, this is the key line: `reducing inflation and shifting the weight off monetary policy'. How does one reduce inflation and shift the weight off monetary policy? Those opposite say `by cutting wages', but how does one cut wages without monetary policy? They will cut them because they have enterprise bargaining. What an unbelievably sick joke that is. Opposition members are not prepared to defend the central tenet of their policy. They run away from it. When a questioner puts the question, `Will this not have unemployment effects?', the honourable member for Wentworth says, `Oh, I am living in a different sort of world-not the world of economics like everyone else has to live in, a different kind of world'. This is unbelievable stuff.

For the honourable member for Wentworth to think that they could parrot this kind of rubbish and then get away with it shows either an arrogance or naivety-one or the other. That is why they were laughing at him at the Metal Trades Industry Association. What did the chairman say when he got up? He said, `We do not want toe to toe industrial contests; we want a mature industrial structure whereby we get a change in the craft structure by evolution through such things as award restructuring'. Which was the industry body putting the big effort into the award restructuring? It was the Metal Trades Industry Association. Those organisations know what enterprise bargaining means: it means that they get cut to ribbons. They are in the eye of the storm.

The people sitting at the top table the other night were in the eye of the storm in 1980-81. People such as Bert Evans watched these industries consigned to the scrap heap under the previous Government's wages policy, and members of the Opposition are back here with the same policy. The three of them are there, the tragic trio: the honourable member for Wentworth, the honourable member for Bennelong (Mr Howard) and Senator Stone. The three people who have already destroyed the economy once want a return bout. They want to come back and have a second go. We would not mind if they said, `We have used the seven years to think about our structure. We will have something different'. But oh no!-no thinking, adopt the Government's fiscal policy, adopt all of its deregulation, adopt its structure and have the same policy, enterprise bargaining, pretend the craft structure does not exist, let the wage mayhem start, bring interest rates down on them and give Australia a recession, because that is really what it needs; it will cut the import growth and lower the inflation rate. That is the Opposition's dull policy. That is the bankruptcy of the Opposition.

In terms of creativity or ingenuity the Opposition has nothing as a party or as individuals. No party in the world would see done to a country what those three did to Australia and then have the front to propose them again to manage the economy. Anyone in American politics who did this would be drummed from the regiment; they would never appear again. Anyone in British politics who sent the British economy into a recession and the rest would never appear again. But oh no, those three are back again, large as life, cocky as you like, saying `We can do it all again'.

What does the Opposition propose in its policy? Basically it proposes a set of bribes and then a set of give-aways, the most outrageous of which is the capital gains tax. It cannot even keep together the basic fabric of the structure that the Government has put in place. We have done the hard work and put the capital gains tax in place. We have taken the political risks and put it there. The Opposition does not have the decency or the common sense to understand that something of value has been done and that it should be preserved. Oh no, the Opposition thinks it can give one per cent of the tax paying public tens of billions of accumulated contingent tax liabilities sitting there. It thinks it can hand them over. As I said, it is not the legitimate operation of a party thinking about a better policy structure with a proposal for a change in public policy. It is a proposal for public theft; that is what it is. It is on that basis that I move the following amendment, to put some real substance in the debate:

That all words after `That' be omitted with a view to substituting the following words:

(1) this House notes the widespread criticism of the proposal of the Leader of the Opposition to abolish the capital gains tax, and in particular, the disastrous consequences for the economic health of the nation of the proposal;

(2) consequently, this House believes the Leader of the Opposition must provide the public with a detailed account of:

(a) what prompted the Opposition to backdate its proposed concessionary speculative gains tax to 19 September 1985;

(b) on what basis has the Opposition calculated that the revenue cost of their proposal would be $450m a year, and to what extent does this costing include an allowance for the realisation of windfall tax-free capital gains derived from the backdating of the Coalition's proposal;

(c) to what extent does the Opposition's costing make allowance for increased tax avoidance, the potential for which was described by Business Commentator Mr Terry McCrann in the Melbourne Sunday Herald on October 29, 1989 as follows:

Mr Peacock proposes to turn back the clock and once again unleash the assembled might of the legal, accounting and financial professions in the drive to turn otherwise taxable income into tax-free capital gains of five years' standing. That is unacceptable-not only on equity grounds, but in terms of promoting the very changes necessary to make Australia more competitive and more efficient. We don't want our best brains and available resources devoted to shuffling bits of paper for tax and financial reasons. Better they be directed to investing in and building real businesses;

(d) to what extent does the President of the Liberal Party and Chairman of Elders IXL, Mr John Elliott, benefit from the Opposition's proposed changes to the Capital Gains Tax;

(e) to what extent does the Liberal Party Candidate for Barker and Director of Elders IXL, Mr Ian McLachlan, benefit from the Opposition's proposed changes to the Capital Gains Tax;

(f) the discussions that took place between Mr Elliott and the Leader of the Opposition prior to the latter's challenge for the Leadership of the Liberal Party and what discussion was there of the Opposition's proposed changes to the Capital Gains Tax;

(g) similarly, what discussions, correspondence or other communications have taken place between the Shadow Treasurer or his office and Mr Elliott or his advisers on the structure of the Opposition's capital gains tax proposal;

(h) what prompted the Leader of the Opposition to tell the Metal Trades Industry Association on 23 October that ``countless millions'' of taxpayers pay capital gains tax, when statistics of the Australian Taxation Office show that less than one per cent of individual taxpayers paid capital gains tax in respect of the 1987-88 income year;

(i) what has prompted the Leader of the Opposition to claim that his is a proposal to help small business when more than two-thirds of the capital gains tax payable by companies is paid by the largest 1 1/2 per cent of Australian companies;

(j) whether it is Opposition policy, as stated by the Leader of the National Party in his address to the Australian Petroleum Exploration Association last week, that exploration `farm-out' agreements will be exempt from the Opposition's so-called Speculative Gains Tax? and why was this exemption not included in the Opposition's so-called Economic Action Plan; and

(k) what other exemptions from its Speculative Gains Tax proposal has the Opposition agreed to but not detailed in its Economic Action Plan and what is the revenue cost of these exemptions?

The amendment calls on the Leader of the Opposition (Mr Peacock) to provide the public with a detailed answer to these questions. In particular, the amendment asks the Leader of the Opposition to provide an account about what discussions, correspondence or other communications have taken place between the shadow Treasurer or his office and Mr Elliott or his advisers on the structure of the Opposition's capital gains tax proposal, particularly around the Harlin Holdings proposal. Tell us about the relationships and the questions about--

Dr Hewson interjecting-

Mr «KEATING —No, we are not. I know that Elliott was in touch with the shadow Treasurer's office about Harlin; I know he was in touch with his office about the structure of the shadow Treasurer's proposal, because Harlin does not succeed unless one goes back to September 1985. I repeat: Harlin does not succeed in terms of capital gains treatment unless one goes back to September 1985. Let the Leader of the Opposition tell us whether, in his discussions with Mr Elliott prior to the change in leadership, the capital gains tax issue and the backdating to September 1985 was discussed. I ask the Leader of the Opposition to tell us these things and then we will see what veracity there is in the Opposition Leader's claim that this is just a change in public policy. It is a fact that the proposal is for the largest transfer of wealth of the public's contingent capital gains tax liability as taxpayers to the Commonwealth in the nation's history.

Let us get a real issue on the table of the House of Representatives and not some phony proposition from the shadow Treasurer about fiscal responsibility when members opposite in fact bequeathed to us the most disastrous fiscal inheritance in the nation's history. I would not be bothered tabling once again the note from the then Secretary to the Treasury saying that the speed of the fiscal deterioration in Australia was unparalleled in the post-war years. If my memory serves me correctly, he might have said, unparalleled in our peacetime history. That is what the Secretary to the Treasury said in the note that was given to the then Treasurer before the 1983 election-the fastest deterioration in fiscal policy ever. Who was left to clean it up? It was this Government. The shadow Treasurer has the temerity to come in today and say that, because my colleague the Minister for Social Security (Mr Howe) refers to the wage-tax trade-off of this year-which is, of course, the successful plugging of a wage explosion-and speculates about the prospect of such an economic technique being employed again, the Government would then have some kind of irresponsible fiscal policy. In fact, the very wage-tax trade-off that the Government introduced on 1 July succeeded in plugging a wage explosion. That is why we will have wages growth of 6.5 to 6.75 per cent this year instead of about 15 per cent which we would have had under the Opposition parties, which would then have been followed by a crash landing, a recession.

The Government's plan did work and, despite the cynicism that it was greeted with as being an election ploy and the rest, it was a necessary part of economic policy. The Government will make judgments in the future about what is required in terms of wages and fiscal policy. As I said the other day, the requirements of fiscal policy will be paramount: that is, the question of demand will be paramount. The Government's stance on fiscal policy for the coming year will be determined in the coming year and all other judgments will be contingent upon that requirement, a requirement of a reduction in demand. So the Opposition's proposition is fraudulent and without any basis.

I want the shadow Treasurer to face up to his claim about his different world and to tell us what kind of world he believes exists, what kind of different world exonerates him from the laws of economics. What kind of different world frees him of the laws of economics and the behaviour of economic aggregates and economic variables? Let the shadow Treasurer tell us that, because if any one of the rest of us said something like that he would be beaten to a pulp by the media of this country, as he deserves to be.

Mr Tim Fischer —I rise on a point of order, Mr Deputy Speaker. Standing order 173 provides:

Every amendment must be relevant to the question which it is proposed to amend.

I submit further from the House of Representatives Practice at page 361:

The only exception to this rule is that an irrelevant amendment may be moved to the question `That grievances be noted'.

There are certainly a lot of domestic airline passengers with grievances at the moment. I put to you, Mr Deputy Speaker, that the amendment moved by the Treasurer is out of order in accordance with standing order 173. I invite your ruling on whether that amendment to a very narrow specific motion moved by the honourable member for Wentworth is in fact out of order. The amendment was moved by the Treasurer of the Titanic, who got it wrong again.

Mr DEPUTY SPEAKER (Mr Ronald Edwards) —I have considered the amendment in the light of standing order 173 and also in the light of House of Representatives Practice. I consider the amendment to be in order.

Mr Lindsay —I rise on a point of order, Mr Deputy Speaker. Over the last two weeks we have had persistent points of order taken by the honourable member for Farrer and on each occasion those points of order have been overruled. I draw your attention to standing order 303 (b) which deals with the question of disorderly conduct. I am asking that in the future frivolous points of order of the kind inflicted on this chamber by the honourable member for Farrer be treated as disorderly conduct and that appropriate action be taken against him.

Mr DEPUTY SPEAKER —It is in order for members to take points of order during a debate. It is difficult to determine beforehand whether the point of order is relevant. The determinations may have been against the honourable member for Farrer, but it is his option to raise points of order. As to whether it is a matter of disorderly conduct, I would have to consider that another time. There is no point of order.