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Thursday, 5 February 2009
Page: 592

Mr TURNBULL (3:10 PM) —My question is addressed to the Prime Minister and I refer to his failure to answer my previous question. Will the Prime Minister advise the House whether the government is committed to delivering the 2009 and 2010 tax cuts?

Mr RUDD (Prime Minister) —I have said on multiple occasions in this House that the government’s legislated tax cuts proceed. There is nothing remarkable about that. The debated question here is about tax cuts versus stimulus now. I draw the honourable Leader of the Opposition’s attention to comments from the chief economist of the IMF who said that tax cuts are not the most effective stimulus. He says—and he is the economist—that taxes ‘tend to have less effect in the short run than measures which increase spending’. The Business Council of Australia says:

A significant body of research highlights that additional tax cuts, unless very … targeted, tend not to be the most effective measures for stimulating demand in circumstances of rising unemployment and poor confidence.

Greig Gailey of the BCA says:

Well our concern with tax cuts other than the offset taxes for low income earners which we absolutely support, our concern on tax cuts is that the tax cut will actually be saved when in fact we want to stimulate the economy.

Heather Ridout of the Australian Industry Group says:

The higher level income tax cuts are more likely to be saved. We are in no hurry to see those brought forward.

The body of advice internationally and nationally from the credible business organisations is that, if our task is to provide stimulus here for the economy, it is to take measures such as the government is currently supporting: investing directly in infrastructure—and, together with the premiers and chief ministers, we agreed this morning on the type of infrastructure and an implementation plan—and providing support for households, about which there has been some debate in the House in the last 24 to 48 hours.

As to the decision of those opposite, I seem to recall the Manager of Opposition Business said that it was unanimous within their party room—though Fran Bailey seemed to have a different view on radio this morning and various press reports seemed to indicate that various members may have had a different view. But let us just say that they resolved that this was the right course of action for them politically. What they need to answer in their own minds and in their own communities is this: what will you say to each one of those farmers who will not receive a one-off hardship payment? What will you say to each one of those families who will not be assisted with their back-to-school bonuses? What will you say to each of those families who are doing it tough and may, in fact, be suffering from the prospect of unemployment, when you, by your action, are seeking to prevent them from access to those one-off tax bonuses? What will you say to each school across the country when they come forward with each of their proposals for an assembly hall, for a new resource centre, for a new library, for a language laboratory or for a science laboratory, when each one of you is saying, ‘No, no, no; we can’t do that’?

If the policy reasons advanced added up to something, maybe we could have a discussion. But if you look at every piece of serious advice from every credible economist, from every credible business organisation, from the international monetary and financial authorities themselves, there is no policy argument. There is no argument in terms of helping people who are doing it tough and schools that need the help. Do you know what this is all about? This is one man’s personal political interest and his struggle against the member for Higgins.