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Thursday, 23 September 1999
Page: 10402

Mr CREAN —My question again is to the Treasurer. Treasurer, do you agree with the study by international capital gains tax expert, Dr Jane Gravalle—also reported in the Financial Review , but not on page 1—which shows your capital gains tax assumptions to be far more favourable than those actually experienced in the United States? Treasurer, why have you assumed a huge rush to realise capital gains, much greater than was the actual experience in the US? Is it not a fact that, if these risky assumptions are not achieved, there will be an even bigger funding gap in your business tax package?

Mr COSTELLO (Treasurer) —The assumptions on which that is based are the changes to capital gains tax generally and the fact that this will be such a significant cut. This is a halving of the actual Labor rate. As a result of the inquiry and the costings that were put to it, the Ralph committee said that it would lead to greater activity. Of course it will lead to greater activity, not only for the millions of Australian shareholders but in relation to scrip for scrip rollover and the opportunities that you will have to grow a small business big again, and the capital gains tax relief. Of course you will get much greater activity.

I do not know where this is leading, but if it is leading to the point that the Labor Party opposes capital gains tax cuts, why doesn't it just say so? We are quite happy if the Labor Party stands up and says, `We are opposed to capital gains tax cuts.' But the Labor Party does not do that. The truth of the matter is that the Labor Party cannot bring itself to support a good government policy but it cannot bring itself to oppose it either. After we announced the change to business taxation, we had the extraordinary situation where the Deputy Leader of the Opposition said, `It's a good basis for negotiation.' No, it is a good basis for legislation. That is how you actually get good tax change. If the Labor Party wants to come out and stand for higher capital gains taxes, we would be happy with that. We will explain to the Australian people that that is consistent with the view the Labor Party took before the election. Remember? The Labor Party wanted to tax all pre-1985 capital gains. It would be totally consistent for the Labor Party to oppose cuts in capital gains tax.

I think you will remember that it did not get you anywhere in the election. Afterwards, the Labor Party came to the view that this was not consistent with aspirational politics—and this is aspirational politics for the millions of Australians who own shares. We are quite happy to say that we support cutting the capital gains tax burden. If the Labor Party is opposed to it, say so. We will make sure that we negotiate these matters with the Australian Democrats. If the Labor Party is in favour of it, come out and say so positively. Make it clear, because people are going to want to take decisions on 30 September and they deserve to know what the taxation treatment is going to be.