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Monday, 4 June 1984
Page: 2476

Senator Walsh —On 3 May 1984 (Hansard, page 1555) Senator Maguire asked me, as Minister representing the Treasurer, a question without notice concerning whether the Government was investigating the feasibility of changing the timetable for taxation payments as a means of smoothing out liquidity flows and thereby reducing side effects on interest rates.

The Treasurer has provided the following information in answer to the honourable senator's question:

The seasonal patterns of the Government's outlays and receipts are such that the Budget is usually in surplus over the June quarter. This largely reflects the collection of certain important revenues including the payment of the bulk of provisional tax by individuals and the largest quarterly instalment of company tax. The concentration of these payments to the Government during the June quarter normally results in the so-called 'seasonal run-down' of liquidity.

This seasonal tightening of liquidity tends to be reflected primarily in short term interest rate movements. Short term interest rates tend to be higher around the seasonal rundown period than at other times and on occasion this seasonal pattern can complicate the interpretation of underlying financial conditions. Smoothing of the seasonal pattern of disbursements and receipts of the Government would reduce the seasonal fluctuations arising from the Government's accounts and would assist in reducing short term interest rate volatility.

The Committee of Inquiry into the Australian Financial System examined this issue. The principal recommendations in relation to the timing of Commonwealth tax collections were that there be a review of the arrangements for collecting provisional tax with a view to early introduction of a system of instalment payments, and that arrangements for the collection of other taxes should be reviewed.

The Government currently has this matter under consideration.