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Thursday, 16 May 1985
Page: 2072

Senator Dame MARGARET GUILFOYLE — I direct my question to the Minister for Finance. It follows the answer that he gave to Senator Durack in which he said that increased revenues will more than offset the additional outlays as a result of devaluation. I ask the Minister: What calculation has been made of the increases in revenue from income tax receipts which result from increases in the consumer price index from devaluation effects? If such calculations reveal the considerable increases just mentioned by the Minister, why did the Treasurer in his statement on Tuesday not commit the Government to seek discounting at the national wage case and any deferred productivity claims? Does not the answer of the Minister for Finance contradict what was said yesterday by the Prime Minister and the Treasurer that discounting was something that did not need to be faced until well into the future?

Senator WALSH —Senator Dame Margaret Guilfoyle attempts to draw some link between the increased revenues likely to be returned because of the devaluation induced CPI increase and the national wage case. Frankly, I do not see any logical link between the two, but I will deal with those two issues. To my knowledge no calculations-I think that was the word that Senator Dame Margaret Guilfoyle used-have been made of the likely increases in personal or other income taxes because of the likely higher CPI figure. I have seen some ball park estimates. I cannot recall what they are, but I will ask the Treasurer whether there are any more precise estimates, given certain assumption about CPI increases. I did stress in my earlier answer, perhaps I should interpolate here, that the major boost to government revenues will not come from the higher CPI effect on outlays but because of the anticipated stimulus to growth that the devaluation will have.

As to the national wage case, the reason for the statement made by the Prime Minister, the Treasurer and me yesterday for the Government decision not to argue for discounting at the September national wage case is that at that time, as Mr Howard has already stated publicly, the devaluation induced CPI effects will not be significant. They are unlikely to be significant at that time. Therefore, the Government's decision was that the question of whether there should be any discounting for the CPI would not be raised by the Government at the September national wage case, but that the Government would instead seek a deferral of the productivity claim which at that time is likely to be quantitatively more important than the devaluation induced CPI change in the March and June quarters of 1985.

Senator Dame MARGARET GUILFOYLE — Mr President, I ask a supplementary question. Will the Minister make available the calculations in the ball park figures that he mentioned because they must have taken into account the expected effect on the consumer price index of the devaluation? Such information would then allow us to verify with some accuracy his claim that increased revenue will more than offset the increased outlays in such departments as Defence and others.

Senator WALSH —I will not give any guarantees at this stage about making figures available but I will look at the matter and report back.