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Wednesday, 10 October 1984
Page: 2023

Mr WELLS —I address my question to the Treasurer, who was recently acclaimed as international finance Minister of the year for having presided over the world's most resurgent economy. Can the Treasurer advise the House whether the Government expects the Budget deficit to be reduced in future years? What role will changes to the taxation system play in that achievement?

Mr KEATING —The honourable gentleman asks whether I expect to see reductions in Budget deficits in future years. He also asked about the role of taxation. Let me say in respect of the Budget deficit for 1985-86 that I can give an unequivocal yes to that question. There will be a reduction in the Budget deficit under this Government in 1985-86. It is our intention as recovery proceeds to pull the deficits back. I indicate that this outcome will be achieved not by relying upon an increase in the tax burden but rather by relying upon growth and a firm approach to expenditure review, which this Government has indicated in two Budgets it has been prepared to do. In two Budgets we have seen substantial savings by the Government in ambitious expenditure review procedures . After the conspiracy between the former Prime Minister and the former Treasurer to hide the true state of fiscal policy in 1982-83, this Government has reduced the Budget deficit from a prospective $9.6 billion to $6.7 billion, a reduction of just on $3 billion over the course of the two Budgets. I indicate that no such prospect is likely to emerge under the Liberals. Indeed, when one looks at their taxation promises, one can see that it is absurd for anybody on their side to suggest that they can run an even modestly respectable fiscal policy.

I think it may be worth while detailing to the House the precise, specific and unequivocal promises on tax reform made by the Leader of the Opposition and his Deputy. They have promised unequivocally to abolish the lump sum superannuation tax at a cost of $300m; they have promised to abolish the coal export levy at a cost of $60m; they have promised to abolish the wine tax at a cost of $62m; they have promised to abolish the new oil excise at a cost of $317m; they have promised to extend the investment allowance and increase its rate to 20 per cent at a cost of $600m a year; they have promised to provide a special tax deduction for manufacturing systems at a cost of about $10m a year; they have promised to abolish the so-called double tax of company income and dividends at a cost of approximately $400m a year; and they have promised to introduce a 50 per cent premium for deductions in relation to research expenditure at a cost of about $ 90m a year. Those unequivocal and firm commitments by the Leader of the Opposition and his Deputy-I am not relying on things said by members of the back bench or picking up references that someone has made-amount to $1,839m. The Commonwealth would forgo revenue of that amount of money.

It does not stop there because there is an even firmer commitment to raise the 46 per cent threshold in the income tax scale so that anyone on adult full time average weekly earnings would not be caught at all by the 46 per cent bracket. The cost of that in a full year would be $2,065m. I can be that precise about that. The firm commitments I listed plus the 46 per cent rate step would cost revenue $3.9 billion. One has to ask whether, given the unfortunate prospect of a coalition government in Australia, the Leader of the Opposition and his Deputy are saying that they would have an $11 billion Budget deficit. That is precisely what they have said. One would not mind if they detailed expenditure cuts, but they have a myriad of expenditure outlays. I have not touched on the expenditures. The Prime Minister mentioned them a few moments ago.

So what we would see under a coalition government is not a fiscal policy with a winding down in the deficit as growth came through and as the government undertook expenditure reviews; rather we would see high deficits, high interest rates and, of course, a slow-down in economic activity back to recession levels. I give the unequivocal commitment that there will be reductions in the Budget deficit in 1985-86 under this Government as there have been in the two Budgets of this Government. That is a clear commitment by a responsible Government in office. Contrast that to the ratbaggery of the Opposition in tax and outlay promises. As the Prime Minister said, the Opposition will be asked plenty of times to say where the money is coming from and where it is going to. The Opposition will be reminded of its disastrous fiscal legacy. It will be reminded of its obfuscation and duplicity. It will be reminded of its incompetence. It will be reminded once and for all that firm commitments of this kind will come back to haunt it.

Mr SPEAKER —Prime Minister?

Mr Hawke —I would like the honourable member for Franklin to have the opportunity to ask his question.