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Thursday, 11 October 1984
Page: 2147


Mr SIMMONS —Can the Treasurer advise the House whether there is any evidence of bipartisan agreement that the Government's 1 November tax cuts are significant and genuine?


Mr KEATING —Unfortunately, the Opposition has persisted in misrepresenting the Government's tax cuts by failing to recognise the fact that all taxpayers will receive a tax cut-the vast majority of them a tax cut of $7.60-by virtue of the fact that there is now a 25 per cent rate step, which did not exist in the previous scales, between the tax free threshold of $4,595 and $12,500. Since the Budget was handed down we have heard constant misrepresentations from the Leader of the Opposition and his Deputy, but particularly from the Leader of the Opposition, crying crocodile tears about people on average weekly earnings being in the 46 per cent marginal tax rate area. On 29 September last year the Leader of the Opposition said:

I believe that a marginal tax rate of 46 per cent for those on average weekly earnings is totally unacceptable.

On Budget night he repeated his lament about the 46 per cent area. I indicated yesterday that to move all persons on full time male average weekly earnings out of the 46 per cent bracket would cost $2,065m. Of course, we have a totally different view from the Deputy Leader of the Opposition who is on the record on two occasions as saying that he would give no tax cuts.


Mr Howard —That is a lie.


Mr KEATING —That is not a lie. I will read it to the honourable member.


Mr Howard —No, why don't you read the lot?


Mr KEATING —The honourable member should withdraw the word 'lie'.


Mr SPEAKER —Order! The Deputy Leader of the Opposition knows that the use of that term is not permitted in the House. The Deputy Leader should withdraw.


Mr Howard —Mr Speaker, I am perfectly prepared, in deference to you, to withdraw the word 'lie' and give notice that I will make a personal explanation.


Mr KEATING —That will be a surprise. On 19 March, on the radio program AM, the Deputy Leader of the Opposition said:

I think if the Government is faced with a choice between giving a tax cut of, say, $1 billion and having a deficit a billion lower than it might otherwise be, I think it ought to choose the latter.

He made another statement when launching the Opposition's economic policy. But the most revealing thing is that yesterday the Deputy Leader, in putting out a Press statement attacking me, said:

For example, we have made no commitment to alter the 46% income tax rate in the next Budget . . .

I repeat:

. . . we have made no commitment to alter the 46% income tax rate in the next Budget . . .

What has the Leader of the Opposition been saying for months and months? We have had matters of public importance every day for weeks, referring to the thousands of people in the 46 per cent area. Now we find that there is no commitment whatsoever to alter the 46 per cent income tax rate step. So much for the crocodile tears of the Leader of the Opposition! Look how long it takes members of the Opposition to back away from their commitment. After one day, under some pressure in the House, they back off on the major commitment to change the 46 per cent area. It is revealing that we have had two Press statements in 12 hours from the Deputy Leader, attacking me by saying that I am simply not telling the truth on three features. In the first instance he got the figures wrong. He misrepresented me yesterday when I said that it would cost $300m a year to wipe out the superannuation tax change. He attacked me yesterday by saying it would cost $600m a year. He had to issue a statement today backing away from that statement by saying, miserably, that it was a typographical error, when he had devoted a paragraph to it the night before. He said:

The same goes for his dishonest allegation that removal of the lump sum superannuation tax would cost $600 million when Mr Keating's own estimate . . . $120m.

The estimate of $120m is the 1984-85 cost-the full year cost. Yesterday I directed my remarks to Budget deficits, the structural deficit and the full year cost of these measures. The Deputy Leader knows that the full year cost of wiping out the superannuation tax change is $300m, and it is mentioned in the Budget Papers for 1983-84. It is a firm figure.

The second matter I wish to raise about these two very revealing Press statements is the challenge by the Deputy Leader of the Opposition of the figure of $400m I listed yesterday to remove the double tax on dividends. He is now backsliding on that promise by saying that he is going to restore only the rebate for the first $1,000 of dividend income. That is not what he said when he released the industry policy. He said that he would deal with the double taxation of dividends. After one day of scrutiny, he has now repaired to $1,000- he is going to restore the rebate for the first $1,000 of dividend income. So the figure of $400m that I put up yesterday was a correct figure for wiping out the double taxation of dividends.

The third matter which arises in these two very revealing Press statements is the figure of $600m for the investment allowance. He says:

Mr Keating knows this is simply not true, as his own extension of the existing scheme to cover items with a completion date by the 30 June, 1987 . . .

I am talking about the full year effect of wiping out the investment allowance. It is $600m. That is the impact on the structural deficit.

Let me just conclude on this point: Yesterday I referred to $2 billion worth of specific tax promises of the Opposition. The Deputy Leader contested only a number of those. He failed to contest any of the others. He contested only about half. Of the ones he contested, he has now backed down on them, said he put the wrong figure in or reneged on the promise. So the fact is that the figure of $1, 950m-odd I detailed yesterday was a correct figure. All that the Deputy Leader of the Opposition reveals now is how embarrassed he is by the fiscal portent of those promises. He now seeks to resile from them. But, most revealingly, the additional $2,000m of revenue forgone by moving people out of the 46 per cent rate step is something on which the Deputy Leader of the Opposition now says they made no such commitment. The Deputy Leader of the Opposition, in his Press statement, said:

. . . we have made no commitment to alter the 46 per cent income tax rate in the next Budget . . .

So, in other words, what he is admitting is that our tax cuts are real and are big at $7.60 a week. He is saying that he accepts the fiscal realities. The Deputy Leader of the Opposition may giggle in embarrassment, but the fact is that he is now saying that the Opposition would not alter the steps which are in the current Australian tax rate scale. That simply means that the Opposition is now saying, through its shadow Treasurer--


Mr Peacock —You take $22 a week and give them $8 back.


Mr KEATING —I would have thought that the Leader of the Opposition would be the one most embarrassed by this. He has been up every day parroting about the 46 per cent rate. For weeks the Leader of the Opposition has been raising matters of public importance and talking about the thousands of Australians who are in the 46 per cent rate step area. The Opposition is now saying that it would not adjust the 46 per cent area. The fact is that this makes a total mockery of all of the criticisms of the Government's tax cuts, of all of the criticisms of the policies the Opposition has espoused to give tax relief. The other revealing factor is that, despite two stupid Press statements in 12 hours, the table of costs of the tax promises of the Opposition which I proposed yesterday is a factual record of the fiscal impact of its promises which I said yesterday would produce an $11 billion Budget deficit next year if the Deputy Leader of the Opposition happened to be Treasurer of this country.