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Friday, 4 May 1984
Page: 1610


Senator ROBERT RAY —My question is directed to the Minister representing the Treasurer. In view of the criticism from the Opposition with reference to the method used by the Australian Statistician in establishing the consumer price index-


Senator Crowley —Good question.


Senator ROBERT RAY —Can the Minister, for my benefit and Senator Crowley's benefit, indicate the way in which the consumer price index is determined? Did the previous Government attempt to alter the way in which the consumer price index is calculated? Finally, has the Organisation for Economic Co-operation and Development objected in any way to the way in which Australia produces a consumer price index?


Senator WALSH —There were several sub-questions and I will deal first with the last one. As far as I know the OEDC has not expressed any reservations about the way in which the Australian CPI is compiled, although I will ask the Treasurer for further information on that point. Senator Ray also asked whether the previous Government had attempted to make any changes. I think I can recall some minor changes being made during the term of the previous Government to the CPI or to its regimen, or at least to its weighting. I do not know whether that was done as a result of suggestions by the Government or spontaneously by the Australian Statistician. I will try to get that information as well. It is correct that the Australian CPI is not identical to the CPI used in other countries. One important difference between Australia and the United States of America, for example, is that interest rates are included in the American regimen and they are not included in the Australian regimen.

Senator Ray asked whether the previous Government had attempted to make any changes. I think what he probably meant was any changes to the present CPI arrangements under which, effectively, indirect taxes are included in the CPI and direct taxes are not. I certainly cannot recall the previous Government attempting to change that arrangement. That has particular relevance to the Medicare levy and the negative quarterly March CPI figure. It is, of course, correct that the Medicare effect on the CPI will apply only in the March and June quarters. But it is still vital because with the wages policy that is in existence the Medicare effect, although it is a once only effect, will establish a new and lower threshold of inflation which will be sustained by the wages policy. For that reason it is very important. That is a fact which does not seem to have been appreciated by the Opposition-at least, if it is appreciated, it has refused to acknowledge it-nor has it been appreciated in the community as widely as it ought to have been.