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Tuesday, 15 October 1985
Page: 1212

Senator COLLARD —My question is addressed to the Minister representing the Treasurer. It follows the admission by Senator Button last week that the Government took its final decision on taxing private use of company cars in the absence of a specific study of the effects of the tax on employment in the motor vehicle industry. In light of the major job losses which have already occurred in the restaurant and catering industry, did the Cabinet have available to it an estimate of employment consequences of ending tax deductibility of entertainment expenses when it made that decision? If so, what was it? If not, does the Minister agree that neither he nor the Treasurer is in any position to contest estimates by reputable industry organisations and consultants that more than 10,000 jobs are likely to disappear in the restaurant and catering industry because of the tax changes?

Senator WALSH —The Opposition continues, either for political reasons or because of intellectual inadequacy, to fail to appreciate that there will be offsetting jobs generated somewhere else if there is a decline in any particular industry because less money is spent on the product or the service of that industry. The money which the Opposition claims will no longer be spent in the restaurant industry will be spent somewhere else. It might well be spent in an area where it will do more for the long term health of the economy than the free lunch will do.

I must say again that I find it quite astounding that a Liberal Party which attempts to present itself as a puritanical economic developer with a rather Calvinistic attitude to economic development should be subscribing to the free lunch led economic recovery. It is one of those amazing contradictions in which the Liberal Party abounds.

Senator Collard referred to reputable industry organisations which have made estimates and to jobs which have been lost already and so on. When he can produce some reliable statistics about changes in employment, he perhaps will be taken seriously. However, while he just makes wild assertions he should be treated with contempt.

The so-called reputable industry organisations, consultants or whatever are, of course, hired guns acting for a lobby group. Even if they were not, however, it is instructive and particularly instructive for Senator Messner to remember that an independent organisation, the Bureau of Agricultural Economics-or more accurately one officer of the BAE-a long time ago did a study of the likely effects of a sales tax on wine. Those conclusions were uncritically picked up 20 years later and exaggerated by Senator Messner and his colleagues. They forecast that as a result of a 10 per cent wholesale sales tax on wine, wine sales would fall by 14 per cent.

The PRESIDENT —Order! The Minister is debating the question now. I suggest that he come back to the question.

Senator WALSH —Certainly, Mr President. The point, however, is that these wild allegations are made by vested interest groups; they were made on that issue and they continue to be made today. The fact is that the Government could have done a pseudo-scientific study on the likely effects of the end of the tax free lunch on employment in the restaurant industry and the end of tax free cars on employment in the motor vehicle industry. Any such pseudo-scientific study would have been incomplete in its macro-economic effects unless it also took account of the employment generating consequences of the expenditure diverted from those industries, if there was any, to other industries.