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Wednesday, 13 November 1985
Page: 2068


Senator COATES —My question, which is directed to the Minister representing the Treasurer, is about the Government's tax package. Has the Government formulated a response to the Opposition's disarray shown by its several inconsistent attitudes to the Government's tax reform package? What is the Government response? Does the Minister believe that the blind opposition by Mr Howard and the supporters he has left to selective parts of the Government's attempt to restore fairness to the tax system is, firstly, hypocritical; secondly, the ultimate in political expediency; thirdly, merely stupid; or, fourthly, all of the above? Or does the Minister take Mr Howard's refusal to promise repeal of the legislation as a sign of support for the correctness of the Government's policy?


Senator Chaney —Mr President, I raise a point of order. I fail to see how most of that question can be a request for information about any matter which is within the province of the administration of the Minister. It is just another invitation for political debate and abuse and the Minister's usual diatribe. I ask you to rule the question out of order.


Senator Coates —I wish to speak to the point of order, Mr President, I was asking whether the Government had formulated a response on these matters. I thought it may well have a right to do so.


The PRESIDENT —Order! There is no point of order. I call the Minister.


Senator WALSH —The Government has not formulated a response in any formal sense to that specific recent statement by Mr Howard. But the Government's response to all such statements is that it will introduce the legislation for the tax reform package announced by the Treasurer just under two months ago. The Government hopes and believes that that package of legislation will be passed. If it is not passed, either the tax cuts, which were outlined in the same statement and which will apply in 1986 and 1987, cannot be delivered or, alternatively, expenditure must be reduced in some other area.

While on this subject-it is a matter of fact and is highly relevant to the question-I should comment on the statement made by Mr Howard on AM this morning. He said that the Opposition would vote against elements of the package. When asked how the Opposition would deliver the tax cuts if it were in government, Mr Howard said that this could be done by increasing either the rate or the coverage of indirect taxation. He said that elements of the package which the Opposition had said it would oppose amounted to only $700m to $800m. That statement is wrong. The Opposition has announced that it will oppose the following tax reform measures: The fringe benefits tax, negative gearing, farm losses, foreign tax credit and the capital gains tax. The 1987-88 revenue which would accrue from those five components of the package is $1,070m and the figure would go higher in future years. So Mr Howard's figure of $700m to $800m is a significant understatement. It seems that he is about as good at costing his tax policy as he was at Budget figuring when he was Treasurer.

It is also worthy of note-it is something which the Government takes extremely seriously and finds very dangerous in this proposal-that the income tax revenue generated by the Government's tax reform package would be substantially sacrificed as would revenue raised from indirect taxation. The $1,070m in additional indirect taxes which Mr Howard has forecast a Liberal government would impose, would have about the same effect on the consumer price index as the devaluation of the Australian dollar has had on the CPI to date. Mr Howard said that the view that the CPI effect of the devaluation of the dollar has been quite catastrophic, very dangerous or disastrous is quite inconsistent with the alternative proposition that tax reform should be funded by increases in indirect taxation which would have the same effect on the CPI.