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Wednesday, 7 June 1989
Page: 3539

Senator MESSNER —My question is addressed to the Minister for Finance. Did the Minister say in the Senate yesterday that people investing in interest bearing securities will have reaped windfall gains as a result of the Government's high interest rate policies? Have holders of government fixed interest bonds, particularly members of superannuation funds, incurred substantial windfall losses in the value of those assets as a result of those high interest rate policies? How can the Minister claim that members of superannuation funds will not lose one cent in the value of their share in the fund? Did the Minister also claim yesterday that the Opposition's amendments to the Government's new superannuation tax would cause fund managers to invest in foreign businesses rather than in Australian businesses? Why does the Minister contradict the Treasurer's comment on page 8 of his 1988 May economic statement when he said that those who invested in foreign businesses would not be penalised because they would receive credits for dividend and interest withholding tax on income received from foreign sources? Why did the Minister, therefore, mislead the Senate yesterday?

The PRESIDENT —I point out that part of that question referred to the debate that is currently before the chamber, and I would ask the Minister to take that into account.

Senator WALSH —I am not sure whether I got all the questions down, but it is a fact that if there has been a general rise in interest rates long term government securities decline in price. But the holders of those securities lose money only if they sell the securities, not if they keep them until maturity. If cash investments are being turned over when they are reinvested, or if new funds are being invested, they would have been invested at a higher interest rate and that is the basis of what I said yesterday. As for the allegation about contradicting the Treasurer, I did not.