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Wednesday, 18 August 1993
Page: 213

Senator MICHAEL BAUME (3.23 p.m.) —I want to take up the government's responses to two questions, and that is why I am supporting Senator Short's motion. Senator Hill asked Senator Gareth Evans to explain the statement of the Prime Minister (Mr Keating) on 19 November that `What I am promising is not to put up tax'. He asked Senator Evans to explain how the present budget could possibly be justified in the context of that statement. Senator Evans—who I am glad to see is at the table and not even dictating into his dictating machine today—

Senator Gareth Evans —Oh, no; not in the slightest.

Senator MICHAEL BAUME —He came out with the extraordinary response that tax was not being increased. I would like to refer Senator Evans to page 4.19 of the budget papers which shows this: total individuals' tax revenue—that is, revenue by the Commonwealth from individuals; personal income tax, if I can translate it into simple words that Senator Gareth Evans will understand—is going up 2.6 per cent. Average weekly earnings are going up by about the same percentage—2.7 per cent—according to the budget papers. So, yes, there will be an increase in total individuals' tax collections, despite these marvellous tax cuts as a result of which a low income earner will not be able to buy even a Big Mac each week. Then we come to total indirect tax. We find that the indirect tax bill this year will go up by $2 billion—$2,000 million—a 9.1 per cent increase in the budget papers which Senator Gareth Evans was saying did not represent an increase in tax revenue.

  Let us get this clear for Senator Evans: inflation will be about 3 1/2 per cent, so that does not account for a 9.1 per cent increase. Private consumption expenditure will be up about 2 1/4 per cent—that does not make up a 9.1 per cent increase. So here we have consumption expenditure going up 2 1/4 per cent and inflation up 3 1/2 per cent but total indirect tax going up 9 per cent.

  How Senator Evans can pretend, with a straight face—sorry, it is not a straight face; I just noticed that it has broken into a sheepish grin—that this does not represent an increase in taxation is quite beyond me. We have here something like $3,000 million more tax being collected in Mr Keating's secret hidden GST than in fact was collected in the previous year—and this is not even a full year's tax collections. Next year they will go up not simply because they will apply for a full year instead of part of a year, as they have done this time, but in addition there will be further increases in the rate applying, for example, to sales tax.

  Wine is getting a 55 per cent increase in sales tax this year, but it goes up to a 60 per cent increase next year. I support the comments of my colleague Senator Tierney—who represents in this chamber the whole of the state of New South Wales and, in particular, the Hunter region—about the devastating effect that this tax will have on the industry's home base. It is only if we have a sound home base that we can, in an industry like wine, sustain an export component.

  This government is not only massively increasing the tax take from ordinary Australians; we are also getting a big increase in the borrowings of government. So not only is the government ripping more out of the pockets of ordinary Australians—particularly those on lower incomes—by all these tax rises, which it promised would not take place, but also it is into the market more and more for money. I think it is the biggest public sector borrowing requirement since about 1985. So here we have this double whammy: yes, a big increase in tax revenue; and, yes, a big increase in the demand for money by government in the marketplace. So, yes, interest rates must rise. What this government is doing involves a massive increase in inflation—far more than the GST. (Time expired)