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Monday, 17 June 1996
Page: 1621


Senator SPINDLER(5.31 p.m.) —I will be very happy to pick up some of the points that Senator Short made. This debate on the matter of public importance seeks to highlight one of the election commitments breached by Mr Costello and Mr Howard during last year's Premiers Conference: namely, the promise not to increase existing taxes or introduce new taxes by proposing a new $1.2 billion Costello sales tax on the states, territories and local governments. According to Mr Alan Stockdale, the Liberal Treasurer of Victoria, Mr Costello had breached no fewer than five separate commitments.

Let me advert to the requests made by Senator Short: namely, the Democrats should wholeheartedly support the plugging of the rorts that are no doubt inherent in this system of sales tax on cars that are provided to public servants and executives. This measure goes well beyond the mere plugging of rorts: it devolves a responsibility of the Commonwealth onto the states. It is merely a shuffling of responsibilities, responsibilities which the Commonwealth government does not want to be seen as having cut in terms of the services provided by the states. It dearly wants to collect the money without taking the blame.

Senator Sherry, who proposed this matter of public importance, knows full well that Labor in government were the past masters of shifting their budgetary problems onto the states. Between 1985 and 1992, the Hawke and Keating governments cut grants to the states in real terms by 19 per cent with a further cut last year. These cuts were partly responsible for the states having to cut over 150,000 jobs in the state public sector and to increase taxes in a wide range of areas.

The Democrats have been a little astounded, I must say, by Mr Costello's definitional gymnastics in recent months about what is or is not a rise in tax. A tariff, we have been told, is a tariff, not a tax. A rise in HECS is a rise in HECS, not a rise in tax on graduates as Senator Vanstone asserted only last year. Now we are told that adding a $1.2 billion tax impost on the states is an attack on rorts and not a rise of $1.2 billion in tax.

Mr Costello's arguments were rejected in very strong terms last week by his state colleagues, who correctly pointed out that his tax grab on the states was an attack on services. But then, this government does not seem to be particularly interested in the impact on the Australian people of its pursuit of the $8 billion budget cuts. Mr Howard and Mr Costello conveniently ignore the fact that the $8 billion cuts are not necessary in economic terms. We all know now that they are in fact based on very rubbery economic growth forecasts, which have already been stretched.

They ignore the fact that $8 billion worth of cuts will hurt an awful lot of Australians through higher charges and lower services. They ignore the impact on the unemployed and the advice of some of Australia's most senior economists such as Fred Argy, John Neville, Fred Gruen and John Quiggin. All that matters is the glowing praise of the financial markets for delivering $8 billion worth of cuts, whether they can be justified in economic terms or not. So Mr Costello and Mr Howard got their $1.5 billion worth of expenditure cuts over the years from the states. The CPSU has estimated that it will mean another 90,000 jobs gone over the next three years or it will mean the states and local authorities will have to increase taxes and charges.

The other interesting thing about Mr Costello's astonishing performance last week was his newfound interest in tax rorts. He said that it was the main reason why he would wish to introduce this particular measure. The Democrats believe that there are many areas in tax rorts where Mr Costello could have made a start and many areas where the Democrats would wholeheartedly support him. An article in last weekend's Australian, written by Mike Steketee, states:

. . . the Keating government announced that it was going to collect $800 million in tax from 100 of the wealthiest Australians who put money through trusts, the advice from the tax office was that 80 of them had assets valued at more than $30 million each but had reported taxable incomes of $20,000 or less.

It is perhaps also important to quote a statement made by Michael Carmody, the tax commissioner. He said:

Put simply, it is difficult to expect the general community to meet their tax responsibilities if they see some high-wealth individuals paying little or no tax.

The Democrats welcome Mr Costello's newfound interest in tax rorts but we would like him to attack some other areas which are well and truly on the record, such as the ones I have quoted.

We accept that some budget deficit repair will be needed in this year's budget. Labor's unfunded tax cuts and unfunded Working Nation program make this necessary. But we encourage the government to take the advice of Dr Vince FitzGerald in his national savings report, and the suggestion by former EPAC chief Fred Argy that the opportunity for deficit reduction should be used to repair the holes in the revenue base. (Time expired)