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Wednesday, 19 June 1996
Page: 1860

Senator SHORT (Assistant Treasurer)(6.17 p.m.) —Senator Sherry might be enjoying his job but, by gee, he deals very lightly with the truth in this place. He knows full well that what he has just put to the Senate is not true. He knows full well that the government, proposing the bill that we are, is not in any way saying that next year the rate will go back to 10 per cent. He knows that absolutely full well, and small business knows it.

I am absolutely amazed that Senator Sherry should be prepared to deal so lightly with the truth on such an important matter as to so totally mislead the provisional taxpayers of this country, in particular small business. He professes to be a supporter of small business. I say again, as Senator Watson has—I said this in summing up the second reading debate—that if any government ever was guilty of absolutely slaughtering small business in its whole range of policies, tax and other, during its period in office, it was the Hawke-Keating Labor governments of which Senator Sherry was a member.

Small business knows the situation. Small business knows that your government killed small business. It sent tens of thousands of small businesses broke, bankrupt, insolvent. You did it year in and year out. You did it as a result of the most incompetent government, financial and economic management that this country has seen virtually throughout its history. For you now to be coming in and parading yourself as the champion of small business is hypocrisy at its highest level.

I come back to the facts of the situation. In response to Senator Kernot's comments, last year it was the coalition opposition that first moved the amendment to reduce the uplift factor for 1995-96 from eight per cent to six per cent. We did it in the House of Representatives.

Senator Kernot —Did you press it when it came back?

Senator SHORT —It is true that we did not press it when it came back here the second time. Do you know why we did not press it? There was the real risk that you would have finished up with an uplift factor this year of 10 per cent because the Labor government was not going to accept that amendment. To have rejected it twice would have meant that the tax uplift factor for 1995-96 would have been 10 per cent. Whilst we supported the reduction to six per cent and whilst we urged the government to do so, the fact that the then Labor government was not prepared to accept that amendment meant that the uplift factor would have been 10 per cent. I am surprised that you were not aware of that.

I turn to the claims by Senator Sherry that we have broken our promises in relation to the commitment to reduce the uplift factor from eight per cent to six per cent. He was not here when I spoke earlier so he may not be aware of the complete confusion within the government's own ranks on this issue. On 22 May, the shadow Assistant Treasurer, Mr Latham, put out a statement saying:

The federal government has broken its promise to small business and self-funded retirees to set the provisional tax uplift factor at a permanent rate of six per cent.

He used the word `permanent' there, which was absolutely an untruth because the coalition never said `permanent'. First of all he said that we had broken our promise.

He then went on later in his release to quote the coalition's statement in its policy paper `A New Deal for Small Business', which said that we promised to `reduce the provisional tax uplift factor from eight per cent to six per cent'. That seems to us precisely what we are now doing. But Senator Peter Cook just three or four weeks later—on 14 June, last week—put out a statement the first sentence of which was: `Reducing the tax uplift factor is one promise the Howard government will keep.' In other words, Senator Cook is saying that we have kept the promise. Mr Latham is apparently saying that we have not. But you all know full well that we have kept the promise because our commitment was to reduce the uplift factor from eight per cent to six per cent. That is precisely what we have done. To suggest that it is going to go back to 10 per cent next year, as Senator Sherry has done, is a total distortion of the truth. I am pleased to see that Senator Sherry has a little accepting smile on his face.

Senator Sherry —I raise a point of order. I am not smiling at your response and your comments; I am smiling at Senator Collins here and the conversation we are engaged in.

Senator SHORT —It did not look like it to me, but I will let that one go. The coalition announced during the election campaign that it would reduce the provisional tax uplift factor to a level which is more in line with nominal growth in the economy. That is our long-term undertaking. That is what we want to do and that is what we will do. That is why this year we have reduced the figure from eight per cent to six per cent. That is what everyone seems to want. The only question at issue seems to be in relation to what you do with the default rate. The proposition that you reduce the default rate now seems to us to have little if any merit because it is too far out to be able to assess the validity or the usefulness of that default rate.

So you do not achieve anything at all by the measure that the opposition is proposing. For that reason we will not support the opposition amendment. We will maintain our total commitment to the provisional taxpayers of Australia so long as we continue to have a provisional tax regime to set the rate each year when we are better informed as to what the outcome and the prospects for growth in the economy over the year ahead will be, to set the rate as near as we reasonably can at the nominal rate of growth. Fiddling around with the default rate has no relevance to that situation.