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Wednesday, 19 June 1996
Page: 1862


Senator WATSON(6.22 p.m.) —I regret that there has been some misunderstanding, perhaps, in listeners' minds as a result of the sorts of issues that have been raised in the debate today. The government is delivering 100 per cent on its election commitment to reduce the uplift factor from eight to six per cent for the provisional year 1996-97. The concept of a default provision has been around for a number of years, as the opposition well knows. I regret that Senator Kernot in her deliberations and reflections on last year's amendment was a little confused. The amendment related not to the default option but to the actual rate for the current year. My recollection was that the Democrat amendment, which had a lot of attraction, was not the default provision.

The Senate heard that Treasury officials at committee hearings were unable to actuarially support the eight per cent. It was the former government's tremendous grab for extra money and the bringing forward of the timing of taxes that were the determinants. The Keating government said that if the Senate pressed the amendment the government would exercise the default option of 10 per cent. The opposition, which was the Liberal Party at the time—knowing Keating's grab for money—was not prepared to place small business at the risk of a default option of the order of 10 per cent and backed down. Senator Kernot well knows why we did not press the amendment that was moved in the House of Representatives and debated here. The Keating government said in no uncertain terms: `If you press this issue, you will have to carry the cross for the additional provisional tax that small business will have to pay.'

We have honoured our commitment 100 per cent. We are delivering on that commitment 100 per cent. We have said that next year and subsequent years we will set that figure annually as it applies to the next year in relation to the prevailing economic circumstances so it can realistically reflect the increase in economic activity and in taxable income and so that there is not this grab for money.