Brett Raguse (Forde, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Will the minister advise whether the government’s Nation Building and Jobs Plan will maximise support for jobs? Why is a temporary stimulus through targeted payments and investment a better mechanism for supporting economic growth and jobs than are tax cuts for higher income earners?

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

The government’s Nation Building and Jobs Plan is designed to push back hard against the very powerful negative economic forces emerging from overseas that are causing major problems for the Australian economy and at the same time to leave a legacy of new and upgraded infrastructure for the future of Australians. The individual payments that we are committed to will hit the Australian economy first in March and April but will continue to flow through for some months thereafter because people may in some cases save initially and spend subsequently. The investment in insulation of Australian homes, in schools and in housing will ensure that we rebuild the infrastructure of this nation, both the community infrastructure and the productive infrastructure, for the benefit of future generations.

It is legitimate to ask what exactly across-the-board permanent tax cuts favouring wealthy people would do for future generations in terms of productive infrastructure and community infrastructure. How are they going to improve the productivity of this nation? Yesterday I reminded the House of the infamous statement by the member for Curtin on Sunday where she advised that the coalition’s response was ‘broad and sweeping tax cuts that will increase the tax base and increase tax revenues’. As I have already pointed out, this is based on the discredited theory of Professor Arthur Laffer that if you actually cut taxes that will mean tax revenues grow. I note the Leader of the Opposition’s response to that in a radio interview where he stumbled, he bumbled, he weaved and he ducked but he was unable to avoid saying that he kind of agrees sometimes with his own deputy leader, his own shadow Treasurer. There were lots of, ‘Well, it, it’, ‘Simply this’ and ‘I am not going to’—

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. This is like Groundhog Day, except that the second time around it is far more presentable. I would ask you to bring him back to the question that he was asked by his own side.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

I am listening closely. The question asked for a comment on targets and tax cuts, and I think that is what the minister is making.

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

There is another element in the statement by the Deputy Leader of the Opposition that warrants some examination too. That is the reference to ‘increase the tax base’. Increasing the tax base means one thing, which is that you start taxing things that currently are not taxed. That is what the former government did by introducing the GST. That is what ‘increase the tax base’ actually means. I note that the opposition, who are today making such an issue of deficits, are saying that their alternative strategy outlined this morning by the Leader of the Opposition involves a stimulus package of $15 billion minimum. When on radio today the Deputy Leader of the Opposition was asked, ‘If you were going to spend $15 billion in a recovery package, would that send the Australian economy into deficit?’ her answer was: ‘It would balance it in fact at this point.’ Not only has she not caught up with the $115 billion collapse in government revenues that the Prime Minister announced on Monday, but even if you measured this against the projections in the Mid-Year Economic and Fiscal Outlook paper published in mid-November you would see that this statement is 100 per cent wrong. She cannot even add up, because the stimulus package they propose would take the budget into deficit even without the recent updated analysis of the collapse in tax revenues.

The statements from the Deputy Leader of the Opposition lead to one of two conclusions: either the opposition has a strategy to impose new taxes, perhaps by broadening the GST and putting it back on food as it always wanted to do, or the Deputy Leader of the Opposition has absolutely no idea what she is talking about. Those are the two options. I concede that there is quite a bit of evidence to support the second hypothesis, but having been in this place for a while I am a bit of a cynical type and I am a bit more suspicious. I tend to believe that, in politics, where there is a little bit of smoke there is going to be fire.

I note with interest that in late January the Deputy Leader of the Opposition also said that one of the first things the opposition would do in response to the global financial crisis was revisit industrial relations laws. I wonder what that is a reference to? I believe in watching what people do in politics. What we have really seen hinted at by the Deputy Leader of the Opposition, and walked away from to a degree for public presentation purposes by the Leader of the Opposition, is the real traditional Liberal Party strategy, which is tax cuts for the wealthy, an increase in the GST’s scope and bringing back Work Choices. That is the strategy of the opposition.

The government reject these approaches because we are investing in the long-term infrastructure needs of this nation. We are getting spending moving into the pockets of ordinary families to ensure that the retail sector and the ordinary small businesses of this country can continue to grow to sustain jobs and growth.