Arthur Sinodinos (NSW, Liberal Party) Share this | Hansard source

I rise to speak in support of the Tax and Superannuation Laws Amendment (2015 Measures No. 2) Bill 2015, and I welcome the fact that the opposition have indicated that they will support the bill, notwithstanding the spray that people have just heard about certain aspects of the economic history of this country going back to the eighties and nineties. Let me expand a bit on that economic history in order to correct this impression that has been going around ever since Paul Keating wrote an article to The Australian Financial Review seeking to rebut some comments by the former Prime Minister, John Howard.

The eighties was a period where several major reforms were backed in in this country, and that was done with the support of the opposition. The most significant was the flexible exchange rate. That was a very important reform which opened the way to a lot of other reform. The coalition, having gone into opposition, could have played politics with all of that but did not. They backed it in. They supported it wholeheartedly. Malcolm Fraser and John Howard had put together, through the Campbell committee, a set of recommendations to open up the banking system.

When Paul Keating came to power as Treasurer in 1983 he appointed Vic Martin to do a review in order to find a way to rationalise the Labor Party's support for those changes, which went to the entry of foreign banks and the deregulation of our capital markets. The financial services industry, which is so important today, particularly in my home state of New South Wales, and which is one of Australia's comparative advantages today when it comes to trade and investment, grew off the back of that deregulation and having a sound, robust regulatory system. That was supported by the coalition. Labor built on the work of the coalition to bring forward the recommendations of the Campbell committee.

What was the big tax reform that was attempted in the 1980s? It was the rejigging of the taxation system to put more focus on indirect tax and to take it away from direct tax. It was to reduce income tax and company tax and put more focus on indirect tax through a broad based indirect tax known as the goods and services tax. That was the big change. That was option C, and Labor laboured mightily in 1985, through the tax summit and whatever, to produce a package which included this major tax. Who was the first person who expressed support for this tax package? It was that then shadow Treasurer, John Howard. In fact, Paul Keating went up to him and signed a copy of the paper that encapsulated option C, and they talked about the importance of getting this tax reform through. What happened on option C? It was torpedoed by the then Prime Minister, Bob Hawke, because the ACTU had the final veto over that package. Isn't it funny—30 years down the track and here we are again: the ACTU has a veto over Labor Party policy. It was Simon Crean and Bill Kelty who vetoed that package. The coalition was prepared to support a comprehensive package, but then Paul Keating decided that he would go with changes to capital gains tax, fringe benefits tax and other things, but he was not prepared to have a go with the big change, the big reform. So the coalition rightly said, 'We are not going to support piecemeal reform—we need comprehensive reform.'

That is what the 1980s were about: when bipartisanship counted on the big things, the things that would particularly impact on the public, on the person in the street, the coalition was prepared to be there. The coalition was prepared to be there on tariff cuts, which impacted on part of the coalition's constituency in manufacturing, industry and business. We are seen, in part, as a party which has some regard for business—big and small business—but we supported those tariff cuts. We did not exploit every job that was being taken out of motor vehicles or textiles, clothing and footwear. We supported those cuts right through that period, including the third set of cuts in 1991 at the height of the recession we had to have. So this talk about seeking to close down bipartisanship and trying to minimise the amount of bipartisanship is wrong. On the big calls, the coalition was there.

That changed in 1993, when Dr Hewson came along and Paul Keating decided that for political reasons he would not support a GST—what he would do was to say, 'You can have income tax cuts without a GST.' 'The budget will whirr back into surplus,' he said. He produced a set of numbers in his One Nation statement to show that this would happen almost automatically as the economy recovered; you did not have to have more hard reform. Well, we saw what happened: he opposed reform, then from 1996, when Labor went into opposition, they opposed any and every reform going. That was the sad reality of that period. All those reforms—the New Tax System in 2000—were hard fought. We had to get votes wherever we could in the upper house. So there was bipartisanship on economics in the eighties and nineties but it has since disappeared, much to the cost of the national economy.

I want to pick up on what Senator Singh said in relation to the issue of spending and taxation. She rightly said that Labor have produced a couple of proposals lately in respect of taxation. But they do not talk about the budget as a whole. They do not talk about how they are going to pay for the billions of dollars worth of promises that Bill Shorten made in his reply to the budget—$40-50 billion worth of promises—