Page 1659 - Week 07 - Tuesday, 29 May 1990
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our schools and our hospitals at their present levels. If such a tax were used to raise the $100m which the Commonwealth's former Minister for Finance estimates as being our overfunding, a sales tax of 3.4 per cent on everything sold in the ACT would be required. If essential commodities such as food, housing and health care were excluded from such a tax, a rate of 5.4 per cent would need to be applied to the sale of all other commodities.
Such a tax would have grave economic implications, raising Canberra's retail prices by something of the order of 3.4 per cent or more. Household expenditure would rise on average by $21 a week and the impact on low income earners would not be offset by social security adjustments. The Commonwealth would not adjust its benefits here to take account of local taxing policies. Raising prices in the ACT relative to surrounding areas would also have adverse effects and perhaps would sound the death knell for some local businesses, particularly small businesses. People would simply take their business somewhere else.
My judgment is that such a tax regime would not be generally acceptable and should not be contemplated as an option. I repeat, as I have said many times before, the Alliance Government does not accept that raising new taxes or charges provides an easy or acceptable answer to our problems. I know that is the policy of Labor in opposition; they would tax us out of existence. It is not the course taken by the Alliance Government because I do not believe it is an acceptable one. From this point of view I wish to make it clear that the Government will be rejecting the Priorities Review Board's suggestion that compulsory fees be introduced for attendance at preschools. We opposed such fees in opposition and will not countenance them in government. Similarly, we will not be taking up the board's suggestion for introduction of fees for secondary colleges. Canberra can be justly proud of its college system and, at a time when much greater attention is being paid nationally to the importance of lifting retention rates, we have no wish to impose a charge which might reduce our present outstanding performance at that level.
By reviewing some of its current revenue sources, however, the Government has identified measures which will raise an additional $23m in a full financial year. So much for the claims of the Leader of the Opposition that we have not looked at the revenue side of our budget! She must think we are almost as stupid as she is. This will have a significant effect on the projected budget deficit but will still leave a major task ahead in reducing expenditure. It has been the Government's hope that we could consider reducing the tax burden on business, having regard for the difficult situation currently existing nationwide, but the clear messages from the Commonwealth indicate that no budgetary relief for the ACT is likely to come from that source. Accordingly, I must defer consideration of any tax reductions on the business community for the time being.
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