Keating wants trade-off for tax cuts

Press, 4 April 1989, Page 9

Keating wants trade-off for tax cuts

NZPA-AAP Canberra The Australian Federal Government will try to delay wage rises next financial year so the July 1 personal tax cuts do not lead to a surge in consumer spending and further demand' for imports. The Federal Treasurer, Paul Keating, said workers should accept the tax cuts as compensation for cost-of-living increases. But wage rises stemming from award restructuring would be available “some months after July 1.” “What we’ve put in place on July 1 is tax cuts which will have strong pre-wage .equivalents in the hand on day one,” Mr Keating said.

“That means from our point of view that the Government is entitled to a phasing of those wage increases which would give us a wage outcome with no acceleration (in wages growth) next year over this year.” The president of the Australian Council of Trade Unions, Simon Crean, said the trade union movement accepted the size and timing of pay rises would vary across industry, but insisted all workers should at least receive an initial instalment by the end of the 1989 calendar year.

“We recognise that the time of those amounts will vary between sections of industry (but) so long as there are payments to all of the workforce by the end of the year, that will meet our concerns,” Mr Crean said. But he also warned high interest rates could bring down the Government, echoing comments last week by National Australia Bank’s managing director, Nobby Clark, who predicted a further rise in mortgage interest rates above 16 per cent would be the end of any Government. “I think there is a point beyond which interest rates can’t go,” Mr Crean said. “We are very close to that at the moment.”