Fed: PM hints at budget tax cuts

AAP General News (Australia)
04-07-2006
Fed: PM hints at budget tax cuts

CANBERRA, April 7 AAP - Prime Minister John Howard has given a strong hint of more
tax cuts in next month's budget.

Mr Howard said he had not yet seen the final figures, but expected Treasurer Peter
Costello to talk about tax on budget night.

"I would be astonished if the subject was not mentioned in the treasurer's speech,"

Mr Howard told Southern Cross Broadcasting.

"We have always said that if we have got a good surplus and we have paid extra for
defence and other things that we have to invest more in - I had a very big announcement
on mental health during the week - if we do those things and there's money left over,
then it should go back to the taxpayer by way of tax relief."

The surplus is officially forecast to be $11.5 billion when the budget is handed down on May 9.

But economists have speculated that booming resource exports could push it as high
as $16 billion.

Mr Howard said high petrol prices, now exceeding $1.30 a litre in capital cities, were
hurting economic growth.

But the economy was still growing strongly and the current five per cent unemployment
rate was the lowest for 30 years, he said.

"If there had not been a big increase in petrol prices, the economy would be growing
now more strongly than it is. It is still growing very strongly," he said.

Mr Howard said the unemployment rate put the debate about new industrial relations
laws into perspective.

"What it demonstrates is that we are living in a workers market and the bargaining
power of workers now is greater than it has been at any time in the last 30 years," he
said.

Mr Howard said that would only affect interest rates if it fed through to inflation
because of excessive wage settlements.

"And so far that hasn't been the tendency," he said.

"It doesn't automatically follow that if unemployment falls, interest rates go up.

Interest rates only go up if falling unemployment leads to higher wages and that then
feeds into inflation.

"If you have a centralised rigid labour market which the Labor Party and the unions
want, the flow-through effects are more direct and more immediate."

AAP mb/mfh/it/nf

KEYWORD: TAX HOWARD

2006 AAP Information Services Pty Limited (AAP) or its Licensors.