In an address to the National Press Club in Canberra, Mr Keating announced that company tax rates would be reduced from 39 per cent to 33 per cent from July under a Labor government. This compares with company tax of 42 per cent under the opposition conservative Liberal-National coalition's proposals.
Small and medium-sized businesses will receive a further incentive in the form of a 10 per cent investment allowance for plant and equipment under Mr Keating's offer.
He also pledged a substantial boost to government assistance for working women by announcing that parents would be able to claim a 30 per cent rebate on childcare costs related to work.
The twin appeal to business and working women will form the basis of the Prime Minister's campaign over the next five weeks to win a fifth term for the Labor government in what will be a very closely fought election.
Mr Keating's most acute problem is Australia's 11.3 per cent unemployment rate, which, he acknowledged yesterday, 'will not be easily reduced'. It was for that reason, he said, that private companies, particularly small and medium-sized businesses, had to invest more.
A year ago, Mr Keating announced a sweeping U-turn on his policies of economic rationalism from the Eighties in the form of a large spending programme on public infrastructure designed to boost economic growth. The programme has not reached the targets for growth and employment that the government set then.
Mr Keating said private companies had been slow to respond to the government's lead. He called for a 'new age' for Australian business. 'The Australian company, large and small, will be the basic device that powers our innovation, marshals our capital and our productive power,' he said.
To pay for the tax breaks, Mr Keating proposed that the government sell a further portion of the Commonwealth Bank, retaining government equity of 51 per cent. It will also re-introduce a scheme to collect company tax quarterly.
Mr Keating's boost to business is designed to steal the electoral thunder from the investment incentives promised by John Hewson, the opposition leader. Dr Hewson dismissed Mr Keating's plan yesterday, saying it was impossible to fund. But the Australian Stock Exchange welcomed it, closing almost 20 points higher. Business leaders were more cautious in their response.
Mr Keating clearly hopes that the measures will be seen as part of a strategy to push Australia into greater involvement in the booming economies of Asia.
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