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KENNERLEY:
Welcome Mr Howard.
PRIME MINISTER:
Hi Kerri-Anne it's good to be on your show again.
KENNERLEY:
Great to have you with us. Well it really is like the main event
Mr Howard. It's a bit like the Melbourne Cup to me a
lot of preparation, a long, hard race. What do you think your biggest
handicap will be?
PRIME MINISTER:
I guess the reluctance of some people to change, but the change
that we're offering is good for the whole country. The reason
I want to change our tax system is that I believe that a new tax
system for a new century will make Australia a stronger country,
it will help boost our exports, it will help us compete in a difficult
world environment, it will give low and middle income people more
incentive to work and to save and it will just produce a fairer
system all round, because I think all of your viewers probably feel
deep down that the present system is unfair, it's old-fashioned,
it's not working very well. We've tried to tinker with
it in the past but that hasn't really fixed it up and at long
last the Government has come along and given a comprehensive plan
for change and I think it is, most importantly of all, it is good
for the country and Australians if they think something is good
for their country and they think it's fair to them, then they
will back it.
KENNERLEY:
If one is using racing analogies it seems you jumped out of the
barrier quite well. Reading the editorials this morning, how did
you feel?
PRIME MINISTER:
Well to use a cricket analogy we've had a very solid start,
we haven't lost a wicket yet and we're building for a
big score. I mean the sporting analogies are very appropriate. Look,
I think it's had a good reception because it's a very
comprehensive plan and it's a very fair plan. We've laboured
long and hard to make sure that low income people are protected,
there's a lot in it for retired people and getting rid of things
like provisional tax, introducing a 30 per cent tax rebate for private
health insurance those sorts of things are particularly good
and it's very very good for families. But I don't take
the Australian people for granted. They expect of me that I will
go around the country, I'll talk to them about it, I'll
answer questions about it and I'll explain the detail of it.
I'm enthusiastic about it Kerri-Anne because I believe it is
good for Australia and that's the main thing that's driving
me. I want to devote myself over the weeks and months ahead to explaining
this plan because I think if we can get this in, it will be the
next thing that helps set Australia up for the 21st century.
We've got rid of that big deficit, we've got interest
rates at their lowest levels for 30 years, we've created 300,000
new jobs over the last couple of years. The next thing we've
got to do is to fix our tax system and I am really so committed
to it because I think it will be so good for the whole country.
KENNERLEY:
You talk about being enthusiastic for it it is all about
the sell. Can you sell your socks off, because while you're
selling a package a lot of people are seeing a new tax. Can you
sell it Mr Howard?
PRIME MINISTER:
Well, the Australian public will decide, nobody else, whether they
want to support it or not. And it's not a new tax, it's
a whole new system.
KENNERLEY:
But doesn't that come from an inspiration. People need to
be inspired to know that this is a whole package, not just a tax,
but that's what people are hearing and seeing.
PRIME MINISTER:
Well, Kerry Ann, I believe that the way it's been structured,
that people will see it as a total plan and not just a GST, not
just a tax cut, or just this or that, but that they will see over
the days and weeks ahead, they will see that a government has been
willing to tackle the whole thing. And I mean, we've not only
re-written the tax scales, we've created a fairer system, we've
given a very big boost to the bush, we've taken $4.5 billion
off the cost of Australian exports. Right at the moment, the thing
that Australia needs as much as anything else is to sell more overseas
and if you can bring in a tax system that reduces the cost of our
exports, we'll sell more of them and we'll do better.
I mean they're the sort of things that we've been wanting
for a very very long time and they're delivered under this
system.
KENNERLEY:
But it is pretty difficult to sell it. Other people, Mr Howard,
have tried before. John Hewson for instance really came a cropper
when he tried to sell his tax, in fact, I'm sure you remember
this very well known piece of footage.
Journalist: "If I buy a birthday cake from a cake shop
and GST is in place, do I pay more or less for that birthday cake?"
Hewson: "Well it will depend whether cakes today in that
shop are subject to sales tax or they're not, firstly, and
they may have a sales tax on them. Let's assume that they don't
have a sales tax on them and that birthday cake is going to be sales
tax free, then of course, you wouldn't pay, it would be exempt,
there would be no GST on it under our system. To give you an accurate
answer I need to know exactly what type of cake to give a detailed
answer".
KENNERLEY:
And that detailed answer went on for a few minutes and we talked
about candles and we talked about everything. What did you learn
by Mr Hewson's experience.
PRIME MINISTER:
Well, I can tell you the price of birthday cakes will go up between
2 and 4 per cent under the plan, it depends on the particular type
of cake.
KENNERLEY:
I've got one right here.
PRIME MINISTER:
It will go up by between 2 and 4 per cent but you'll have
more money in your pocket with which to buy it.
KENNERLEY:
As simple as that?
PRIME MINISTER:
As simple as that. You'll be better off because you'll
get a tax cut or you'll get a pension increase or you'll
get an additional amount of money through the increased family benefits,
and you'll be better off and other things will come down in
price. I mean a motor car for example, now carries a 22 per cent
wholesale sales tax. I mean, the price of the average family motor
car will come down in price and there are a lot of things now that
will be cheaper, other things will be dearer. The reason some things
will be cheaper is they now carry very high sales taxes which are
hidden and motor cars are a very good example 22 per cent
is a lot more than 10, and if you're running a business you'll
have uniformly cheaper fuel. Every litre of fuel you buy to run
your business will be seven cents a litre cheaper and all of that
will help business operate a lot better and all of that will generate
more jobs. And the tax cuts have been deliberately designed to help
people in the lower and middle income area to get the greater benefits,
particularly if they have children.
KENNERLEY:
There are so many aspects to this package it is difficult to try
and analyse them today but for instance did you and your people
look at other examples and their applications of this type of tax
, for instance, New Zealand. Did you look at how that worked there
and what the hiccups might have been?
PRIME MINISTER:
Yes, we looked to some degree, but every country is different.
I mean we have designed a tax system for Australia, to take Australia
into the 21st century. We're not slaves to any particular
overseas model, but we knew that if you wanted to get a proper indirect
tax system that was fairer than the present one, it needed to apply
to virtually everything. I mean it won't apply to doctors'
bills or dentists' bills, it won't apply to child care,
it won't apply to nursing homes or retirement hostels or to
hospital treatment. It won't apply to that. It won't apply
to education, it won't apply to child care those things
are out of the question. You've got to have virtually everything
else in otherwise you are really left with the inadequacies of the
present system.
KENNERLEY:
Do you think you will be surprised, as New Zealand was, and they've
said how they underestimated the enormous revenue from the black
economy, do you think you'll be surprised?
PRIME MINISTER:
There's no doubt in the world the Australian tax payer will
benefit from the cash economy being brought into the net of the
GST - there's no doubt about that and in New Zealand that was
the experience and I'm certain the same thing will happen here
in Australia. One of the reasons we're able to provide people
with personal tax cuts is that under the new system, people who
are now escaping through loopholes and through the cash economy
will be caught up and the money they now have to pay which
they should have been paying in the past can help pay for
your tax cuts.
KENNERLEY:
And when the electorate, who has heard in the past, L-A-W law,
we've heard non-core promises, the electorate is cynical, do
you think that's fair that we should be cynical?
PRIME MINISTER:
Well, there is a difference between this and L-A-W law. L-A-W law
referred to the fact that before the 1993 election Mr Keating promised
tax cuts and opposed a GST. After he was elected, he took aways
the tax cuts and he put up indirect taxes, which was his own GST.
On this occasion, I'm laying out in front of the electorate
before the election my proposal for a total tax change, including
a GST, and there's a very, very big difference.
KENNERLEY:
Well, Mr Howard, thank you very much for your time. You've
got an enormous schedule ahead of you and we do appreciate your
moments with us on Midday.
PRIME MINISTER:
Thanks for having me. Very nice to talk to you again.
KENNERLEY:
Ladies and Gentlemen, the Prime Minister of Australia, John Howard.
ENDS