E&OE..........................................................................................
PRIME MINISTER:
It is not a rich man's package. It is a package that will
encourage average Australians to work harder. It will protect low
income earners but most importantly of all it will help the whole
country to grow stronger and that is why I am so committed to it.
PEACOCK:
Now essentially this new GST that you are putting in is the tax
for the States, it'll be paying the States' way. Why would
they want it when currently their income is growing by 3.6, I think,
a year and your growth estimate is at 2.7, they'd be losing
wouldn't they?
PRIME MINISTER:
No they won't. Over a 10-year period from just after its introduction
this will produce, we estimate, about $25 billion more revenue than
they would receive under the present arrangements. The States for
time immemorial have said they wanted a growth tax, well now they
have it.
PEACOCK:
Well is that growth assured with the Asian economies the way they
are?
PRIME MINISTER:
Well is anything, you know, anything in relation to growth at a
particular level assured. You can't do better than to say to
the States, you want freedom, you want the capacity to have a growth
tax, you want that independence, well here it is. No Prime Minister
has in the history of Federation made a more generous offer to the
States of Australia.
PEACOCK:
So we put that GST aside and we then look at the income tax cuts
and the various other changes that you are making, where are you
getting the money for them?
PRIME MINISTER:
Well there's a combination of things. We are obviously, because
of the GST, you get a growth dividend, you get dividends from the
black economy and you get some money out of the surplus and if you
look at the figuring you find in different ways contributions are
being made. And it's a very balanced package and, of course,
it all adds up.
PEACOCK:
Isn't all that money though available to equally to Labor
without a GST, I mean they can raid the surplus just the same as
you have and they can try to get the black economy as everybody
has always promised but never delivered?
PRIME MINISTER:
Well the last person to promise personal tax cuts without restructuring
the system was Paul Keating before 1993. Remember L-A-W law, what
did he do? He whisked away the tax cuts and for good measure he
put up all of the existing indirect taxes without giving the pensioners
and the battlers any compensation. The Labor Party if it wins the
next election will do the same thing. So I say to the Australian
people, beware of Labor Party leaders offering tax cuts without
a GST.
PEACOCK:
So your answer is yes, Labor could do it but it is a question of
credibility, you don't think they would?
PRIME MINISTER:
Not only it is a question of credibility but this package is interlocked.
You can't start putting and taking without the whole thing
unraveling. And if you look at the detail of it you will see that
many of the dividends that enable certain things to be done are
as a consequence of the introduction of the Goods and Services Tax,
the cash flow benefits that go to small business won't be there
without the GST. The reductions in business costs. You can't
give the bush a $3.5 billion cut in fuel costs without the changes
that we have proposed.
PEACOCK:
Okay, what about the tax mix? Now there is, you have agreed, some
switch in the mix. There's a switch of what is it, $10 billion
between income tax and indirect taxes?
PRIME MINISTER:
Well it's in the order of 0.7 per cent of GDP which incidentally
is virtually the same as the indirect tax increases that Mr Keating
and Mr Beazley hit us with in 1993 without any compensation for
the battlers and the pensioners.
PEACOCK:
Now in terms of the equity of this package, it appears to favour
upper income people just as much, if not more.
PRIME MINISTER:
No, no it doesn't because you don't just look at the
dollar amounts. It stands to reason that somebody on $100,000 will
in dollar terms get an attractive tax cut because he is already
paying a lot of tax. But if you look at the proportionate increases
the greatest proportionate beneficiaries are middle income families.
I mean look at this, a dual income family 9.9 per cent on $35,000,
you are not going to tell me that person's elite are you?
PEACOCK:
Same list though if we look at it Prime Minister....
PRIME MINISTER:
It's a very good list Matt, it's a very, very good list.
PEACOCK:
$5,000 income, they get a benefit of 2.4 and if you go to the top
of the scale they are getting 6.7 per cent.
PRIME MINISTER:
Yes but have a look at the middle there, I mean don't ignore
the middle. It's fantastic 9.9 per cent, beat that.
PEACOCK:
I can see this argument can go on for some time. How much time
do you think it should go on for, I mean we haven't had time
to examine it. Do you think we need until Christmas for the population
to understand it?
PRIME MINISTER:
Matt, I said before it was released that I would allow sufficient
time to the Australian people to understand it.
[ENDS]