E&OE...................................................
LAWS:
On the line from our Canberra studios, the Prime Minister of Australia,
John Howard. Good morning Prime Minister.
PRIME MINISTER:
Good morning John. Nice to be with you.
LAWS:
Good to be able to talk to you. Can I preface our discussion by
saying that I have, and you know it, that I have absolutely nothing
against the GST. I would rather be the supporter of GST. I don't
think we should get too wound up discussing it until we have some
more detail but I do feel that you have left the door open for a
terrific amount of criticism trying to sell it because of the use
of the word, permanently', and the use of the words,
never ever'. Do you agree?
PRIME MINISTER:
No I don't. Back in 93, I am sorry, back in 95
before the last election I ruled out a GST, and you have referred
to that, and that is fair enough, and I don't deny using those
words. And you will be aware of course that I haven't tried
to introduce a GST or tax reform during our first term in Government.
We have formed the view that tax reform, including possibly a broad
based, indirect tax, or GST, whatever you might want to call it,
is desirable for Australia and we are going to the public at the
next election and we are laying out our plan and if the public don't
like it, then they will vote against us, and we will fail.
LAWS:
But Prime Minister but never, ever means never, ever.
PRIME MINISTER:
John, when you say to the public, your position is X, you have an
election and you stick to that and then you believe in the national
interest it should no longer be X, What is wrong with then going
to the public and saying, we have changed our position but before
we implement our changed position we are going to give you a chance
of voting against us.
LAWS:
I don't see anything wrong with that at all.
PRIME MINISTER:
Well, that is all I have done.
LAWS:
But, my only comment, my only comment on the whole thing is...
PRIME MINISTER:
If there's nothing wrong with it, what's all the fuss.
I don't mean you but I mean from others. That is about as open
and as transparent as anybody can ever get in politics. It is different,
if I may say so, from what the Labor Party did in 93.
LAWS:
I accept the fact that people should be able to change their mind.
In fact I have always said that I believed it to be an indication
of a big mind if a man can say, well hang on, that might not have
been quite right. Let's have a look at it this way.
PRIME MINISTER:
It's not a question of not being right. I mean, you can form
a different view and if you are honest enough to put another election
between the change of mind and the implementation about change of
mind, that could be, you can't be more open and transparent
otherwise we would all be lumbered with the views we had 20 years
ago. Now you would agree that some of the views you had 20 years
ago on certain issues have changed. So have mine and they will change
again, and providing, in my case as a Prime Minister or a political
leader, I am open with the public and I say, right, I have changed
my position but before I implement that changed position, I am going
to give the public an opportunity at a general election of passing
a verdict, of making a decision as to whether they support my change
of mind.
Now that is very different, if I may say so again, and it's
a very important comparison. In 1993 Mr Beazley and Mr Keating said
they were against a GST and they would give us L-A-W law income
tax cuts and they were against indirect tax rises. They got re-elected
and then they changed their mind, but the crucial difference is
that they changed their mind without giving the public an opportunity
of passing a verdict on their change of mind and they repudiated
all of those promises immediately after they had been re-elected.
Now you know as well as I do that in the 1993 election campaign,
if the Australian public had known from Paul Keating and Kim Beazley
that they were going to increase all of those indirect taxes, that
they were going to renege on the L-A-W law tax. What would have
happened is that John Hewson would have become Prime Minister of
Australia in 1993 and the difference between me and them is that
I am saying to the public now, openly, candidly, my position now
is that I am in favour of tax reform. I will give you all of the
details and you can make a judgement before I implement it, and
if you don't like it, you will vote against me. If you do like
it, you will vote for me. Now that is the difference. It's
open, it's transparent and it's honourable.
LAWS:
But you are drawing the parallel between Kim Beazley and Paul Keating
talking about L-A-W law tax cuts and then going ahead and introducing
certain other increases in taxes without having pre-told the electorate
that that is...
PRIME MINISTER:
I am sorry, it was worse than that.
LAWS:
.... anyway, that they would do it.
PRIME MINISTER:
No, no, it was worse than that because what they effectively did
after the 93 election, and this is the view of the best academic
on indirect tax in Australia, Dr Neil Warren, was to introduce in
effect their own GST. They did it without any compensation. So not
only did they, before 1993, say look fellas, we are going to give
you income tax cuts, and go back on that, in addition they said,
we are not only against Hewson's GST but we are against any
increases in indirect taxes and taxes are going to go down. Now
they got elected and they did the complete opposite and they promised
tax cuts and no GST. When they got in they gave you no tax cuts
or only half of what they promised and they gave you their version
of a GST without consulting the public again.
LAWS:
But you've just done the reverse. You've promised people
no GST, never, ever, permanently off the agenda and then gave them
one.
PRIME MINISTER:
Hang on, no I haven't given them one. I will only give them
one if they vote for me in the full knowledge that they will get
it. That's the difference. You can't, I am sorry John,
you can't, nobody can argue against a bloke saying look, that
was my position, I have now had a different, formed a different
view but before I implement that different view I am going to give
the public an opportunity to vote against me if they don't
like the new view.
Now Keating and Beazley did not do that in 93. That's
the difference. We are being open and transparent. They in 1993
were deceitful and dishonest and if they had put their plans on
the table, if they had revealed in the 93 election campaign
what the 93 Dawkins' budget was going to contain, I believe
John Hewson would have won that election and won it quite easily.
LAWS:
Well I am not sure that I would agree with that given that, I mean
there was a....
PRIME MINISTER:
That's a bit academic. Whether Hewson would have won or not
is academic but the behaviour is different. I mean, what I am saying
to the public is yes. My view now is different from what it was
but I am going to lay out my new policy and I am going to give you
an opportunity to pass judgement on it and if you don't like
it, you can vote against it. If you do like it, you can vote for
it. Now I don't know how more transparent, open and honest a political
leader can be.
LAWS:
But Prime Minister, my comment to you, I agree with everything you
are saying abut changing minds and certainly...
PRIME MINISTER:
And the openness.
LAWS:
I agree with the fact that you have been open about it in a convoluted
kind of way.
PRIME MINISTER:
I don't think it's convoluted if you say to the public, I have
changed my mind.
LAWS:
But you didn't say that. I haven't heard you say, I've
changed my mind.
PRIME MINISTER:
Well I have just said it. I now believe that it is in the long-term
interest of this country to have tax reform.
LAWS:
And never ever, in the minds of the Opposition and the minds of
those who are opposed to a GST when it comes from the lips of John
Howard, means three years.
PRIME MINISTER:
No, that's not right. I mean it depends entirely upon... well
it depends what issue. I mean, I am not going to deny what I said
but what I am saying to the Australian public...
LAWS:
You can't.
PRIME MINISTER:
I can't and I won't. I am not going to insult the intelligence
of the public and say that I didn't say it and that was before
the last election and I have honoured that during this term. There
is no GST during this term and now I am saying to the Australian
public I have come to the conclusion and my Government has come
to the conclusion that despite what we may have said in the past
and what views we held in the past, we believe tax reform is essential
to further secure and give safety to the Australian economy and
we are going to lay out a plan, we are going to lay it out before
the public before the next election and to give the public an opportunity.
They can pass judgement. If they don't like me, if they don't
like my plans for Australia then they can vote Labor. If they do
like our plans for Australia they can vote for the Coalition. And
we're not holding anything back. I mean, the difference between
me and Kim Beazley on this issue is that he held something back
in 93 because he knew that if the Australian public had been
told that they were going to jack up those indirect taxes in the
93 budget, they would have voted for the Liberal Party.
Now what I am saying to the Australian public is, I will give you
the details of my plan. The benefits that accrue to the Australian
public from that plan, if you like it you will support it. If you
don't you will vote for the Australian Labor Party. Now that
is what democracy is all about.
LAWS:
Now John, unlike you, you seem to be missing the point that I am
endeavouring to make here, and the only point that I have made about
it is that I would have thought, given the comments that you made,
given the phraseology like never, ever, and permanently, that you
were going to have a great deal of difficulty selling a GST. Do
you not accept that?
PRIME MINISTER:
I don't believe selling a GST or, I won't be selling a
GST. I will be selling tax reform. I want to make it very plain.
LAWS:
But part of it will be a GST.
PRIME MINISTER:
A broad based, indirect tax is clearly one of the options. We haven't
formulated all the details yet but obviously, if we are going to
reform the tax system in a big way you have got to get rid of the
existing wholesale tax system and if we do have a broad based, indirect
tax or a GST, we will throw out the existing wholesale tax system
lock, stock and barrel with all of the inequities and lopsided approaches
that it contains and of course, one of the advantages of a broad
based, indirect tax and one of the reasons why we are looking at
this again is that it attacks the black economy.
A couple of years ago an academic study was done in this country
that showed that no less than $15 billion a year was being lost
to the federal revenue through the black economy, through the cash
economy, and one of the great advantages of a broad based, indirect
tax or GST is that it attacks the black economy and that means that
you and I and all the other honest tax payers in Australia will
be better off because those who are now evading their responsibilities,
will not be able to do it so easily, under a different tax system.
LAWS:
But do you....do you really think that the average battling Australian
is going to care much about the justice of non-taxpaying people
if it means their bread's going to cost more?
PRIME MINISTER:
Well the average Australian tax payer will be cranky if I produce
a tax policy that makes them worse off. And I can promise them I
won't. I will produce a tax policy that won't leave them
worse off....
LAWS:
You see, because that's the difficulty of it at the moment.
Fear, fear that exists because they don't have an understanding
of it.
PRIME MINISTER:
John, John, I can, I understand that when all the details come
out, and even now, we have the responsibility to explain and to
advocate. Now I accept that. But if you're saying to me, that
we face the job of selling and persuading and advocating, of course
we do, I accept that. And it would be an easier life if I took the
lazy approach and said, "oh, no, we'll leave a rotting,
decaying tax system. To hell with the national interest, we won't
do anything about it.". Now, John, Kim Beazley and Gareth Evans,
they were in Government. They were in fact part of Paul Keating's
tax push in 1985. They know, as I know, as Paul Keating knows, as
you know, as John Hewson knows, anybody, Peter Reith, Peter Costello,
anybody who's had any contact with the Australian taxation
system over the years knows damn well that sooner or later we've
got to reform it. I mean I can remember private discussions I've
had with my colleagues on other sides of the House, particularly
Paul Keating, about the need to change the tax system. There was
a time, 13 years ago, when he and I were basically saying the same
thing about tax reform even though we were on opposite sides of
the House. And he knows that, and I remember it very well and I'm
sure he does. Now all I'm saying is that there does come a
time in the life of any political leader that you, when he's
got to take some risks in the national interest. When he's
got to say "well it might be unconventional, it might be unpopular,
people may vote against." But if you really care the national
interests, if you really believe that Australia needs a better taxation
system, than you've got to take the risk. Now I can say to
the battlers of Australia, you are not going to be worse off. Many
of you will be better off. You're going to be fully protected
if there is a broad based indirect tax. You will see in the compensation
and personal income tax arrangements that you are certainly not
disadvantaged and the great bulk of you will be advantaged The only
people who will lose from my tax reform plan will be the cheats.
LAWS:
Will, will there definitely be reductions in regular income tax?
PRIME MINISTER:
Of course there will be.
LAWS:
Dramatic increases?
PRIME MINISTER:
John, until people see the figures. They'll be significant
and they'll be income tax reductions that will, I believe be
seen as not only fair but also, to many people, generous, because
we believe that some tax relief is desirable. But there are also
other benefits that flow from a change to the system and I've
already talked about the
$15 billion that's been estimated as being slipping through
the fingers, but Tim Fischer made the point last night that the
present system penalises our exporters. I mean we tax inputs to
exports. People make things in Australia to sell overseas, and they
pay taxes on inputs and it's crazy.
LAWS:
You said, you said yesterday if we introduce a new broad based
indirect tax you can rest assured whatever it's introduced
at, it will stay at. But there are going to be people who are going
to say "well that's like never ever.".
PRIME MINISTER:
Well some people will criticise that. I accept that and it will
be for the Australian public to make a judgement.
LAWS:
But you meant what you said, if it's introduced at 10% it
will stay at 10%?
PRIME MINISTER:
I'm not saying what the percent is........
LAWS:
No, no, I know.
PRIME MINISTER:
What I meant is that if it's introduced at X'%
it will stay at X%.
LAWS:
Despite the fact that in 21 of 23 OECD countries that have got
a GST, they've all risen?
PRIME MINISTER:
I understand that, but I also understand....
LAWS:
Some of them have doubled.
PRIME MINISTER:
Well, some of them have, but you've got to remember that in
many of those countries they doubled. You know why? Because they
were too narrowly based which of course is the problem with our
existing wholesale tax system. I mean you've got some items
under the present wholesale tax system, take a television set which
is now a pretty standard item for the average family. I don't
think anybody regards a television set as a luxury, that's
32%. I mean, 32% is ridiculous.
LAWS:
And would that 32%.....
PRIME MINISTER:
That would disappear all together. I mean if you have a broad based
indirect tax, what happens is that all of those big lumpy rates
go, and you have a single rate.
LAWS:
I'm just looking here at the, this is interesting, the United
Kingdom introduced one at 10%. It went to 17.5%. It's a pretty
dramatic increase.
PRIME MINISTER:
Oh yes, that's true and it's also true of course that
they had a far more narrow base at the beginning. John, these are
all things that people will make judgements on I'll answer
it when rates are established and the details are out, these are
things that we'll campaign on, talk about, and we'll be
able to tell the public what we intend to do. And if they form a
judgement that this is in the interests of their country and that
it's fair, I believe they'll support it. Now, if they
don't, well they won't, and in any democracy, I will accept
the verdict of the public. I'm not holding anything back. I
mean, I say again, I'm not going to the election saying, if
you elect me I'll do X' and when I get re-elected
I do the opposite of X'. Now, I'm not doing that.
I'm going to the public telling them that we now believe that
tax reform is in the long term national interest of Australia.
LAWS:
When will we get some detail on it?
PRIME MINISTER:
Very soon. I can't tell you exactly when, but obviously...
LAWS:
You're working on it.
PRIME MINISTER:
Well, Peter Costello and I have been working on it quite extensively
and our other senior colleagues, and he's over in New York
at the moment ringing the bell in Wall Street, and he'll be
back shortly, and he and I will be having further discussions over
the coming weeks. But we've done a lot of work, it's well
advanced, it's very....
LAWS:
So are we talking about weeks or months?
PRIME MINISTER:
Well, I don't want to get into that. I mean, weeks merge into
months and ...(inaudible) into weeks. I mean, two months is eight
weeks. So John please, I don't, all I'm saying is that
it is sooner rather than later.
LAWS:
I'm asking you for your sake, not for mine.
PRIME MINISTER:
I realise that, look John, I just you know... sooner rather than
later.
LAWS:
Okay, thank you very much for your time Prime Minister. I think
you are in for a couple of rough days.
PRIME MINISTER:
Well, John, politics is about being willing to do the right thing.
LAWS:
It should be.
PRIME MINISTER:
Well, I think it is right for Australia to have a better tax system
and I am prepared to face the Australian people, to tell them openly
what we intend to do. I don't intend to get re-elected, telling
them one thing and doing the opposite immediately after I'm
re-elected. They really get angry with that, and they have a right
to be angry with that.
LAWS:
But Prime Minister, just back to it again. There are going to be
those people who say well that's just what you've done.
You were elected and you've told us there wouldn't be
a GST and now there is one.
PRIME MINISTER:
But before there will be one, they will have an opportunity to
vote me out if ...
LAWS:
To vote on it.
PRIME MINISTER:
...they don't like me, now that's the difference. They
didn't have that in 93. In 93 Keating and Beazley
said one thing. They won on the basis of that one thing they'd
said and then they immediately did an opposite without going back
to the public and saying "woops I'm sorry I've changed
my mind, I'm going to introduce my own GST and I'm going
to renege on the L-A-W l