E&OE....................................................................................................
Well thank you very much Mr McKenzie-Forbes. To my colleague
Teresa Gambaro, who is the Federal Member for Petrie, to John Hodges
over there who use to represent this electorate, and to the other
directors, ladies and gentlemen.
It's an enormous pleasure for me to be here this morning. I'm
often asked by people, as I travel around our wonderful country, what
is the best thing about being Prime Minister of Australia. And the
best thing without doubt about being Prime Minister of Australia is
that you have an opportunity virtually every day, wherever you might
be, of meeting a different group of Australians -in their homes, in
their local community, in their local retirement village, wherever
it may be. And the remarkable thing is that every group is different.
Every group has something new or different to tell you and something,
quite often, a new or different piece of advice to give you and that
is part of the process of the exchange that ought to go on between
a Prime Minister and the people who he or she is elected to serve.
And I do want to take the opportunity this morning of saying a few
things to you about the plan we announced last week.
But before I do that I want to congratulate this retirement village
and indeed I want to congratulate all of those associated with providing
security, comfort, and a congenial living environment for Australia's
senior people and senior citizens. I don't just say it because
I'm addressing this audience but I'm very conscious that
that age cohort of Australians who are represented here today have
contributed so much to our country. The great bulk of you, at various
ages, have lived through a war. Some of you through a depression.
All of you through those years of post war reconstruction in Australia.
And you've all contributed so much and you all held through those
years to some constant enduring Australian values. And you've
created the society that people of my age and younger have the great
privilege of enjoying and I want to place on record my respect and
appreciation for the generation of Australians that you represent
and what you have done for our country.
And it's really doing something for our country which the tax
plan I announced last week is all about. People have talked about
this or that aspect of it but the most important thing about it is
that it is designed to help Australia and to help Australian families.
It is designed to make Australian stronger economically. It's
designed to help Australia export more and if we export more we'll
be more prosperous and we'll create more jobs. It's designed
to give more choice and more help to Australian families, those particularly
with young children. And it's got to be looked at as a whole.
We all like getting benefits but you can't really have benefits
without fundamental reform. The idea that there's a magic pudding
that somebody can come along and carve up and hand out without having
to sort of do anything to build and do anything to put it together
is of course wrong. We build a house and we have the most comfortable
room in it, the one we like to go to most frequently. But, of course,
unless that house is built on sound foundations than it's not
going to last for very long and the transitory comfort of that nice
room is going to disappear.
Now there's been, understandably, a bit of focus on how this
plan affects pensioners and self-funded retirees and I want to come
to that in a moment. But before I do could I just emphasise that the
most valuable thing about this plan is that it will, in a time of
some difficulty around the world, the economies of Asia have turned
down and that hasn't affected Australia too badly because we
are now much stronger than we were. But what we therefore must do
is to make ourselves even stronger. And some people are saying: well
when you've got trouble overseas you shouldn't try and change
anything. I say the reverse. I say because we have challenges overseas
we must change certain things that will make Australia stronger and
make Australia better. And the whole purpose of this plan is to give
us a new and better taxation system to help the entire Australian
nation, particularly our families. And I think everybody understands
that the present system is really on its last legs. But the present
system does need change. But we can't hope to go ahead, the whole
country, unless we have a better and a reformed taxation system. And
that's why we're doing it. We're not doing it for political
advantage. Some people have said to me you shouldn't raise something
like this perhaps a few months out from an election. But we are doing
it because we believe very very genuinely and very sincerely that
it will be good for our country. And I'm very personally committed
to it because I believe in here that this is good for Australia and
good for Australian families.
Now, like any other section of the community, pensioners and self-funded
retirees will say: well if it's good for Australia that's
good. But, not surprising, they say: well how does that affect our
position? And there are ten ways in which...within this plan, there
are ten particular ways in which protection is provided and benefits
are provided for pensioners and self-funded retirees. To start with
there is an up front, from the 1st of July 2000, increase
in the pension and all other like benefits. And that 4% increase takes
effect immediately on the 1st of July when the new plan
comes into operation. And part of the guarantee in relation to that
increase is that the pension will be permanently 1.5% above, 1.5%,
the increase in the pension, 1.5% above any increase that will flow
from price changes as a result of the introduction of a goods and
services tax. And some of you will say the introduction of a goods
and services tax will put everything up by 10%. It won't. And
the reason why it won't put everything up by 10% is that a lot
of things that now carry wholesale sales tax will come down in prices.
There are a lot of things you buy like detergent and soaps, and other
household items where there's a 22% wholesale sales tax. You
pay 12% wholesale sales tax on some biscuits, on flavoured milk. You
pay 32% when you buy a television or a video. You pay 22% when you
buy a family motor car. Now all of those will disappear and therefore
the price of many goods that you now buy will actually fall. Others
will go up. But it's because some come down and others go up
that it averages out, according to our calculations, at about 2%.
One thing a lot of people forget is that when they go to the supermarket
everything they buy in the supermarket, 20% of the cost of that is
attributable to transport. If fresh food, or canned food or anything
is, it doesn't just materialise on the supermarket shelf, it
has to be carried there. Now one of the big things about this plan
is that transport costs are going to be cut very very significantly
and they're going to be cut because the price of petrol for every
businessman will fall by seven cents a litre, and on top of that we're
going to give a very special big concession for the excise on diesel
which is the fuel used by most large trucks to carry things around.
And this is particularly important for Queenslanders because Queensland
is a very big State and it's a very decentralised State. Queensland
is the only State of Australia where the majority of people live outside
the capital city. So therefore a change which helps to reduce the
cost of carrying things around the State is particularly beneficial
to Queensland because there is more long distance haulage involved
in a decentralised State. That's a digression from the 4% increase
in the pension but I think an important one to explain it. So that's
the first thing.
The second thing is that for a long time now we've had a special
rebate for older people so that no part of the pension will be taxed
and we're going to increase that by $250 for a single person
and $350 for a couple. And thirdly we're going to increase the
pension free area, that's the amount of income you can have without
the pension being affected, by 2.5%. Fourthly, when the pension does
start to be withdrawn we're going to reduce the taper rate from
50% down to 40%. In other words, instead of losing half for every
dollar of private income, that's going to be reduced to 40%.
There will of course, depending on your level of income, be reductions
for all Australians over and above any special provision for older
Australians there will be reductions in personal income tax. The tax
free threshold is going to be lifted to $6000. The bottom rate is
going to be cut from 20 down to 17%. And when you reach $20,000 of
income the rate will be 30% and that will apply right through to $50,000.
There will be no change at all in the tax rate between those two figures.
And that means about 60 to 70% of all wage and salary earners will
be able to, depending on their level of income, they will face a marginal
rate of 30% or less and that is a huge improvement on the present
situation.
The sixth thing that's of particular relevance to pensioners
and self-funded reitirees that for every person 60 and over there
will be savings bonus a one-off tax fee payment of $1000 in
relation to any investment income that you might have and that investment
income will be very broadly defined to include things like superannuation
and of course returns of dividends and interest savings and so forth
from the bank. And that's available for everybody 60 years of
age and over, pensioners and self-funded retirees. Then additionally
for self-funded retirees who are of pensionable age or above there
will be an additional $2000 one-off tax free bonus. And both of those
payments will be fully available for people whose income is up to
$20,000 and then it will phase out between $20,000 and $30,000.
Now the eighth benefit applies to those of you who may own shares
in companies. You know there's been a system now for some years
called imputation whereby the company is meant to pay the tax and
then it sends the dividend to you on which there's a...sends
you a franked dividend on which the company tax has been paid. Now
there's a lot of retired people, there's a lot of people
generally, where tax is deducted at, by the company at the company
rate of 36%. But because their rate of tax maybe only 20% or some
other figure below 36% at the margin they don't get the full
benefit. Now what we're going to do is to change that and under
the plan we're going to introduce what are called fully refundable
imputation credits on shares. And it means that if the company pays
the 36 and send you the rest and you're on a 17% rate or a 30%
rate you'll get a refund from the tax man, a cheque from the
tax man, that's always good, between the 17 and the 36 or the
30 and the 36. And it will mean that people whose marginal rate of
tax is below the company rate will get the full benefit of the imputation
credit on the share.
Now there are two other things that I've left till the last because
I think they are of particular importance and particular benefit to
senior people. And they are the introduction, without an income test,
so therefore it's available to anybody, of a 30% tax deduction
or payment in relation to private health insurance. Now what this
means is that if you've got a private health insurance policy,
from the 1st of January next year, not from the 1st
of July in the year 2000, but from the 1st of January next
year, you'll be able to get 30% of that off either your tax or,
if you want to get it earlier, you pay the premium you can go along
to the Government office and they'll give you a cheque for the
30%. Now if you've got a $2000 policy that will be worth $600.
And the present arrangement, which is a lot more modest, will of course
continue through to the end of this year and the new system will come
into operation on the 1st of January next year. And that
will be universally available. And at the present time the private
health insurance subsidy the maximum if $450 and that's for families.
It's a lower amount for couples and it's a lower amount
still for singles. And this of course won't discriminate at all
between those different people but obviously if you've got full
family cover that's a bit more expensive and the amounts that
you will get back will correspondingly be higher.
And the final thing of course that I wanted to mention is that part
of the plan is to abolish in full provisional tax. And I know from
my experience as a local member, I know from my experience as Treasurer,
I know from my experience as Prime Minister, and I also know from
my experience years ago as a provisional tax payer that provisional
tax is one of those things that did irk a lot of people. And it always
seemed that you were paying it a little bit ahead of time. You didn't
like the tax man suggesting that there was an automatic increase in
the amount of money you were going to earn from year to year and one
of the things that we find we're able to do as a result of the
changes that we've introduced is to abolish provisional tax.
Now I've taken some time ladies and gentlemen to go over some
of the particular features of the plan that relate to pensioners and
self-funded retirees. And I've done that because we spent a lot
of hours and devoted a lot of time in trying to get the balance right
because we are conscious that there is change involved in this and
people are naturally entitled, when change occurs, to be reassured
about the impact of that change on their own circumstances and that
particularly applies to people who are relying on investments and
who are relying on those investments to provide themselves with a
secure environment.
Now one of the things any Government can best do to help provide a
secure financial environement is to see that the level of inflation
is kept as low as possible. I know that lower interest rates are not
as good news for people relying on investments as they are for people
paying off a home. I'm able to say when I go around Australia
and I talk to home buyers, I'm able to say that under the Government's
policies we have reduced interest rates to their lowest level for
home buyers for 30 years. Now that's great if you're paying
off. If you're investing and you're relying on the interest
from that, well it's not so great. I understand that. And that
is why we have gone to some trouble and taken some care to ensure
that the changes that we are making, and I've listed many of
them that have particular relevance to older Australians, those changes
have been incorporated into the plan.
If I could just say one or two other general things and that is that
any government, no matter what stage it may be and no matter what
side of politics it may be, has a responsibility at various times
of its existence to stand up in front of the public and say: we believe
that something ought to be done for the long-term benefit of the country.
When I entered Parliament in 1974, which is just, in May of 1974 when
Mr Whitlam was half way through his term as Prime Minister, and a
few months after a entered Parliament there was a report tabled which
recommended a big change to Australia's taxation system and it
was called the Asprey Report. Some of you may remember that name.
It was chaired by a now deceased Supreme Court Judge of New South
Wales. And you know what it reccommended? It recommended the introduction
of a broad-based indirect tax. It recommended the abolition of the
wholesale tax system. It recommended a whole lot of the changes that
the Government has announced in the last few days. It recommended
reductions in personal income tax, it recommended some other things.
Not everything in the Asprey Report has been picked up by us but it's
very interesting that 23 years ago this expert report that had been
commissioned by the late Sir Billy Snedden who was Treasurer in the
Liberal Government, had been delivered to Mr Whitlam as Labor Prime
Minister and it recommended these things. And since then various people
have tried to change the system. And the reason they've tried
to change it is not because people enjoy changing things. I mean from
a point of view of ease and comfort the simple thing to do is to not
sort of change anything and just let things bubble along. The problem
is that that's not always the best thing for the country. And
the reason people have tried at various time to change it, I tried
on a couple of occasions when I was Treasurer in Mr Fraser's
Government. Mr Keating tried it when he was Treasurer in Mr Hawke's
Government. Dr Hewson, as Leader of the Opposition, tried before the
1993 election and we've come back and we're putting in forward,
in a better form if I may say so, I hope with no immodesty, in a better
form than any of those that who've gone before me. But the reason
we've all tried is that deep down everybody knows that the present
system has to be changed, on both sides of politics. And at various
stages I can trawl through the records and I can find remarks made
by Mr Beazley and Mr Evans and Mr Keating and Mr Hawke as well as
myself and Dr Hewson and Mr Costello all saying that change is needed,
reform is needed. And it's very tempting when you're a politician
to say: we'll offer you the nice things without the reform. And
I think you all know from your life's experience that it's
never quite as simple as that.
So what we've tried to do on this occasion is put together a
total plan that will, above everything else, be good for our country
and good for Australian families. That's the most important thing
about it. And if I wanted people to think one thing of it, I would
want them to think that it was good for Australia and good for Australian
families because that at the end of the day is the thing that unites
all of us whether we vote Labor or Liberal or whatever our age is
or whether we were born in this country or whether we adopted this
as our country, and whatever our background may be, in the end we
are bound together by a common love of our country and a common concern
for our country's future. And that is the most important thing
about this and that is the reason why I am personally so very committed,
and we are putting it out for people to have a look at. We think it
will provide plenty of protection and plenty of reassurance for retired
people, for those on the pension. We believe it will be good for the
economy, it will make our exports cheaper, it will make production
costs for Australian businesses lower, it will therefore mean that
more jobs can be generated, and it has had a very strong response
from the business community, not because there are such enormous tax
cuts for the business community, and in fact there are none. What
there are for the business community are reductions in their costs,
because now when business operates things, when you run a business
you've got to pay taxes on many of your business inputs, simple
things like computers, you've got to pay tax on them. Under this
system you'd be able to get the tax, which will be at a lower
rate back, because that's how a goods and services tax operates.
There are a number items which are GST free. Doctors' bills,
dentists' bills, prescription drugs they are GST free.
Childcare expenses, education expenses are GST free. And that means
that you don't pay anything on them and the people who produce
them can get a full refund of their input credits. And we calculate
that the cost of, operating costs of doctors and childcare centres
will in fact fall. Nursing home fees are GST and so are hostel charges,
GST free. SO we have taken care to exclude from the GST those things.
We have included food and clothing for the simple reason that if you
leave out very big items like that, then other people will say why
don't you leave something else out and you'll end up back
with the present system which has become so unworkable. And providing
you get the compensation right and providing you build in these other
protections and benefits then all of that I think will work out for
the benefit of the country.
Ladies and gentlemen, I have appreciated this opportunity and I thank
you very very warmly for your patience and willingness to listen.
It is my responsibility as Prime Minister to explain to you and to
explain to millions of Australians why I think this is good for our
country and for our country's families, and to direct my comments
to areas that they particularly effect, because that is accountability
in politics is all about. Now, I think this is a good plan for our
country's future. I'm putting it out before the election
so people so will know about it when they vote, whenever that may
be. I don't want to be in a position of saying nothing about
it before the election and then bringing it in afterwards, because
that would be quite dishonest. And I want people to know exactly what
I am going to do before the election so that they can make their judgment
and I think if they consider the long term future of Australia and
if they look at the way in which it effects them, then I believe,
and I certainly hope that they will come to a very positive conclusion.
But whatever conclusion you come to, that is your perogative as an
Australian and I will accept the judgment of the Australian people
with the very best of grace and good will because I have an enormous
regard for their common sense. So thank you very much, Sir, for inviting
me along, and thank you very very much for listening and I look forward,
over a cup of tea perhaps, of wandering around and chatting to you
and answering any questions you have to put to me. But thank you,
and good luck to all of you and it has been a very great privilege
for me to have an opportunity of talking to you this morning.
Thank you.