Subjects: Senator Harradine's decision
E&OE................................................................................................
JOURNALIST:
John Howard, what happens now.
PRIME MINISTER:
Well we will amend the legislation in the Senate to give effect to
all of the increases in compensation and other changes that I outlined
to Senator Harradine yesterday. We will naturally do everything to
the legislation that I told him yesterday we were going to do. We'll
then put that legislation up and if it's rejected we'll
put it up again. And that's because the Government believes that
this country badly needs taxation reform. We told people all of the
details of our plan before the last election. It's not just a
GST. It includes massive cuts in fuel taxes, it includes a 30% top
marginal rate for 80% of Australian tax payers, it takes $4 billion
off our exporters, $10 billion off business costs, and it's
got $13 billion of personal tax cuts. It's a total revamp of
our system, and we need it. And I believe in it because it's
good for Australia, not because I'm on some ideological kick.
I've got plenty of other things I could be ideological about.
But I really believe that this country will be better and stronger
if we can have a changed tax system.
JOURNALIST:
Was it clear from Senator Harradine's conversation with you today
that not only does he reject this latest package of yours, but that
he is now not open to any further offers, that his mind is made up
against the GST?
PRIME MINISTER:
That was the very clear impression that he gave to me today. I thought
until the last 24 hours that he may have thought that it was more
important to honour the mandate we received at the last election,
particularly as we made full disclosure before the election what we
were going to do, that that would, with a bit of extra compensation,
that that would outweigh his reservations about the character of our
taxation reform. But he decided no.
JOURNALIST:
So once you've put it a second time, if it's rejected a
second time, will you keep open the option of a double dissolution
election on your tax reforms?
PRIME MINISTER:
Well if a bill is rejected a second time after the lapse of three
months it's always open for a government to have a double dissolution.
You'll understand I'm not foreshadowing now when the next
election will be. I don't know when it will be and I would think....
JOURNALIST:
But it's a live option?
PRIME MINISTER:
Well it's always a live option of you have a double dissolution
trigger, yes of course it is. But we don't need another election.
We just had one on the GST and I made full disclosure. I mean I looked
everybody in the eye and said this is what I'll do if I get elected.....
JOURNALIST:
But then you've taken it back to a Senate that wasn't elected
at this election.
PRIME MINISTER:
Oh yeah, but I mean I think that's fairly corny argument. Well
if that is the only objection then the Senate that was elected at
the last election ought to pass it the second time around.
JOURNALIST:
Except that unfortunately for you the same who put you back into government
also put in a Senate that would appear to continue to be hostile to
the GST.
PRIME MINISTER:
But governments are formed in the Lower House and if we're to
have a political process that works then it's got to a possible
for a party that makes full disclosure to get its mandate implemented.
I mean it would be a different matter if I had simply said to the
Australian public if you reelect me I'll cut your personal tax
by 20% and I didn't say anything about the GST until after the
election which is what a certain Mr Keating did in 1993.
JOURNALIST:
It's hardly a screaming mandate if you scramble back by a few
thousand votes and less than 50% of the vote overall.
PRIME MINISTER:
There's an old political saying that if you get 50 plus 1 you
win by a landslide.
JOURNALIST:
You always seemed confident that you'd be able win Senator Harradine
in the end with what you called more than once, fine-tuning. You were
wrong it seems.
PRIME MINISTER:
No, I said I was hopeful, rather than confident. I always thought
it would be difficult but I was hopeful. And we certainly made a very
generous change to the compensation arrangements. The pensioners alone
will get almost $800 million more compensation; 5% instead of 4% increase
in the pension; and in future, if the plan goes through, the pension
will be always 26% of male average weekly earnings instead of 25%.
JOURNALIST:
And yet you never convinced Senator Harradine at any point that you
were able to guarantee that these compensations would last over time,
that they would not be eroded over time, whereas as he said in the
Senate today, the GST is there for good.
PRIME MINISTER:
Well no current Parliament can bind a future Parliament. By the same
token a future Labor government could increase wholesale sales tax.
JOURNALIST:
But you are binding a future government to the GST aren't you?
PRIME MINISTER:
Well a future government can repeal a GST.
JOURNALIST:
Only with the support of the Premiers. I mean you......I'm
sorry, no, that was about increasing it.
PRIME MINISTER:
Yeah that's right. Now they can repeal it. I mean, you've
put a very interesting point, the Labor Party is against the GST yet
when asked Mr Beazley doesn't promise to repeal it if he inherits
it. I mean we are being utterly consistent. I have always believed
in tax reform. Mr Beazley knows that tax reform is needed. The three
Labor leaders I've opposed, Bob Hawke, Paul Keating, and Kim
Beazley, all at some stage have embraced a GST. Mr Beazley is engaging
in political opportunism by doing what he's doing now.
JOURNALIST:
But the person whose vote you really needed, and the person who appeared
to approach this with all sincerity and no kind of political opportunism
was Senator Harradine. Do you accept that he has been sincere in this?
PRIME MINISTER:
Well look, I don't make a judgment about Senator Harradine accept
things that he said to me. He's been honest with me. But it doesn't
alter the fact that..he's not accountable to me. He's accountable
to the Australian people. I mean the Australian people will make a
judgement about him. It's not for me to pass a judgement. I've
always found...
JOURNALIST:
I think you've been respectful of him in the past.
PRIME MINISTER:
Yeah, I've always found him to be an honest person to deal with,
and I've always dealt honestly with him.
JOURNALIST:
He sat through four months of Senate hearings on the GST. He's
obviously agonised for months over this decision and he does appear
to be genuine in this. If you're right and he's wrong, having
listened to all he's listened to as an intelligent man how could
he get it so wrong?
PRIME MINISTER:
Well, I can't answer that Kerry. I can't answer that. In
the end in politics what you do is you put up a program, you seek
electoral support for it and then you hope you can implement it. Now
I did that. I mean nobody could say for a moment that I held anything
back. I mean we hear a lot of criticisms of politicians for being
deceitful and dishonest. On the issue of tax reform I was open, I
was patent, I was sincere, I was transparent. I told it warts and
all before the last election. Now if you can't in those circumstances
get your program implemented, we really are approaching political
gridlock in this country because under the present electoral system
no one side of politics can ever win control of the Senate. So the
only way you can ever hope in a decent sense to get your program implemented
is to spell it out in detail before an election and then say to the
Senate the people knew about it, they returned us and you ought to
pass it.
JOURNALIST:
Senator Harradine made the point also today, and in this he seems
to agree with Labor, that if the system ain't broke why fix it.
And I suppose what he's pointing to, amongst other things, is
that you've brought in a surplus of $5.4 billion in your next
financial year. If you look at future years without the GST you could
be looking at a surplus of $20 billion three years from now. Now how
is that system broke if it can deliver you that kind of surplus?
PRIME MINISTER:
Well it's broke in a number of ways. It doesn't provide
enough funds for the States. One of the great advantages of the GST
is that it will underwrite the essential services of the States. A
tax system is not just about raising revenue. It's also about
making our exporters more competitive. We could be a wealthier more
competitive, more successful society if 80% of our taxpayers paid
only 30 cents in the dollar at the top. If we provide more incentive
we can have a more energetic, more forward-looking community. We are
a vast country. The price of haulage by fuel is still too great in
this country. All of those things can be attended to by taxation reform.
JOURNALIST:
But presumably if you've got a $20 billion surplus to play with
three years from now you can provide a greater largesse in a number
of those areas that you're talking about now.
PRIME MINISTER:
Well Kerry, you can't assume that you'll have all of those
surpluses forever, and after all we are accumulating surpluses now
to pay off the debts that Mr Beazley ran up when he was finance minister.
JOURNALIST:
But $20 billion would look after that.
PRIME MINISTER:
Well hang on, we inherited $90 billion, so we have a lot of debt still
to pay off. And what we would like to do with those surpluses Kerry
is not squander them, but to use them to repay debt.
JOURNALIST:
You've faced the prospect of this defeat for months now. What
is your alternative plan, your fallback plan if you go through the
process of the next three months of being rejected twice in the Senate?
What is your fallback plan for the tax reform that you say you're
going to remain committed to?
PRIME MINISTER:
Well Kerry, I think you should invite me back in 3 months time, and
I promise to appear if that eventuality occurs. I have known from
July 1997, when I resolved that this country needed taxation reform,
that I would have to go through this process. That I would have to
go to the public, telling them everything, laying it out in detail,
running the risk of a fear campaign, running the risk of losing the
election. Facing the inevitability of not controlling the Senate,
knowing that I would have to try and persuade Brian Harradine, and
Mal Colston to support us. I knew that. I've known that for two
years and in that sense I'm prepared for all eventualities. But
that is the only way that you can get tax reform. There is no other
way because that is our system. I mean Kim Beazley 14 years ago believed
in what I now believe in. He supported a broadbased indirect tax in
1985. Bob Hawke did, Paul Keating did. We all know it's needed.
They're playing games. The country deserves better.
JOURNALIST:
John Howard, we're out of time. Thanks for talking with us.
PRIME MINISTER:
Pleasure.