E&OE..................................................................................................
MITCHELL:
First today in our Sydney studio the Prime Minister. Mr Howard, good
morning.
PRIME MINISTER:
Good morning Neil.
MITCHELL:
It's confirmed that you are going to open the Olympic Games,
what are you going to say?
PRIME MINISTER:
What people normally say and it's very brief. I just declare
them open and sit down and let the competition begin.
MITCHELL:
It's quite an honour.
PRIME MINISTER:
Yes, it is.
MITCHELL:
Well, why do you think it is appropriate for the Prime Minister rather
than the head of State?
PRIME MINISTER:
Well, we argued it ought to be the Prime Minister when Paul Keating
was the Prime Minister and John Hewson was the leader of the Opposition.
I felt that as the most high profile elected Australian figure the
Prime Minister was the appropriate person to do it. But these things
are not a matter of personal view. I was advocating this before I
was Prime Minister and frankly at a time when my prospects of ever
becoming Prime Minister were about one in 100.
MITCHELL:
What are your prospects of being Prime Minister by the time the Olympics
come?
PRIME MINISTER:
Oh, a lot better than one in a 100, mate.
MITCHELL:
We'll take some calls for the Prime Minister. Mr Howard, GST.
I am getting a lot of letters from people who have got detailed figures
and arguments showing that they will be worse off, but you say nobody
will be worse off. Will you increase compensation?
PRIME MINISTER:
Well, we are going to obviously look at whether there's a need
for fine-tuning as I have called it. Our argument has been that the
compensation elements of the package are fair and comprehensive and
we don't believe all the Senate investigations have demonstrated
that any group on any reasonable assumption is going to be worse off.
MITCHELL:
Senator Harradine's talking about a lot more than fine-tuning
though isn't he?
PRIME MINISTER:
Well, he made a speech and I have read that speech and....
MITCHELL:
Well, what do you think?
PRIME MINISTER:
Well, I am interested in the fact that he didn't say outright
that food should be excluded. I understand the enormous store that
he's always placed on fairer tax deals for families. There is
huge increases in the benefits for families under the existing package.
I think the most sensible thing I can do is to state the obvious and
that is that the Government is looking carefully at what Senator Harradine
had to say. We would like his support, we would like Senator Colstons's
support. It is only through getting the support of those two men that
we can hope to get this package through before the 30th
of June. Look, everybody knows that and there is no point in mincing
words about that.
MITCHELL:
But is Senator Harradine talking about fine-tuning or is he talking
about significant change?
PRIME MINISTER:
If I want Senator Harradine's support on this the best thing
I can do is talk directly to him for there to be direct discussions.
Clearly I will be talking to him, clearly the Treasurer will be talking
to him and you will understand my saying at this stage that there's
nothing to be gained in my publicly speculating about exactly what
Senator Harradine wants or exactly how we might respond to it.
MITCHELL:
Okay. Do you accept, and I am sure you are getting similar messages,
do you accept that a lot of people particularly pensioners and self-funded
retirees are, after doing the figures, are convinced they will be
worse off?
PRIME MINISTER:
Well, some people may believe they are and a lot of that could be
due to a misunderstanding of the benefits that are really available.
And every situation is different but I'd say again that every
pension and every benefit is increased by not only the consumer price
impact effect of the GST but also an additional 1.5 per cent. And
yet on top of that there are tax cuts, any self-funded retirees who
pays tax will benefit through the tax cuts. In addition to self-funded
retirees over the age of 60 there is a saving bonus and there is an
additional one for pensioners as well as self-funded retirees. There's
an increase in the pensioner tax rebate, there's an increase
in the free earnings area. There's been an increase in the tax
rebate for private health insurance. That's already come in,
that's of enormous benefit to lots of retired people. I guess
in a situation like this if people have particular examples, and I
say this very genuinely to your listeners, if they do want to send
them to me we'll try and respond to them. It's very hard
in a programme like this with the best will in the world to do other
than to state the generic position as to an individual's position
it will depend on a lot of things. It will depend, for example, on
whether a self-funded retiree has got a small share portfolio. If
that is the case there's a thing called the imputation credit.
MITCHELL:
Oh yes, well most of the letters I am getting they have factored in
all those things. That's a good idea if people want to send letters
into.....
PRIME MINISTER:
Provisional tax gets abolished.
MITCHELL:
Is food non-negotiable too?
PRIME MINISTER:
Yes.
MITCHELL:
Totally non-negotiable?
PRIME MINISTER:
Absolutely. And the reason that it's not negotiable is that if
you take food out you are really in the long run giving a much greater
benefit to high income earners because there are an enormous....there's
a lot of evidence suggesting that high income earners spend up to
twice as much on food as low income people.
MITCHELL:
Why the delay by the way, I thought you were anxious to get this through?
PRIME MINISTER:
Well, the Democrats weren't ready to resume the debate. And we
wanted to go ahead today, I mean, it'll be up to the Senate but
whether it votes for the debate to be resumed today but the Government,
so I am told by my Senate colleagues, is ready to resume today and
we want it to go ahead today.
MITCHELL:
Mr Howard, the....and I've seen you describe this the other
day as a growth tax for the States, I saw you, I think it was with
Laurie Oakes the other day, saying it will grow $15 to $20 billion
a year for the States, is that right?
PRIME MINISTER:
Well, the amount involved, it will grow to that figure if I said a
year then that was...
MITCHELL:
[Inaudible]
PRIME MINISTER:
A slip. It'll grow to abut 15 20, perhaps a bit more,
it's a bit hard to estimate. I have been told by the Treasury
that by the year 2005 the States will be $2.9 billion better off than
they would have been if the old system, that's the present system,
had continued.
MITCHELL:
And that's with all the State taxes that we know about gone?
PRIME MINISTER:
All of that yes, that's right. They'll still be $2.9 billion
better off than they would have been under the present system.
MITCHELL:
Does that include stamp duty on non-residential deals, conveyancing?
PRIME MINISTER:
The stamp duty on...well, that's going to be subject to a
phasing arrangement and I would expect that it would have been gone
in all States by then.
MITCHELL:
I've just got in front of me the inter-governmental agreement.
PRIME MINISTER:
Yeah, there's a phasing arrangement in relation to that.
MITCHELL:
Yeah but looking at the figures here, it says after the abolition
of non-residential conveyancing, by 2005/6 $1.5 billion. Your $3 billion,
which is $2.859 billion is if that non-residential tax stays in.
PRIME MINISTER:
Well I think that's just in relation to the stamp duty, not in
relation to all of the revenue.
MITCHELL:
No, no, but does the stamp duty have to stay in for you to reach the
$3 billion?
PRIME MINISTER:
The stamp duty, well, it's not a question of whether it has to
stay in or out, it's a question that under the transitional arrangement
stamp duty will, that non-residential stamp duty will be progressively
eliminated and what I'm saying is that when the transitional
arrangement has finished and the full benefit of the GST clicks in
the States will be $2.9 billion better off and then that will grow.
MITCHELL:
Yes but that would be after the abolition of the non-residential.....?
PRIME MINISTER:
Yeah.
MITCHELL:
That's what I'm saying, these figures that I've got
in front of me say that if that...after the abolition it's
down to $1.1 billion. Before the abolition it's $2.8 billion.
PRIME MINISTER:
Yes, but have you factored in the growth?
MITCHELL:
Yes.
PRIME MINISTER:
Well I don't know that....
MITCHELL:
2005/6.
PRIME MINISTER:
Yes but the residential...the agreement you've got in front
of me, I'm not sure that we're comparing apples with apples.
I think you're talking about the revenue yields from particular
taxes rather than the extra money the States will get under the GST
over and above the amount they would have got under the existing financial
agreements and their own...under the existing financial agreements.
I think we're talking about different things.
MITCHELL:
Could you stand by that $3 billion by that time....
PRIME MINISTER:
No, the figure that I stand by, and it's a figure that's
been given to me by the Treasury is that the States will, by the year
2005, under the new arrangement, that's after the transitional
period, will under the GST be $2.9 billion better off than they would
have been if the existing Commonwealth/State financial arrangement
had continued.
MITCHELL:
Okay. So that's with all those taxes coming off.....
PRIME MINISTER:
No, no. They're effectively getting $2.9 billion more from the
Commonwealth than they would have got under the old arrangements.
MITCHELL:
So are they going to be better off.....by the time they take of
all these....
PRIME MINISTER:
Yes. Well that's the advice that I've been given yes.
MITCHELL:
Including this non-residential....
PRIME MINISTER:
Well I'm not, I mean I have to say I'm not entirely certain.
I think we are at cross-purposes there. They're going to be better
off to that effect.
MITCHELL:
Okay. I guess that the underlying thing point that would alter the
credibility of this claim is that the GST is a growth tax. That the
growth tax goes to the States. If they get all their....
PRIME MINISTER:
Oh look, the condition is that they abolish a designated number of
State taxes and that's the deal. When the thing fully clicks
in those State taxes including the non-residential stamp duty which
is going to be progressively abolished, that will go, the stamp duty
on shares will go, the stamp duty on promisary notes will go, and
that would be replaced by a GST. Now every State acknowledges that
it will be better off under the GST. That's why they signed the
agreement.
MITCHELL:
On the way I read things the GST is not the main growth component
of the tax. I mean you're talking about $25 billion, extrapolating
$25 billion. Only $8 billion of that was the GST and the rest of it
is, on the figures I've seen, is non-residential....
No. I think we are looking at two separate sets of figures. I think
we really are at cross purposes. I'm talking about the fact that
once the GST is fully operative, once all the State taxes have been
abolished, all of the revenue from the GST, that is the 10% collected
all around the country, all of that goes to the States.
MITCHELL:
And leaves them...
PRIME MINISTER:
Well, by 2005 they'll be $3 billion better off than they are
under the existing arrangements.
MITCHELL:
[Inaudible]
PRIME MINISTER:
Well, they don't get the GST unless they do that.
MITCHELL:
Okay. We'll take a call on this, oh sorry, on the GST not on
this, it's a bit complex. Peter, hello, go ahead.
CALLER:
Yes, good morning Neil, good morning Mr Howard.
PRIME MINISTER:
Good morning.
CALLER:
I have one question. Not all self-funded retirees are over 60, there's
a lot that have been, sort of, retrenched or companies being taken
over. And they may be 50 with a small retirement [inaudible] so they
have got a little bit of investments, they're not on the pension,
what's in it for someone between 50 and 60 that is, sort of,
just keeping their head above water with their investments but they're
not getting a pension? That's where they are, they are in the
middle, do you understand?
PRIME MINISTER:
I do.
CALLER:
But they don't seem to be getting any benefit out of this.
PRIME MINISTER:
Well, would the person you have in mind, would that person be earning
more than $5,400 a year?
CALLER:
Yes.
PRIME MINISTER:
Well, they get a tax cut because the tax free threshold rises from
$5,400 to $6,000. In addition, over the $6,000 the bottom tax rate
falls from 20 per cent to 17 per cent and at every step the personal
tax rate is lower. Now, I think in relation to the self-funded retirees
it should be borne in mind that if they are paying tax, and most of
them are, then they get personal tax cuts as part of the plan so that
the impact of the GST is matched or more than matched by the value
of the personal tax cuts.
MITCHELL:
The Retired Persons' association estimates 5.1% is needed rather
than your four percent compensation. Will that be looked at?
PRIME MINISTER:
Well I'd like to see the basis of that calculation. Once again,
without going over old ground, and the analysis before the Senate
inquiry didn't really punch too much of a hole, or any hole really
in our arguments about compensation. I mean people got into arguments
about other things, but Neil Warren in the end did say on any plausible
assumption I can't say that a particular group is worse off.
MITCHELL:
Michelle, go ahead please.
CALLER:
Mr Howard, I have a larger than average family.
PRIME MINISTER:
How many children? Eight. Good.
CALLER:
Eight, from 11 to four months.
PRIME MINISTER:
Terrific.
CALLER:
You were saying before that the cost of the food, the food aspect
of the GST it's the higher income people that spend more money
on food. What about a lower-middle income?
PRIME MINISTER:
Do you mind my asking is your total annual income more than $70,000?
CALLER:
No.
PRIME MINISTER: