E&OE................................................................................................
MILLER:
Prime Minister good morning.
PRIME MINISTER:
Good morning John.
MILLER:
Prime Minister now that the dust has settled after the, well you've
got to say, historical deal broken with the Democrats on Friday, do
you remain confident that your tax package is substantially still
intact?
PRIME MINISTER:
Oh absolutely, we have got 85 to 90 per cent of what we took to the
people. We've preserved in full the tax cuts for people under $50,000
a year, that means 80 per cent of Australian tax payers will be on
a top marginal rate of no more than 30 cents in the dollar. It means
that you can pass from $20,000 of income to $50,000 of income without
going into a higher taxation bracket. We have preserved the agreement
with the States whereby after the transitional period the States will
have access to a growth tax and will be better off than they would
have been if the existing arrangement were to continue and we are
going to get rid of a raft of indirect taxes not as many as we initially
planned but the wholesales tax will go, financial institutions duty
will go six months later and the stamp duty on share transactions
will also go so overall it's a splendid outcome, one that I think
the Australian people will very warmly welcome.
MILLER:
On the subject of the fact that 80 per cent of Australians will be
on that much, much lower tax scale. The big question that's being
put to me this morning, is will those tax scales be indexed so that
we don't have the situation with that phrase I love bracket creep
that these people who currently will be eligible for the much lower
tax scales won't at the end of the day in five or six years wind up
back on the treadmill.
PRIME MINISTER:
Well John, the answer is that indexation is not included in the agreement
but it must immediately be said that if you have the same rate between
20,000 and 50,000 you don't need indexation because bracket creep
only occurs if you've got brackets to creep into and if you have no
new brackets between 20,000 and 50,000 your income can creep as much
as it likes in between those two ranges, those two points and not
pass into a higher tax bracket. So that's the whole virtue of this.
MILLER:
Well surely that's well and good for people who are starting at the
bottom end of the scale, what about say if I'm earning that $45,000
a year and a few years time....
PRIME MINISTER:
Well, in a few years time who knows what other changes in a few years
time might be capable of being made. I mean one thing at a time. You're
talking about a situation in five or six years time. I'm talking about
a situation over the next 12 months and in the years immediately following
that. Now obviously you don't make a once only for all time adjustment
to tax scales you keep them under review. I'm not making any promises,
let me make that plain, but clearly the point you make will be kept
very much in mind by the Government as time goes by. But nothing can
alter the fact that we will have a revolutionary more incentive driven
tax system as a result of these changes that 80 per cent of people
will be on a top marginal rate of 30 cents in the dollar. Now that
is real incentive to middle Australia. There's been some paring back
of the cuts for higher income earners but somebody on $75,000 a year
will still get a tax cut of $62.00 a week so they can hardly say that
they're still not a great deal better off but the real value, the
really spectacular change occurs in the middle.
MILLER:
Alright let's look at those wholesale sales tax, you say that they're
all still to go?
PRIME MINISTER:
They are all going lock stock and barrel on the 1st of
July next year.
MILLER:
So when we go to the supermarket in July next year, August next year,
we should see substantial price reductions in some items.
PRIME MINISTER:
In some items they'll come down a lot. Other items will rise a bit
not as many of them as a result of the excision of food.
MILLER:
Alright let's look at the comments made by for example Terry McCran
in the Weekend Australian. He described it as a betrayal of a significant
slice of middle Australia, those rich people taking home between 680
and around $1,000 a week in wages. Now that is a substantial number
of people nowadays.
PRIME MINISTER:
But I don't know how something's a betrayal if you still get a tax
cut. I just don't know. I read that article and I have a lot of respect
for Terry McCran but on this I think he's off the pace. Those people
are still getting a tax cut but I don't understand what Terry's getting
at. I don't accept there's been any betrayal. How can something be
a betrayal if you preserve in full the tax cuts for everybody up to
$50,000, beyond 50,000 you still get an additional tax cut but it's
not as generous as previously committed and you're taking out food,
how can that be a betrayal? I just don't understand that language.
MILLER:
The front page of the Courier Mail, also Prime Minister, there's a
young couple there, they are both upwardly mobile, professional people,
they're on good comfortable wages.........
PRIME MINISTER:
What incomes? I haven't seen the Courier, what incomes?
MILLER:
Well just off the top of my head I think they're around, they're talking
around the 60 - $70,000 mark.
PRIME MINISTER:
What each, each.
MILLER:
Well certainly with the father. Let's take him as an example.
PRIME MINISTER:
Well he would get, have they got any children?
MILLER:
Yes they have two children.
PRIME MINISTER:
Well if the family income, now I don't know I haven't seen the paper,
but if the family income is below $70,000 and they've got a couple
of kids they do very well.
MILLER:
Well this chap is quoted in the paper as saying that he doesn't think
on his analysis of the situation that they will be doing well, that
their tax cuts will be minimal and that the end of the day they're
not going to be any better off..........
PRIME MINISTER:
Well if his income is in the order of $70,000 a year and he has children
his tax cuts will not be minimal. They'll be very substantial.
MILLER:
Ok.
PRIME MINISTER:
They will be very substantial but I am talking blind because I haven't
seen the paper.
MILLER:
I understand that, I understand that. Look we'll leave that aside
for the moment, just going back as I said quickly to that essential
issue of as well as the tax benefits, is it a fact that we are going
to be able to police the passing on of this GST, sorry the abolition
of the wholesale sales tax and the implementation of the GST so that
retailers will deliver substantial cost to many items in the supermarket
trolley.
PRIME MINISTER:
Yes. They will be under enormous public scrutiny and public pressure
to make sure that the full value of the removal of the wholesale sales
tax is passed on. Of course they will be. And there'll be additional
powers given to the ACCC to ensure that that happens.
MILLER:
So at the end of the day I suppose we can say we now have 12 months
where people can study, they can look at what's going to happen and
I suppose there is some tidying up to do around the edges as to what
will be GST free and what won't be GST free.
PRIME MINISTER:
Well the design principles of that have been agreed with the Democrats.
Now the actual writing of the legislation has to accord with those
design principles but that will be achieved. The agreement will be
honored in full, there won't be any chiseling away of the agreement
with the Australian Democrats. It was entered into in good faith and
it will be kept in good faith and we do have 12 months and there will
be an extensive public education campaign once the legislation's passed,
there'll be plenty of information made available to the Australian
public, there'll be a lot of assistance given to traders, there'll
be many methods of explaining the operation of the new system and
we've got a whole year for it to come into operation. We're not the
first country in the world who've adopted this kind of system. But
there's a tendency when ever anything big like this happens in Australia
for some people to fuss at the peripheries and lose sight of the grand
design of it and the historic reform that's represented by it.
Now we would have preferred food not be carved out but once Senator
Harradine said no or I cannot it was necessary to see if we could
reach an agreement on another basis and the Democrats felt strongly
about the exclusion of basic food and I knew that I wouldn't get an
agreement with them unless the Government agreed to that. Now it's
as simple as that. The alternative was to walk away entirely and throw
away years of work and throw away the best opportunity this country
has ever had for major tax reform and I wasn't prepared to do that
and that's why I reached the agreement and I'm glad I did and Meg
Lees is clearly glad that she did because we've done something good
for the long term benefit of the country.
MILLER:
Alright. So once again just finally no indexation at this time of
those tax scales.
PRIME MINISTER:
Well no necessity to index tax for 80 per cent of the Australian population
because 80 per cent of them will be below 30 per cent. I mean you
only need indexation if there are a whole lot of brackets that you're
passing into.
MILLER:
Alright. Now may I just change the subject for one moment before we
let you go.
PRIME MINISTER:
Absolutely.
MILLER:
The fate of those two Australian Care workers in Yugoslavia. What
is the Federal Government going to try and do here.
PRIME MINISTER:
Well everything we humanly can. It's very difficult. It's hard to
fathom the basis on which this verdict was given, it does seem very
severe. It seems extraordinary that it was brought down despite the
rejection of the original charges. There is an appeal being prepared
and we hope that is successful and we'll use every diplomatic means
at our disposal to try and get them home.
MILLER:
Will any consideration be given to sending some sort of special emissary
a-la Jessie Jackson to Yugoslavia?
PRIME MINISTER:
Well he's not a citizen of Australia but we will...........
MILLER:
Well no I'm not talking about him but someone of that calibre.
PRIME MINISTER:
Well Malcolm Fraser's been on a number of occasions, former Prime
Minister, the Chairman of Care Australia. We will try everything we
can John, every single thing we can and I don't mind if it is the
national of another country. If I thought that would get these two
men out I would ask the national of another country to go but the
indications are that that won't necessarily work. But we will continue
to try and we feel for the families. We feel for them very, very deeply
and they're very much in the thoughts of millions of Australians at
this difficult and very stressful time for them.
MILLER:
Prime Minister John Howard thanks for talking to us this morning.
PRIME MINISTER:
Pleasure.
MILLER:
Bye.