E&OE...................................................................................................
Ladies and gentlemen, today we have had an extraordinarily successful
Premiers' Conference. We've reached agreement on all outstanding
matters relating to the financial agreement between the governments
which has now been signed, sealed and delivered. And the last act
in the dramatic transformation of Australia's taxation system
and the last deed required to take this country into the 21st
Century with a financial and taxation system fit for the 21st
Century is for the Australian Senate to take heed of what the governments
of Australia, the Federal Government and the six State governments
and the two Territorial governments of Australia have done.
It was a very good meeting, there was a bit of give and take. The
Commonwealth was able to go part of the way in relation to the Queensland
situation. We agreed with a number of the State requests in relation
to the disputed items. We did not agree with one major request relating
to the fringe benefits tax because that did not involve as alleged
by the States any diminution at all of the goods and services tax.
Overall it was an outstanding result. It speaks volumes for the constructive
character of these meetings when they are backed by a decision of
the Australian people. As one of the Premiers said today, the Federal
Government has a mandate to implement taxation reform and of course
we do. And the Premiers were recognising that and that is why they
signed this agreement. But it would be wrong of us, of either of us,
to discount the historic character of today's agreement. This
is the largest single transformation of Commonwealth-State financial
relations at least since the end of World War II and perhaps since
federation. And it lays the basis importantly for a growth in tax
revenues to the States that will fund the schools, the roads, the
police services and the hospitals that the States need.
One of the ironic things to me about this whole tax debate is that
the GST is the most pro-welfare sector tax system that this country
could ever have. Because it's through the GST going to the States
that for the first time the States will have enough money to fund
all of the services that they want to fund.
The other item that I'd like to mention is drugs. The Commonwealth
has offered a new $220 million drug programme over a period of four
years. This is over and above the $290 million under the Tough on
Drugs strategy that I have progressively released over the last couple
of years. The biggest single item in the new programme is a diversion
strategy whereby the Federal Government will fund, we calculate up
to 300,000 treatment places over a period of four years as part of
a diversionary programme whereby people who have been apprehended
by police that are not judged to be people who would benefit from
going through the criminal justice system are offered the opportunity
of going into treatment. And if, we believe that if we can through
this approach divert a large number of those people into treatment
facilities that will not only be of enormous long-term benefit to
them but also to the community. The Commonwealth will provide the
money, we will fund the places, the States and Territories will provide
the police services, there will be joint assessment teams to be funded
by both the Commonwealth and the States. We will work out a separate
protocol between the Commonwealth and each of the States in relation
to the interaction of the assessment procedure, the police and the
treatment facilities. It does represent a new approach. It does have
some similarities to an approach being trialled in Victoria and also
some aspects of the drug court approach in New South Wales. And it
is going to be adopted on a national basis and in addition to that
we'll be providing a lot more resources for schools, some further
resources to go into the activities of the Federal Police and the
criminal investigation activities of the Federal Police and the National
Crime Authority.
But it represents new money of $220 million over and above the $290
million which now takes to over $500 million the additional Commonwealth
Government commitment to the war against drugs. We don't argue
for a moment that it provides all of the solutions but it will be
another important building block. We have also indicated that we will
to the best of our capacity at a federal level fast track the National
Health and Medical Research Council consideration of the listing on
the pharmaceutical benefits scheme list of Naltrexone and also when
an application is made in relation to Buprenorphine we will adopt
the same approach as well. That is the drug that has been mentioned
by Mr Beattie, the Queensland Premier. And the Victorian Premier placed
on the table for consideration by governments, and it will be a matter
to which we will return later, the proposal to establish a national
institute in relation to depression.
Overall, the drugs component of the conference was equally constructive.
There's a genuine desire Commonwealth and States across party
lines to focus on our many common points of agreement and to make
a further contribution towards fighting the scourge of drugs within
our community. And I am particularly pleased at the very co-operative
attitude displayed by everybody in relation to that.
JOURNALIST:
Mr Howard you mentioned give and take with the States on the tax deal.
Are you ready to extend some give and take to the Senate in the form
of enhancing the compensation package?
PRIME MINISTER:
Well, we think the compensation package is good. We think it has stood
the test of scrutiny and examination and we look forward to the debate
starting.
JOURNALIST:
Mr Howard can you guarantee that pensions under the GST will always
be higher than they would otherwise have been without the GST?
PRIME MINISTER:
Well, I can repeat the guarantee that I gave in the election campaign
and the guarantee on which we were elected and that is that under
our arrangements people receiving the pension will always be in real
terms 1.5 per cent ahead of the CPI. That was the guarantee I gave
in the election.
JOURNALIST:
What about in relation to male average weekly earnings?
PRIME MINISTER:
Well, you know the arrangements in relation to male average weekly
earnings. You know that as a result of our legislation there was a
guarantee under that legislation that it would not fall below a certain
percentage of male average weekly earnings and that's always
been the case. If as a consequence of the action of our proposals
and our commitment pensioners are even better off, well that's
good.
JOURNALIST:
Is your drugs policy predicated on zero tolerance especially in schools?
PRIME MINISTER:
Look our drugs policy is not predicated and never has been predicated
upon a particular description. Everybody around that table today is
united in the view that there is no place for drugs in the schools
in Australia, and that we will give the principals, the parents and
the school communities every support in pursuing that objective. Some
people like myself call that zero tolerance. Others might call it
something else. But the name is not as important as the commitment,
and the commitment is that there is no place for drugs in our schools
full stop.
JOURNALIST:
On radio this morning you spoke of an element of compulsion for this
treatment.....
PRIME MINISTER:
Yes there is. There is an element of compulsion. I mean what happens
is that if somebody is apprehended they have to be assessed. They
might then decide not to comply with the, or enter into the treatment
to which they have been assessed. But of consequence of that could
be that they slip back into the criminal justice system.
JOURNALIST:
Mr Costello how important was your conversation with Senator Colston
in arranging the extra money for Queensland and how important do you
think your future dealings will be with him in terms of arranging
passage of the GST legislation?
TREASURER:
Well it's very important. Senator Colston had previously made
representations to us concerning additional funds for Queensland.
He's a Senator from Queensland and I think he's got the
interests of Queensland at heart. I rang him again this morning. We
had a discussion about compensation. He put his view to me and as
it turned out the Commonwealth and Queensland compromised. Queensland
had been seeking an additional top-up after the first year and we
agreed to give a top-up after the second year. And so we met the Queensland
demand half way. But Senator Colston was very important to that and
I recognise the submissions that he made and they proved very successful,
very good for Queensland if I may say so today.
JOURNALIST:
And what about the future of the GST? Did he express or do you expect
to discuss with him any question of compensation for the poor under
the GST plan?
TREASURER:
Well I think Senator Colston's made the point before, that he
respects the Government's mandate in relation to GST. By the
way it wasn't just Senator Colston. Premier Beattie made the
same point today. He accepts the Government's mandate in relation
to GST. We went to an election. We received a mandate and those people
that recognise the outcome of elections, and that governments ought
to be allowed to govern on the basis of their policy recognise that.
And Senator Colston's made that point previously I believe.
JOURNALIST:
Treasurer, the States, Premier Beattie...
PRIME MINISTER:
Speak up George. I can't hear you and I always like to know what
you're saying.
JOURNALIST:
You said Peter Beattie respects your mandate but that still didn't
stop you from kicking in a bit of extra money. The Senate, even if
it did respect your mandate, would be demanding extra compensation.
Is that now the reality that we are in? That having compromised with
the States, that we are looking at some sort of compromise with the
Senate to get the package through?
TREASURER:
Let me make the point about Queensland's claim. Queensland's
claim was that the GST revenue ought to be distributed on a pure horizontal
fiscal equalisation basis which would deliver them a bonus over and
above the minimum guarantee, the current system. And they said that
they should be entitled to that from the beginning. Our argument was
that that money should be used to make the minimum guaranteed payment
to the other States and that for the first three years any bonuses
should be redistributed into the pool. Now we came to a compromise
with Queensland so that Queensland gets the benefit after the two
years. It wasn't fully what they were seeking but it was a compromise.
Now you're asking about the Senate and compensation. The first
point I make, and I think the Prime Minister said it, the Senate is
the States' House. It would be a funny day wouldn't it if
the Senate tried to vote down something that's just been agreed
by the Commonwealth's six States and two Territories. And you
may well ask why the States' House which is there and elected
on a State franchise would be voting against an agreement between
eight governments and the Commonwealth. You might well ask that first
point. The second point is, and I come back to what was said yesterday,
even after yesterday, the preferred modeling which was requested by
Labor from Ann Harding still doesn't identify losers. I mean
it's all very well to go around and say "additional compensation".
But if each category of person under all reasonable assumptions is
still a winner it's additional compensation to people who are
already winning. And....
JOURNALIST:
But on their assumption, pensioners get 30 cents in some cases.
TREASURER:
Well depending on the assumptions you make George, but I think I'm
right in saying, and I think this has been accepted by Warren and
Harding, and by anybody that's looked at it, on all reasonable
assumptions, under tax reform all identified category and classes
are still winners - are still winners. In other words if tax reform
were defeated they would go backwards. Now I know there are a lot
of arguments that got around about additional compensation but that's
sort of premised on the fact of identifying people who would be worse
off. We have still not, and none of our political opponents, and none
of the modellers, have yet identified a category of person that is
worse off.
JOURNALIST:
So are you ruling out additional compensation, Mr Costello?
TREASURER:
I'm saying that no additional compensation is required if all
categories of person on all possible analyses, with all reasonable
assumptions, are still winners.
JOURNALIST:
Does that mean you are ruling it out?
TREASURER:
Well I gave you the answer ...
JOURNALIST:
At least three of the States are reviewing National Competition policy.
Do you view that with favour and what is your concern about it?
PRIME MINISTER:
It wasn't discussed. Nobody raised it with us.
JOURNALIST:
Premier Beattie...
PRIME MINISTER:
Well he didn't raise it. I mean people can always, you know,
have reviews in their minds and amongst themselves but they didn't
raise it with us.
JOURNALIST:
How much is the total value of the compromises you had to give today
to get the States on board. They were asking $800-odd million, was
it a figure of $600-odd?
PRIME MINISTER:
Nothing like that.
TREASURER:
The largest item of the claim from the States was a claim on fringe
benefits tax of $750 million over three years which is not accepted.
PRIME MINISTER:
But look, can I just say in relation to that it was give and
take. And one or two of the items that the States put forward had
merit and we agreed to them.
JOURNALIST:
But how much did you end up giving?
PRIME MINISTER:
Much less than they asked for. The precise amount I don't remember,
Paul.
JOURNALIST:
Was it $819 million over three years?
PRIME MINISTER:
Well, I haven't done the calculation. We agreed to give, I think
it was about $70 million a year in relation to the local government
and then there was a certain amount going to Queensland and there
was some in relation to housing and the tax equivalent payments.
JOURNALIST:
Would it have been more than you expected?
PRIME MINISTER:
No. It was about what we thought look, you may find it very
hard to accept but we actually did try and analyse the merit of the
argument. And there was some merit in the Queensland argument, some
merit, not as much as Queensland claimed. There was certainly some
merit in relation to the local government argument. There was no merit
in relation to the fringe benefits tax argument, none at all. There
was some merit in relation to housing and some in relation to the
tax equivalent regime. So we are reasonable men and we settled in
a reasonable fashion.
JOURNALIST:
Given that, then one could assume if there were any merit in the arguments
put by the Senate you'd have a little (inaudible)....
PRIME MINISTER:
Well, we had an argument about merit last October and we were judged
the more meritorious of the two teams and that's why we won.
JOURNALIST:
Given the defeat on FBT is Victoria the only State that's lost?
TREASURER:
The defeat on FBT doesn't produce any loss in Victoria.
PRIME MINISTER:
No.
TREASURER:
But the claim on FBT by the States was that because the gross up factor
will be increased as a result of the GST, that revenue should go to
the States and not the Commonwealth. The Commonwealth position is
and was that fringe benefits tax, which is an adjunct to the income
tax system, is a Commonwealth tax base and GST is a State tax base
and that the States were not entitled to any of the proceeds off the
Commonwealth tax base. That was that argument. The argument by Victoria
that they haven't done well is an argument in relation to the
funding for 1999/2000. It's not an argument about the distribution
of funds under the new tax system. It's an argument about the
distribution of funds under the current tax system with the relativities
as set by the Commonwealth Grants Commission. It's the last argument
of the ancient regime, that argument. And since they now have a guaranteed
tax base in the future we don't have to have those arguments
anymore because they've got a guaranteed share of the goods and
services produced in Australia at 10 per cent.
JOURNALIST:
Did Victoria go it alone on FBT or did the other States support....?
TREASURER:
It was put forward this morning as a joint demand.
JOURNALIST:
Mr Howard, if the Senate continues to refuse to accept your tax package
in its current form, now that the States have signed off on it, and
if the Senate still refuses, will you consider a double dissolution
election, now that you have the backing of the ....?
PRIME MINISTER:
Oh look, as I've said before, it's not long since I was
re-elected and I've got no desire to race back to the polls.
I remain positive. I remain hopeful. I believe that today's outcome
sends a loud, unmistakable, powerful and emphatic message to the Senate
get on with it, do the will, do the bidding of the Australian
people; do the will, do the bidding of the Australian States. I mean,
if you can get Bob Carr and Jeff Kennett and Peter Beattie and Richard
Court and John Olsen and Jim Bacon, all of them - three Labor, three
Liberal - to sign up and to say this is the tax system for the new
century, how on earth can the Senate hold out and preserve any sense
of credibility. I mean, here you've got the most recently successful
Labor leader in Australia, he's offered Della yet again to visit
Canberra...
TREASURER:
Which we accepted.
PRIME MINISTER:
Which we accepted. The most recently successful Labor leader in Australia,
the two most recent leaders I mean, Beattie and Carr have won
elections and those who have lost elections on the Labor side should
take a bit of notice of those who've won elections on the Labor
side and they should heed their message. But we will just take the
Senate in its stride. The debate starts soon. We'll listen to
the debate. We'll talk to people. We believe the Senate should
do the will of the Australian people and I have no intention of hypothesising
and speculating about entirely hypothetical situations.
Thank you very much.