Subjects: Opposition budget response; tax reform; election; health; education; self-funded retirees.
E&OE.................................
MITCHELL:
They've been forced into it because of a question from a schoolboy but Kim Beazley's promised no increase in taxation. Would you match that promise if you win power at the next election?
PRIME MINISTER:
He's promised no increase in income tax rates, that's what he's said. Of course we're not going to increase income tax, we've cut income tax, we're hardly going to increase it. Of course we're not going to. But what has happened now is that we have revealed to the Australian public courtesy of Senator Conroy the real truth about roll back. You cannot be serious about rolling back the GST in any significant way unless you are prepared to either increase taxes in other areas or cut spending in a significant way.
Mr Beazley outlined a plan for roll back which was $15 million a year, $15 million a year out of budget of $160 billion. That's 75 cents a year for every Australian, now that's a joke. So what Mr Beazley has to do is either tell us where he's going to increase taxes or cut spending in a significant way so that he can roll back the GST in a significant way, or alternatively he has to own up to the fact - and this is what I've always believed - that he knows we needed a new taxation system. He just wanted the Coalition to do the heavy lifting. He wanted the Coalition to take all the political pain of bringing about a major reform and then surf into office on the back of perhaps peoples reactions to the changes and get all the benefits of it.
MITCHELL:
Are you suggesting his promise is hollow, that he will increase taxes in other areas? Are you saying he'd do that?
PRIME MINISTER:
Well I'm just pointing out Neil that his pledge last night was very precise. He said he wouldn't increase income tax rates. That's a very precise comment, that doesn't mean. it theoretically, and I can't put it any higher than that at the present time, he could still honour that promise and fiddle with the tax thresholds, he could reduce them. He wouldn't be increasing the tax rate. He could increase indirect taxes in other areas, you could increase petrol excise - that's not covered by that commitment. He could increase other, he could increase company tax, he could increase fringe benefit tax, he could increase capital gains tax. I mean there are a whole raft of taxes that are not covered by the promise he made last night. But it really gets us back to the central point, I mean we've got to be serious about this roll back. If you are going to roll back the GST what you're really saying is you're going to take the GST off certain items. Now the GST collects about, I think, 25 to $30 billion a year. If you're really serious about a roll back you're talking about several billion, you're not talking about a few hundred million, you're talking about several billion. But you can only get several billion dollars by big cuts in Federal Government spending or increases in taxation in other areas. I mean the system just won't allow anything else to happen.
MITCHELL:
Well can we have a look at what you will promise going into the next election. You say there'll be no increase in income tax under you in the next period of Government, is that correct?
PRIME MINISTER:
Yes.
MITCHELL:
What about other taxes?
PRIME MINISTER:
We don't plan to increase any taxes.
MITCHELL:
Can you guarantee there'll be no increase in other taxes?
PRIME MINISTER:
We're not going to increase any taxes. We want to reduce taxes.
MITCHELL:
So that's an unequivocal guarantee, no increasing taxes in the next period of Government.
PRIME MINISTER:
We are not going to increase taxes.
MITCHELL:
In the next period of Government.
PRIME MINISTER:
In the next period of Government.
MITCHELL:
Ok, well that's rock solid.
PRIME MINISTER:
Well look, heaven above Neil, no Government has gone though more detailed travail on tax reform than has this Government. We have reduced the tax burden on the Australian public. We've reduced taxes, we've cut income taxes, we've got rid of indirect tax and we've cut company tax. We're getting rid of the Financial Institutions Duty, we've cut capital gains tax on individuals.
MITCHELL:
Mind you you shouldn't be increasing income taxes, you're going to get an extra $22 billion in income tax through bracket creep in that three year period.
PRIME MINISTER:
That's not all bracket creep, Neil. We had this discussion the other day. A lot of it is due to more people being employed. well it is.
MITCHELL:
Well some of it.
PRIME MINISTER:
Well it is, and it's also due to enhanced compliance.
MITCHELL:
How much is the bracket creep?
PRIME MINISTER:
I'm sorry I didn't hear that we're getting a bit distorted again I'm sorry.
MITCHELL:
How much of it is bracket creep?
PRIME MINISTER:
Some of it is bracket creep, but a lot less under our new tax scales than previously. Some of it is I'm not denying that.
MITCHELL:
What about GST? Would you make any changes to the GST or.
PRIME MINISTER:
We don't plan any. We certainly will not be increasing the rate.
MITCHELL:
What about changes to whats.
PRIME MINISTER:
I mean that's something that Mr Beazley interestingly enough last night didn't guarantee. He didn't guarantee he wouldn't increase the rate of the GST. It was a very very limited precise promise. But look it gets us back to the fundamental thing, if you're serious about roll back you've got to tell us where you're going to cut spending and where you're going to, or alternatively increase taxes or thirdly, and I think more dealing with reality, admit you really know we needed tax reform but you were just happy for Howard and Costello to do the heavy lifting and then you get in on the back of any discontent involved in the process.
MITCHELL:
Just while we're on this period, it's almost like an election discussion, [inaudible] to the next term. Will you serve all the next term if you're elected?
PRIME MINISTER:
Well my position on that I made clear. I want to get a lot of things done in the next term. I said I'd look at the situation around the time of my 64th birthday and I've said that before and I'm not altering that. But I got to tell you the last thing on my mind at the moment is retirement from politics. I'm loving it.
MITCHELL:
Okay. But it's uncertain as to whether you'd serve the full term.
PRIME MINISTER:
Well I can only repeat what I said before.
MITCHELL:
Okay.
PRIME MINISTER:
And I am trying to level with people in relation to that.
MITCHELL:
What about the idea from Kim Beazley about cutting spending on advertising. That didn't look like a bad idea. There's a hell of a lot of money being turned over on advertising.
PRIME MINISTER:
Every government has a certain level of expenditure on advertising. And we get constant complaints you know from people that they don't know enough about the details of government programmes. And a large chunk of that advertising on an ongoing basis, admittedly there was some extra at the time of the introduction of the new tax system. I don't deny that. But on an ongoing basis a great bulk of that is involved in actually providing people with information.
MITCHELL:
What about money like monitoring the media? Bronwyn Bishop, $350,000 in a year monitoring the media. $240,000 in three months after the kerosene incident.
PRIME MINISTER:
Well that's minuscule compared to the cost of ANiMaLS that used to operate under the former government.
MITCHELL:
And you criticise that. Can you justify Bronwyn Bishop spending this sort of money?
PRIME MINISTER:
I can justify, I can defend.
MITCHELL:
I'll send her the tapes for nothing.
PRIME MINISTER:
I'm sorry I didn't quite hear that last bit.
MITCHELL:
I said I'll send her the tapes for nothing. But go on your were saying you'd defend.
PRIME MINISTER:
I would defend a reasonable level of media monitoring by a Minister. Yes I would, I think it is necessary for a person in her position to know what is being said. You know as a radio commentator you know you get us on and you ask about something that you've been told about that was said on a radio programme in another part of the country. You know about it because of your radio network. Surely the Minister's entitled to be told that something has been said affecting her portfolio so she can effectively answer a question when she's being interviewed. I think it is unreasonable of people in the media to suggest, I'm not saying you particularly, but it's unreasonable of people in the media to suggest that a Minister's not entitled to be kept fully informed of what is being said about her when she herself is required to answer about what is being said about her.
MITCHELL:
Well for a period of three months $20,000 a week, is that reasonable?
PRIME MINISTER:
Well because there was a total preoccupation at that particular time by the media, by the Opposition, by a lot of people on that particular issue. And it was quite impossible for the Minister to do her job without being kept fully informed of what was being said both about her and about the incident during that period of time.
MITCHELL:
So you would say that is reasonable?
PRIME MINISTER:
Well given that particular issue yes.
MITCHELL:
Okay. We'll take a quick break Mr Howard, we'll try and do some fiddling with the sound problems you're having. We'll take a break and come back with some calls and some more questions. Meantime technicians will beaver away for a couple of minutes to try to improve it.
[commercial break]
MITCHELL:
Fourteen to 9, the Prime Minister in our Canberra studio. We might have.
PRIME MINISTER:
We have Neil. We've isolated the problem, it was my earpiece not 3AW.
MITCHELL:
Oh, maybe in the next budget you can get a new earpiece.
PRIME MINISTER:
That might be regarded as excessive media monitoring spending.
MITCHELL:
We'll take some calls. Clive go ahead.
CALLER:
Prime Minister good morning. I think your budget is just and fitting to the economy and I'd like to thank you for that. I also think that Neil isn't asking enough questions on Kim Beazley's reply. And I think.
MITCHELL:
What questions should I be asking Clive?
CALLER:
Well you should be asking many more.
MITCHELL:
Well give me one and we'll ask it. What's the question?
CALLER:
Well you weren't listening this morning, last night rather. Beazley did say there would not be any income tax.
MITCHELL:
Yeah I watched it. Clive give me the question please.
CALLER:
There wasn't going to be any increase while he was leader he said. So if he's not going to be leader then they'll increase it.
MITCHELL:
Okay so what's the question?
CALLER:
That's the question.
MITCHELL:
[inaudible]. Okay Mr Howard, I think he's offering you a free kick. Actually you have got an opening here haven't you? I mean you must feel that Kim Beazley and Conroy have given you a big opening.
PRIME MINISTER:
Well that old saying about a week in politics is a long time is certainly true. But Neil I'm not getting any exuberant comfort out of what's happened over the past couple of days. We still have a hard slog ahead of us. But what has happened is that the heat and the focus and the acid, if I can use all of those terms have really been put on the Opposition Leader and he really does have to face up to this central dilemma. If you are promising the public rollback what you're really saying is a Labor Government would significantly reduce the incidence of the GST. That's what he's wanting people believe when he talks about rollback. Well the arithmetic is that you can only do that if you are either willing to cut spending in a significant way and identify the programmes that affect people that will be reduced under a Beazley government. Or alternatively increase other forms of taxation because we have a balanced budget.
MITCHELL:
Is this going to be the focus of the election do you think? You say no changes in taxes and you say you want the same.
PRIME MINISTER:
Well I think there'll be a lot of issues. Particularly whether the public wants to go back to the 17% interest rates and $96 billion of government debt and the 11% unemployment of the Beazley-Keating years. I think the comparison of the relative economic performances of the government, I mean whether the public really believes that a Beazley Government could manage the Australian economy better. I think that's an issue. I think there'll be a lot of issues. But to the extent that Mr Beazley wants to make tax reform an issue, he has to answer the question that Senator Conroy honestly tried to address yesterday. Senator Conroy was really calling it as it is.
MITCHELL:
You told me on Wednesday that your intention was an election.
PRIME MINISTER:
Current intention.
MITCHELL:
Current intention was the end of the year. A week is a long time in politics, what's your current intention?
PRIME MINISTER:
It remains the same as it was on Wednesday Neil.
MITCHELL:
It must be drifting a little with developments like that.
PRIME MINISTER:
Well no you've got to be very sensible about these things. People develop attitudes over a period of time. We have some work to do with people. We're trying to address some of their concerns. We believe that we've been a courageous government that's been willing to do the heavy lifting of a lot of major reforms.
MITCHELL:
But do you think you're on the comeback trail now?
PRIME MINISTER:
Well, that is for other people to make a judgement about. We've certainly brought down a budget that's been economically well received and it has addressed some areas of concern. It's a socially just budget. It's got a lot of social initiatives in it. A lot of extra spending on health and areas of education. It really is a very socially based document. It's a socially comprehensive document. It's not just an economic document.
MITCHELL:
Can I ask you about a health issue, the cholesterol drug?
PRIME MINISTER:
Yeah.
MITCHELL:
There's a lot of confusion. Say my doctor determines I should be on it, for whatever reason, my doctor says you need to be on this anti-cholesterol drug, will I be guaranteed a PBS subsidy? Because the difference .
PRIME MINISTER:
If you are prescribed, it is PBS.
MITCHELL:
So it's up to the doctor.
PRIME MINISTER:
It's up to the doctor in the end. Now, I'm not a doctor and I've got to be careful what I say but my understanding of what will happen is that the doctor will be enjoined to, in effect, take the patient through some non-drug ways of treating the condition, such as diet control and more exercise, before prescribing a drug.
MITCHELL:
But will a guideline be set above this figure?
PRIME MINISTER:
There will be guidelines laid out but if the drug is prescribed it's on the PBS. It's not disappearing from the PBS.
MITCHELL:
So you won't say, you can't get it if you're under, say, 6% or whatever the reading is?
PRIME MINISTER:
Well, no, it's not going to be as tight as that as I understand it. It's going to be, in the end, left to the discretion of the doctor.
MITCHELL:
Did you see the head of the AMA has threatened to sue the Health Minister?
PRIME MINISTER:
Yeah well, I think, you have these exchanges occasionally. Look, I have an enormous amount of confidence in Michael Wooldridge. I think he's done a fantastic job as a Health Minister and, of course, the AMA is certainly the most prominent body, not the only body, but certainly the most prominent body representing doctors. And we seek the good will of doctors. I think we've delivered very good health policy and we've addressed the concerns of the medical profession in a number of areas. There are always going to be differences. I mean, I think some of the criticisms that have been made by the AMA of, particularly the cholesterol measure, have been unfair.
MITCHELL:
But Doctor Wooldridge is refusing to apologise, said he'll go to court if he has to. I assume that the Government pays for that if.
PRIME MINISTER:
Well, look I don't want to get into the details of a personal disagreement. I am interested in policy issues.
MITCHELL:
Yeah, but he'd be covered, wouldn't he? The Government would be pay if he goes to court.
PRIME MINISTER:
Look, any Minister who gets involved in things in the course of his or her job naturally is supported by the Government. But look, I would hope that we don't get into that situation and I don't believe that we should and I think commonsense will mean that we won't. The important thing is that the policy - there will be policy disagreements between the Government and the medical profession and there's no reason why there shouldn't be because we're not beholden to any group and we don't expect any group to automatically parrot support for things the Government does. But I would say to doctors, generally, that we did, in this budget, address some of their concerns about the remuneration under the Medicare system. And we have provided, in areas such as cervical cancer and asthma and mental illness, opportunities for doctors to give more extensive consultation and provide better services to their patients with appropriate additional remuneration. And that does meet one of the concerns that doctors have legitimately addressed.
MITCHELL:
We have another call. Stan, go ahead please.
CALLER:
Yes, good morning, Neil. Good morning, Mr Prime Minister. My concern is the difference that's starting to creep in between the disability support pension/carer payment as opposed to age pension.
MITCHELL:
Yeah, you're talking about the $300 bonus.
CALLER:
Well, the $300 bonus, no that's fair enough for the older people but the tax reforms or the tax income earning amounts and that, they're just not available to the disabled or the carer.
MITCHELL:
We've had a lot of calls about this, Mr Howard, the disability pension and also the self-funded retirees under 65 saying they're being discriminated against. What's your reaction to that?
PRIME MINISTER:
Well, my reaction to that is that the whole purpose of changes here is to help people of a particular age group because, generally speaking, the view is taken that once you reach a certain age your prospects of working are less and the expectation that you will work is less.
MITCHELL:
The Opposition's quoting only 35% of self-funded retirees will gain, do you agree?
PRIME MINISTER:
Well, no. I don't know how they calculate that figure. But look, Neil, it depends what your definition is. I mean, in theory, you know, how long is a piece of string. If you say a self-funded retirees over 55, why 55, why not 45, why not 35? I mean, a young fellow like you decides to retire, do you think you should be given the same tax treatment as somebody over 65?
MITCHELL:
But I'm not able to do that under a superannuation scheme, am I? I can do it at 55, I can't do it at 45.
PRIME MINISTER:
Well, I know some people who, you know, have retired in their early 50s and the argument being that.if you're going to take it below people of recognised and accepted pension age - and that is 65 for a man, 61, 62 for a woman - then once you start doing that, you know, there is no limits to it because, in theory, there's no reason why you should stop at 55. I mean, you can't get down to 55 and people who are 53 and 54 who've been retrenched or have decided for some other reason to retire, they will turn around and say, what about us.
MITCHELL:
We've got a call on this topic. Chris, go ahead please.
CALLER:
Good morning, Neil and Mr Howard. That really follows on from that last question of being a self-funded disability retiree under 55. There just appears to be no benefit whatsoever for people like me. Our expenses are no different from anybody else, especially the older people.
PRIME MINISTER:
Well, that is right but so.I mean, many people who - I don't, Chris, know all of your circumstances so it's just a bit difficult without knowing all of them, including income details to make too much of a comment - but it is true that the tax change is limited to people who are of pension age and above and the $300 bonus is limited to people of pension age and above. Now, both of them are age-related measures and they are based on long, accepted cut-off points in relation to the age at which somebody is regarded as retired. And I think the trend in modern society is really to try and encourage people to remain in the workforce longer rather than encourage them to get out of it earlier. Now, I know in the case of somebody on a disability pension this comment does not apply and I make that point very clearly. But I don't think we should be embracing a system that provides more incentives for people to retire earlier. Shouldn't we be encouraging incentives really for people to remain in the workforce longer.
MITCHELL:
Do you accept that some - on the figures that some of the experts are quoting - some self-funded retiree couples, if they're clever, could, in fact, get up to $60,000 tax-free?
PRIME MINISTER:
Well, I've seen some of those. I've also seen some analysis in, well not in the opposite direction, but sort of arguing perhaps in a different direction. I can't answer that because I haven't analysed the details of that proposition. Look, it's a very simple.it's a tax-free threshold for a single person, first $20,000, and it's delivered by way of a rebate and it phases out so that by the time you reach $37,000 of income you're in no different tax position than any other person who's not of pension age. If it's a couple you reach that point at $58,000. Now, they're the facts and what it means is that it does deliver a significant tax benefit to a lot of self-funded retirees. It doesn't deliver an additional benefit to what I might call the much better off self-funded retirees. They don't get anything out of it. The much better off ones don't but the ones who are, sort of, what I might call, middling self-funded retirees will do very well out of it and that's exactly what we think should happen.
MITCHELL:
A couple of other quick issues if I may. HIH, a freeze on the funds, are you happy with that?
PRIME MINISTER:
Well, I don't think I should comment on that. It's before the Supreme Court of New South Wales. I don't think I should make a comment on it except to say that it indicates that the Securities Commission is certainly active.
MITCHELL:
Kim Beazley and the money that, well it seems would be taken away from private schools, your reaction to that.
PRIME MINISTER:
Well, I think he's playing a very dangerous game of envy politics. I mean, in Melbourne, for example, the schools that are going to be affected, he talks about Wesley College in Melbourne and Kings School in Sydney. He doesn't mention that he will affect Mentone Grammar School, Mentone Girls Grammar, Eltham College, Ivanhoe Girls Grammar, Ivanhoe Grammar School, Caulfield Grammar School and Halebury College in Keysborough. All of those, incidentally, are in Labor held seats and all of them are by no means wealthy schools and the parents are regarded amongst independent school parents as being very much in the middle-income range, not wealthy people.
MITCHELL:
Prime Minister, there's more spring in the step after this week, I can tell that, thank you for your time.
PRIME MINISTER:
Okay.
[Ends]