Subjects: Tax reform; UK visit.
KIRK:
Mr Howard, good morning.
PRIME MINISTER:
Good morning Alexandra.
KIRK:
There's been a smooth transition for the GST so far, but do you agree that until people sit down and look at their pay slips, how much extra they're receiving and then deduct their outgoings for a few pay periods at least. That's when they'll know if they like the GST or not.
PRIME MINISTER:
Alexandra, I think that's fair. Yes, it has gone smoothly at the beginning. The world did not come to an end and chicken little did not arrive on Saturday as Mr Beazley has predicted and I am very pleased about that. I think the Australian public has taken the initial changeover in its stride, but it will be a few weeks yet before you can do all those sums and I think your analysis is pretty accurate. But it has to be said that the initial phase was a lot smoother and more easily accommodated than many people predicted. I want to thank the small businesses of Australia especially for the work they put in to getting ready and as I hoped to be the case, the Australian people took the change well and truly in their stride.
KIRK:
And do you expect it will be as smooth a transition in three months time when small businesses will have to put in their first quarterly return?
PRIME MINISTER:
Well I would hope so Alexandra. We had a situation here where people, particularly the Labor Party, have predicted doom and despair and when they find it doesn't arrive they start adjusting the goal posts. I think that the thing will continue to go smoothly. We have put a lot of resources towards helping people to understand it, towards explaining it. It is a very big change. We have got to always keep sight of the overall scene and the overall scene is about cutting people's income tax, about making Australia a more competitive nation in the world and getting rid of an old ramshackle wholesale sales tax that's been with us for 60 or 70 years and has clearly outlived its usefulness.
KIRK:
Yesterday you claimed that petrol hasn't gone up as a result of the GST but the oil companies are saying that petrol will rise by four cents a litre this week. So the impact of the GST is still to come isn't it?
PRIME MINISTER:
Well I am puzzled that the oil companies are talking about four cents on account of the GST. There is no possible justification for that. I am not saying that petrol will stay at the same level because the world price of crude oil might go up, it might go down. But what I am saying is that there are cost savings for the oil companies, they should be passed on and even the oil companies themselves haven't argued that the difference between us and them is four cents a litre. What they've said is that they don't have cost savings of one and a half cents a litre to pass on and we don't agree with that. But if there are any attempts in the next few days to justify a rise of three or four cents a litre on the basis of the GST, that would be quite wrong and if there's any unfair conduct by the oil companies then that will be investigated but let's wait and see.
KIRK:
But it's clear now isn't it that the likely impact of the GST on petrol is likely to be more than one cent a litre.
PRIME MINISTER:
Well I don't accept anything. I look at field evidence.
KIRK:
And do you except though thatÉ
PRIME MINISTER:
Well no, expectations. We've had expectations for six months. I mean there were expectations of doom and disaster on Saturday and they weren't realised. I mean let us deal in reality. What I am saying is that even on the oil companies own rhetoric of last week, they couldn't possibly justify movement of that kind and that's if you accept the rhetoric which the government doesn't, but even you did, you couldn't justify that kind of movement. I am puzzled that they should have said that. But anyway let's wait and see.
KIRK:
Another [inaudible] thing you are doing battle with is the brewing industry and the brewers look like challenging the new tax system writing to the tax office warning that they're paying extra excise under protest. Are you convinced that the excise regulations are legal?
PRIME MINISTER:
Yes of course. We do everything in accordance with the law. We put down a regulation as we always have and then that will be followed at some time in the next year with an act of Parliament. That is the way it has always operated. We are not acting illegally. I am surprised that the breweries are still pursuing this campaign. Other people are adjusting to the new system. I don't see why the breweries should regard themselves as being a special category. Many Australians will look rather askance at breweries regarding themselves as a special case. But if they want to take action, well they can take action, it's a free country but I just say that other Australian companies are adjusting. They are adjusting, they are adjusting in a big way to the new system and the breweries of Australia shouldn't imagine that they are in a special category.
KIRK:
On a broader front, one key promise that you and the Government made was that nothing would rise by 10%, but plenty ofÉ
PRIME MINISTER:
No, no. What we said was that things shouldn't go up by more than 10% and we could see no reason why anything should rise by the full 10%.
KIRK:
But plenty of things have risen by the full 10%, which are things like books, I went to a plant nursery and video store on the weekend, they're applying the full 10%. It's clearly a pledge that you can't keep isn't it?
PRIME MINISTER:
Well Alexandra, I can't sort of give an expert opinion on each individual item and it would depend on the circumstances. But the point that we made was that we believed that because there were embedded cost savings that there was no need for anything to rise by the full 10%. Now that was our best assessment and it remains our position. Now obviously if people have complaints about things well, they will lodge those complaints with the ACCC and you are no exception.
KIRK:
And do you really think the ACCC can monitor all these things, all these complaints all round the country.
PRIME MINISTER:
Well I think the ACCC has done a very good job and the indications were at the weekend that they had fewer complaints than they expected, far fewer complaints. I mean what has happened at the weekend is that despite all of the predictions of doom and disaster and then negative campaign of the Labor Party that has now gone on for two years and the suggestion by Mr Beazley that we would have a deluge of darkness on Saturday. We actually moved through it quite smoothly and I know that is very disappointing to him and the Labor Party. They wanted unhappiness and dislocation and chaos on Saturday because it suited their own political ends. But the Australian people have handled the new system quite reasonably and well, I certainly found when I was out and about in shops unlike Mr Beazley who was locked up in his caucus room in Canberra, I actually found that people had got ready. Small traders, shop keepers, the general public, I spoke to plenty of them. Some of them said, yeah this went up but this went down and I found this is cheaper than I expected and overall it's not too bad. Now that's an early take out. I am not saying that's uniform, I am not saying it's going to be repeated on every day. The one thing I can assert with absolute conviction and that is it wasn't the doom and disaster and confusion and chaos that had been predicted by the Labor Party and I think they should hang their heads in shame for trying to sabotage an historic reform that this country has needed for 25 years.
KIRK:
Your other key pledge was that no one would be worse.
PRIME MINISTER:
No tax payer will be worse off.
KIRK:
How will Australians be able to test that when the only people who can make a compensation claim through official means is those people who receive family payments through the family assistance office. Isn't that discriminatory that nobody else can make a claim for compensation if they think that they're going to be worse off?
PRIME MINISTER:
No, you're forgetting that there is a separate mechanism for people who are outside the tax system, which was announced at the time of the deal with the Democrats. For example somebody who might be on a post graduate scholarship, there is the second application mechanism for those people, so that covers that. But as far as the general commitment is concerned, we have said all along that no tax payer should be worse off because we believe that the tax cuts are adequate, indeed more than adequate in most cases, I think indeed to compensate people for the price effects of the GST.
KIRK:
If you are not a post graduate student and if youÉ
PRIME MINISTER:
Alexandra I am just giving that as an illustration. The point I make, can I just repeat again, when we made the deal with the Democrats, there were claims at that time that there were people who were outside the system and who had, who thought they were being short changed, they could apply, and then separately from that there was assistance which arose out of suggestions in relation to the change over to the new system that people could make applications if the family payments arrangement left them disadvantaged so there are two separate streams there. So the question you raised earlier is covered by the deal that we announced with the Democrats.
KIRK:
But if they're a low income earner or you are a pensionerÉ
PRIME MINISTER:
Well if you are pensioner, I am sorry Alexandria, if you are a pensioner you get a 4% increase.
KIRK:
But if you think that you are better off, if you think you are going to be worse off, how can youÉ
PRIME MINISTER:
Well Alexandra, the calculations that we have made are that when you have a 4% increase in pension, people won't be worse off and they will always be 2% ahead in real terms of any increases in prices as a result of the Goods and Services Tax.
KIRK:
But how can they test your guarantee that they won't be worse off if they believe that they are..Do they write to you? Do they write to the government?
PRIME MINISTER:
Well Alexandra, it's a question of dealing with reality and the reality is that if you have a 4% increase in the pension and you have a guarantee that you will not be, you will never fall further behind than 2% above the price impact, the GST, then you can't be worse off. You can't be worse off if the pension is being lifted by 4%.
KIRK:
But there is no official mechanism is there?
PRIME MINISTER:
I think an increase in the pension of 4% is about as official as you can get. And there are other benefits as well. The rent allowance is going up by 7%. I mean we, we carefully calculated these changes when we were putting the scheme together. We added to them on two occasions and they are seen widely as being a very generous safety net. And on top of that of course we will continue to monitor the operation of it, so I don't know what more guarantees a government can do. I mean this, this is, this sort of questioning is all of a piece with the criticism that was being made in the weeks and months leading up to Saturday. Now, Alexandra we don't want to leave pensioners out in the cold. It's the last group in the Australian community we would dream of hurting. And we believe that the compensation is very appropriate, it is at a good level, but of course we will continue to monitor it. But we have no doubt that it will prove to be very adequate indeed.
KIRK:
Mr Howard, you are heading off to London today for the Federation Centenary Celebrations Ð two Australians are doing particularly well at Wimbledon, if they continue to do so will you go to see them play?
PRIME MINISTER:
Well Alexandra at the moment I have so much work to do and, as it should be, that I don't have any room in my programme over the next four or five days for those sorts of activities, but we'll just wait and see. But, in a sense I am damned if I do and I'm damned if I don't. If I go and watch them I'll be criticised by some as enjoying myself and if I don't I'll be criticised for being unpatriotic, so I'll just have to make a judgement when I'm there. But right at the moment, I've got, I get off the plane tomorrow morning and I see Mr Blair and I see the Chancellor of the Exchequer and deliver a speech extolling the strengths and the prospects of the Australian economy and that kind of thing is really repeated for the rest of the week. But we'll just wait and see, but it's a very busy programme and I doubt at this stage that I've got a lot of room for that, but we'll just have to wait and see.
KIRK:
Mr Howard, thank you very much for joining us.
PRIME MINISTER:
Thank you.
[ends]