Subjects: GST and tax reform; Centenary of Federation London Trip
E&OE………………………………………………………………………………………
ZEMANEK:
On the telephone now, actually on the landline from his office we have the Prime Minister of Australia, Mr John Howard. Good morning.
PRIME MINISTER:
Good morning Stan.
ZEMANEK:
You must be pretty pleased with the way things have gone but you must get disillusioned with some of the reporting you see on television, radio and newspapers.
PRIME MINISTER:
Well yes and yes. I am pleased that so far the Australian people have taken this big change very much in their stride. The world did not come to an end. Chicken Little did not arrive as Mr Beazley had predicted. And I think so far so good. I think some of the reporting has been lacking in balance, others quite good. But it really is a great change and people will, as you rightly say, get the good side of it this week as they get their tax cuts. My take out and I was out and about on Saturday morning at some shopping centres in my own electorate, one at Top Ryde which is very much middle Australia. People there were adjusting. The small traders I spoke to they’d all got ready for it. The shoppers they were very direct. A couple of them said they didn’t like it but they thought it had gone all right. Most of them said no problem. People were saying my shopping has not gone up by as much as I expected. Others who had obviously planned for it very carefully said it was exactly as they predicted.
But overall there was no sense of resentment or panic or hysteria. All that talk about how it would be a terrible day and a day of darkness and pestilence. None of that arrived, it was never going to arrive. It was always ridiculous of people like Mr Beazley to pretend that it would arrive. And now as we go into the period when people start to get their tax cuts I think most Australians in a little while will do their sums and say hey this isn’t too bad and we’ll move on with life.
Now it will take, I guess in the ultimate, some months before it’s all finally bedded down. But Stan I couldn’t have hoped for a better transition but I’m a cautious bloke by nature and I know that there could be some glitches ahead, that’s always a possibility but so far it’s really gone very well.
ZEMANEK:
One of the things with governments - they seem to sort of lack the ability to be able to sort of put the positive spin on things and they’re always on the back defence, on the back foot rather, which you have been over the last few months with criticism coming from Mr Beazley, from Mr Crean and from the Opposition etc. Why hasn’t your Government gone out there and done more to express to people exactly what the improvements are going be, what the gains are going to be as far as tax cuts? I know that you’ve tried but you don’t seem to have got your message across.
PRIME MINISTER:
I guess the answer to that Stan is that it’s easier to sell bad news than good news. Scare stories make front pages far more readily than good news stories. It’s far easier to attract the eye by saying something is going up by 10% than it is to say you’re going to have a tax cut. Now I’ve always believed that in the period leading, coming up to the introduction of the new system we the hardest part for the Government. We’re like a boxer with one arm tied behind his back. People were hitting us and we couldn’t full retaliate. But now that the system has become, now that it’s there. Now that people are actually experiencing it we can say to them, look you now know that everything’s not going up by 10%. You are finding that your grocery bills have not gone up by as much as you were told by some people and you’re going to have a tax cut. And they can judge those words against the reality of what they’re experiencing.
Now okay you can say we should have been able to persuade them beforehand but it’s in the nature of human beings that you tend to disbelieve promises of relief from governments but are predisposed to believe that they’re going to do things that might hurt you. Now what’s happened is that we’ve presented a reform package which has been brought down because we think it’s good for the country and will make us more competitive and it will under right the capacity of the states in the years ahead to provide the services this country needs in areas like government schools and hospitals and police and roads.
Now that it’s there and people are actually experiencing it they can make a far better and more accurate and I believe balanced judgement. And I’m really so pleased that the day has come and the anxiety and the phony war is over and we’re now into the real thing and people will find that it’s far more acceptable than they were led to believe.
ZEMANEK:
All right, we said, we were told that there was going to be no GST on fruit and vegetables yet the front page of the Telegraph talks about the broken promises. It says, “Promises- fresh fruit and vegetables GST free- reality- fresh apples rise by an average of 3.6% in Sydney supermarkets and grocers.”
PRIME MINISTER:
Well that will be investigated because it’s across the board and I’m puzzled to hear that, I’ve not heard that before. I mean maybe it was only one store, I don’t know. I’ll get that, that is, those sorts of things are being checked but there may have been some other reasons for fruit and vegetables going up because they do vary. Anything that’s fresh produce fluctuates enormously. You can’t control the price of that, it could go up for reasons quite unrelated to the GST. It’s a bit like crude oil. It’s a bit like petrol. When you are governed by a market price that moves around on an almost daily basis it’s hard to make any firm predictions about the level.
ZEMANEK:
Yes of course but as far as petrol is concerned I mean you dictate the terms of that to a certain extent because lets face it, 49% of every tank of petrol there’s a government tax on it whether it be federal tax or whether it be the three by three from the New South Wales state government.
PRIME MINISTER:
Well that’s right Stan.
ZEMANEK:
So you do have it in actual fact to be able to bring prices down quite easily by bringing down the tax on fuel.
PRIME MINISTER:
Yes but that doesn’t contradict or cancel out what I said that the…
ZEMANEK:
No it doesn’t.
PRIME MINISTER:
… that the price of crude oil that we’ve got to pay is governed by the world level. Of course you can vary the tax, of course you can. And we’ve varied the tax. We’ve cut the excise by six point seven when we introduced the GST. And then with cost savings which we believe are there, the oil companies are arguing about the timing of those. But I don’t think even they dispute that there are cost savings. That equilibrates to the, or equals the GST. The point I’m making is that with a lot of things like fresh fruit and vegetables and petrol the price can move around for reasons unrelated to revenue, that’s the point I’m making. I’m not denying that the Government has an influence because it collects revenue from petrol excise, of course it does. All governments, Labor and Liberal have done that.
ZEMANEK:
But it seems a hell of a lot though, at one stage like 49%. I mean that’s a lot of tax.
PRIME MINISTER:
Well governments in the old, you know to use the old saying governments have to get their money from somewhere and we do have the western industrialised world we have the third cheapest fuel. It’s $2.14 a litre in Britain.
ZEMANEK:
A lot people argue with that.
PRIME MINISTER:
Well, no you can’t argue with the fact that it’s $2.14 a litre in Britain.
ZEMANEK:
But compare it to America though.
PRIME MINISTER:
Well America was cheaper than us, yes. You know I said the third cheapest and America is the cheapest and Canada is the next and Australia comes after the United States and Canada and it’s a long way cheaper here than it is in Europe.
ZEMANEK:
Okay leaving the chicken aside, leaving, sorry leaving the petrol aside and keeping the apples aside. We’ve had a bloke called Chicken George on the program last week and he said if you have an uncooked chicken there is no GST. That’s correct isn’t it?
PRIME MINISTER:
Yeah, we’ve been through all of this.
ZEMANEK:
Okay, hang on but a cooked chicken will attract the GST right. But there is no GST on a cold chicken but a cooked chicken, if you allow a cooked chicken to go cold there’s no GST. Why is that?
PRIME MINISTER:
Well this is because the Democrats decided that we had to exempt basic foods.
ZEMANEK:
But I don’t understand if you actually cook the chicken I can understand the service component in it but as soon as it goes cold it then loses the GST.
PRIME MINISTER:
Well that was the classification that followed from the amendment that was made in the parliament. I’m sorry about that but these things are a consequence of carving certain things out and there’s nothing that one can do about that because judgements have to be made at the margin and they followed from, you know there was a rule of thumb adopted in relation to the condition of something and that was it.
ZEMANEK:
So if it’s cold, no GST?
PRIME MINISTER:
Well look some of those, I mean I know some of those rules appear somewhat…
ZEMANEK:
Idiotic?
PRIME MINISTER:
Well no I don’t use that expression, I’m careful what I say.
ZEMANEK:
Gee I would.
PRIME MINISTER:
Well Stan we would have preferred the original package, you know that.
ZEMANEK:
Which would have been the smart way to go.
PRIME MINISTER:
But we couldn’t get it through the parliament. The Labor Party would not bow to the wishes of the Australian people. The Democrats wouldn’t support it and Senator Harradine wouldn’t and we made changes. Inevitably when you make those changes you’re going to have some arguments at the margin and you’re going to have things like you just quoted. And people can say well shouldn’t it be otherwise but in the end there’s nothing we can do about that and I just ask people to focus on the broad situation to remember that there will be tax cuts, $12 billion worth of tax cuts- average families $40 to $50 a week better off as a result of the tax cuts and increased family benefits. I mean these are the overall benefits.
Sure you can find some criticism at the periphery, I understand that but that is now in a sense behind us because what we’ve got now we don’t intend to change. I mean we’re not going to start extending it. I want to make that clear. We’re not going to change it. It’s there now. I think people are adjusting to the change. The small businesses of Australia have done magnificently getting ready for this and I believe that people have really taken it in typical Australian style in their stride and there’re to be congratulated. And on behalf of the Government I thank them very warmly for working hard particularly in small business to get ready for this very important change.
ZEMANEK:
What do you say to Kim Beazley though when he says we’re going to roll back the GST? How detrimental to Australia’s economy would that be?
PRIME MINISTER:
Well he talks about roll back. I mean if he’s serious about a roll back it’s going to cost a lot of money otherwise it’s just cosmetic. And if it’s going to cost a lot of money where’s the money coming from? And I think most Australians having adjusted to this very big change the last thing they want, like a hole in the head it will be to have the prospect of other, further complicated changes in a couple of years time.
Mr Beazley has played a very negative, obstructive game on this. He predicted day after day that the world would come to an end on Saturday. Then he started to say oh no it’s going to be slow burn. He said that you couldn’t make it fair and now he’s promising to make it fair. He’s bouncing around because he doesn’t really have a clear position.
I mean you can criticise me, you can attack the Government. You can say we’ve got this and that wrong but at least we’ve had a go. At least we have views about how you might change Australia for the better. We don’t spend all our lives being negative and Mr Beazley has spent all his life, politically speaking since the last election trying to sabotage and undermine this reform. And I am so proud to lead a Government that’s withstood that heat and that pressure and we’ve now got it there and I believe it will be seen in the fullness of time as being a very important reform.
ZEMANEK:
In the paper this morning, in the Herald it says the GST has already claimed at least three small businesses in the New South Wales north coast town of Warhope (?), three shops in High Street- Tommo’s Tucker, the Slice and Dice Deli and Pauline’s Frock Saloon closed their doors for the last time on Friday just hours before the new tax came into effect. Now you’re obviously going to have a lot of reports from those sort of people from around Australia who’ve closed their doors. Are these people closing their doors, (a) because they’re ignorant of what goes on; (b) because their business was in such dire straights before or does the GST have that impact on businesses?
PRIME MINISTER:
Well I don’t accept the last, I don’t think it does have that impact. There are plenty of small businesses like those you mention whose proprietors I spoke to on Saturday myself as I went around my electorate who haven’t closed down, who’ve got ready and find business conditions very good. I don’t pretend to know individual reasons why small businesses close. Small businesses are opening and closing the whole time.
ZEMANEK:
Anti GST protesters have vowed to keep up pressure to have the new tax repealed after the next election. Up to 300 people staged an anti-GST rally in Sydney on the weekend chanting, “Tax the rich and not the poor.” Now organisers say the rally is the first in a series of planned protests. Now what’s your advice to these people?
PRIME MINISTER:
Well I think they’re wasting their time. I mean I walked through middle Australia on Saturday morning in Top Ryde and people weren’t protesting there- one or two cat calls, probably local branch members of the Labor Party. But that’s fair enough, that’s the give and take of Australian politics. But they are really wasting their time. The great bulk of the Australian people want to get on with their lives. If they don’t like something well they’ll exercise their right at the ballot box. But my sense is that people are willing to give this a go. And they’ll take a while before they form a final judgement. I think their initial reaction…
ZEMANEK:
What sort of time frame?
PRIME MINISTER:
Oh I think probably three to six months before you can be finally certain that people have had enough time to make a judgement. Some will make it earlier than that, others won’t. The great bulk of people who are wage and salary earners, 80% of your listeners, for them, some things go up, some things go down, some things remain the same and they get a tax cut, that’s all it means. I mean all this talk about confusion, I mean as you said you know somebody was confused and in the end their bill was 64 cents dearer. I mean they’re still buying the same goods and that person presumably or that person’s husband or wife would have a tax cut. So I don’t know how that person could possibly think on the basis of that experience anyway that he or she was worse off.
ZEMANEK:
But if they’re confused there’s obviously hundreds of thousands of other people out there confused as well. Doesn’t that mean…
PRIME MINISTER:
Well how can you be confused though really if you buy a basket of goods and the price of a few of them vary. That of itself is not a reason to be confused.
ZEMANEK:
All right look I know that you’ve got a time restraint here because I know that you’re going overseas later today. I think you leave for London to take part in the celebrations marking 100 years since federation. The trips been widely criticised. How much is the trip going to cost? And how many people are actually going?
PRIME MINISTER:
Well look I can’t tell you that. I mean I will give you a precise figure, I’m not keeping it secret.
ZEMANEK:
But a couple of people say it’s going to cost a couple of million dollars.
PRIME MINISTER:
Well I don’t know about that. It could be, I mean we have a Federation Guard over there, I think you saw that on the television.
ZEMANEK:
And I thought that was fantastic.
PRIME MINISTER:
Oh so did I. I was stirred to hear the Road to Gundagai and Waltzing Matilda. I mean what’s wrong with that to give those young men and women who put their lives on the line as members of the ADF, what’s wrong with that?
ZEMANEK:
I don’t have an argument with that at all.
PRIME MINISTER:
Well that comprises of the figure of $1.7 million that’s been flung around, I think that’s half of it. And the Labor Party is complaining about that. I mean when Mr Beazley was Defence Minister in 1988 at the time of our Bicentennary he sent the guard, the same size, same cost. I didn’t object to that.
ZEMANEK:
How many Labor Party Premiers are going?
PRIME MINISTER:
Oh, Mr Carr has gone. Mr Beattie has gone. Mr Bacon has gone and Mr Bracks have gone. Every last Labor Premier has gone.
ZEMANEK:
Except….
PRIME MINISTER:
Mr Beazley’s not going. No. And he’s doing it because he thinks he can score a political advantage. I mean I’d like to know if Mr Beazley’s so willing to mingle with the Australian people where was he on Saturday morning. I mean I was out in my electorate talking to people, listening to what they had to say. He was safe and sound and secure in the Labor Party caucus room in Canberra and the only people there were journalists. Now no disrespect to your profession Stan but why wasn’t he facing the people? I mean for heaven’s sake, first day if it was such a disaster as he predicated he should have been out there trying to comfort the public. But no he’s being very opportunistic. Now I think this trip is absolutely defensible on both historic grounds and also we have a very important bilateral relationship with Britain and Mr Carr and Mr Bacon and Mr Beattie and Mr Bracks, all Labor Premiers and Labor mates of Mr Beazley think so as well.
ZEMANEK:
All right we’ll have a talk with Mr Beazley a little bit later on. I know you’ve got to rush off and pack. And I thank you very much. Have a good trip.
PRIME MINISTER:
I’ll do that.
ZEMANEK:
And thank you for giving us so much time this morning.
[ends]