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PROOF. ONLY -E O E
TRANSCRIPT OF PRESS CONFERENCE COLONIAL MOTOR
LAUNCESTON 22 OCTOBER 1984
PM: Well this long awaited statement on taxation policy
by the Liberals is deserving of and will receive the contempt
of the Australian people. Someone making an application for
a loan from a bank for an advance to start a pie stall would
have to provide more details to their bank manager than these
people have been prepared to advance to the people of Australia.
They have had 18 months to bring forward a tax policy. They
had talked about precision and certainty so that the electorate
would know where they were going. This is a document totally
lacking in precision. But even what is there is a certain
prescription for economic disaster. I understand that they
have said this time no fistful of dollars, they have substituted
for the fistful of dollars a fistful of unsigned, blank cheques.
Let's look at; hat the impact would be. If you look at in terms
of impact on inflation, the increase in indirect taxation that
they would have to undertake to make up for the selective cuts
in direct tax would imean just for about $ 2.5 billion extra impact
on charges. In other words, if you had another 4 billion increase
in indirect taxes that would put up the CPI by 5 percentage points
which would mean in turn that your budget outlays would increase
by $ 2.5 billion. So you are not only going to have taxation
policies which will be discriminatory in the electorate, uncertain
in their impact, but are going to be disastrous in terms of
economic management because it will put up inflation by
several percentage points-which will mean higher wage claims
and which will in turn mean substantially increased budget
outlays. Whichever way you look at this policy it is as
far as you can make any sense of it all, a prescription
for economic disaster. It is as I say, an insult to the
intelligence of the Australian electorate, totally lacking
in any spelling-out. In the area of a consumption tax they
haven't even made up their mind what sort of consumption tax
they want to talk about, and they will have an enquiry about
that. As I have said I have been waiting for this statement
which we have been promised for so long. I believe it would
be a fizzer, it is arguably the greatest fizzer that any political
party has ever produced in an important area of policy in a
federal election.
JOURNALIST: Is there anything good in it at all?
PM: Yes for us it is marvellous. I find it as I indicated to
you that I was looking forvard to it. I would be talking aboit
tox for a very long period. I said as you will rocall ea;: lier
Uu~ -CI-V u~ rl ~ 3j-I1U VL
2.
PM cont: today that I wasn't going to indulge in a hypothetical
snack, I was waiting for the full meal. We will be feeding off
this as will the Australian people be feeding off it for a
considerable period of time after the 1st of December
JOURNALIST: What is your reaction to the income splitting
proposal? PM: Well the income splitting proposals are uncertain in terms
of when, or if, or how. What they would mean in their present
imprecise form would be a discrimination against a large section
of the Australian tax payers who wouldn't get the benefit of them.
But this is the problem that you have with the whole of this
mish-mash of a wish list. You can't describe it as much more
than wish list. I mean, what do they tell you about income
splitting. What will be the dimension of it. When will it be
introduced. No-one can make any sensible statement about what
they are proposing because they haven't in fact given the electorate
any details, as I say of the dimension, or when they say, they
say these things that we list, now this long list of desirable
goodies, we will think about introducing them as budgetary
circumstances permit. No w what have they told us about
possible budgetary circumstances under a coalition government.
What do you say now about all the promises they have made. ARe
all those promises cancelled or are they not. The 2.5 billion
directpromises that have already been made, the other 3.5, 4
depending upon what significance you attach to some of the prorises
they have made, is that 4, 5, 6, 7 billion dollars of promises of
additional expenditure, are they still there, or are they not,
And they say that their capacity to introduce any of these things
will depend upon a combination of expenditure restraint and economic
growth. Now I have gone to those two elements. I mean I ask you
to look at their own conditions for implementing this mish-mash
of a wish list. They say the conditions are: expenditure restraint
and economic growth. Alright, let's look at the first one,
expenditure restraint. They liave given ycu this great list up
until this point of additional expenditure they are going to
undertake. Where is their restraint going to come from Do
we now put a line through everything they have promised in regard
to additional expenditures. Or are they still there on the table.
Does the Australian electorate out there say to themselves tonight
well we have got a promise from. Mr Peacock in regard to the railway,
in regard to his other list, now the submarines, all these other
things, the 2.5 billion firm, specific promises they have made,.
are they on the table or are they not. Now in regard to the ". oss
of revenue, obviously they are sticking with their assets test and
lump sum tax position, so they are denying themselves revenue ; Ln
that way. Or are they still on the table. We don't know. They
say themselves that their capacity to do anything in the tax
area depends upon expenditure restrain and the Australian electorate
is left in a total sea of confusion. about that. WE will want to
know, and the people of Australia will want to know which of your
promises have meant anything. Have you just been fibbing to the
Australian electorate up until today when you have made these promises
or haven't you been. Which promises do you mean you will stick to.
So that's On the expenditure restraint side. Now economic growth.
If you want a prescription for a return to the past of the Liber: als
and the National Party for economic stagnation, it is here. Because
they ask you to Understand what the overall economic implications
are. They are saying that if they move to these substantial reduction:.
in direct tax that haive been talked about here, it will be made up
WUL ZZOt IV, ZZ 0111 1000: 3q MW i 3.
by increases in indirect tax. Now as I have gone through some
of the figuring with you about that. If you take the listing
of income splitting and other direct tax benefits that they say
they may think about giving. They add up to over $ 4 billion, so
that wouldirequire about $ 4 billion increase in indirect taxation.
Now as I have pointed out to you in my opening statement, if you
increase indirect tax by 4 billion that would increase the CPI by
percentage po~ hts. Now just look at the economic implication. s
of that. It sends inflation crazily through the roof, goes into
wages but of itself it would require another $ 2.5 billion in
expenditure-outlays because as * you know something like 60 per
cent of budget outlays are e ither directly or indirectly indexed
So this is the economic madness that is proposed here. You will
havo a policy which will push up the consumer price index very
significantly, and the very pushing up of the consumer price
index means that your expenditure outl~ iys arc going to have to
rise in this case by the order of 2.5 billion, but you remember
the first condition, the first condition of bringing them in
is that you are goinS to have expenditure restraint. YOu'have
got the circle of economic lunacy. The condition of giving effect
to your direct tax cuts is expenditure restraint, so you are
going to increase indirect taxcs in way which pushes up expenditure
outlay increases be'causo that's a condition of bringing in your
indiroct taxes. Now in their last period of government. This is
what they did. A very substantial increase in the reliance upon
indirect taxes. In the last 2 Howa~ rd budgets, sales tax recei'~ to
increased by 1.4 bil: lion dollars, or 66 per cent and that was
right at the very heart of their economic problems. They had
no wages policy. That sort of stuff fed into your wage claims
and your substantial increases and so you got economic stag~ nation.
It doesn't matter which way you look at this policy. If you look
at it in terms of the precision that you are entitled to expect.
I mean how long do they need. They have had 18 months. How
long do they need. No precision at all. And as I say if you
importantly not just at that aspect of it, but do what you hav: e.
got to do and think about the economic imlications of this for
overall macroeconomic policy it is a prescription for a return
to the disaster of the past.
JOURNALIST: Prime Minister, the Qibera-l
Party also includes a child care rebate, there has also been
considerable pressure for The introducticn of some form
-of child-care rebate: Would your government in any way
consider introducing some sort of child care rebate.
PM: Now just let's go back to-. them. You are saying it is
listed. ' Of course, it is listed. But Just about anything
in the area that you would like to think about gets a guernsey
but is therco any 5tatement to the Australian people that it
will be introduced, when and how, what the timetable is.
According to how budgetary circumstances permit. Is that
supposed to be a policy. You can't say that that is apolicy
in regard to child care rebates. Anyone can have a wish list.
But the Australian people haven't been told in election that
that is what goingj to happen. Now in-respect of oursolves
you can have a total contrast . VYa don't have to go intco this
election and say well look we have go wish list about what we
would like to do somo time, perhapst maybe, if the budgutary
circumstances permit. WE have been in control of the budget UlI
since we have been. We inherited the $ 3.6 billions but we have
stuck to the broad situation that we put to the electorate 2 years
ago because now in a matter of days the people of Australia are
not going to have to speculate about whether our budgetary
circumstances will permit some significant achievement in the
area of tax'policy. We have created the budgetary situation,
we have reduced the budget deficit by billion since we
have been in and reducing the budget deficit by getting the
economic growth, by having the mix of policies in the fiscal
area, we have produced a factual tax cut for every Australian
tax. payer which is the equivalent of an $ 11 a week wage increase.
So there you have got the definiteness of Labor in government
having tax policies related to and integrally part of an overall
macroeconomic policy which has produced record economic growth
and out of that we have been able not to hypothesize with the
Australian people but say to them that as a result of successful
macroeconomic policy we have got this fiscal policy which means
you are going to have the first real tax cuts that this country
has enjoyed for years. If we had merely given them tax indexation
it would have been $ 1.3 billion in a full year. The cost of our
real tax cut in a full year is 2.1 billion.
JOURNALIST: Mr Hawke, how does the imprecision of tht Liberal's
tax plans differ from you repeated statements of that Labor's
tax plans will be revealed once the tax review has been
completed in 1985?
PM: It is in this way, as I have just said, I have given you
an explantion of what we have done. We haven't hypothesized
we have produced the first, efffective real tax cuts for a long
period of time. Then we have said, of course, and we have
been saying it for some time, there will need to be a review
of the tax system within a framework which follows on what
we have done. WE are not hypothesizing saying well perhaps
as budgetary circumstances permit. WE have promised the
Australian people there will be no overall increases in taxes.
We made that promise and we have been able to that within a
deficit reduction situation and in aposition where we have
reduced, reduced taxes in the way, in the direct area that
we have talked about. Now we have said, not just in an election
context, we have been saying for some months, that the existing
tax system is not perfect and that we will have a tax review
within the framework that we have put, of giving hard tax
reductions on the table, not meandering about saying it may
happen. They are there, they are on the table. They'll be
in people's pockets in a matter of days.. Now we have said
then promise no further increase in the overall level of taxes
now we will, together with you the community, examine whether
we can make the overall tax system more fair and more efficient
and importantly and there is the great distinction between the
Labor Government and these people opposite that we have said
that we will sit down with the relevant sections of the community
and work out tax reform which will meet the criterion of efficiency
and equity. Now to make any system of tax reform work in a
non-inflationary and equitable way you've got to have the trade
union moverment involved in consultation and co-operation in that
tax reform. Otherwise by definition it. will not work. If you have
P. M. cont...: tax reform based upon cutting down direct taxes
and having billions of dollars increase in indirect tax, which
is what's foreshadowed here, and you haven't got the support of
the trade union movement, then all that happens is that inevitably
you CPI will go up only by the direct result of those increase in
indirect tax, but because they'll also be fed into the wages
system. Because you've got to look at this in total. You haven't
got just a tax policy here presented to you. You've got to take
it into account as part of their overall economic approach which
involves the abolition of centralised wage fixation and the abolition
of the accord. So in their tax reform approach they will have
no co-operation with the trade union movement. By their own
deliberate decision they've thrown that out the window. So you
will have the increase in the CPI as a result of putting up indirect
taxes. But as I've said you'll also have that flowing through, through
increased wages claims, which will -be able to be obtained in many
areas. Now there's the difference. To answer your question there
is the difference between our approach to tax reform and the
Opposition's. It is clear to everyone that if you're going to
have effective tax reform which looks at any change of the balance
between direct taxes and indirect taxes, you must have the
co-operation of the trade union movement. Otherwise it's a
recipe for disaster. And theirs is a recipe for disaster.
JOURNALIST: Prime Minister, there are three things Mr Peacock
has been definite about he'll have no capital gains, death
duties, or wealth taxes.
You don't quote him correctly. Let me quote him correctly
so that you've got it " no new capital gains taxes".
JOURNALIST: Alright. Well can I a: ssume from your last answer
that through this campaign you'll continue to maintain the position
that those issues are issues for the tax review that's coming up.
I have made it clear, Geoff, during the campaign and during
the quite early stages of the campaign we'll go into more detail
about how we will approach this issue. You won't have to wait
very long for that. But I still go back to the basic point which
is right now on the table in front of the whole Australian
electorate. They were waiting and expecting to get a detailed
tax policy, they haven't got it, they have not got it. With us
you've got the results flowing into the pockets in a very short
period of time and the total difference between us and our opponents
that in any tax review we can make it work because it will be done
in consultation with the business community and the trade unions.
They will not be able to do that.
JOURNALIST: Prime Minister what scrt of timetable are you looking
at for announcing details of your tax review. Will it be in the next vz. a
or Oh I wouldn't say the details of the tax review will be going
more broadly than that. I'll be talking about it probably this week
I would think. 13ut lot me make it clear, what our immediate priority
will be obviously, as you will want and the electorate will want will.
be a detailed analysis of our opponents. After all they've been tollin:
6.
P. M. cont...: us all that here it was going to be unveiled on
Monday. That Monday 22nd was the big day. No, we will spend some
time in analysing it with you and with the electorate in a bit more
detail in the next few days,.
JOURNAIST: I don't mean to be pedantic but what
Well, why not?
JOURNALIST; when you say broadly what exactly do you mean by
that. When you tal. k about your own taxaetion policy?
Well what I'm saving is thiat will, I'll be talking to
the Australian people Aout how we intend to approach this is what
I was talking about. TWhen I said more broadly I was asked about the
details of it I said we will be broadlyputting to the ' Australian
people what our approach is in a way whicha, of cour,.-e, will bo
much different to what1C's been done here in the basic sense. That
we will be able to show. to the Australian people that our approach
will be done cooperatively with the coimrunity, including the
trade union movement, so that our Lax policy will be seen as an
integral part of overall macro-economic policy. This policy is
a prescription for economic recession. ours will be part of the
process of continued economic growth.
JOURNALIST: Prime Minister does that mean a tax summuiit as was
suggested by one person last week?
Well I'll be going to that issue when I address these things.
JOUR-NALIST: Prime Niniter althotigh you are promising this
detailed analysis later on this week..
P. M4.: Well could I just interrupt you Gary, when I say detailed
analysis, what irzi saying is that we'll be addressing ourselves
to the issues that have been raised so far about our tax policy,
those things that have be-n raised, and h.-ow we will go about the
process with the cormunity of undcrtaking that review.
JOURN4ALIST: I was talking about your promise to have a detailed,
to provide a detailed analysis, of your reaction to the Opposition'-s
taxation policy. From what you'v. boan sa . ying it seems to me
that your reading of the policy Llrnost defies a detailed analysis.
I mean you can't really have it botCh ways.
Wlell that's a fair point. I mean. I was really saying that
we are going to dissect, we're having a meal as it were if we could
us that analogy. And there are cjreat gulps that you can havc! and
get satisfaction from. But we want to cio through it in very fine
detail -sentence by sentence each part of the niish-rna. h, evory
promise that's listed and put the intcrn~ il inconsistencies one
the other. I mean it really does warrant some detailed teteti
that respect. I mcan the ba. sic poinit remains quite clearly t~ hat
there are no details about . Yhen and ho-a. A-, nd having said thi~ t
L-LJ V 0I. L ILj VV
P. m. cont x because that's indisputable,, there are nevertheless
elementst conceptual elements# of w'hat are there which will get~
from us veny very detailed analysis. But I come back on the
question of detail, as I said' in* opening it some bloke was goin.-g
to the bank to get an advance to put up a pie stall outside the
Flinders Street ; station-held be required -to give more details -than
they'~ ve put up here. And this is supposed to be a tax policy for the
nation. JOURNALIST: Dar Hawke can I just arsk you about tax splitti ng proposals
which you'oiytuhdo very brief ly.-in 1974 -when -you were
Pres'ident of the ACTU, the ACTU supported tax splitting what'Is
your position... 19m, not addressing myself to that at this point at all.
I'm simply saying that in regard to what we have to deal with here
you've got a vague proposal put which, if taken to its . liimits, let
me say would involve a cost of about $ 2.2 billion. That vwould be
the cost of all income splitting. Or. if you take it to the figure
of 18,000, about one and a half billion dollars. Now. I'm not
going to fall into the g~ reviouLA; error of these people and say,
oh yes .1 think income nplitting is a good. idea. There it is.
You can't do that in this' sort o . area_ You've got to, particularYly
for these people they've had 18 months to come up with a gjreat
detailed policy and that's the very best. they can do we wonlt be
rez; ponding on the run, and say oh yes we think income spl'itting is
a good idea. Yes we* ll put that to our l. ist. We don't opera~ te
that way. We've in fact been thexe in Government, we've produced
t hc goods. And in the tax area it has produced a very substantial
real. tax cut. That's a benefit to everyone. What they aro.
talking about is a very divisive, discriminatory sort of benef! it
perhaps one day,. maybc, soiie Lima for soneone.
* A