PRIME MINISTER
E O. E. -PROOF ONLY
TRANSCRIPT OF AN INTERVIEW WITH WARWICK BEUTLER, ABC, THE
WORLD TODAY, 12.15 PM, 20 JUNE 1985
BEUTLER: Mr Hawke you say there is broad community support
for your preferred tax position. Yet we've seen strong
opposition to all or part of it from various sections of
the community. Where's the evidence for your contention?
PM: Well let me say this, that if you look at the
proposal that's been put up, I haven't seen any evidence yet
of the emergence of an alternative proposal. What you've seen
is objections, questions to certain elements of the proposal.
That's not only legitimate, its certainly to be expected.
Now, if we'd had the position where you're really seeing the
emergence of a position where it said, now here is the way to
go, as distinct from the preferred Government position, then
I think that would be different. Now I accept the adequacy
of what you say, that there has been widespread criticism of
elements. Now that's right, what we will do between now the
Summit is to continue to put what, on the evidence available to
me, and the Treasurer, makes us believe that our preferred option,
with admitted difficulties, is still the best way of going.
If up to and at the Summit we get compelling evidence that
there is a better modified, and qualified way to go, then that
will be done.
BEUTLER: Well whose told you that they wart a consumption
tax? PM: Well, not in order of priority. The Opposition.
BEUTLER: But why should you do it because of the Opposition.
PM: Now wait a minute. I'm siaiply saying that one
shouldn't ignore the Opposition entirely, although most sensible
* people do. But nevertheless they speak for some people.
They say they're in favour of it. That is until Mr Sinclair
said he wasn't. But he got put back into the cart by
Mr Peacock, apparently. And he said, according to today's
press, that he does support it. The Business Council
hasn't said that they oppose the consumption tax. And
sections of the Trade Union movement haven't said they
oppose it. But they have questions about its implementation
or the structure of the red~ uction indirect income tax that
should be associated with it. Sections of the Retail Trade
have said, directly to Mr Keating, that they support it. So
at this relatively early stage I'm not surprised by question
marks that are being raised. I'll accept my obligation
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as will the Treasurer, of explaining, as I say on the
evidence available to us, why we think that it's the best
way of going. Now, it will be up to others, and we will
listen to them, to say well look perhaps there should be
modifications. BEUTLER: Well how do you answer the latest criticism of
the business community, that your plans will reduce private
investment, will reduce growth, and will reduce employment
opportunities. PM: Well I've come to understand during a fairly long
life now in the economic field in Australia, that the
capacity to making ambit claims is not the prerogative of the
Trade Union movement. The business community is just as
capable of making ambit statements as is the Trade Union
movement. BEUTLER: And that's all this is?
PM: It's certainly not accurate.
BEUTLER: Have you and business fallen out?
PM: Well, I don't know what it was that we were in,
out of which we've fallen. I think that sounds grammatically
correct. I believe that over the period that I've been in
public life I've developed a good understanding and rapport
with the business community. And certainly in Government we've
not by rhetoric, but by decisions, have shown that we're about
improving the climate for the private sector. And the
creation of the 375,000 jobs that's characterised our period
in Government has been evidence of that... Now, the business
community has on a number of occasions applauded the
capacity and determination of my Government to make the
decisions that are necessary to get economic growth going.
And I believe they still had the view that we are an extremely
competent Government in that respect. Now, they are no
different from anyone else in the community when the question
of tax reform comes up they are going to be predominantly
looking at it from the point of view, does this effect us
adversely in some particular way... I'm not worried about
that, but I want to say this, that I believe that at the
Tax Summit the representatives of the business community
will make a constructive contribution.
BEUTLER: Well you've always expressed confidence that the
Union movement will qome ab~ oard the cart. But what's going to
entice them to do so?
PM: Well very simply these facts. Firstly, the way
the existing system has been decaying has meant that an
increasing burden has been imposed upon their membership.
At this point of time 39% of full-time wage and salary earners
are paying 46 cents of every marginal dollar they receive
in tax. If this is allowed to go on, by the end of this
Parliament well over 50% will be in that situation, and that
will be an intolerable position. It will mean that the 46 cents
in the dollar rate will come in at $ 17,000 of income. That's
intolerable. Will be unacceptable to working men and women,
and I believe to their organisation. Secondly, if nothing is
done substantially about the existing system, then you will
have a continuation of the position whereby more and more of
a burden is being imposed on ordinary wage and salary earners.
That is intolerable and unacceptable with the working men and
women of this country. So something substantial has to be
done to reduce, and to reduce significantly, marginal rates
on the dollar earned by people in employment. That can only
be done I believe if you have a significant and equitable
alternative base of revenue. I believe that the broadening
of the tax base, the direct tax base that's involved in the
proposal in the preferred option, together with the consumption
tax which will be very very much more than compensated by
substantial direct tax cuts, plus the fact that by the broad
based consumption tax you get what is referred to as a fiscal
dividend. That is a contribution to the revenue from those
very substantial, high level income earners who don't pay
any tax at the moment. All those things mean that the ordinary
wage and salary earner in this country, and those dependent
upon them, will be very very much better off directly and they
will also be saved, as I say, from an increasing burden that
will inevitably be imposed upon them if we don't reform the
system.
BEUTLER: Why don't you exempt food from the consumption
tax?
PM: Because all the advice that we have been given
from other countries, and from independent experts is that
there should not be exemptions. Because once you start
having substa ntial exemptions it means these things. Firstly,
it means that the burden upon those who have to carry the
administration of the tax, the retail outlets. They have to
have a more complex cash register system and and accounting
system. Secondly it imposes the inevitable situation
upon governments of any complexion that they will be having
lobby group pressures upon them to exclude this, to exclude
that;' to exclude that. And you'll lead to the situation that
you have now in the wholesale tax system, which brings in
just under five billion dollars now, which is imposed upon
some goods and not upon others. Which has some categories
in the 7% tax, some in the 20% and some in the 32 with no
logic, rhyme or reason. And it represents the fact that
successive governments have responded to political lobby group
pressures upon them. So for reasons of administration and of
logic and efficiency you can't go down the path of substantial
exemptions. BEUTLER: You say substantial exemptions, do you rule out
any exemptions at all?
4.
PM: Well you talked about food, and that's a
substantial category. I had put to me this morning, the
proposition that for instance disabled people, wheelchairs,
that in the absence of any arrangement in respect of them
you could be imposing a new burden on them which doesn't
exist now. Now, I simply said that its conceivable that in
some areas of medical, physical disability considerations,
and I'm saying this without commitment, but its conceivable
that you may be able to have such a fence around things like
that which made it quite incapable of extension into general
areas by way of precedent. And that would be worth looking
at. However it may be the case that because of the difficulties
to which I've referred about exemptions there may be other
ways of compensating people in those sorts of circumstances.
BEUTLER: Mr Hawke, what is negotiable at the Summit.
You've told us what isn't negotiable what is negotiable?
PM: When I've said what isn't negotiable, what I've
put firmly, and what Mr Keating has put fir. mly, our strong
belief as towhat is best. But I'm not closing my mind, nor
is Paul Keating, to listening to, hearing what people have
got to say about the whole of the white paper, the whole
of the package.
BEUTLER: He seems to be closing off a hell of a lot of it
though. PM: No. I think he is saying, and, I'm saying, look
we've got an obligation upon us. We told you the people of
Australia, in the election campaign, that we would make tax
reform central in the life of this next Parliament. We then
said we'd accept the obligation of analysing the inadequacies
of the existing system we've done that. We said further
we'd accept the obligation of putting to the people of Australia
avenues for bringing about a tax system which would be fair,
efficient and simple. Now, on all the evidence available to
us we believe that the preferred Option is the one best
calculated to do that. And we're saying we think that's
what should happen. And we don't believe you can improve that
by saying we'll exempt this, exclude that from this concept.
But that doesn't mean, as far as we're concerned in any sense,
that we won't listen to what people have got to say. We have
come with integrity to a position which we believe represents
the best. If further evidence comes out which should suggest
in any way that there would be sensible qualifications
to achieve the objectives if the broad community wants to,
well then we'll be open to persuasion.
BEUTLER: Mr Keating, by taking the high profile, has
appeared at some stages to overshadow you. That you're
being dragged along by him. Has he tended to undermine
your authority?
PM: No.
BEUTLER: Not at all?
PM: No.
BEUTLER: How are you going to get this through Caucus?
PM: Well I would believe that if the vote were taken
in Caucus now they would be in favour of the preferred option.
But that's not the way we go about things. The members of
the Caucus are important members of the community as a whole.
They will be listening to the debate, they will be studying the
White Paper, and I believe that out of those processes they
would come to see that the preferred Option is the best way
of going about it.
BEUTLER: There's still a lot of opposition in the Caucus?
PM: Yes there is.
BEUTLER: Even from your own faction.
PM: But I believe that as I said a moment ago, I believe
there would be a majority position there for the preferred
position. But I'm not trying to impose now some position upon
them. Mr Keating has spoken on a number of occasions to the
Economic Committee of Caucus, and at length. And I've had
conveyed to me that as a result of those sessions that Paul
has had with the Economic Committee of Caucus that there has
been a substantial acceptance of the views that he's putting.
But I'm not trying to pre-empt the position of Caucus because
they are fully entitled to be part of the process of
consideration up to and including the Summit and trying to
make an assessment themselves then. In the post-Summit
situation, with us, with the Cabinet, with the Ministry, of
what is the best way to go.
BEUTLER: Where you serious when you suggested that you'd
rather lose government than see these reforms fail?
PM: No that's not an accurate way of putting what I
said. What I said was this, and J1 don't in any way retreat
from what I'm saying, is that if I came to the view after the
Summit that there was a large measure of support satisfying
Principle Nine, for the approach that we're talking about
But that you still had a situation that you might be disaffecting
some people, and that you ran a risk in those circumstances of
losing office, I would not ' be diverted because I believe that
the ordinary people of Australia, the ordinary men and women
of Australia, and those dependent upon them have increasingly
been subjected to a position where they are carrying an
infinitely greater, more inequitable burden than they should.
In economic efficiency terms I know that the future wealth
of this country has been prejudiced by a continuation of this
grossly inadequate, inefficient, inequitable system. Now if
I come to the conclusion that the sort of reform that we're
talking about, and that it has broad support is the way to
go, but that there. would be certain interests who would try
and use that approach to defeat the Government, then I would
still go down that path. Because I am dedicated, and the
evidence is there that I've been dedicated from day one of
Government to make the tough decisions that are necessary to
get the Australian economy into the best possible shape.
That's what I believe my obligation is. And if ' in taking the
decisions to achieve that result I run some political risk
I said so be it. I repeat that.
BEUTLER: Mr Hawke, if finally we could turn to the ordeal
in Beirut. Do you agree with President Reagan's response
of not negotiating with the terrorists.
PM: I think the principle is right. I believe that
if you have a situation where you allow terrorism and the
tactic of terrorism to become legitimised in international
relationships then you are proceeding down a very dangerous
path. I have great sympathy, with not merely President
Reagan, but with everyone involved under this threat, this
atrocious threat to human life which is involved. And I
merely say that my thoughts and wishes are with those who
are responsible. And on behalf, I'm sure not merely of the
Australian Government, but I believe the people of Australia,
I would say to those involved in the Lebanon, and those
with particular opportunities and responsibilities, to resolve
this matter. That they should try and get a perspective which
is beyond their immediate concerns, and understand that in the
long-term the use of the tactic of terror, while it may be
seen to be helpful to the pursuit of a particular cause at a
particular time, is a tactic which can rebound. And can in
the long-term mean only further bloodshed and violence and
terror, indiscriminately for all. And that's not the path
that's sensible in the interests of those in the Lebanon.
BEUTLER: Mr Hawke thanks for your time today.
PM: Thank you very much