E OE PROOF ONLY 27 JUNE 1985
PRIME MINISTER INTERVIEWED ON CHANNEL 7 ( BRISBANE) STATE AFFAIR
( INTERVIEWER MIKE DARCY: ANCHORMAN GLENN TAYLOR), 27/ 6/ 85 6o30 pm.
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GT: A major split has appeared in the Federal government's
campaign for tax reform. The powerful Centre Left of
the Labor Party, headed by Queensland's Bill Hayden, has
declared it will be opposing the government's preferred
tax plan. It seems no one wants to buy the package
which the Prime Minister and Treasurer have been trying
to sell around Australia over the last couple of veeks,
and time's rup out. The tax summit starts on Monday
a: nd Mr Hawke finished his campaign for support in Brisbane
today. He speaks with State Affair's political reporter,
Mike Darcy.
MD: Mr Hawke, the climb to the summit very difficult for
yourself and Mr Keating?
PH: I wouldn't describe it as difficult, there's been a lot of
hard work but our goals wore clear and we knew the dimension
of the task and the degree of emotions out there ranging from
hostility in some areas to scepticism through to just straight
uncertainty, and think that Paul in particular has had the
main carriage of it, has done an excellent job. I've tried
to assist. I think it's meant that by the time we get to
the summit oh Monday that an unprecedented public debate will
have taken place and it should mean that people when they get
there are going to have to nt . just utter prejudices but
they're going to have to substantiate positions, as we will.
MD: Up until now theares been a lack of enthusiasm right around
Australia about the preferred options.
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PRiME MONOSTER
PM: The lack of enthusiasm has pe-' h*& ps been more reported than
the onthusiasm. I1 can say now that I've spoken to thousandsi
o-f' people and received a very . good response. -A lot of'
people have aiid well we were worried but now we understand
apd. we approve. Ithink i~ s In the nz~ ture of' things that
you tend to got the report about opposition rather than
ugreement,,,
MD: Well where is the bagreement c6orzing from...?
PM: From ordinary people.
MD., There seems to be discontent ' in rural Australia you've
got the
P: L'et's take it one by one you'~ vz got the National Farmers'
l'oderation is notv opposed to L. ha totality of the package,
they think the idea of' a consumption tax makes sense they
have the qualificaion. about . the app . lication of it to
their fuel imputs and that's artdrtnal~ obfn tsi
correct to say that the Parmzral federation are against the
totality
HD: No rural Australia'. Ycu've adthes-cene of tens of
thousands in the streets
TMO No. 1309.* d
MD: Yes, but they're c: Oming down to Canberra also t0@ 9.
P: Let's get it quite. clear that. those rallies have not
Veen about the tax, proposals ' as such they've got a concern,
which I understand, and I've said so, about rising farm costs,
Oecause they are being hit to leg on the international
m~ arkets by the operations of : the Europeans and they are
correspondingly mo : re concerne d about farm costs, and that's
what they've been rallying about around Australia in a
s~ ense, justifiablY. But it hasn't been against the tax
package.
tIP.: But they're tur'nina; upi to Canberra.
M: Of course they are and it would be. ver-y silly Of theM
in a sense not to tbiy've been rallying round Australia
an~ d they're going tc have the sp). light on Canberra on
Monday, they'd be silly not to..
MD: The ACTUfs uncommitted, the building unions have rejected
the consumption tak: outright...
PM: The ACTU's left itts option open.
MID: Right. There's opposition from some sectors of the business
jI: There'~ s also Zreat support from some sections.
MD: Well,. lukewarm rec9ption..
PM: No the Business Council of Auptralia when they haC their
second consideration of it, t-ame out wit%-h a very tzl
supportive stAtemefit.
MD: What about welfare agencies? For example the Salvation
Army this morning was reportea as saying they're going to
be out of pocket by $ 5 millioil.
PM: Well on the assumptions they biake but it.' s that area that
I11l1 be listening to very very closely at the tax summit
because we certainl. y are not ' going to do anything which Is
, going to adversely'affoct the needy in this community and
I believe the welfare communit~ y has an obligation to put their
case which they wll. discharge and if they can show the-need
for some sort of adjustment 8and fine tuning so that the needy
are not disadvantaged we'll take that aboard.
MD: Well what about consensus? TYhe polls seem to indicate that
Australians at the' moment are not prepared to-accept any
changes or r~ forms on tax.
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PMI' don't accept thate. 0
MD: There was an-ABC poll last ni*-ht., theve was the Taxpayers'
Association poll which they s'ay 80 per cent of consumers
rejected and 91 pei' cent o~ f business-* O
PM: Yes sure, I just make this ge'neral point about polls -if
you let me write the question's X111 tend to guarantee the
abrt of' answers I1.1l get and : that I want. Now that's not
to say, I'm not trying to dis Icount there's a lot of opposition,
of' course there Is, but there is also much more agreement
than anything else on the tac-t that the existing ayste~ m
has had it and something's go't to be done, and something will
be done. It's a question of whether we can get broad enough
support for exactly the option. that we think at this stage
in all the evidence -is the bea* t way of' doing it, and as I've
said from thelword go we'll l'isten to what people-have to say
at the summit' and if' there's reed for somne sort of'
qualification'to better match the broad community attitude
then we'll do that.'. But we gwill continue to put, as on the
evidence I believe the case t~ o be now, the preferred " p. Ntion,
MD: But. you are keeping-your optf~ ons open?
PM: Yes, but I'm ' not doing it just now, I've done it right
f'rom-the very beginning in the election campaign.
MDl: So there could be ! changes to the preferred options....
M: There could be I'vc-said that but this stage, on the evidence
available to'me, I don't see thtteeneeds to be, but
c'ertain things have arisen which obviously need close
examination and 11' ve taken the. view all along that we're not
going to be~ Pig-headed and s6y that this is what it must be,
sie're absolutely right., we're' going to listen.
MID: ' You talked last night about t he* privileged. That the.
current system i-s set up to look after the privileged in
our community. In trying to get at the privileged and the
tax avoiders, and that in our'. community are you really going
to be hurting the average per : son or the disadvantaged of
Austral. ia? I
' K C. I * 1~ l
PH!~ The evidence is quite to the contrary. If you l. ook at
the simple Guide to T~ ax R~ eforpi we put out, thr~ the
simple facts. You take the person on $ 17,500 income par
year you รต hould get a tax cut' of $ 22.70, the increase of'
costs you'll be cotifronted with. 0.0 s1 it will bo $ 7.40
a week better off & Lnd so on. And, in regard to that those
who are on social welfare payments it's calculated that
for the single penpioner costs Would go up by 6 a week
and. we'll1 increase, the pension by $ 9 a week, so of' course
we'Ire going to enspre that peobple are not only going
to be not worse off, but are better off. Ife'll be able
to do that to a cofisiderable : extent because, under the
preferred option a large econof' the people, those
privileged people who have evaded and avoided tax
wiLll be caught by a consumption ta:: and that gives what we
talk about as a fiscal dividend which gives you part of the
wherewithall to help tiiose wh'o deserve help.
MD: But every gets hur by the consumption tax..
P Therels no point in sayin& ge. t hurt. . I mean it's no good
saying they get hui't by payin* S the. consumption tax and say
you've finished it. The pac'icage is not just about a
consumption tax, at the same time as this increase in price
there's also an increatse in t -he pamnsavailable. So
make this point8 people seem to say, or people perhaps includi
yourself seem to think, that this'is the first time the tax
bystem, has had anything to do. with people's capacity t6' buy
goods and services. At this: ti~ me the tax system determines
your capacity,, and'the capacity-of ot'dinary people to buy
goods and services because you buy your goods'and services
with your after-tax income. Now because your after-tax
income has been reduced considerably by having to pay too muc2
tax in part because other people Are avoiding theirs, you.
have-a lesser amoutit of money with which to buy your goods anc
services than you ehould have.. So the tax system now
operates on the capacity to buy the level of your goods and
services. So if kre substantially increase the amount of
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money that you've got in after-taxc term~ s to buy Goods and
services, the pricbs of which yes have come up sonewhait,
you're gotng to bel better off'. Don't let's think that
tbis9 is the fIrst timo tax system has impinged on goods and
services. It's impinging no and in a very unfair' vay.
14D: Basically'people want to know: what. they're going to'get
oit of it isn't that basically what it come' downt?
PM: That.' s reasonable too,
14D: You're saying that they're going to get -that the average
p~ raon will be better off -so why isn'' t everyone embracing
o ption C?
PM: Because it's natural enough that people will have their
concern focussed upon. things they see that might going to
be hurting thew, Let me say also about the Labor dovement
because there's a lot of oppos8ition or non-acceptance in
the labor movement. Now. that' . s exp lained by the fact
that historically the labor w'overnent both politically and
industrially has skid that indirect taxes are bad and they've
been right because thoe philosophy of that opposition has been~
right because by definition if ' you impose an indirect tax
on goods and services poorer : people are going to be hurt more~
thn-zthe well off. And so peboplea attitudss.-have been shape~
historically by that well-founded position. Now they havenu'
yet realised that it's n~ ot just a question of imposing
indirect tax but a very substantfial compensation--
package of $ 2 billion. Now that $ 2 billion interrupts,, if
y . ou like, your history. So the poor will not in fact be
adversely affected.
MD: B ' i~ f you can't even sell It' to your own ALP branches round
Australia, how do you expect *. to sell it to the average person
in the street
PM: O Tt may in fact be easier because you ' see people have been
a . ctive in the Labor party and, they've been imbued.' with this
h-istory I've referred to and. I understand and accept that
bistory, and I think they haven' 1t been able to make a jump
at sindorstanlding that we know our history as well as they do,
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and are dealing with it. Al) 1 can jay is I've been round
Australia and I've talkced to thousands of~ people and some
havea come up and said sure we. wer'e worried but w! e now
nderstand. I aclept'that rhabre you're ( ealing with tax
you're dealing with Nomathiig of deep concern and people have
tbeir prejudices. We've gone about our task I think
reasonably, of trying to expl -ain and we realise of course
that there's a lot more explaining to do.
GT: The Prime Minister, Bob Hawke speaking there in our Brisbane
studio with Mike *-' Arcy. Indeed there's a lot of' persuasive
idea and merit to the-notion of catching those people w: ho
do~ n'L contribute any tax at all. ! The way though ia that
there wili'be a lot of middle'to high income earners who
fir'ish up paying both aides of the merry.. go-round getting
no tax relief and getting the' consumption tax as well..
Another . question to be asked, of course, is how much will
this new revenue-raising cost*. in ternpa uo administration.
ends OT 8 pm..