Jh. AUSTRALIA.
PRIME MINISTER
E. O. E. PROOF ONLY
PRIME MINISTER INTERVIEWED BY HAYDN SARGENT ON RADIO 4BC
TALKBACK, BRISBANE 27/ 6/ 85.
HS: Mr Hawke I understand on Monday night the members of the
Centre Left faction met and decided they wanted option A
which must cause you some concern?
PM: I don't know, I haven't had dny such reports and I'd be
eurprsed if any such decision had been taken, but anyway
what I've said is that we'll go to the summit, we'll listen
to what's said and as a govetrnment we'll go through the
processes of coming to a ' decision which we believe will be
in the best intere. sts of this country. I would think that
all members of the party will play their part appropriately
in that process. I don't believe they would have closed
off options..
HS: Are you disappointed in the lack of support for your tax
proposals from the various State branches of the Labor Party?
PM: Obviously one would have rather seen them being more positive
and affirmative about it, that's clear, but I'm not entirely
surprised because this is a debate which covers an area of
considerable emotion and an area in which there have been
historically hard-held positions within the Labor Party,
that is Against indirect taxes, and that is a philosophically
sound position if : that's all you're doing, but Paul Keating
and I are no less : aware of the reasons for being against
indirect taxes than anyone else in the party. It's bocause
we are aware of the rerressive nature of them, that is that
they cn all otlher things being equal hurt lower incomcr
people uore, but . he patkae contains $ 2 billion north of
compensation to c46pensate arid more than compensato, tho;; e
o o/ 2
-2-
who would otherwise'suffer that that injustice. Now
it's not to be expected that everyone within the party
would be a) as well aware of' all the details of' what's
in the package as w are, nor b) lhave had the opportunity
to study the way in which the whole system has decayed
and to really understand the paiadox ' that it's only in
a s' 3nse by overturning that previous philosphy that you
can really achieve the fundamental objectives of thd party.
HS: Itseems in the past. that Bob Haw~ ke and the Labor Party
have enjoyed very much the women's vote in Australia,
and it seems to me that come the consumer tax the women are
going to be confronted by taxation perhaps in a more
startling way at the supermarklet cash regiater. Is that
going to aff'ect-your political fortunes?
PM., You go to a very in tresting p. oint there Haydn, it was
riised very early on in the dis'cussions we were having about
tax reform9 It was at a rneet'ing* at the Lodge soon af'ter
the election and we were starting to get ready to prepare
for the work on tax and one of' my advisors there mado the
poilnt he said listen one thing you're going to have to
watch is if' you go over this route you're talkinig about
yo u'vo got to remember there's. still a lot of' Iustralinnhouseholds
where the old man gets the pay packot ind tho
lady of' the household doesn't. krnow exactly how ho 16Z73
he hands out a certain amount,* and he'll have ai Lot
nore in his pay packet and his, wife vill be to t:, e
nupeimarket, see the higher prices and ohe'll & till have " Cho
same amount in her handbac, it's a scrious po . nt that s
to be takcen into account io that if' the sort of option ? o
talking about is brought into operation, ther& l have L'.
a very heavy education campaign so thnt the womon -arid nIOI
just the women but I'm, particuslarly referring to you~ ro
queotion -will know that. Dad crinyhas gdc,,.; oino nmo,. e
dollars in the pay pocket and she should bo. getting hcr ' V O
on thorn0 e 3
L u S
HS: Maybe that's a domestic quest. on that a Prime Minister
should stay clear Of?
PM: Well I'm in the happy position well happy for me that
since our marriage. Hazel handles all the financial matters
at any rate. It's not something I'm conscious of. But
it's something that's quite serious that should be taken
into account.
HS: I'auppose only a m4sochist is really enthusiastic about
taxes. I haven't met anybody yet who is really enthusiastic
about paying tax. Do you sometimes regret that maybe
you've called the tax summit, because it really is an
unpopular topic it's a bit like castor oil it's got to
be taken and maybe'the simplest thing would have been for
the government to have met, mde a decision and said to the
Australian public '" this is it."?
PM: No, on the contrary the more this process goes on the happier
I am about it because tax as you recognise is a touchy
subject and there are probably very few, as you recognise,
will touch it and it's much more sensible that we provide
the opportunity for significant public discussion debate,
and then at the. sutmit be in a position as a government
to listen to the views of widely-representative organisations
The great tragedy of the present time, the reason why tax
reform is on the a enda in 1985 is because for 30 out of the
last 35 years our conservative opponents have been in charge
of this country and the present tax system is their tax
system and it's precisely because they did what you were
saying get an idea in their minds, bring it in, no discussic
no consultation, except what vome of their privileged friends
presumably said you had the emergence of a system which is
-totally against th; interests of ordinary Australians, Mow
it's much more sensible that we should say all right we've
inherited this mess from you people who acted in that way,
who created a system in which more and more of a burden is
imposed upon the ordinary wage and salary earners of this
country, the ordinary people.' ' We're going to bring an end
to that, we're going to say "' here it is" we're going to cxpose
the inaaquecies of' the present system and go to the people aTc
A t w gjino to iet
betrsystem, let's biear what* You've got to say. That's
an infinitely. bette#: way of' conducting the affairs of' this
country than the aiternative because You look at the
alternative you see; what's it'* s produced,
HS: It seems to me that the key jo'b'foir you as Prime Minister
and for Mr Keating : as Tre'asurer is to sell to rank and rile
Australians, not necessarily ' to the influential of Australia,
this isaue Of Privilege. Some people enjoy Privilege
tix-free cars, chaL~ feur-driven cars, entertainment expenses,
travel allowance -". and other don't enjoy those Privileges.
It seems to me that's one of you-r'* key selling..
PM: It08 one or the jobs, it's one of them. I think you really
can see by looking at the overall at . atistics you go back
years ago to 1953-54 then yoU had the situation where one
Per cent, Just one'per cent of people in full-time employment,
paid a marginal rate. of 460v now that figure is just under
4.6 per cent 39 per cent are paying almost halt of that
extra dollar in tai, and thatt's the sort of' clearest indicatic
of' what we're talking about. You~' re getting this growing
an~ d growing pressure and burden of tax on the lower and
ordinary income people Of Australia because the more privileGc
are avoiding their tax altogether, and that's the aggregate
figure of' it and it-' s only happening because the share of ta.-I
that Should be Coming from areas with greater caipacity to
pay has been diminished,
HS; Final question -Comning back to this meeting Of the Centro
Left on Monday night, at which I understand Senatolr Button
was present, and l understand he's one of' your closest
advisors and conridente, don't you foel that som~ e of your
Ministers are virtually pulling * the rug out frcti under you?
P: NIdon't think ta. We as a Cabinet had to take thioi
Process through and we did, b'ut it was. ' Cknowledgad thintw
D~ me Ministers had reservations or concornS about, not
principle of the Opproa'ch, I Ithink rieght ito ; Vnyc
as to whether all the elceentes of compensation and ai.*~
about Inflation rate, whether* they uere exactly. r~ ih, : C
toey eanted to be 6ble to do-' Inore t~ orh on that, and I / C;
that but the government had the' responsibility of getting
what it thought was ; the best position and then going out'
and selling that. Wa I've 6s ai d from the very beginnin* 9
during the election:: campaign ar~ d . right through and I say now
and I'll be saying at the summi tka we accept the responsibility
of doing two things of analysing the existing system
showing its inadequecies and thaithtere must be changes,
and secondly-saying here are ways in which we believe the*
system can be improled and Including saying it looks to ' us
as though this i-s the best way of going, option C. Now we
will be listening very c losely at the summit and if it emerges
that there are qualifications or better ways of doing it, then
I'vze got a n open mind about that: and so has Mr K~ eating. We
strongly believe, on the eviden* ce Available to us at this
point, this is the Preferred way of going and we're going to
listen.
HS: Let's take some calls.
PETER: My question, the first part of ; m y question i s, when are you
going to honour you'r 1983 election promise of reducing the
price of petrol at : 30 a litre?
PM: The government's position has ' been that it will proceed alonrg
the path of'the import parity * pricing policy we've done that
and whore that policy has inv~ lved decreases well that's
what's happened; where it's involved increases, oithor bocam.,
of what's happened * to the market prices, the Arab lieht(?) oi:*
dqpreciation in the Australian dollar, wetve' 6one that. lUp
to the last meeting tie had last week when vie decided uo v3ou?. d
not merely take account of what was happening in the ppice oV
Arab light ? 1the.* official priceO but that we'd also look ati
spot prices as well, and the ' e~ ult of that has been tilat
there will be a reudction 0.3. f a litre in the price oT petro
tUo've got to operate on the basis of combination of tryi& ng
to keep the price of petrol a's lOW as possibloe and cn: so:
vith the fact that it's a scarce and limi~ ted ronource and o
got to 3ce that it: Os thoreforea pi~ ic6d at anll
economic pricc, 0 : 1 would Yzo6iid you that coiap \ ed t.
rest of the world Australians. still get their :& ctrol veryrv
Very eheaply-Indecyd. 06
PETER: I understand:. petrol's going to'. go up again at the tax summit
by 121 per cent, 1i that right?
PH: What we've said in: the White Paper is this -under the
Preferred option C, then you would want if you could to
differentiate between the business'imputof fuel and it's
Ube for private consumption so'that you wouldn't be taxing
It as a business imput; but at this stage it looks as though
the differen'tiation bvtween the business 1. mput and private
consumption-i3 rath~ er difficult to take, and so it has been
designated'as what'! s called a.. restricted good and it would
be subject to the consumption tax so you're right but if
the preferred option C in its.' present form were to be adopted,
then there would be'an increase in'the price of petrol, but
itsno good when you're taJling about tax reform just looking
at one element. it's no a'ood' saying but the price of petrol
will go up, ' or theprice of Something else will go up, you've
got to ask yourself will you bave more in your pay packet
than before*, and more in fact * than will be necessary to covet,
the increase In the prices yop'll be confronted iiith by
movements in goods. subject to, the broad-baged consumption ta,,
And the answer is that. you'lll have more in your pay packet,
so -that in net t " erins you'll b6 ete orff,
HS: We'll take a second1 caller.
CLR: Regarding you're ' alegation against Sir Joh, Mr Hawkeabout
him being an incomj~ etent leadefr., what grounds did you base
thi* on?
PM^: I'Im glad you asked me that question. I think you'll a~ i-oo
that Sir Joh, more than any other political figure in Austra-. 1
in recent years ha's been making* allegations about othar
partics and saying that he is** the best man and his party's
the best to govern*, and he ma'kes allegations a~ ainst other,
p arties in thin State -not juat the Labor Party, but the
Liberal Party, and Ve makes thiep-against federal ( I~ rvcn.
and so we start fr. om the flrst step, therefore v thct
beilevas thnt the tian in charg. je and tho party lillat -pc,
dotormines In one \-jay or another the quality of govcr-nuant
t~ he level of' econo' mic perfborm~ ance. So, there~ oro1the o
step is to say very well if that's r ight let's look at the
level of' economic performance . in Queensland and compare it
with the other States and tha t's what I did, and the sorts
of things that people will make judgments about in this area
i6 what's happening to employment, unemployment, prices and
things like that, so let's ha've a look at a few of' those
things by which you contest Sir : Job's theory, not mine that
I'm talking about now,, his theory that it's the quality of
tne leadership and: the party ' pf'the leadership that determines
the quality of economic performanc. Let's look at
unemployment the-fact is that the unemployment rate in
Queensland is the worst in Aup'tralia. The Australian average
is 8.4 per cent, here in Queensland it's 9.9 per cent.
Epaployment in the test of Aus'tralia has been rising, here it's
falling; inflation in! the yea'r to the March quarter for
Australia as a whole 4.4 per bent* Queensland .4DB per cent;
let's look at the reoistratiobs of new motor vehicles which
. is always regardedl as a test of how an'economy if moving,
for Australia as a whole new : Potor vehicle registrationa,
that's over the past year, halve gone up by 18.3 per cent,
in Queensland only 10.9 per cent. Another very impor'tant
area of' the level of economic activity how an economy's
going Is what's happening in the housing industry, Here in
Queensland an appalling perfo -rmance compared with the
A'ustralian. average:. If you look'at the last I-larch qua rter,
the most recent figures, for" Australia as a whole an licrease
of 0.9 per cent in, dwellings approved; in Queen. 3land a
decline of 19.8 per cent. So if you look at all th~ be thin~ l,
all these critical. indicators Queensland is doing woro2e than
all the other States. Look at the question of industrial
dispute, Sir Joh that this is ve.' y important, urell how is it
that for the rest of Australla we have a situation where tunc ei
the policies basically that we've'been followin-and xihich
have been reflected in all the* other States, you have industr:
disputation at almost a 17 year historically low point in
Queensland ' with ii'duatrial disputes going throuGh the' P00f
So if you take the Premior's * own test that it's 1cnderobip)
n and the policies 6f that leader and his party That coirnt
daez'rino the ley~ l of econiouic perforciacilc,, tbon
worSt in Australia, andit's ot ziurprisinig becc~ tzSe he Coocu
regard the task of leadership as trying to rigtbo 0 1
-8
together, his concept of leadership is to try and tear the
community apart set group against group and it's no
wonder, therefore,' that the great people of' Queensland,
I ean you've got A great State*-you've got the resources
here in this Statel which would be the envy of' many other
States, you've got: great resources, you've got a great.
population, the trOuble I~ s thAt you've got the worst leader,
and in the result the very fine people' and the fine resources
ot this State are being made to turn . in a worst performance.
There's only one thing to do . and that's well, fairly
obvious I woculd th~ nk.
CALLER: The 12J per cent tax that you~ lre going to put on meat, milk
( KEVIN) and groceries -how is the unepmployed going to be given extra
money to balance that?
PM: Very simply the Social Security payments will be increased
-by more than the increases in prices that will result, What
you've got to understand is tha't while what's being talked
about is a 12L' per cent increase in-& consumption taxa
consumption tax pt a 12? 1 pe'r cent rate the impact on the
CPI is 6J. per cent because that' 12?! percent is compensated
by removals of pri'ces associated with the existingiwholesale
and sales tax, that goes, and, tbere are adjustments in certal
excise areas, so that-the nett result is 61! per cent, Now:
the payment of' unemployment benefits and other, Social Socurit
payments will be increased by significantly more than tho
amount necessary simply to, co ver the per cent increase in
prices.
CALLER ( ERIC) I have a small but'cher's -Ahop* and a couple of restaurants,.
Under the new tax scheme th~ e* tax for restaurants and they
in turn will charg~ e it again , to the public, ion't this doubl(
. taxing?
F~ M: Well in any free enterprise Soc'iety here you~ ve got the
situation, if I underatand-ydur* question rightlys whcro
enterprises may tr'y and cover , theldoelves by passing on t
to consumers, but -in the w; hole assumptions that valve rade
in our approach hore, I would. not assume that where tho tax
I
Is met by the enterprise that'he'si not going to pass it on,
that's the whole reason why you get your calculation of the
per cent increape in the OT~ th at we're talking about,
and what we are saying is, that ina the package as a whole
the people who are going to be coming into your shop or going
into your restauratits, are in fact going to have very much
more money -in their pocket than they otherwise would have.
I do try anidiplead with you, tric, not just to pick out one
part of' the package and say, there is the whole'explanation
of the wholeithing. I mean it's absolutely no good saying
a person's going t0o be confropted with somewhat higher prices,
ir you don't'at the same time : utderstand that they're going to
have significantly: more in th'eir pockets, and more in their
poDckets * than the inicrease in the * prices that are going to be
operating, so that . there's no reason why the people that are
your customers are , not going to be at bast as well able
into the future to'come and buy the things that they have been
accustomed to buying as they were in the past.
Yes, but I still think it's a* sort of double-taxing. I mean
they're going to be copping it from both of' us really.
The situation is the people are going to be paying a tax, on
goods and services* as a resuJ~ t of a consumption taxr, th; Et's
t . rue. But that assumes that* alt the present time your
customers aren't af'fected by the tax system -the fact is that
they are, because what they ha ve got available to thera to spcmp
on goods and services is there as a result of how much tax tnhz
pay. Let me put 6 simple ex Iample -let's say they'rc g-ettin3
6,100 a-week that's your pay an d that the tax is 650 on thatp
that loaves you $ 5b to spend on goods and services. llow7th , A
that you've got to spend * is a result of tax, it's thc! levc3
of direct income taLx operating on your pay determining the
aMount of goods and services you can buy. So tax now currc-.--
determines peoples capacity to, buy goods and services. Thc,
buy with their afteor-tax income. Now if we reduced t h t tt,
on the $ 100 sign: ficantly, ) lct's say it comes down to
t'h-Nt means thoy~ vo thngot 670 to opend on eore6,-and
ve irapose som~ e' tax on thoss jgoodt and sorvizcJ 01,
are still being of fected by t axc on the amount goods n
services they can : buy, but the ' whole package vill men t) P
ERIC: PM:
the increase in the price of goods and services associated
with the consumption tax will have a lesser effect than the
reduction on their direct taxes. So in the example I've
given the $ 70 they've got to spend on goods and services
the prices of' which will go up by 6J per cent, will still
leave them better off'. In other words don't let's operate
ih our discussion on this new proposal as though it's only
with the introduction of a consuimption tax that the capacity
of people to buy goods and services has been affected. It's
being affected now, but the terrible thing is that the capacity
of the ordinary waf'e and salary . earners to buy your goods and
services is progressively being reduced because a greater and
greater tax burden-is being imposed upon them and in the
overall package that's being ' proposed by us you will find
I'm sure we'll be ' proved righ t, that the comnhunity as a whole
will be better placed and there will be a fairer distribution
of capacity to buy goods and services.
11: Prime Minister, just a point 6n that consumer tax4,, how many
times will it be applied? The restaurant meal is probably
a good illustratio6. Will it be applied when the farmcr
sells his beef, wiil it be apolied when the wholesale slaughte
yards sells the cut meat or carcase to the butcher?
PM: Au I said it's a broad-based consumption tax -you see u; hat
the alternativcu we were Laced'with the concept VAT ich
is the one that's been adopted In * many countriez of' Europo,
or the broad-basedconsumption tax. This was lco! hed at and
there were certain arguments in favour of a VAT but the Inafl
argument basically against it is that you have a imuch i~ iore
complicatod mechanism and many more collection noWnS, knnd
it was suggested pr'obably the opportunity of' evcsion rncy be
greater, and certai5nly the administrative costs would be.
grt.' ater and you would be imposing, administrative burdens
on more points in the. communi ty. So this i. 5 at tho
point,
1S: So when tho butchop" sells tho. meat to 11-he restv ñ a'nit
no tax at th at poifit; but When the. restaurant s'lsthe
Meal? 0 0 0 l I
PM; 1i~ depends how the'restaurantpur does his purchas ing. If
he just goes'along to the but~ her shop yes he'd pay.
CALLER: I'd like to talk about tax on the everyday commodities.
Ites been talked about that things like washing machines/ cars
will be cheaper. If we have to tlighten our belt we'll
just have to make ao with~ tho64 items a little longer
instead of trading them in and getting the latest model.
You don't buy thosO every day of' tbe week. But, we have
ti) buy food so we ' can eat and live. If cars and washing
machines can be reduced you mnust h ave been collecting a
pr-etty big rfevenue. out of them.. In my view the rich will
benefit from the reductions because they're the ones who
trade-in their cars every couple of years, as do you people
in the goverlnment. But if the petrol goes up we won't be
able to afford a car. What's you're honest view on those
things.
P14: You don't have to, with respect, use the adjective what is
my honest view, because all my views are honest M* adam and
1I'm not very keen on reintroduction of the adjective, but
let's go to the facts. You dck out cars. At the raorient,
under tho wholesale tax system wihich is full of anomalion,
it's not only card, it covers* TVs,, radios, soaps and detorgenM
pet food, soft drinks, insecticides, toys, toilet papor,
watcher, shavers, cosmetics, toiletries, pens and handbargs.
I mean you've got ' this whole range of goods, many of which
you use, where ther~ e is an existing wholesale tax. Now
with the abolition of the who'leqale sales ta* i thon the prices
o f those goods obv iously come down and that.' s why In total
where you're talking about a I2 per cent broadly bascd
consumption tax the overall effect will be only 61 per cont.
You talk about the' impact on. lo wer income people. Theo e
o f my public life,: In the tralde. union movement, in the Laboup'
Party and now in government, : has been a concern to try and
ensure that the lower-incom) " people of this country got a
deal. I mean that' what rn whole life has been about 2nd I
not going to Suddenly when I come to tax reform say, oh no
the principlea that have GL Iod ri all of' m! y lir,-, Are
egoing to f ly out the window0 Because we knot? that 3S -Vou
brought In'a consu6. ption tax andddIdn't do anything c 2 hw* G
pooror people uou), d be helped, is tiy woc've got Ca tOtal
S12
package. Now that package involves $ 2 billion-worth of'
compensation so that people ip the lower-income level who
depend upon social security benefits'will get those benefits
increased not justby the 6& per cdent but by more. Let me
give an example for a single ' pensioner what you would need
to cover the increase in prices associated with the broadbased
consumption tax would bb a.$ 6 a week increase, welt
we're pronosing $ 9a week i tc ' ease and so on through the whole
range of social security benet'its. The level of people who
are in employment, the proposed cuts in direct tax will be
very very much greater. I J -ust ask you to think about this
situation and if you are afrald that the bringing in of this
consumption tax is going to be unfair in that it will be,, as
Vt1e economists say: regressive, that is it will hurt more down
the bottow and help the people at the top, the great trAgedy
of which you ought to be aw-are and the people of Australia
ought to be aware, is that at this, time the most regresnive
feature of' the tax system is* that you're paying tax but that
the people who can afford to pay tax are not. The most
regressive feature of any tax' system is that people avoid tax
they don't pay, and what that's meant is you,. ald tons of
thousands of' people like you' under 30 years of' governmont of'
our conservative opponents, mopre and more tax has been'pi bj
you and no tax has, been paid * by the wealthy and the privilege.
So what we're, about in this wbole approach is Sradually'
relieve the burden upon people such as yourself, so that in
relative terms we're going to , have much greater fairnez33 in
the system. ItIs: totally un fair that billions and billions
of dollars have no-tobeen paid in tax by the rich and the
privileged and the' wealthy. Not by people like you because
you can't afford a rich tax accountant or a smart ta,. r law~ yer
to tell you how to got out of' paying tax you pay your tax,
And what we're about is trying to remedy the whole system, vo
that you will pay less, that ~ rou're ; capacity to consume will
increased and the rlich and the privileged in the commiuni. ty ii:
at long last start. to pay the ir f'air share.
CA~ LLER2 Si. r I support your uovez to brn ha fal-rer ta) Kt!, o, s
a . nd it seems t o me: you are on the right trva ck1 c, S yot 1L rn-00
t. here are more 1than 2 million people living boiowz the 0oro
line now,, and I'm -one of thema. W~ hen you bring In your ruv
. fnvetiOT1 SVstrj twi-lX your pgoVernment automatically adjklst
13-
th : e incomes for all those Australians, and I'm talking about
those below the pove rty line, obigte bv h oet
line, and I'm not forgetting that yesterday the Treasurer,
paul Keating, said : the average ed . an income wage is $ 19t500
ayear and could I -suggest that aletthporyline
today would be equal'to a third of that which is equal to
$ 6., 500 a year. And don't forg~ b in a free enterprise syntem
there is no limit on the profi~ ts and prices of people in that
free enterprise system.
We will, of course, .' be increasjing social security benefits
by an amount more than is necessary to compensate for the
increase in prices ' associated : with a broadly-based consumption
tax, if that's the route the Sovernment finally goes, so
that people in that direct sen~ se will be more than compensated
As. ? hesuggestion of the lifting of the tax-free threshold'
aso from $ 4595 up to $ 6250 would mean that ab such a neW
tax scale, if tbat were implemented., thatwould increase'the
amount of money that you would be able to earn would ' be
before you had to pay any tax . at all, would rise from 08
a week to $ 120 a weekc. Itto quite clear, and I'd be misaleadil,
you if I. were to say that in one fell swoop * associated with
tax -reform we were -able to make the giant jump in paymonts
to got above the calculated poverty line that you refor to,
but I think the imoortant poipt, to understand is that until
tie have a tax system in w-hich everyone is payine ta-p with thc
capacity to pay thdt is-and not avoiding it -andl'si
over the years billions of dollars, then neither ny goovn-:;,..
nor any other government is going to bo in a ' por! 2onl to n. ov,-
gradual~ ly tovards chievihg. that objective. U, t-y ) l bo t
intention once we get the tax. system reformod, ono we go',
a fair and equitable tax 3ystem we will be able -ro'durcly, ' Z
move towarda making life oven monre acociptable tfa ill. i t
for those who for one reason or another, and of,-; cn 1' l õ
no fault of their pbwn~ are at, the lowor end of the incovii,
scale. TIt's Patti St'nith li~ cra from th o Austvoli~ nn riY,-
F i r_-t wo' 1 lke to* con~ ratuicto ' thc gQ'vOrnt1, eflt
Lncreaac of' 14 per! cent in th spouso irebate npr'ff.
allowances0This: reppeented two of'ot~ r cLt
PM: CALLER;
14
in. our writte'n submiission t o the tax summit, the third
being Income-splitting. The ' increase in spouse rebate
merely partly addrebses the inequity in between the
sinigle income earne'r and the dual income earner.
No twithstanding all: this and the fact that we represent,
the Australian Family Association represent's the largest
single interest group in Austral ia, we were not invited
to the tax summit. Prime Mia ister could you comment?
PM: May I firstly say thank you for your acknowlegorueht of
some of the things * we have don e in meeting the objectives
that you regard as-appropriate. Secondly as to the point
you make about the unit for taxation in the difñ' orence in
tax impost broadl~ y what you:. are saying is correct we are
aware of those arguments and that is a mnatter discussed in
the white paper and will certdinly be discussed at the & ummit.
Thirdly as to actual attendance at the summit, we were raced
with a situation of hundreds of organisations and individuals
Who wanted to be there and in drawing up the invitation list
we tried to do the best job we could, knowing that some would
be disappointed. I can only say this the submi~ ssion3 tbat
your ausociation hds put in are included within the docuincntat
which will be available to the participants at the summit and
I think a lot of people are making arrangements of' have
material available there for distribution to parbicipc~ ts & n,
1: imagine you'd be doing that, 8o I think you siould bnve ro n
concern at all that the thrust of your argument -, o
before the people who will be' at the suiumit,, bo~ h Z h
being raised in the white pap or itself 1 by the avib ity
of access to your submissions and thinking -I ' Lopo CtQ
the immediato post-surmit situation if' you've Got ayth-.,
more that you would like to put to us in the 1' i -ht of to,.
of things that are: said and d'one at ' the summit' tbtnt yor
uan't be discouraged from not* having beon therc but uI ; i
uB the benefit of' your thoughitz in the imincdiato post--' w. X
situation. They ' will1 certainly be taken into Lc; count,,
CALLMI% lird one of' the povcrty pe op o~ a p~ anionek-. ! it2. S:
( RITA) foaaiblo to staggor thia consumption nd El~ JA..
rate: of' tvn on so-ae essentla,. 4 graiduating by 2i'pe
rises to 123 per cent f or lu,,;; urios
PM: 1can assure you that one of the questions that has been
considered, not only in this c ou n t. ry elsewhere, is the
possibility of' the sort of' thi. ng that you're talking about,
t9 have differential rates, but the unanimous advice that
we've received in our consideration of' this tax reform has
be4en both from other countries and from international experts,
that once you start having differential rates that you are
then pretty much on a disaster path to the possibilities for
avoidance and evasion, the administrative complexities are
increased enormously plus the'fact you immediately then set up
the situation where all governments are continuously subjected
to pressures saying there ought to be this exemption or that
oxemption or this gr that lesber rate, which would mean you
would have a repetition of what you've got now in the wholosal
tax area where you have the absurdity that confectionary like
Kit Iat on the one'hand and chocolate biscuits which are
virtually the same thing one is taxed and the other is't
Because of' the arguments agaifist having a differential rate
or exemptions of the sort that I've put to you, welve naverthc
loss wanted to try and make sure that what we do by w-ay of
compensation more than covers the best calculations of what
the increased cost-to you woul. d be. Very detail. ed work has
been done to try aold get a picture of the consum. ption pattern
ot poorer people aftd then to load, the figuring in such a way
that means, according to our best estimates, the amount of
additional money that we'll be giving to you and others on
social security payments, that the amount of in ; ieso you'll.
get will be miore than the increase in the price of goods
with which you will be confronted. Let me repont tho examplo
I gave with regard to the pensions -in regarld to the snl
pension you'd need IW6 a week i,' ncrease in the pension to covclthe
increase in the cost of' things the ponsionep would be
faced with0 So we're not going to make it $ 6 a vecic we're
going to make it And that sort of approach is also
being followed throughout the, area of social uelfaro yLt.
An important part of the summi. ill be to enable the
repreoentatives of the welf'are community to ge thoupli r
asosrnpti onn, Co thiPok1-h our i: rcto Oce, iihceh-or
vv: e have mado is *, P-ceinpnatoriyn thoc way ITc : c
Onsure we have dono tho right thing. I can gi. ~ you C1~
,./ 16
-16-
undertaking that one part of the. proceedings that I'll be
listening to most closely will be this area that you're
talking about. Because I1' lneed to be absolutely sure*
in my mind that people who do'depenid on social welfare
payments are going'to be at lcast as well off after the
reform as they wer6~ before I'give you that undertaking.
[ IS: Just one final ques õ tion -if ' after you've met in consultation
with so many organisations and so many different pressure
groups, I have a feeling that thiere won't be the simple
consensus at the end of this'Conference that there was
perhaps at the endof the Accord, but that in fact it will
still be left to ypu to bear inmind their recommendations
and their opinions: and their preferences., but when it comes
down to the crunch it's you anid Mr [( eating who will have to
make the final dectsions.
PM4: I've never thought that we'd be able to get consensus at thi3
slimmit bocause in the nature of the thing a suarait. on taxatio
is differont to the sort of summit we had in 1983. Rather
live hoped and I still expect' that at the summit we'll have
the opportunity of hearing di rectly from a wide range of
people in the community what they think and what their
proferred approaches are and ' it may be that out of the proces
wo would also see that, some ot' the work that welve done
needs some qualification to take account of particular"
views we regard as relevant, Take the example of the wolfavc)
area that we've just been talking about. I'mean if It could
be shot-n that some* of the assumptions that we made in tho
calculations which vie're now confident that those people will
6e more than composated, if we. were shot-n there was some
questionmark about those, then we'd need to re-think thzt, ank
if it emerged that there vfasn It nearly enough support for
some of the concepts, w-ell we'd have to take that into accounl
Bit you're quite r ight in the ense that ultimately iwel-' O
the government and we're going to havc to mako the doccizion
And that's the uay it's always been the it s-houl d ie0
Dut I bQJ3iovo that as a result of pr~ oece c~ sO o0 t> 6.
public debate and ' thc-n at the summit, I thinkc t~ o Bhculd be
a0nb otter position to be more likely to Calco the bcest
decisioyl. Thanh you Haydn and thaxi.; you ities