E. O. E. PROOF ONLY
TRANSCRIPT OF iNTERVIEW WITH MIKE WILLESEE 19 SEPTEMBER 1985
WILLESEE: It's been a long time coming, but the Federal
Government's promised reforms of our tax system are finally
on the table Prime Minister, thank you for coming.
PM: My pleasure, M1ike.
WILLESEE: Today was the long awaited tax reform statement,
but there was a tension of a kind if I can divert for a moment
given to you defending yourself on the half million dollar
payout for Mr Armstrong, the former head of the Dr Armstrong,
the former head of the Bicentennial Authority. You appeared
to be in your defence in parliament today, angry and upset.
Why?
PM: Well I was angry, Mvike. I don't know about upset. Angry
because from the beginning of this Government we took the view
that we had inherited a Bicentennial Authority legislative structure
and personnel which was entirely the creation of our opponents.
We don't think that that structure is the ideal one, but we
made a deliberate decision, Mike, that because of the importance
of the planning for, and the ultimate celebrations of our Bicentenary
in 1988 it was not appropriate to make any attack upon this,
but to try and make it work. Now, they deliberately created
a situation in which the government and the parliament has no
control over the operation of the Authority. The responsibility
for decisions within the Bicentennial Authority are with the
Authority itself. And in the situation where the government
and parliament has been denied authority over the way hundreds
of millions of dollars are expended, it struck us as being entirely
hypocritical that a great issue was being made of an amount
of money which was, in comparison to the hundreds of millions
of dollars, small. Now, in my handling of this, therefore,
after my discussions with Mr Reid, I had deliberatly handled
it in a way which was going to create the least amount of disputation
trying to create public fracas that could divert the attention,
the involvement of the whole political community and the community
as a whole, in this issue. We have nothing to hide, and indeed
I said to the Leader of the Opposition, not only here will I
talk to you, but I specifically arranged for the Leader of the
Opposition to see Mr Reid so that he could be fully informed
of everything that had happened. Now, against the concentrated
attempts that we have made since we have been in office, to
work within the parameters of lack of control and involvement
of the government, created] by our predecessors, within those
p~ r4mi created by our opponents, we have tried to do the
right thing. Anid now, you are, having this politicisation of
this issue. Now, that is wily was disappointed and angry.
WILLESEE: Prime Minister, I want-, to ( jtonto tax now, so I
will try and deal with this quickly.
PM: Did you mislead Parliament at any time over this matter?
PM: I have never misled the Parliament or the people on this
issue. The statement of 11 September is a totally accurate
statement. WILLESEE: ( inaudible) err on the side of generosity in
getting rid of Dr Armstrong.
PM: What I said was this. I said that I believed, on the all
evidence available to me, that a change in the chief executive
position was appropriate. Now I said in those circumstances,
Michael, quite straight-forwardly, that here was a position
where he had to go, in our judgement. We couldn't have thbcapacity
to do it. And to meet that situation, I said, all
his entitlements should be, we believe, met. And in creating
a situation where a man who expected to be there for another
six years was going, that he should err on the side of generosity,
in those circumstances. Now, what I was told, Mike, was that
to buy out a contract that was six years to run, at a fairly
high salary, that would mean a settlement of 400,000 plus.
Now in fact, my concern that developed was in regard to that
amounti'Nal emerged. * t was not specified in terms of six times
that annual salary, but came to be expressed in a different
way. And so I have raised the question with the Chairman of
the Authority as to whether there is any inappropriateness in
the way that has been done, whether there is any suggestion
of tax minimisation or avoidance. Now, I am awaiting a reply
from the Chairman on that issue. And once we have received
that reply we will deal with it., as is appropriate in those
circumstances. WILLESEE: tax payers, it must be very hard for a normal
taxpayer to understand somebody who is perceived to be not the
right man for the job, getting half a million dollars, I suppose,
to go.
PM: I'm sorry, I don't follow your question. What are you
saying?
WLJLLE7S=: It'S going to be very hard for the average taxpayer to
understand how a man who is perceived to be not good enough
for the job to be given half a million dollars to go.
PM: What I'm saying, Mike. It was in a sitruation where, under
the legislation created by our predecessors it was not a question
of the government saying, you go. The Authority under the Act,
and under the articles of association of that company established
by our predecessors, the decision and the responsibility for
removing an employee anid the conditions of that removal, are
with the Chairman and the B~ oard. Now, what f'm saying is that,
in those circumstances, the Chairman put to me that that would
involve a buying out of* the contra-: ct. arid that represented something
like six times the annual salary, t-. o buy it out. And with the
associated long service leave and aninua. I leave provisions.
3.
WILLESEE: ( inaudible).
PM: Yes he has my support. I have asked, Mike, for a response
from him as to whether the deal, which was in fact negotiated,
in terms that were different from what he initially suggested
to me, whether there has been any inappropriateness in the way
that has now been done in regard to tax. Now, I have got to
wait until I get that reply. If the reply is satisfactory,
then of course there is no problem in that respect. If it is
not satisfactory, we will have to deal with it at that point,
but it is totally unfair to Mr Reid, or to anyone else to make
pre-judgements at this stage until I get his reply.
WILLESEE: Prime Minister, on the tax reform.
WILLESEE: Prime Minister today we have your tax reform package.
Is this the reform you wanted?
PM: Clearly, Michael, the Government's preferred position was
option C, the more preferred one. But let me say this. You will
recall that I said from the beginning, which goes back to the
last election campaign. The reform package we ultimately wanted
was one which satisfied all the principles which included a broad
community support for the package. And quite clearly the option C eleme~ nt
of the package that we put to the people didn't get that required
support. Now we therefore attempted to bring in a comprehensive
reform package which meets the broad principles that we set.
We believe that we have done that.
WILLESEE: inaudible
PM: Well, I have already answered that question. I said at the end
of last year there were nine principles. The ninth principle was
that the package proposed had to have broad community support. The
option C preferred package clearly did not have that. That is not
being forced into a compromise. It was reacting to our own stated
principle. WILLESEE: PM: No. On the contrarythere was no other way I would think
in which you have got such an express and clear, unequivocal
expression of the broad community position. We have got that
and we have responded to it.
WILLESEE: You have already had a mandate to govern?
PM: Well that is true. And the mandate to govern that we asked
the people for on tax was according to nine principles. We
operated precisely according to that mandate.
WILLES EE: inaudible
In the future no Australian will have to pay more than half his
or her income in taxation. That is still a lot isn't it.
PM: Well, let me say this. It is also a lot that is demanded of
government in respect of government expenditures. They demand
properly, high and increasing levels of aefence expenditure.
They demand and in appropriate terms increasing levels of
expenditure on education. A whole range of goods and services
that can only be provided by government. What we have done is
to impose upon ourselves a constriction, a restraint that has
never been imposed before. In other words, bringing down taxes
in this historic way. WE have said to the people now we are
not going to allow the deficit to blow out by now undertaking
expenditures of government in a wild and extravagent way. The
important point is that all the tax revenue that we are getting
from these measures is going not to the government but going back
to the taxpayers. Let me just add. We could get taxes down
further if we cut out, I mean if I decided that it was silly
to have the level of defence expenditure that we have now,
we could reduce taxes, have less defence. We could have less
roads. We could have less education. We could have all those
things. What we have done more that,-any other government is to
cut out unnecessary government expenditures. We have got the
PM cont: lowest level of growth now for six years. We are cutting
back the deficit by more than half of what we inherited.
WILLESEE: I understand why you have instituted a capital gains
tax. But how do you reconcile that politically with your election
promise when you first sought the Prime Ministership?
PM: That was in 1983 and in that first government it was not
done. We totally adhered to that promise. We went to the people
at the next election at the end of 1984 saying that we would look
at the whole tax system comprehensively. There was no attempt to
say to the people of Australia in that last election that in looking
at the whole tax system we wouldn't be looking at the possibility
of capital gains. After all there has been an election since
March of 1983.
WILLESEE: I appreciate that
I would like to recall a clip from your policy
PM: Well you can if you want to take up time that way, but it
is a waste of time because that was in 1983 in regard to the life
of that next parliament. That promise was totally kept. At the
next election I put it on the table that capital gains tax would
be on the table in the total tax review. So you show it if you
wish, but it is irrelevant.
WILLESSE: PM: Sure. let me make it beyond even all their powers of
misrepresentation and distortion there will be no
new capital gains tax."
WILLESEE: Prime Minister, why I wanted to show stated
was so emphatic, you were happy about it.
PM: I was absolutely emphatic about it. It was the appropriate
statement to be made in the 1983 election. There had been so much
misrepresentation by our opponents about this issue. And to have
a certainty in the minds of the Australian people about the things
that we were going to do in our first government to turn this
economy around to rescue it from the worst recession in 50 years.
That certainty had to be introduced. We governed completely
according to that mandate and turned this economy around completely.
We have moved it from the worst recession in 50 years to the best
growing economy in the western world. Then I went to the people,
having done that, at the end of 1984, and I said now I am coming to
you again. We have done so many things, what we have got to tackle
now is tax reform. And I said to the people, and they gave me
another mandate, I said in tackling tax reform we will be looking
at the whole range of issues including capital gains tax. Now they
knew that and I got the mandate on that basis.
WILLESEE: in 1983 when you said that so emphatically, you were
talking about three years of government?
PM: I was talking about that term of government. In fact, I went
to the people in 1984. Now, Michael let's not muck around about
this. Are you saying that because I said that in 1983 and then
I went to the people again in the next election talking about my
PM cant: next term of government and said unequivocally that all the
tax issues, including capital gains tax, will be on the table. That
going to the people then for that new mandate I am now bound by
something I said before. Are you saying that?
WILLESEE: I am asking you how you changed your mind from such
an emphatic statement
PM: I will say it for~ fourth time Michael. We seem always to
get into this problem with you. I will say it for the fourth
time. I went to the people again in 184 after having discharged
my mandate brilliantly successfully in terms of turning the
economy around with my Government, I said now we have done those
things, we have done all those things. We have made a number
of decisions. Now I am coming to you and saying I want another
mandate. And in that mandate I want a mandate to look at the
totality of tax reform. Now I have told you that four times.
I will say it a fifth time if you like.
WILLESEE: inaudible
PM: Good.
WILLESEE: no longer such things as a tax free lunch. What
about parliamentarians allowances?
PM: Parliamentarians will be subject to the same rules as the
private sector.
WILLESEE: inaudible.
PM: What we mean is that in regard to their cash allowances they
will be taxed in the hands of the recipients, of the members of
Parliament.
WILLESEE: inaudible
PM: Well it means very substantially that the very high levels
of allowances that have been paid and not been subject to tax
will now be subject to tax. At the same time, the same rate and
the same conditions as everyone else. And it is appropriate that
that should happen. And you would have followed the press, you have
seen that there has been some concern about it to the credit of
the members of Parliament. And let me say I don't say it as
Government members, I would believe that Opposition members would
take the same view. If you are going to have tax reform it is
appropriate that it apply across the board. And I think all
members of Parliament, to their credit, will take that view.
WILLESEE: Members of Parliament of course get tens of thousands
of dollars a year in what has been tax-free allowances, do they
now have to justify that?
PM: Yes, they will require substantiation. There will no longer
be a situation, Michael, where it is just there and it is not taxed.
To the extent that they have expenses associated with the discharge
of their duties and they wish to claim on those then they will, as
in the private sector have to substantiate. The same rule for them
as for the private sector.
WILLESEE: inaudible
PM: Well, if you come up here and ou want to take out an MP
and you from your meagre resources want to pay for the lunch,
then they will be able to have it with you. If they want to
reciprocate for reasons which they regard as appropriate,
entertainment allowances will not be claimable, but if there
are other expenses of office which they believe are attributable
to the discharge of their office other than entertainment.
Entertainment will not be claimable by anyone. Then they will
have to do that the same as anyone else.
WILLESEE: inaudible
PM: Well, if equity applies, Mike Willesee should because he is
infinitely richer than the Prime Minister.
WILLESEE: inaudible
PM: Would you like a bet?
WILLESEE: Thank you for your time.
PM: Thank you very much Michael.
ENDS.