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* 1~ F 6~ 4 June I
P. Ut 2 ood morn ing Johu.
lAWS: Ioware you?
P t~ ' Vory wiell thank you.
JAW$: First things first the Swans5 didn't do too well.
iJ. N~ o. it was a terrible drubbing. it was one of those
occaesions John where you had one video, Carlton, playing I think
right ' At its very peak and the other side, the Swans, playing
far'from theirs. And unfortunately it didn't produce a good
camej. But congratulations to them. Thoy played very well.
LAWS.' They did. It must be a bit of a change for you -backing a
loser, eh?
" Purely temporary John.
LpWg: ' Andt to make it worse Carlton is Malcolm Fraser's team I think,
isn't it?
Well! didn't have a bet w: ith Malcolm but Don Chipp
i. s a Vbry avid and much longer-torm supporter of Carlton than
even, 1alcolui and he to-ok off m~ e.
LAWSt : On the assets test situation, when that was originally introduced
I got into terrible trouble from almost everybody except you, I think,
becaulse I thought the original plan was a pretty good one. You told
Me y~ u-thought it was a pretty good one. So what changed your mind on
it? P. M1 nll we camne to look at in mnore detail. Vio listened
to r~ pcentations from a number df people in the comumunity
and it's quite clear John that while tho principle of the
first plan wias aboolutely correct, that it had too many anomalies
in I~ t and uncertainties. it renlly diotinguiehed markedly btetween
People who had chosen different lifostyles. You could got an a
.4 4' .4.
.984 IN! TERVIEW WITH JOH{ N LA~ WS 9.00am
P1~ ONOLY
P. M, conte exemption if you had a holiday home to a certain
extent, but othar people who had invested their savings in
other ways weren't exempted. And the more I looked at it
and thought about it the more I realined we needed to do some
more work on it. And that's why, John, we set up this committee
under Professor Gruan and we had people froma the RSL, the
Civilian Widow-s, the Avatralian Pensionore Federation and
other bodies. And in the result that was very uaeful because
they. pointed out,, r think convincingly, the ineqyuities of that
scheme. And what we've come up with now, I think is the fairest
that we poenibly can do becauoe it leaves the homue out. People
are not going to -be assets-tenlted on their home and I think that
* not only for those with vary high valued homes, John, but for
I., lesser-vlued it's a psychological feeling for them and I didn't.
* want to upoot that attachement that they had to it.
LAS Yes. -Now it's obvious that a lot of people are still confused;,
even' by the calls we've had here already. Can you b~ riefly and s* imiply
outline the assets test?
P. m's Vale~ VIl do it as briefly an~ d aimply as I oan. with7:
one prelimiinary comment. One of the problems that we've had,
not jufat this Government but the whola welfare systom,, iB that
tharo is an~ income test on receipt of the pension and the real
inequity that vie had in Australia was that people who were
very much better off than others because they had a large asset
level were so able to arrange those that thay got little income.
* And so while they were . signif icantly better of f than others, people
wuhowere receiving an Sinoome from their lower level of assets8
were being deprived of the pen~ ion, or having it reduced. So
what we had to do was to ha e a test on assete as well. But nlow
it's not on both, it's one or the other. And that means that
people % vith very high levels of asuets will now either loce the
penoion or get a reduced amount. Now that means in specific
tor~ s tis, so that we can got some peasuro of who's affected.
No-one'a home will be counted, John. It doesn't itattar at all.
Tht'e. not counted as an asset which will be used against them
getti. ng the pension. ' The hornets out,
LRIO#. OK, so even if it's a trillion dollar house it doesn't matter?
Yes now then wthat we say is thise: tak~ e the married couple.
Their home, they can have their home and additional assets of
* worth $ 100,000 and they otill receive the full ponsion. They would
have t~ o have assets in & ddition to their house worth a $ 175,000
beforo they would looe the full panalon.
LAWl$ OK fo 10000 to $ 175,000 the pension is affected but it
doesn't vanish until you reach the maximum of $ 175,000?
P. M.:.. 4l75100O.. And at a figure of $ 137,000 for instance they
* would still be getting a half pension. Now that's for the married
Couple. For the single pensioner, JohtD, still home completely
excclm. de4 no worry about that. And they can have $ 70,000 6f
assets in addition to the home and still receive the full1 pension
* and similarly as with the married couple it gradually phases
out tp Up to $ ll5,00C, they can still have $ 115,000 in addition
to their home of other assets; before they lost the pension.
P. M. eont. t So that's the essential atructure of it. It's
vqry fair I think in the sense that what it means it's the
arithmotic of equity, if you like. It means that for the
. overwhelming majority of pensionerO whom we want to help and to
whom we will give additional assitance to in the next Budget,
AMd particularly to pensioner rentera, it means that we'll have
additional rewources availa~ ble to us in the future from not
paying the ponsion to people with ' very very high levels of
4ooets. And that additional aitount of money will mean a
greater capacity to help the groat majority of pensioners.
LAS: OK. Now in order -to fulfil this commitment of yours to
increase welfare benefits in the next Budget to these pensioners
to -whom we ref er, it's now mooted, and strongly., that you're gin
to ' introduce death duties.
N4o. John, what we're witnessing Is an opposition
who has boen almost totally 412credited in this country,
1~ picking up all sorta of strava, clutching at thorn. They
are best described by the press releane of Professor Cruen
after the decision of the Government where he said, and rightly
said, that we had made some mistakes in the handling of this4.
in tho introduction of itl but then he went on to attack
the Oppo'sition and naid they deserved to be regarded as
supremnely opportunistic cynicas. Now they are trying to divert
attention from the very necessary reform that we introduced
by axgain inducing & ll sorts of fears. I un~ derstand that
XFr Peacock's reported over the รต .* eekOhd as talking about the
case of a penitioner who 4ooo blind and wants to then dispose
of a car to the son or-daughter,, but would be prevented under
tis test. Now I don't know how despicably low and into the
gutter the Leader of the oppos~ ition can get, but that's just
about the bottom of tho'barrel, Becaune there ic a specific
pkovision in the arrangements wre bringing in for a hardship
clause where there are particular dircumstances of hardship
that arice. Now that would clearly b-a covered by such a
clause, And I would like to say to you John, and X think you
knowr thit, that this opportunism and cynicism of Mr Peacock
and oaome of tho ILibnrals ought to be set against the fact
that there'a a large section of the Liberal Party who are
applauding a" d support what thIs Govornment has done, And
you-referred to the football game A while ago it's very
interesting that at lunch on Sunday I was sitting there with
John Elliott who's one of the leading Liborals, talked about
as aposuible successor to Miz Peacock, he happens to be
Presidont of the Carlton Football Club, and he said
c~ ngratulationa on what you've done. Ho vaid I'll w: ita to
you and tell you so. Woll in other words, you've got people
therb reflecting the same sort of thing as Senator Chaney
who was their M~ inister for Social 9ecurity when they were
in Government, You remember?
7' r ,, S
And he said,...
z& WS j Yes I do and was pretty good at it too, wasn't he?
he was good arid he said this in 1981, this is an
exact quote from him * I think wo cannot escape the fact
. that there are some genuinely needy pensioners in this country
who do not receive enough help while come other people
by the advantagsos arrangement. of their assets are able
to draw on this system to a greater extent than their real
degree of need would aeon to justify." Now ther6' s Chaney
when ho was their Minibiter for Social Security who knew
the system. John Howard has exaqtly the same position and
gxproased it as recently as last'November when he was
criticising our first toot but just said that wasn't a good
* way of doing it, but agreed wiith the principle. Now I think
it a a tragedy when you've got this situation John that they
know that what wde're doing lo right, and for this cheap
opportunism try and frighton people.
OK, so no death duties?
P. Mts No we've got no plans for death duties John.
: Los~: And you don't see any plans for death duties?
P. Mat No, r don't see any plans. that we've vaid
and this is somothin~ f that we've urged by the business
communit2y of Auatralia, tho Businass Council of Australia
have urged thivo the ACTU have urged this, every academic
concerned with the system has urged us that we sit down
with tho community and analyse the whole tax system. Now
valve boen told we've got to do that to try and create and
fairer and more equitable taxi system.
LJS: OK, and that may well include death duties.
Well, I'm not saying, I mean how can 1, 1 don't know.
What I'm doing is aaying that we ~ iill ask the relevant
organisations in the community to talk with us about this,
put their proposals. For instance, there is a very strong
push coming from within the Liberal Party and other sections
that we have a widely based indirect tax, either a valued added
tax# or an iquivalent.
SYes well I tbink that's agood idea that value added tax.
PI. 1.: W1ell cee, those sorts of things are talked about
by some people. Other people talk about death duties.
Other people talk about other forms of tax. Now I can't
I./
cont. t. honestly say that we're not going to look at the
whole thing. We are, we'll l~ ook at the whole range of
taxation. We'll ask the business community, we'll ask the
trade unions, we'll ask relevant informed academics, we'l.
aeX community organisations to talk with us about the whole
structure of tax in this country, so that ove time on the basis
of an informed community and the largest level-of consensus that
Ne can get, that we can get a tax system which does what any
tax system basically has egot to do. What the tax systemn it;
about i. s to-have the community transfe~ rring resources from
individuals and companies to the government, so that. the Government,
cAn do for the cormmunity the things that the community wants
dcz'es like the building of hospitalo, roads, schools, the looking
after the dofence of the country. That's what the tax system's
about and the secret of a proper taxation system is that the
community can, as far as possible, be satisfied that they are
giving up their money in the way that they see as the most
equitable form~ to that they can have delivered to them the
things that they want delivered. Th~ it's what it's all about
and what my Government's about is to try and have that process
of consultation so that the community can say to government
well, look, we think generally speaking that these are the
betcombination of ways for ui to give the Govornment the
money, the resources* that will enable us the community to
have the Government deliver the services that we want. Now
that process requires a whole lot of discussion andl analysis
and it's not helped by tho injoction of cyncial opportunistic
fears by an increasingly discredited Oppooition.
LA" Ss Yes well I cZrtainly agree with that. I . think that we're
.: all getting a little ti red of tha't. But can I ask you as a
personal question, if you had your choide between dual. h duties
and valudl added tax, what would you personally pick?
P. M. t I don't nlee it as a choice John.
LAWS: If you had to make a decision between them?
But John that really is a wrong way of putting it.
it's not a choice between death duties and a value added tax,
If you wanted to say which sort of tax would moot immediately
help you stop tax avoidance you would say a value'added tax
because people can't avoid their income tax that way, whatever
they purchase is going to got caught by that, But according
to that criteria a value added tax in a more sensible one.
tut that you'know * thatt won't be the only criterionthat people
Vill use in making judgements about' taxes.
LMS SYes. It's worked wel. l in other parts of the world, hasn't
Yes, it'' l-been pretty widely employed and th~ y have been
capable of being adjusted through time to m~ eet teething problems. e. 9 9/ 6
* 1.
H, LAWS OK.. NOiv just before we get away from Andrew Peacock finally
because I'm going to be asked this question so I need to ask you,
he is now also claiming that the elderly will face reduced cxempLions
and tougher assets tests once you've got the next election out of T-he
WellJ i'im glad that he concedes that we're going to wink
the next election. Everyone else seems to and it's significant
that he's conceding it too. But what you ought to understand
that in conceding the next elections, of course, he won't be
the Loader of the Opposition after that, It will either be
Mr Howard who supports the assets test principle or perhaps
Mr Elliott that's talked about as being brought in to replace
and he is congratulating me on it. So in the pogt-election
situation you're going to have at least honest Liberal 1eade! ship
who adheres to the principles that they've been expressing over
a loihg period time. N~ o, as far as change after the next election
i6 concerned, why if we were goitig to do that would we have Introduc
the indexation concept. We h-ave said that when we bring in the
legislation these threshholds will be indexed, no that as values
increase through time they will be adjusted by the index so that
it' $ 100,000 now for married couplan, $ 70,000 for the uingle.
No in tvelve months time if the Index haas gone up by 5 or 6% then
that $ 100# 000 will go up to $ 105$ 000. So we've put in~ to the
Anr~ oincement the exact opposit6. og what Mr Peacock is saying.
LM$ ISt Yes. So you have written in an increase rather than a decreaz
P. M. t Written in a protective guarantee that the value of assets
will be adjusted in mondy torms to reflect what the valuation of
the market is showing.
LAI4Ss Who is going to decide on the value of the pensioner'., assets
P. M. 1 Well, that's boon arranged in a way which will be as
least intrusive as poesible. If you take the question of the
household effects and personal effects, we've said well look:
we'll accept that a figure of $ 10,000 will cover the household
and peroonal effects. We're not going to send people in and
value the'Gheeta and the furniture and all that sort of r-tulf,
because we want the least intrusion, t And people will just have
thAt there, and if they've got assets over and above that,, then
it will be self-declaration. The formt will be made available
to them and they can declare. And within a very short time it
will be clear to the overwhelming majority of pensioners tha~ t
they are not caught up at all. And then that way, John, after
we've had to appoint quite few peoplL in the first year to get
the thing going, it will become a very very unintrusive and
alm~ ost self-regulating thing in the oubsequent years. a. / 71
LAWS I OK. So in other words you are taking as little as
possible with as little trouble to the people as possible.
Yes because that's what this Governmnent's about. We, want
to help and co-operate with peoplo. Wec were told by the
National Economic Sunimit in April of last ycar John by business,
by the welfare organisations, by the representatives of pensioners
and other groups, that there had to be in this great country of
ours, ther~ e had to be some sort of sacrifice by those best able
to m~ ake it, if we were going to get the economy moving and ' Look
after those inost in need. Now what this is about is at the
end now of twelve months when we've really got the economiy
moving, as you know and you've rocognised, this is part of
trying to make sure that we do put Government. in the position
of being ablo to help that section of the cotnunity who need
it most. So that means that very very well off people like
John Law*, and Bob Hawke, and people at this sort of level.
We shoaldbe prepared to make a little bit of a sacrifice, and
I know we are, I know you are,
LMI8: Sure I agree with that.
P014,; Yes$ sure,
X.. IIS; I agree with that. I think tthat that's eminently
reasonable and I think that the people who don't agr-ee with it
really don't understand what looking after a country is all about.,
and that is what it's all about -looking after the country'.
That's exactly 4hat it't itbout John. Tt'B not trying
to say to someone whole been able to accumulate vast assets
that they are guilty peopl. e, or you're critical of them.
On the contrary we recognise that that sort of motive for
building up and growing, that's helpful to the economy.
But we then say, well look in that circumstance it's real: ly
a bit m~ uch to excpect that wie need to pay you a pension or a~
I part pension as well, if you've got million worth of
assetu, It doesn't make,,, ense.
LAS: t I'm not sure that any of us are goirg to do our children
1a great favour by leaving them vast sums of money, frankly.
Well I think. 4thatla right, John. Just to give you
sort of idea of the level of impact its adjudged that this
this schome will affect about 45,000 people, and that's less
than two pe cent of pensioners. So we are really, you see,
going at the very very top and. And M! y owAi view is that the
overwhe~ lming majority of that 45,000 would be like John
Bay# well I think that's fair thing.
. AWS: Yes. Look I would hope so, otherwise there is very little
point in considering yourself a good citizen,
P. M. I think that's right John.
LAWS: Just quickly, away from that for a moment, we've tot a
prbblem in NSW, we've got a few, but one in particular the mass
resignation 6f surgeons in NSW hospitals. Do you see that as
being the start of an orchestrated campaign against Medicare?
I don't think so John because as I understand it, and
I haven't been brought fully into this, but as I understand it
it's said to be particularly as a result of some special
provisions in New South Wales, under the New South Wales
government legislation that they brought in. So I don't
see that it's being suggestod as Auctralia-wide John.
: LAWS-. If it spreads will you buy into it then?
Oh, it became more than the New South Wales, that
we'd obviously get involved. But what I intend to do is to
have a talk with Dr Blewett today or tomorrow just to be
briefed on it, John,. Zto see if it does have any broader
implications. Because no I understand it it doesn't at
this ot. aGe.
LAWSt OK. Well in summary it would appear that the assets test
in its present form is palatable to most people except Andrew
Peacock. It would also appear that the general public are prepared
to accept it for what it is for the benefit of the country nd
-for the benefit of the future of the country. Let's hope it stays
that way. Let's hope it works. Let's hope it doesn't get cha-lnged
7 after the next election.
P-Ii It won't John.
A. SL Good on you.
Thank you, thank youbye roye.