4Ib) AUSTRLAg
PRIME MINISTER
EXTRACTS OF PRESS CONFERENCE BY THE PRIME MINISTER
ALBANY, 18 OCTOBER 1984
.3OUURNALIST Mr Hawke will you say now no capital gains tax after
the election. I will say what I have said consistently7 that we will have
a total review of the tax system. The same way as the Liberals have
said there should be a total review. And within that review We
cannot pre-empt discussion about a capital gains tax. But there
is no, there is no plan, to introduce a capital gains tax or any
other form of tax. What there is an intention to do, as distinct
from the Liberals who surreptitiously say that a capital gains tax
is an inevitable part of tax reform, we are saying nothing is
inevitable, there will be a total review. We'll talk to the
community, the business community, the trade unions, the Taxpayers'*
Association and welfare organisations. And it would be improper
for me to say now thaL we would not allow any issue to be canvassed
in that discussion. But the distinction between us and the Liberals
is that you know that you can trust us as to the way we'll go about
it. They have shown that they'll say one thing in an election and
after that election break that position absolutely.
JOURNALIST: Prime Minister, do you agree with Senator Button's
perspective that there will be budgetary problems next year, arnd
more specifically that those problems will result in intolerable
pressure for new taxes or stronger existing ones.
No, there will be no intolerable pressure for new taxes.
I'm glad you asked the question in regard to Senator Button's
comments in this area of the Budget. What I and the Treasurer have
said consistently from the time that we came into office is that
we would not be able in one Budget or in two Budgets to rectify the
Oconomic chaos that we inherited to get Australia on the path
of stable, sustained long-term recovery of a non-inflationary kind.
And we've said we're going t~ o have to continue in Budget after
Budget to implement Policies which will ensure the achievement of
that objective. Now I want to point out what we've done in that
regard. Because if youtre going to in an election period compare
and contrast the two Parties that are asking for the support of
Government in this area, You've got to look at the facts of what
has been done and then say on that basis what is likely for the
future. Now what was the position under the Liberal National
Party when they were in, in their last two years in regard to their
Budget? In 1981/ 82 their estimate was for a neutral budget
outcome a nil deficit. It in fact blew out to half a billion
dollars. In the last year, 82-83, they budgetted for a deficit of
$ 1.7 billion. It in fact blew out to $ 4.5 billion. Tn other words
in their last two years a blow-out of their Budget deficit of $ 3.* 3
billion that was their last two years a blow-out of the defi& t.
In the last year 16increase in the deficit. Now what have we
dono. We in fact in our first year cut back'from have cut back from
the $ 9.6 billion that was in the offing then and budgetted for a
deficit of not the $ 9.6 billion, but $ 8.4 billion. Now we not only
2.
P. M. cont...: ahieved that but we came in under, came in under > ur
deficit. It was $ 7.9 billion. So we were half a billion dollar
Sunder. In this year we have budgetted for $ 6.7 billion and we will
achieve that. So in our two years we will have reduced the deficit
by $ 2.9 billion against their blow-out. Now what I've said for the
future and what the Treasurer has said for the future is that in
this next year we will do these things and it's consistent with
our record. Firstly, there will be a further lowering of the
deficit. Secondly, that will be achieved with no overall increase
in the level of taxes. And thirdly, and essentially which follows
as a matter of economic logic, that will be done and can only be
done on the basis that the rate of growth of expenditures will be
less than the rate of economic growth. Now we don't go into this
election with hypocrisy and conjured up flat-earth economics.
Mr Peacock is talking about vast increases in expenditures, tax cuts
and a lower deficit. You can't do that. What we do is to say we
have in fact reduced the deficit. We have in fact reduced income
taxes. We will continue to do that. Now thos'e are the realities.
And I say all of that in the context that we will continue
obviously as a Government to have to address ourselves carefully
as we have done to these Budgetary problems. We inherited chaos
and the greatest depression since the great depression. We've had
to turn that round, we've done it, but we've done it in a way which
has involved reductions in the deficit, no increases in the overall
level of taxation. We'll continue to doit. And'our record in this
area will stand up in any debate, any analysis, against the
Opposition. JOURNALIST: Prime Minister, given that you say you're not goling
to pre-empt the decision on taxation reform can you see political
danger of allowing an issue like capital gains to exist. Because
people in the community don't really know how it effects them
Well I'm grateful for that question. The danger in this area
is not from us, but from the Opposition. Now I am not saying that
there will be a capital gains tax, but what we can say in respect
of capital gains, that we have made certain principles quite clear
as to a capital gains tax if there were to be one. As far as the
Labor Party is concerned, if there were to be a capital gains tax
we've made it crystal clear that the family home would never be part
of a capital gains tax. Secondly, that in a situation of a capital
gains tax there would be offsets of capital losses against capital
gains. It would apply only to realised capital gains.. So in respect
of that area it's quite clear for the great majority of people if
there were to be a capital gains, we've spelt out the principles
that would have to apply. But what about the Liberals. They have
said quite clearly that a capital gains tax will be an inevitable
part of any review they have to take. That's what they've said.
That's what their analaysts have said. Don't take any account of
what Mr Peacock or Mr Howard may say on Monday bedause that will
be just as much a fraud in 1984 as what they said in 1977. They
have said a capital gains tax is inevitable. That's what their
backroom boys and their advisers say, and that's what Mr Howard
believes. But what do we know about their capital gains tax.
Would the family home be free and exempt under a Liberal's capital
gains tax. We don't know, because they won't come clean about any
part of their thinking. So the family home may get caught under
a Liberal capital gains tax. They may not allow an offset of capital
losses against capital gains. That's the difference between Labor
and the Liberals. They will have one, but you don't know anything
about it. What it will catch. Who it will catch. What the net
3.
P. M. cont...: will be. under us we say in the review, capital gains
will be one of the things thiat's looked at. And at least you know
in respect of Labor the principles that would be involved if it were
to be implemented.
JOURNALIST: ( H-ywood, inaudible view on capital gains tax).
No I'm not exercising a personal view. And I'll tell You
why I'm not, is that if in fact you're going to allow the
community and its various organisations to have a free and open
analysis and debate and discussion, it's better in those
circumstances, I think, that you don't try and pre-empt. And the
other thing, and I say this quite frankly, I want myself to have
my mind informed by the public debate because you may have a view.
for instance, and it's a theoretically correct view, that without
a capital gains tax you may not have all the instruments necossariy
to completely wipe out the tax avoidance industry. I mean that,
as you know Greg is one of the arguments that's put forward in
favour of a capital gains tax. That wihtout a capital gains tax
you can't have a totally effective armoury against the tax
avoidance industry. But it may be that in the debate and the
analysis that there are other ways in which you can be sure that
that would arise. Because'what you've got to remember is that a
capital gains tax would not be d significant source of revenue.
It is regarded by those who advocate i~ t as desirable basically as
an anti-tax avoidance instrument rather than as a significant source
of revenue.
JOURNALIST: Mr Hawke you put a lot of emphasis in your taxation
statements... do you think it's poSsible to hdve a fair and.
eq~ uitable tax system without some system of death duties?
I think that's possible,* yes. And I'm glad you raised the
question of fairness and equity. In the taxation roview that we
are going openly to conduct and invite evoryone to participate in,
I want the community to know that the twin criteria that will inform
the minds of my Government will be fairness or equity, if you liko,
-and efficiency. Those are the criteria. We say to the people of
Australia that after all these years no-one says that the existing
tan system is fair or that it's the most efficient system. So we
want a fair system. And we have shown by our achievements and
commitments that we can be trusted in this area. The Liberals cannot,