AUSTRALIA L
PRIME MINISTER
E. O. E. -PROOF ONLY
TRANSCRIPT OF PRESS CONFERENCE, PARLIAMENT HOUSE, ON TAXATION
POLICY STATEMENT 31 OCTOBER 1984
PM: Ladies and gentlemen, the statement that you have before you
provides, I believe, the starkest possible contrast between the
Opposition and the Government in regard to tax policy. This
statement that you have outlines a coherent reasoned plan and
importantly an achievable program for genuine tax reform. Its a
program, as you can see, for a complete overhaul of the taxation
system to achieve fairness and simplicity and very importantly the
maximum possible elimination of tax avoidance. For too long now
the average Australian taxpayer has been forced to pay the bill
for the cheats and the avoiders who have exploited the existing
system to avoid their responsibilities an existing system, which
as the statement points out in the 34 years before we came to
office in March had been built up under 31 years of those 34
years, of conservative rule. Now we believe strongly and make it
clear in our statement that reform can only be achieved by an
honest and reasoned identification of the problems involved and
then by a resolve to find the appropriate and the acceptable
solutions to those problems. Now quite clearly, that approach has
no chance of success at all. If government pretends that it
knows all the answers before it starts the process and if it lacks
the resolve to take that process through. And I can assure you
that we viill not be pretending, do not pretend, that we know all
the answers, but I can at the same time promise that we will not
lack the necessary resolve to carry through by way of that process
of community consultation the reform that is required. We are
determined that that reform of the type that the statement
outlines will be achieved for Australia and we are totally
confident that our refusal to impose impossible inhibitions in the
name of current political expediency will win the support of the
overwhelming majority of the Australian electorate. Now, I am
certain, and I believe that this is a point of view which is
shared, I am certain that the Australian people understand that
unless and until the Australian tax system is completely
overhauled there is simply no chance of achieving a reduction of
unfair burdens that currently exist and restoring equity to the
J1 system. Now I am certain equally that'the Australian people are
fed up with the tinkering of the system that our opponents have
for so long dressed up as seemingly attractive electorate packages
W4 t~ r'
and have been pleased to call tax reform. Now therein lies the
total contrast between our policy and the opposition. Once again
in this election they have opted for an attempt at sectional votebuying
gimmickry that quite clearly will not stand up to the
simplest of analysis and has no chance of ever being implemented.
Now, I repeat that for too long the taxation debate in this
country has been addressed by a combination of papering over
existing cracks and by pre-election ( gimmickry. And that is
exactly why the tax system is in the mess it is today. And that
is why the Australian people are prepared to support a government
that is prepared to do the job properly. Put very simply, for
years and years now the Opposition in this country have attempted
to buy votes with pre-election carrots and have then punished the
people with post election sticks. And I can say that neither I
nor my Government will have any part of that sort of politics. I
believe the Australian people have had enough of it. They deserve
better in this important area and we intend to give them the
better approach that they deserve.
JOURNALIST: Prime Minister, the seventh principle put simply is
it saying there that if trade unions are not prepared to wear
indirect taxes then they won't be introduced.
PM: I am saying that what is important in regard to any move t~ o
indirect taxes is that it not be a move which will defeat the
purpose of tax reform by fuelling inflation and it will be
necessary if there is any part of a total package which will be
arrived at with the full consultation of the trade union movement
it will be necessary to get an agreement with and from the tradE!
unions to ensure that that does not add to the inflationary
processes. Now we are certain that that can be achieved.
JOURNALIST: Mr Hawke, you can maintain you pledge not to
increase the overall tax burden for the term of your next
government by increasing the deficit. But do you give a pledge
now that the deficit and GDP will not rise over the term of
the next parliament?
PM: Yes.
JOURNALIST: Prime Minister, does the statement mean that there
will be no tax changes introduced before the budget year after
next the 86 budget?
PM: It certainly wouldn't be introduced i~ n the next budget
because you can see the timetable that we are talking about,
Laurie, is the preparation through the continuation of these
consultative processes the preparation of a draft white paper
and with the summit type conference in the third quarter and
hopefully the emergence of an acceptable package by the end of 135.
So that would rule out changes in the 85 Budget. It may be that
as part of that consultation that there would be agreement that it
would be to the benefit of the Community therefore not however to
wait until the next budget, say in August 86, but there could well
be agreement to introduce the package before the Budget of 86 and
I would think indeed that would be the position. = Z
-JOURNALIST: Mr Hawke, when you give a commitment that there will
be no overall increase in the tax burden.
PM: Yes.
JOURNALIST: that that commitment will include any taxes which
may be transferred to the States or does the commitment only apply
to those taxes which remain under the of the Commonwealth.
PM: I make it quite clear that in the statement that I have made
before and that I repeat again here that that commitment quite
clearly assumes no increased tax powers on the part of the States.
JOURNALIST: Prime Minister, won't smashing tax avoidance requiLre
you to have control of the Senate at the forthcoming election?
PM: I would put it this way, Ken, that clearly if we had had
control of the Senate during the life of this Government, the
Australian people would have been half a b-llion dollars better
off in regard to our legislation. Now, that position again after
the election would be easier to achieve if we had control of the
Senate but I want to make this point. Because tax reform is
clearly an issue, and as I have said from earlier in the campaign,
I want to talk about tax right through the campaign, and will,
that I believe that this Government will be clearly given a
mandate to proceed with the process of tax reform based upon the
smashing of the tax avoidance industry. And in those
circumstances I would expect particularly as we continue the
processes of community consultation and get, as I believe we will,
broad community agreement during 1985 I would think that the
Senate would be thinking twice before seeking to frustrate the
clearly expressed will of the people of Australia.
JOURNALIST: Prime minister, would a capital gains tax contribute
to the smashing of tax avoidance and tax evasion?
PM: It's a question which is not founded, if I may say so, in a
reading of the document.
JOURNALIST: I didn't suggest it was.
PM: No, what I am tryin to say, I would hope that the document
had in fact made that position clear that there is an existing
capital gains tax. People tend to talk about new capital gains
tax. Some of the argument about the existing capital gains tax is
that it is arbitrary and unpredictable. All we are saying is that
we believe that a major concern of the Australian people is the
smashing of the tax avoidance industry and in the community
consultation that is going to take place, I imagine that one of
the things that just about every group in the community is going
to want to address itself to, as has the Business Council of
Australia, the Confederation of AustrAlian Industry, for instance,
is to examine whether to achieve the smashing of the tax avoidance
industry, any changes in the existing capital gains tax system is
necessary to achieve that end. But you see, I can't determine
now, and it is quite inappropriate in an electoral context to put
1 ' A In: Ily-
PM Cont.: for perceived electoral advantage purposes a position
which says you do this or you do that not knowing in the context
of a full debate whether the great objective of the Australian
that is to smash the tax avoidance industry is more likely to be
achieved by some changes in the existing capital tax regime. it
is certainly the view of the business communities represented
through the Business Council and the Confederation of Australian
Industry that some changes there seem to be desirable to achieve
that end.
JOURNALIST: Mr Hawke, when did yoi and your Ministers first
consider the proposal for a tax summit?
PM: I think the answer to that becomes fairly clear from reading
what is in the document it was about page-4 I think of the
document where you will see that we set out the public minutes
of the EPAC meeting of March this-year where while the phrase
summit is not specifically mentioned, it is quite clear there that
the Government has been talking about this issue itself and
through EPAC right through 1984. Indeed the process commenced i~ n
83. Now we use the phraseology there about consultation with the
community, that it is a long term matter, and requires
consideration of the views of the community as a whole. The
phrase summit is not used there, but the concept of summit has
been involved right throughout our thinking, because it goes back,
Michelle, to the point that I make in the statement and that I
made in my introductory comments to this press conference. What: I
think is basically important to understand in the tax debate is
that you are not going to achieve workable and effective and fair
overhaul of the system unless the community as a whole feels that
it has been involved in the process of analysis and discussion and
believes that the outcome meets its objectives. And so the
concept of summit, whether you call it summit or a national
conference on taxation, I'm not hung-up precisely on the word
what I and the Government are totally committed to is a
continuation of the processes which as the document makes clear,
commenced almost as soon as we came to government. We have
undertaken the process of considering tax reform by getting the
views of everyone and have committed ourselves to continuing that
in the post-election period.
JOURNALIST: Mr Hawke, could you say when the decision was made
not to increase taxes or the deficit as a proportion of GDP and
could you say how the decision was made whether by Cabinet or
PM: Made by Cabinet on 3 September.
JOURNALIST: Mr Hawke, do you not see a danger in having a tax
summit that for the purpose of which you talk could be clouded by
a lot of interested pleading. You are bound to have some parties
upset by maybe a majority view. Also,' what form do you see the
summit taking? Will it be similar to the April summit last year?
And where does this leave the EPAC review of the tax system?
PM: Yes, well, the three questions are related. You will see
from the minutes of the March meeting of EPAC that there is a
commitment there to continue within and outside EPAC the
processes of consultation. When we have our next meeting of EPAC
we will seek to get the views of EPAC members as to how they sEe
the process best developing. So I simply cannot give you an
answer now as to the format because we will be guided by EPAC irn
that. I would, however, make this point to you, that when you
look at the composition of EPAC, and let me remind you of its
composition. It has got the large business organisations
represented through the Business Council of' Australia and the
Confederation of Australian Industry. It has got the Council of:
Small Business Organisations and the National Farmers Federation.
So you have got the whole spectrum, if you like, of business,
secondary and rural there large and smal.. You have got all
levels of government ourselves and the State Governments and
local government and you have got the community organisations
represented through ACOSS and the Consumer Organisations. Now, I
would think, and I say this without seeking; in any way to pre-empt
what they would say, but I would think that: they would see some
expansion of those organisations. You know, for instance, one
obvious group would be the Taxpayers Association. So you would
see some widening of the groups there represented and as to
numbers I don't know whether it would be necessary to have the
numbers of the April summit, but I am open-minded on that. The
only thing which is important, and it is critically important, is
that it should be so structured that we as a government and the
community itself can be convinced that there is the opportunity
for a very representative putting of views. Could I just briefly
go to the first part of your question. You prefaced it by saying,
won't there be special pleading and so on. Well, of course. I
mean that is the democratic process. That is what has happened in
the past in a sense. I think the problem has been with the
conservative governments in that 31 years of the 34 until the
beginning of 83d, that special pleading went on behind closed
doors. There wasn't any intermingling of the views of the
community. It wasn't done in an open, constructive way. Now, if
you have this more open process, then I think the great benefits
are not only the obvious one I have referred to that you get a
more representative view, but I think there is imposed an
astringency, if you like, upon the special pleaders because if
they have to put their case before others, then I think that is an
astringent effect which is all to the good.
JOURNALIST: Prime Minister, if you consider that tax
avoidance is going to be such an important issue in the
coming election why didn't you use the rejected bottom of
the harbour bill as a trigger for adouble dissolution and
then possible use it, then possibly push it through
Parliament at a joint sitting of Parliament next year?
PM: Cause I wasn't about triggering a double dissolution
of the Parliament. There was other legislation there that
would have enabled that. You see, that is the sort of
dramatic, confrontationist sort of approach which characterises
the conservative side of politics but which is distinctly
different from the way we approach things. We have tried
to argue our case sanely and constructively in the Senate,
now for a combination of reasons there it wasn't acceptable.
But I think the process that we are putting to the Australian
people now will produce the result that the people want. That
is, that these things will be oat. openly, there will be a
clear understanding by the Australian People of what tax
avoidance has cost them and I think it is fairly well understood
now but as this process goes on, it will. be very clear to
the Australian people what tax avoidance has meant to them
as I say in the statement it has imposed a massive, undisclosed
supertax upon the people of Australia. That has been the effect
of the tax avoidance industry and I think it is going to be
sorted out in the way that I am talk about now.
JOURNALIST: Prime Minister on Justice Murphy if I may
PM: Have you got a time constraint, I mean I would rather
JOURNALIST: Prime Minister you talk in terms of smashing
the tax avoidance industry. Can you elaborate on what you
mean by that and what sort of things you are thinking of
given the fact that the new taxation commissioner has
consistently said that tax avoidance and tax evasion are
dead? PM: Well, you say it has been said consistently that they
are dead. It is quite clearly not dead when legislation
which is necessary to produce results in certain areas
hasn.' t been put into place. The important consideration
as far as, not just the Government is concerned, but as
the community is concerned, is to have an absolute assurance
of two things really that all the armoury, if you like, is gjoing
to be there to prevent any possibility of the tax avoidance
industry existing further or reappearing in other ways. I
mean what you have got to remember is that the history of th.-e
taxation system and particularly as Mr Commissioner Costigan
said in the period 76-81, the tax avoidance industry showed
an amazing versatility ' and imaginativeness in the ways in
which it would seek to enable a privileged minority who had
access-as we say to the slick accountants and the smart lawyers
to dream up methods. Now what is important now is to get the
will of the Australian people clearly expressed and with the
Government therefore with a mandate to say all the armoury
will be there to prevent an remnants or it emerging in any
other way. Peter perhaps we could go to yours now.
JOURNALIST: Would you like to see the Senate reconvened
as soon as possible to clear this up?
% L I? rI
PM: No, and I have only had the opportunity of seeing a
couple, of perusing very briefly press releases I think
from Senator Chaney and Mr Sinclair, and as I see it, there
is no suggestion from the Opposition as from those press
releases that that should be the case. I think Mr Sinclair,
as I understand, has specifically reported as saying it would
not be appropriate to interrupt the electoral process, the
eleciton process to recall the Senate. I believe that it
isn't appropriate and that this will be a matter for the
Senate on the resumption of the Parliament. It is a report
of a committee of the Senate. It is for the Senate to
consider it, and the Parliament to consider at the normal time.
I I n5rue Pfr--: I-
JOURNALIST: What sort of impact do you think it is going
to have on the election process?
PM: I think none. Quite clearly it is not a matter which
affects this government. I have simply said in regard to
all these areas where there is a suggesition of either crime
and I make it quite clear I am not suggesting this in regard
to the judge, but I have made it quite clear in the whole area
where there is suggestion of crime or miLsbehaviour or anything
that the proper processes should be followed. I have indicated
what I believe the proper processes are in this matter.
JOURNALIST: Mr Hawke, do you believe that Justice Murphy
should stand aside in the interim?
PM: I don't think it's a matter for me to express an
opinion on that. I think that this a matter, I assume
that will be resolved within the High Court, presumably
between Mr Justice Murphy and the Chief Justice Sir Harry
Gibbs. And I think it would be improper for me to be saying
something in that area because it would imply on my part that
I didn't have confidence in the High Court itself to conduct
its own affairs.
JOURNALIST: Sir, you said that this is a matter for the
Senate when Parliament resumes. Do you think the Director
of Public Prosecutions also has a role?
PM: Well, he has access, Laurie, to all the material. The
previous material and now all the material if I may put it,
of the second Senate enquiry. Because everything has been
conducted in public. He has access to it. I understand
he is looking at it.
JOURNALIST: Mr Hawke, Senator Evans said that he was looking
over the material and going to put a view to the Government
over * the next few days. What is the process of that, will
that be a view to you or will it be a meeting of senior
ministers? PM: Michelle, He would report to me. And I would believe
that his report to me, what he'd analysed what was there, I
think in terms of appropriate courses of action, I would
assume it would be along the lines of what I have suggested
now. As I understand to be the appropriate course, it would
only be if there was some, for some legal reason, he was putting
to me that there was some other course of action that was
required, I would then call a meeting of the leaders to
consider that.
JOURNALIST: So it's just an appraisal, it's not a recommendation
for action.
PM: Only an appraisal. I must say this, because I don't
pretend to have read the whole report, I haven't. Nor do
I say do I have at my fingertips a full understanding of
every possible legal implication. I am simply saying that
if the Attorney-General were to put something to me which
was other than what I would understand would be the
PM cont: appropriate course that I have alluded to, then in
those circumstances I would discuss it with the leaders. Bu~ t
I don't imagine that will arise.
JOURNALIST: Does the fact that the committee was unable to
reach a unanimous decision undermine the value of the committee's
report in any way?
PM: Well, I don't think it is appropriate for me to enter
this issue by seeking to impose a personal view or intetpretation
and I don't intend to.
JOURNALIST: Mr Hawke, do you that the Government has handlE~ d
the issue from the beginning the correct way rather than setting
up a judicial enquiry?
PM: Yes, I believe the appropriate courses have been followed
and I merely repeat Peter what I have said all the way along
in regard to the whole range of matters; that one has to havE!
a concern for the public interest and t he interest of individuals
who may be involved. I accept, and understand clearly that there
can be sincerely held views about what are the best ways of
matching those two requirements of the public interest and the
interest of the individuals. And I am not here to attack
others who have had different views of how those two criteri~ a
can be satisfied. All I can say is that I believe that at
this stage a postion has been reached Where there are clearly
processes to be followed and processes which I trust will
continue to meet those two criteria. And I believe they wil~ l.
JOURNALIST: Prime Minister, do you think report could
damage Mr Wran?
PM: Mr Wran. No I believe not.
JOURNALIST: Have you spoken to Sir Harry Gibbs or Justice
Murphy? PM: No I haven't spoken to either of them and it would not:
be my intention to as I repeat the question I gave before, our
democracy is very squarely based upon the division of powers
between the executive, the parliament and the judiciary and
I have total confidence in the judiciary.
JOURNALIST: Could I ask you another question on tax?
This is in relation to your answer to Barrie Cassidy
about your expressingonf idence that the ACTU
their decision to introduce indirect tax..
discounting of such a tax.
In the light of Mr Dolan's recent comments why would you
think that?
PM: Well I think if you read everything that was said by
the ACTU and put all of Mr Dolan's comments in the context
of what the ACTU said there is full basis, a full basis for
me expressing that view. The ACTU obviously will be important,
a very important element in the discussions that we have had.
And I can talk, of course, from the basis of having seen the
ACTU, already been involved in those discussions in EPAC, so
my confidence and the view I express is based upon past
experience, may I say not only on the ltax issue, I mean the
-in
PM cont: enormous success of us all in achieving the results,
the economic results that we have, has been large measure based
upon the successful operation of the Accord and therefore I
believe that the ACTU as we go into ' 85 and through this
important area will give a full commitment in trying to
ensure that the best possible results for the community,
as a whole, are achieved. So I have total confidence on thE!
basis of what they have done in the Accord, the way they
have operated within EPAC and in respect of the prepared
position of the ACTU that has been to the people.
JOURNALIST: Prime minister, does retro'spective legislation
remain crucial to smashing tax avoidance.
PM: Well, I think that in the discussions that we will be
having that the question of whether retrospective legislation
will be necessary in the context of any other things that have
to be done will be on the table. WHat I make clear, Paul, i~ s
that it is not just words when we say we are in advance
determining what is necessary. We have basic views and
principles which we have enunciated and we want the whole
issue to be discussed in a way which means at the end of thE!
process the community will be saying to the Government, these
are the things that we want done to achieve these objectives
and if that is one of them well so be it.
JOURNALIST: What I am wondering is, will you be pushing
that legislation again after the election and before
the review?
PM: Well I would think that we would be guided by the
initial processes of the discussions to
JOURNALIST: Mr Hawke do you think that by providing
differing reports, Senator Tate and Senator Bolkus have
made it difficult for the Government to come to a unanimous
view next year if this matter comes up to a vote in Parliament?
PM: * I can't answer that at this stage. I mean it is obviously
going to be a question of the, everyonE! involved reading the
reports and studying them and it would be presumptuous for
me to try and pre-empt people's study of those reports by
giving an answer to that.