-Ji) AUS> 1TL A~ 4
PRIME MINISTER
PROOF ONLY
TRANSCRIPT: " Willesee" l Program, TCN Channel Nine, Sydney.
Mike Willesee interviews the Prime Minister,
Mr. Hiawke.
DATE: Tuesday 23rd April 1985
TO AIR: 6.30 pm
. WILLESEE:
At a time when the whole nation is waiting to see ' what you are
going to do about changing the manne r in-which we are all taxed
you have suddenly added four cents a litre to the price of
petrol. Why?
' PRIME MINISTER:
Because it is the-policy which has been followed by successive
governments. It should be noticed that the Oppogition has
endorsed. the decision we've taken, as has the business community.
It Is a well placed policy because it relates to the* fact that
Australiastill. has to import a significant proportion of its
crude and we have to follow a policy which is relevant to that
and to conservation purposes, and the important thing is that I
have given the undertaking and I repeat It that the revenue
that the government derives from this will not be used to
undertake new spending programs but -will be utilised as part of
the government's overall approach to adhering to the trilogy.
That is, that there will be no Increase In taxation a a
proportion of gross domestic product, no increase in the Deficit
as a proportion indeed there will be a substantial reduction
in money terms in the* Deficit, and there will be be no increase
ini government outlays.* And so we'll be using the income that
flows from the application of a consistent policy that's been
followed -by successive governments to pursue these economic
policies which are calculated to ensure a continuation of
solid economic growth at containable levels of inflation which
has produced for this country in the two years of government
a turnaround from the worst recession that this country has had
for fifty years to record rates of economic growth, to record
rates of employment, and to a halving of inflation. e e / 2
WILLESEE: This petrol increase is still effectively a tax, isn't it?
PRIME MINISTER:
It's a policy which has been followed by successive governments
as being accepted as relevant and necessary to our position
as still an importer of crude. And what has got to be understood,,
that in the result Australians still pay less for their petrol
than virtually any other OECD country.
WYLLESEE: Yes, but it is still effectively a tax.
PRIME MINISTER:
Well yes it is a tax. This is the way in which the system must
operate. But it is a tax which is used for sensible economic
purposes. It is not there simply to impose a tax. It has been
accepted across the political spectrum as necessary a necessary
pricing policy in regard to a scarce resource, and so the fact
that it is collected as a tax is simply a way of saying that is
bow you give effect to a policy, which is recognised as valid
for other purposes. What is important is the commitment that I
have given on behalf of the government: that it is not a tax
which is raising revenue which this will government will use to
increase its expenditures. On the contrary, the revenue that will
be-derived from this necessary decision which has been accepted
across the political spectrum and by the business community
is revenue which will be used to bring about an economic
strategy calculated to improve the general economic position.
WILLESEE: I think if you asked the average Australian at ' the moment what
question held most like answered ' from you,, I think be would
very likely, or she, would very likely ay " r keep hearing about
the possibility of tax changes, how is it going to affect me.
What's going to happen with our taxes?"
PRIME MINISTR:-
Yes, and I reckon -that's exactly the question that I would ask.
And the answer I will give is this: that I have said that the
government does not want arbitrarily to impose changes in the
tax system. We recognise, as does ' that average Australian man
and woman, that the existing tax system is inadequate. 99.9%
of-your average Australians would agree with that. So what we
have done is to say we are going to try and bring representative
Australians together, Mike, so that together we will examine both
the inadequacies of the existing system, and to look at alternative
ways in which we may be able to bring about a better system.
" Better" being judged by the cri-. eria of equity, economic
efficiency and simplicity. I happen to believe that together
we are going to be able to do that.
WILLESEE: Well there's a potential dilemma there with these sujmmits: I mean
if they don't agree, if there are conflicting forces on taxation
which there could Very easily be
PRIME MINISTER:
There will be, Mike. f ./ 10j31
TRANSCRIPT~~ " aESE s ' A
WILLESEE: You're still the government, youlre the Prime Minister. What do
you want changed about our taxation system?
PRIME MINISTER:
Well I do want, if we can, to get to a system where these things
are done: that we don't have such. significant marginal
disincentives in the direct tax rate. I want to see more of tbe
WILLESEE: Sorry Prime Minister, just one at a time. Do you mean by that
that some tax rates are simply too higI4? Personal income tax.
PRIME MINIStER:
At the marginal rate there are moving it is estimated -at
286,000 1 think is the number of people who will move into the
46 cents in the dollar marginal rate. That you have the
situation now where the top rate, Mike, of 60 cents cuts i~ n at
something like one and a half times average weekly earnings
where some ten or fifteen years ago it was about twenty or thirty
times average weekly earnings. So I believe that those marginal
tax rates are cutting in at levels of income which are too low,
and I think t * hat would be generally agreed. So we want to see
if we can remedy that. We also, secondly, want to see, Mike,
if we can bring more of the available income into the tax base.
There is a lot of it-Which is ' avoided which means generally that
the average taxpayer is paying more in direct personal income
tax than he or she would if you had a wider income tax base.
WILLESEE: Can I just go back to the first point of income tax. You are
expressing concern about that but you are heading' a government
which is charged with this responsibility but you're not telling
us what you'Ire going to do about it.
PRIME MINISTER:
Well I'm saying that before we accept, as we will, we accept the
responsibility as a government of ultimatel. y making -the decisions
but the secret of success of this government which-has turned this
economy around from the worst recession in f if ty years to record
rates of economic growth and record levels of employment growth
and halving the inflation rate, we've done t * hose things in very
large part because we have been a government of consultation,
We've consulted with, we've talked with, the business commnunity.
We've talked with-the trade union movement. We've talked with
welfare groups. We have talked with State and local governments.
Now what I'm going to do at this summnit is to continue a process
which has been remarkably successful. Successful in a way which
has been commented upon right around the world. Now we are
therefore In regard to tax going to try and do the same thing.
Not to shift the responsibility to someone else but to try as
far as we can to get the best range of views within the Australian
community as to how they'd like to get changes, and then we are
as government going to try and accommodate as far as we can the
expression of views of the Australian people.
WILLESEE: Well what about the Australian government? I don't want to carp
about the summit concensus attitude because there's a lot of reason
to believe that it's very successful but, you know, as I repeat
you are the Prime Minister, you head the government. if you say
that it's too high why don't you go further and say " It will be
reduced"? / 4
TRANSCRII'T " WILLESEE"
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PRIME MINISTER:'
I believe it will be reduced and that's what we're aiming at.
Blut all I'm saying is, Michael, that there are a different range
of views as to the appropriate ways of achieving end results, and
so we're not having the summit as some charade, some empty
exercise that we're just going through for the formalities.
We believe that out of the process of the summit and the
processes leading * up to the summit and the discussion of the
white paper that we will generate around the community that we,
as a government, can be better Informed. So that the decision
tbat we take at the end, for which we'll accept the responsibility,
will be a better informed decision and one which is more lihely
to be capable of achieving acceptance from the Australian community.
That's sensible politics. It's how you conduct yourself in
normal life. In any community of people, group. of people, you
try if you are sensible not to impose decisions upon people. You
accept you have an ultimate responsibility but it does make a l. ot
of sense, Mike, to get as many views from as many well informed
quarters and concerned quarters. as you possibly can.
WILLESEE: So you are saying that you believe that too many people-are paying
46 cents in the dollar in personal income tax anad too many people
are paying 60 cents.
PRIME MINISTER:
And Mike if I can just add -I don't want to interrupt. but that
these rates are also cutting in at too low a leve-is of . income and
this is acting as a disincentive In many respects. So the secret
of what we're about is to try and achieve a situation where
government will still be able to get sufficient revenue to do the
sorts of things that the coummunity wants done in the field of
defence, educat-ion, the building of roads -' we'lve got to do all
those things. So if the way we're raising revenue and let me
remind you that basically for the last, If you take back to
1949 this country bas' been* governed out of the 35 years, it has
been governed for 30 of them by anti-Labor government. We have
basically inherited a tax system which is the creation of the
conservative forces of this country. So what we want to do is
to make-sure that in doing the things that the Australian people
want of us on the expenditure side, that we can raise revenue
the necessary levels of revenue in a way which is most
acceptable to the Australian people.
WILLESEE: Can I come back in a moment to the other manner in which you can
raise revenue. * On personal income tax, which I think is the
f irst question people want answered, what do -you want? What
wold be desirable, without committing yourself what woul'd be
desirable in your opinion?
PRIME MINISTER:
Well I think a system which would do these things Michael would
be, first of all, progressive. I think there's basically no
argument in the community -about that; which relates the amount
and the proportion of income that people will pay to their income
capacity. So progressivity is important. Secondly, you want a
system I believe which eliminates the poverty traps that can
occur at the lower* levels of income. I think that desirability
is accepted throughout the community. And thirdly, as far as
possible Mike, : you want to have. a system which is going to be
as much lacking in disincentive to people to earn extra income as
you possibly can.
A Atli's~ k
WILLE SEE:
Prime Minister before we take a break could you try and put a
figure on it?
PRIME MINISTER
No it's not possible
WILLESEE: Is there a limit on what people should pay in personal income tax?
PRIME MINISTER:
Well let me put it this -way, the 60 cents rate is certaiDly a
limit. There is no suggestion that we would be increasing that.
If possible I think we'd be wanting to bring those marginal rates
down. WILLESEE: So you are just talking about bringing marginal rates down?
You're not talking about anything more drastic than that?
PRIME MINISTER:
Well I don't no what you mean by " more drastic".
WILLESEE:. Could you suggest figures that would sound suitable to you?
PRIME MINISTER:
Well no I don't think you can just pluck a figure out of the
air. What you can recognise is that the existing system has
evolved mna way which now, I believe, operates as too much of
a disincentive and I think there'd be very, very-widespread
agreement about that. So we have got to-try and construct a
system which meets that problem as far as you can while still
ensuring.-Mike, that the government is going to have available
to it the levels of revenue that are nec essary to do the things
that people want. I mean, too often in the tax debate and it's
so easy to do it, you say " Oh we pay too niucb tax" I think
everyone believes they pay too much tax. You very rarely
hear, Mike, people saying " Well we don't want as much spent on
defence. We don't want as much spent on education. We don't
want as much spent on social welfare. We don't want as much
spent on the building of roads" and so on. So If the commiunity
basically wants all these things done and continue to be dome
then any government must have the revenue to do it. I want the
viewers to understand: I don't want and my government doesn't
want tax, it doesn't want revenue, for our own purposes, I
mean to satisfy ourselves. The only reason that I want
adequate levels of revenue is to do the things that the
Australian people want and which only governments can do. The
community can't, individuals can't create Australia's defence
forces. Individuals can't build roads. Individuals can't spend
money on the total education system. Governments have to do that
on behalf of individuals.
COMMERCIAL BREAK
WILLESEE: Prime Minister, just to* wrap UP. this taxation matter and I
do understand that it's yet to go to the summit and you can't
commit yourself -but is there one thing that you want out of
taxation reform? / 16
6% 6' A. 4JLS A W A1LLOZ eae
PRIME MINISTER:
Yes there is. It's basically this: that at the end of what we
do, or even if what we do immediately is not the end of the
process, I want my fellow Australians to believe that what's
happening in Australia is that they are paying, through the
various forms of tax that exist, that they are paying fairly
and reasonably their contribution to enabling the things to
be done that they believe will make Australia a better place.
You just can't talk talk about tax as tax. Tax is there to
enable things to be done on behalf of the people, and that's
what I want to see emerging.
WILLESEE: So you're saying it is not punitive, it is necessary, and it has
got to be done.
PRIME MINISTER:
Sure, I mean, do you want we to abolish the defence forces?
Do you want me to stop all these things? We don't want that
to happen. I have the mandate,* the responsibility, the
trust, I hope, of the Australian people to be the custodian, if
you like, of the contribution that they make as individuals and
as firms to the processes of doing within Australia the things
that need-to be done by government to make this a better place,
and I just hope that out of this process they will feel that they
have been part of arriving at a decision which means that while
basically no one likes paying tax, they will recognise that it
is being done fairly and effectively to achieve the purposes
that they want.
WILLESEE: Prime Minister, would it be fair for me to interpret what you are
saying as." Don't expect any more money in your pocket after we
reform the taxation lawo!'?
PRIME MINISTER:
No, not necessarily. It may be thecase and in a sense I hope
it will be that for a lot of people that they wi1 in net terms
be better off. Because you will appreciate that I have, on
behalf of the government of Australia, given the commitment that
tax will not increase as a proportion of gross domestic product
whicb means, if I can put it in laymend terms and non-economist
Jargon, that out of what Australia produces, out of what comes
out of the efforts of all of us cooperatively to produce goods
and services that the government will not be taking a greater
proportion of that production.
WILLESEE: So the same amount of revenue raised through tax, but in a
different manner?
PRIME MINISTER:
The basic point I am making is that we will not take more of the
community's productive effort. And in giving that commitment,
and in trying to re-shape the taxation system, I hope that a
significant proportion of Australians will in net terms be
better off. That's what we'll be aiming to achieve.
WILLESEE: Prime Minister thanks for your time. ENDS