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PRIME MINISTER
E. O. E PROOF ONLY
INTERVIEW WITH ITA BUTTROSE, 2KY 24 JUNE 1985
BUTTROSE: Good morning Prime Minister.
PM: Good morning Ita how are you?
BUTTROSE: I'm alright.
PM: Good.
BUTTROSE: I may be a new girl at 2KY but I think you're
copping a lot of flack. Tax must be a bit of a detestable
word for you at the moment.
PM: Yzs well before we go onto that Ita, congratulat-' ns
on your new appointment and the best of luck to you and the
Station. BUTTROSE: Thanks very much.
PM: Ita yes well as you say its very much in the news.
But I want to make this point that I found as I've been going
around Australia, I was over in South Australia yesterday and
talked to a luncheon of about five hundred people, when you
get to the people and talk to them and are able to listen to
what they've got to say, respond to them, there is a very
positive response. So I think there is a difference between
the people themselves, once you can actually talk to them,
and some of their leaders are a little bit timid, should I say-.
BUTTROSE: Prime Minister did you expect that it would be such
a tough selling job?
PM: Yes I thought it would be fairly tough Ita. Because
when you talk about tax you're talking about something that's
very close to everybody. And they tend, naturally enough, I
don't complain about it, to look at it in a very direct personal
sense. They see somdthing that they think might hurt them.
That tends to dominate their thinking. There's a bit of an
incapacity to look at the package as a whole. And in fact
the preferred Option that the Government is putting up would
make virtually everyone, except the tax avoiders, better off.
BUTTROSE: Well there are a lot of tax avoiders in Australia
we know that. That's why I personally believe the system
needs an overhaul. Because when you've got a system where
everybody's trying to avoid paying tax, regardless of where
you happen to be in income levels, you're right. You've
got the cash Society, and then you've got your business people
with all their perks and lurks. There has to be something wrong
when we've got a system that makes everybody want to avoid tax.
PM: Well that's right. And that's one of the reasons
why the preferred Option that we put forward, I think, has so
much merit that it means that at least in respect of their
consumption that people who may be avoiding tax elsewhere
will be paying a contribution to the common revenue. The
central question, Ita, is whether the compensation packages
that are contained in the preferred Option are adequate to
look after the needs of the lower income people and those
on social welfare benefits. So they won't be disadvantaged
by the increase in prices associated with
BUTTROSE: The general consensus, if I can use one of your
words, sir, is that a lot of Australians think that they won't
be looked after well enough. Earlier this morning we took
a call from a gentleman called Bill, whose on an average income
of $ 350, and he says that he doesn't have any money left after
$ 350, after he's paid his tax and everything else. And that
if he has to pay 12h% on a lot of consumer items, he's just
not going to be able to afford that. Now what would you say
to somebody like that?
PM: Wt:: 11 the answer to Bill of course is that as part
of the package he'll have a lot more in his pay packet. Because
the rates of tax will be slashed enormously. I mean for instance
the person in the annual income range of $ 19,500 to $ 28,000 who
now pays 46 cents in the dollar in tax would have that slashed to
cents in the dollar. So Bill would have that much more in
his kick, if I can use that phrase, because he would be paying
less direct tax and he would have more than enough there to pay
the increased costs of goods associated with the consumption
tax.
BUTTROSE: The Federal President of the Labor Party, Neville
Wran, last week came if we can just have a look at some of
the critics of the scheme so far Neville Wran said that he
was against the consumption tax on food. Now when the
Federal President of the Labor Party comes out and makes a
statement like that that must be a bit of a blow to you.
PM: That's not what he said the next day. I mean
when he thought about it a bit....
BUTTROSE: I felt someone probably muscled him.
PM: Oh no. You can't do that to Neville. No he's
had the opportunity of looking at more detail. And naturally
enough I respect. Neville's, if you like, instinctive reaction.
We're all against a tax on food if that's all there is because
we know that it will hurt the lower income people, the needy,
much more. But that's why we're putting two billion dollars
worth of compensation packages, Ita, into the whole proposal
which we believe will offset those disadvantages. But at the
Summit we're going to listen to what everyone' s got to say.
If it can be shown that those compensation packages are not
adequate, and more needs to be done well then of couz: se the
Government will listen to that.
BUTTROSE: Well you said last night, you said yesterday speaking
on the weekend, if there is a better way we will do it. Yet
m Paul Keating has been quoted as saying that everything is
non-negotiable. But are you saying, therefore, that if you
feel after the Summit that perhaps the consumption tax on food
is incorrect you will change your mind?
PM: We've said all along, Paul and myself and the
Government, that we are going into the Summit not with our
minds closed, we're going to listen to what people have got
to say. Now if it could be shown, and it certainly hasn't been
to this point Ita, But let's say that it could be shown, that
there were some new calculations, which indicated that the
compensation package wasn't good enough, and the people, the
lower income levels were going to be hurt in a way which we
can't see that they are, then
of course we'd take that into account.
BUTTROSE: And change your mind?
PM: Cliange your mind as to the way you had to go about it.
I mean I still believe, without question, that an approach ' wiich
involves the consumption tax is necessary if we're going to ensure
that everyone in the community makes a contribution to the
general revenue. But it may be, I mean I just say this hypothetically
it may be that it can be shown that the way we've approached
it doesn't sufficiently take account of some areas which need
further compensation. And I say to the people of Australia,
through your programme Ita, that we are not a Government which
is about trying to hurt people. We want to make them better off
and politically you'd be stupid to deliberately do something
which is going to hurt people. So of course we're going to
listen. And if can be shown that there's some, things that
haven't been sufficiently taken into account then they will be.
BUTTROSE: What about the ACTU, Prime Minister. Now to my
mind they seem to be acting like a separate Government. Almost
like a superior Senate. Mr Creanyhas been quoted as saying
" we will consider our policy and if we so choose nothing will
go on". I wonder do you every remind the ACTU that the
-Government was elected by the-people?
PM: Oh yes, and I understand that you may have that
reaction. But let me-say this, that the ACTU know that we'll
be making the decisions. It makes good sense, however for a
government to be talking, not only to the ACTU, but the
business community. That's what we've done since we've been
in office. Because if you're going to get a system to work
as well and efficiently as possible, then its best go get as
much co-operation as you can from the major sectors of the
community. So of course we'll talk to them. They won't
be making up our minds for us though.
BUTTRQSE: People are very concerned and the polls, well the
polls are not as good as they might be, but I guess you've
been in, well in the Trade Union movement and in politics
long enough to know that polls come and go. But there are
a lot of them, the first I've heard in a long time sir, that
Labor could lose office over this tax. If you look at the
history of the Labor Party it seems to me that the Labor
Party is never beaten at the polls they tend to lose at
the polls because they slip, and I wonder how concerned are
you that there may be a monumental split in the Labor Party
over the tax issue.
PM: Well let me take the points in succession that you
made about the polls generally. And the last poll showed that
we would have won on the distribution of DPemocrats preferences.
And given the troubles that we've had in preparing for the
tax paper and also the Expenditure Review Committee and the
constraints we had to impose there, I think that's not a bad
position. But coming to the position of the Labor Party itself,
you're quite right Ita, in saying that there are obviously
divisions within the Labor Party on this issue. The conferences
generally have not been terribly supportive of the Government' s
preferred package. But we will listen to what they've got to
say but that's not going to be absolutely determinative of
our position. We are elected to govern, to make the decisions
which we thin. 7k are necessary in the best interests of the
country. We will take into account those observations of
the Party conferences as we will of everything that's said
by representative organisations. And we will have the job
after the Summit, Ita, of trying to see whether what's
happened satisfies the Ninth Principle of some broad general
community support for the approach that we're talking about.
BUTTROSE: This weekend there was a Summit talking about yet
another area of concern. There was a Women's Summit in
Canberra, and they now say a taxation plan would be unfair to
women. sending a deputation to see you. Have you
caught up with that report yet.
PM: I saw the report in this morning's paper, yes.
Well of course a number of women's organisations will be
represented at the Summit, Ita. Again we'l11 listen to what
they've got to say. Let me put it this way, that I think the
women of Australia have got to understand that the most
regressive aspect of any system of taxation is avoidance and
evasion. And the only way that you're going to be able to
get at a lot of avoiders and evaders is through a consumption
tax. Now, if the wom~ en's g'roups have got some details that
they want to put to us which they think prove the inadequacy
of the compensation package, of course we'll look at them. And
we'll subject those observations to very rigorous testing.
But there's a lot of difference between prejudice and fact you
know. BUTTROSE: Yes I know that, but there are a lot facts being,
are you saying that the Women's Summit was prejudiced?
PM: No I'm saying, no I'm not casting aspersions againsft
the women that were there. I'm simply saying that a lot of
people start off with a prejudice, and may I say an. understandable
prejudice, against the consumption tax. They say, correctly,
th-at a consumption tax is regressive, because the very low
income people have to pay a much higher proportion of their
income on those goods that are subject to a consumption tax,
and do people like yourself and myself who are on a higher
income. So there is a natural prejudice against that. But then
what you've got to do is do the detail work of analysing the
compensation package and saying now the compensatio~ n package
which is directed to looking after the people at the low income.
level, the social welfare beneficiaries, does that two
billion dollars of compensation in fact overcome that
disadvantage. So its no good just parading prejudices against
consumption taxes you've got to engage in the tough intellectual
exercise. The hard work. of examining the details of the
package. Now that's what I say, if they've done their hard
work, and they can demonstrate factually that the package
doesn't adequately compensate, then of course we'll look at
that and act accordingly. I don't that they've done that.
BUTTROSE: Well clearly its going to be the Summit to end all
Summits I think this one.
PM: No I disagree with that entirely. People have saidL
if you had your time over again you wouldn't have it. Well that's
wrong i would. I believe that what we've done as a Government
has been the right thing to do. We've accepted the challenge
of analysing the present system, in a way that it has never been
analysed before. We put that before the people, and we say now
here are various avenues which we as a society can move down
to get a better, fairer more efficient tax-system. Now, we will
then expose ourselves to the community and say well look tell us
what you think. And I'm sure that out of that process we are
much more likely to get a tax system which is acceptable and
workable. Not only have no regrets about the Summit, the more
that its going ahead the more I'm sure its the right thing to do.
BUTTROSE: I suppose in a sense Andrew Peacock could be regarded
as a strength.
PM: As a what?
BUTTROSE He could be regarded as a strength. Because I don't
see much opposition coming forward from the Liberal Party.
And this morning Andrew Peacock said, if I can quote, " Hawke is
a man who no longer has a clear blueprint, and a schedule
for his programmes. A man who has lost any common purpose, if
he had one, in terms of leading his Party, and has therefore
lost authority in the leadership of his Party."
PM: Well no-one takes any notice of Mr Peacock. * But let
me, and I regard him as an irrelevancy of course, but let me
make some observations in regard to what he said. The reason
that we are in this position of having a Tax Summit is because
the Party of which he was a leading member has been in control
for thirty cf the last thirty-five years as the Government of
this country, and the fact that we have a tax system which is
recognised as the worst in the western world is a reliection
upon the lack of vision, principle, authority of the
Governments of which he was a part. Governments in which
I might say he was conspicuous by the absence of his contribution
to any areas of economic thinking at all. Now, that's the first
point. This Government under my leadership has the responsibility
of fixing up the mess that we've inherited from thirty years
of Peacock type governments. And the second point I make, is
this, that Commissioner Costigan in 1981, in his report to
Mr Peacock's Government, the Government of which he was a member,
Commissioner Costigan said that in the last five years, that
is from ' 76 to ' 81, the fastest growing industry in Australia
was the tax avoidance and evasion industry. In other words,
under the Government of which Mr Peacock was a prominent member,
they allowed the ordinary tax payers of Australia to be bulked
of billions and billions of dollars because they allowed the
tax avoiders and evaders to get away with blue murder at the
expense of the ordinary people of Australia. No wonder he won't
come to the Summit he couldn't come with clean hands. He would
be laughed out of court. So if you're going to have people
judging the credibility of political leaders in the area of
tax, Mr Peacock doesn't even get to the starting line.*
BUTTROSE: Prime Minister I know we're coming to the end of the
time, that you have to return to Cabinet, but just very quickly
I'd just like to ask your reaction to the Builders Labourers
Federation, well the long running campaign iI about to undertake
to free Norm Gallagher.
PM: The processes of the law have been properly followed.
I agree with the position of Premier John Cain.
BUTTROSE: Do you think that the Builders who were involved
in the case should have been dealt with more severely as
some BLF supporters are saying.
PM: Well I'm not here to interfere with the processes
of the law. I mean one can have -tviews about apparently different
standards. All I'm saying is that I agree with the position of
Premier Cain. The processes of the law have been followed,
oind there should not be interference by Government in those
processes. BUTTROSE: Thank you very much for talking with us this morning.
PM: TMh. a nk you Itta and all the best.