J!, AUS R LIA IPRIME
MINISTER
PRIM'E MINISTER ON l1A 13UT' 1' IKSE ZKY 20 September 1985e11
E 0 E PROOF ONLY
BUTTROSE: Everyone in Australia knows that reform of the tax
system was necessary. And the previous Governments have ducked
and dodged the issue for years. So, no-one in Australia
can deny that the tax system needed reform and I believe the
Government is to be congratulated for having the guts to bring
about the reforms. The Prime Minister has been giving interviews
almost non-stop since Treasurer Keating delivered the tax
reforms to the Parliament. He even survived interviews with
the brothers Willesee on their respective current affairs showsno
mean feat. This morning the Prime Minister will be happy
to answer your calls on this program and I have the Prime
Minister on the line now. Prime Minister, good morning.
PM: Good morning, Ita, how are you.
BUTTROSE: Well thank you. How are you, a little more to the
point, you've been a busy mnan. You've been giving interviews
all over Australia I wondered what the reaction is to the
Government's new tax reform.
PM: Generally favourable Ita. It's as to be expected, there's
some Indication of a little bit of a whinge here and there, but
overall favourable.
BUTTROSE: On television last night a small whinge -you seemed
a little touchy on the issue of capital gains tax. During the
1983 election campaign, as you explained, you said that you said
there would be no capital gains tax In the life of that Parliament
and you did, indeed, keep that promise. Then last year during
the election campaign you said there would be a review of the
tax system and you didn't rule out a capital gains tax. So you
certainly haven't misled, the people. However, it did appear that
you are somewhat sensitive to some criticisms of that tax.
PM;. I wasn't sensitive to criticism I was just a bit annoyed
at the silliness of my old mate, Mike, who at the end accepted that
held got it a bit cocked up and we went on. I mean it was quite
clear that he was not misrepresenting, I don't put it that waybut
he was saying something that was relevant if I'd brought in
the capital gains tax in the first Government by showing the ' 83
clip. But as I pointed out to him, there had been an election in
HAWKE cont.: between in ' 84 when I said it's now on the table.
But I think if I can go to the question about capital gains, Ita,
the important point is this that I think we've met the
understandable concerns of a number of people. The family home
is not in, it doesn't apply to existing assets and it's only
for real gains and importantly deeming at death is out. SoV
there's no death duty element of it.. Now I think that people
understand that it's necessary to have a capital gains tax
provision there to stop tax avoidance. That's why it's there
and I think the great majority of people will say well that's
a sensible thing to do.
BUTTROSE: I can't help but think Prime Minister that a capital
gains tax, however equitable it may be, being introduced is a
deterrent to entrepreneurs and small businesses. Now in America
there are moves afoot to completely wipe out capital gains tax,
And I'm wondering about the young man who's going to leave
school next year and he's an entrepreneur and we don't. bave
many of them in Australia, not as many as we should have, he's V
an entrepreneur and how will he find, how will he be encouraged
to go out into the community buy, sell, buy, sell. I do think
capital gains is a deterrent in that sense.
PM: Well I must say I disagree, Ita. That would be-the case
if you were just imposing a tax on the nominal gains, so you
didn't take account of inflation, but this will be a modest
impact. But the important thing you've got to look at If you
talk about the impact upon the economy is that what was happening
in this country to a very large extent was that because there
was not tax on capital gains people were distorting their
patterns of investment and instead of putting it into areas which
were producing income which would be subject to tax they were
diverting investment into areas which would show capital
appreciation upon which there was no tax. So that it was a
very integral part of the whole avoidance industry and it
diverted economic resources in quite uneconomic ways. Now to
stop that is important. It's going to create an environment in
which the young man that you're talking about is going to be
much more likely to be able to be operating in a prosperous
and growing economy.
BUTTROSE: We've got some calls come up now for you Prime Minister.
I wonder if we might take some. Our first caller is-Jack.
Good morning Jim.
CALLER: Good morning Ita.. Good morning Mr Prime Minister.
PM: Good morning Jim.
CALLER: Sir, I'd like to ask you one question and I. tbink you're
on the right track now after a long time. But unfair taxes as
far as the. PAYE people we re being taxed unmercifully on their
wages and it virtually was a setback for the country because it
gives people no incentive for productivity. Everybody I've spoken
to in the working class, they more or less say well we're be Ing
blitzed with taxes, what's the point of getting involved in it
t fl . l
CALLER cont.: as far as productivity Is concerned, when otber
people in the lurks and perks department get away with
everything. I mean as far as business lunches are concerned
they can sit down and drink the best wine and eat the best food.
BUTTROSE: Not any more.
PM: Well you're quite right Jim and you're right on the button.
We recognise that it was a disincentive to honest blokes like
yourself who are out there working when the marginal tax rates
were so high and you were getting more than half of every extra
dollar you worked for taken out by the'tax man and so that's
why these rates have been we're bringing them down very
significantly now. And again you're right on the button. One
of the ways in which we're going to be able to afford to bring
these rates down is to cut out the lurks and perks tbat you were
paying for out of your tax for other people. People were just
having their free lunch on you, on the taxpayer.
CALLER: While we're sitting back at lunch time eating a sandwich
and having a cup of tea.
PM: That's right Jim. And so what we've said, well, is -if I
can use an Australianism you know, bugger that type of thing,
because why should some people be able to just have their high
class entertainment on the Jims and Jacks of this world who've
got to pay their and in the process have to pay too much tax.
So we're bringing in a great deal of revenue by closing of f all
those lurks and perks and applying that revenue to reducing your
tax rates.
BUTTROSE: Prime Minister on that question of no more free
lunches for business deductions, the restauranteurs trade and
in particular their spokesman, Oliver Shaw, was saying last night
that it will be very detrimental to the restaurant business.
because there'll be a drop-down one presumes in the people going
to lunch because they can no longer claim it as a deduction,
that restaurants will suffer and that there will be unemployment in
this field. Obviously that would concern yo u, but what reassurance
can you give to these people.
PM: It does concern you, but you've got to in accepting the
responsibility for Government, you've got to look at the overallwelfare.
And what your last caller, Jim, said was right. There
is no justification for a situation in which tbe ordinary working
men and women of this country and those dependent upon them are
paying for free lunches of others. Now if in the process that
means some slight diminution in employment in the restaurant
industry, well I believe that the whole of Australia will say
well, that's the price that will have to be paid. I % e other
point is, of course, that with the change in the taxation structure
there'll bo more money -in the hands of a range of people vi-diznry
wage and salary earners -more in the hands of those who were
adversely affected by the poverty traps at the 16wer end, and
the fact that there's going to be more money in their hands-they're
going to have more disposable income will mean that they will*
spend money on a range of goods. So overall, taking the economy
as a whole, the employment effects will be beneficial.
BUTTROSE: What sort of reaction, sir, do You think you'll get
if you walk into Edna's Table today.
PM: because there are tax perks in existence and that's
artifically elevated a particular area of employment in
restaurants, we don't do anything to introduce tax jlustice
because we might effect that area.
SUTTROSE: Prime Minster we lost you for a minute there, I just
asked you what sort of reaction would you expect to get if you
walked into Edna's Table today. r
PM: Oh, I don't know, you know I'm not scared of things Ita.
I'll walk in anywhere and if people want to have a rational
discussion with me I'll have it.
BUT'TROSE: Great. Betty, good morning to you.
CALLER: Good morning Mr Hawke.
PM: Good morning Betty.
CALLER: What I'm ringing about -I have a house on the market
for $ 130,000 and what I want to do, I wanted to sell it and go
into a cheaper area to be with my daughter. Now when I sell it,
I want to pay about $ 80,000 or $ 90,000 for another one and the
rest of the money I was going to buy a new car and refurniah the
other house. Now how would I go as far as the selling out of here
and going into this other area would I be taxed on that extra
money that I'm going to get by buying..
PM: No. The single important point you've got to understand
Betty is that when you sell this existing asset you've got, it
will attract no capital gains tax at all. On that existing house
you can sell it no capital gains tax.
CALLER: Now how about, though, say it's in bank for two or three
months until I buy the other house and I only pay out say
$ 80,000 for another one, that extra money that I was going to buy
tbe car with and do things in the other bouse. Will-that attract
a capital gains tax.
PM: That proceeds that, you get from the sale of this house attracts
no gains at all, and you go into another house.. YoUr residence at
any stage, not only your existing one, but at no stage will your
house attract any capital gains tax, Betty, nor your motor car.
BUT17RQSE: Alright Betty, so you can sell your house and be happy
and not worry. Right, the Prime Minister has answered that question
for you and we'll take another. Good morning, Harry.
CALLER: Hello It&. Good morning Mr Prime Minister.
PM: G'day Harry.
CALLER: I think you're a great Aussie, mate.
PM: Thank you very much Harry.
CALLER: Now listens I want to get rid of this big brother attitude to F
to the ID card. Now we know the multi-national companies, they
have records on our jail rec * ord, our credit ratings, whether we
are compo. kings, or our or union bashers. Now tbe Government
is drowning In numbers and signatures why not one number for the
lot like for tax, medical and the social service. And why aren't
these social services fingerprinted.
PU4: Well just taking your last point first, harry, I think once
you get Into fingerprints you're getting into a very broadly
unacceptable area. But with the Australia Card that we'll be
bringing in, that will stop fraud in the social welfare area. s
It's amazing to me Harry to find some people objecting to these
cards when In fact the absence of them is allowing a whole lot
of people who are really bludging on the system to get welfare
payments one time, two times, three times, four times over.
Now that will stop that system. Now as far as the card is
concerned, Harry, it will be used in regard to employment so
people can't cheat there under false circumstances, In regard
to certain financial transactions which involve tax and in regard
to the welfare area. Now it will be limiuted to those things and
I think you're right in what I think you're saying-and that is
that If you do it for these legitimate and obviously proper
purposes, there's no-one can complain. We don't want to have
a great proliferation of cards, this is not going to do it.
But what it's going to mean according to our calculations,
Harry, is that once it's fully in operation It will mean over
half a billion dollart8 will be saved so that ordinary taxpayers
won't have that extra burden imposed upon them. The cheats will
be stopped from getting away with over halt a billion dollars
of ordinary taxpayers' money and I think that's what people want
to see.
BUTTROSE: Prime Minister, if I could just cut across there, a lot
of people don't understand, and I must confess I'm one of them,
don't understand the Government's decision not to put photographs
on the ID cards. ton't you think that they will not be as
effective as they might be if the photograph is not to be included.
PM: Look the advice we have, Ita, is that they won't be as
effective without the photographs. But this is an area in which
we tried to take account of as broad a range of views as we can.
There's no doubt that there's some feeling in the community against
these things, so we've taken this step. I think It's one of those
things Ita, that once it's in and people understand the importance
of it, the effectiveness and the fairness of it, the community
may come to see that that next step is one to go to.'
BUTTROSE: Are you saying then that you think there may be a change,
perhaps between now and when the 1D cards are introduced.
to get the card in and if the community gets used to It
and comes to see that it may be even more effective with a photo,
well then that. could come. But there'll be a very, very
substantial saving to the community through this step alone.
BUTTROSE; Betty, good morning.
CALLER: Hello Mr Hawke.
PM** Good morning Betty.
CALLER: I'm a Labor and I always will be. Why I-Im ringing you
is this two things. Firstly, I'm on an invalid pension, my
father died, and I've lived in a Housing Commission unit for
the last five years, a single unit. I also receive $ 10,000 from
my father's estate he died in. April. When I rang the social
security in regard to this, they said my pension would be cut
out $ 10. Also, then I rang the Housing Commission, they * said
my rent would be put up. That is the first thingI wanted to ask
you. I have reared four children etc. etc. I have nothing else
in the bank.
PH: Well Betty all I can say to you with certainty without knowing
all your details, and I'll come to that in a minute,, as far as
the tax package is concerned that was announced yesterday, the
benefits there are substantial for pensioners. I1 don't know
all your circumstances, but these things are significant for
people who are dt~ pendvfit vil pt-nrii004 Or LhatL isUrL ur b*, nefit.
Firstly, the area that will be freed of the income test will be
Increased by $ 10 a week for single pensioners so that that
adverse impact , which will mean in fact that people can get up
to an additional $ 5.00 a week, that will go to about 450,000.
XIM not sure whether you come into that category. I can't tell
from what you're saying. In regard to rent assistance, that
separate Income test on rent assistance will be abolished so
that's going to provide relief to about 700,000 pensioners.
You may come in there. And thirdly, I didn't get the age of
your children..
' BUTTROSE: 21 to 31, four children.
PM: ' What I want to say to you Is that I always make the point,
Ita and Betty, when I get a question like this on a program the
listener can never give all the details so that I'm able to give
an answer which I know will be accurate. So, Betty, if you
would like to and Ita, I know you'd co-operate, if you would
send to me care of Ita's program the full details of your case,,
I'll give you a guarantee that I will have them examined to see
whether there's any way In which you are not getting all the
benefits to which you're entitled or if you're being penaliaed
in any improper way.
BUTTROSE: Prime Minister a change for a moment -off the question
of tax. The very vexed question of the almost half a million
payout to the former head of the Australian Bicentennial Authority,
Dr David Armstrong -now obviously I've followed your remarks
in the Parliament and I'm familiar with the case. But * even if we
were going to err on the side of generosity, It Is indeed a very
generous payout. You're waiting for another reply from Mr Reid
on this matter and I understand that a previous employee of the
Bicentennial Authority has now consulted his solicitors to see
whether he should be entitled to a similar type of payout. Are
you happy that the Bicentennial Authority is being run, in the
way-that it should be.
PH: Well your last point goes right to the heart of it. The
Bicentennial Authority operates and is run under a legislation
that we inherited from the previous Government. They set'it up
A ,2t C~$ LY. ' 17
PM cont...: as a separate company so that the' Overnment and the
Parliament have got no Involvement in its running or any direct
oversight of It.
BUTrWuSE: Aren't you able to change that.
PM: Well, you see Ita, it's a good question. When we came to office
we made a deliberate decision. It's not the sort of way we would
have liked to have set it up. But what we thought was this
we didn't want to have a political argument and look as though
we were getting into a partisan sort of position about the
important issue of the bicentennial. So we made a deliberate
decision to say alright, we didn't set up this legislation.
We didn't appoint the people who are there. But let's try and
make it work, not have a political fight about It. And so we'veA
tried to make it work. And increasingly there's been criticisms
about some of the things that have been happening. And so we've
been trying.-to deal with them in a way which is not going to
make this a political football. Now unfortunately*. that attitude
is bein g frustrated to some extent. Now we'll have to seriously
look at the question I guess, and particularly I mean I do have to
wait until I get the further replies from Mr Reid and I don't want
to in any sense prejudge, I'm not trying to do tbat it's just
Improper to make any comment until we get those replies but
depending upon the sort of thing that develops out of those
replies, we may have to look at whether there needs to be a
situation where the Government and the Parliamenit do have a greater
degree of involvement.
BUTTROSE: Well there's been a massive amount of overseas trips, q
there's been, I think the sales spending so far by the Bicentennial
Authority is $ 45 million, coupled up with a half a million dollar
payout to Dr Armstrong. I now realise that by seeking my career
in private enterprise I've definitely done the wrong thing.
I should have taken a bureaucratic job. And then we had the
resignation of Ranald Mc~ onald. Now perhaps you and Ranald
McDonal d have had policies that have not always agreed. But I
think in terms of being a businessman whose views are respected,
It is a most unusual step for somebody like Ranald'to resign from
the Bicentennial Authority, because he's not satisfied with the
way that it's being run. And to me that means alarm bells of
a tall order.
PM: Well Ita. it's precisely because there are some alarm bells
ringing, including Ranald McDonald, and there ar~ e other
criticisms, that I had discussions with Mr Reid and it included
the matter of the Chief Executive. 1 mean I haven-It ignored those
and I've tried to this point to operate within the-structure
that's been imposed upon us by our predecessors. I'm aware
of those concerns and I've asked that certain consideration
be given to some of the points you make about the number of
overseas trips and so on. But you're in this position where
you have no authority over the running of the blessed thing.
I mean you talk about bureaucrats. Essentially what they've done,
what our predecessors have done, is to set this up as a separate
company, and that's what it's done. It's a separate company, it has
articles and memorandums of association.
BUTTROSE: Even for a separate company, it's a big payout.
Anyway I know you've got the cat by the tail, so to speak sir, so
BUTTROSE cont...; I know something else will happen. l'm
just fascinated and intrigued by the various things that have
been occurring. You also have time restriction on you this
morning. Would you have time for one more call.
For you, Ita, I would, yes.
BUTTROSE: Thank you. Les, you're the lucky person. Good morning.
CALLER: Good morning sir.
PM: Good morning Les.
CALLER: This is away from the tax question. What it's about is
a national program about the unemployment. The benefits that
are paid out and are not been utilised, it's wasted money paid
out, not in the sense of a waste of helping families, but it's
wasted in helping the country. Surely there could be a State by
State scheme introduced where there's some return, some work
return, some projects for States..
PM: Yeah Les, it's a very good point you raised and In some
sense that concept is already being utilised. We've got the
CEP scheme which involves that sort of idea where people -are in
fact doing community work it's called the Community Employment
Program where in return for help and training they are doing
projects of community benefit which wouldn't otherwise be undertaken.
And in the new overall project for youth that we announced at the
time of the Budget, there will be further attention given by
us and particularly by the Minister assiting me, Mr Dawkins, to
see how we can look further at schemes which will Involve people
who are getting the unemployment benefit being involved in actually
undertaking useful work in the community which wouldn't on normal
commercial terms be undertaken. So,. Les, I can say to you that
your concept makes a lot of sense. Some of the things that were
doing already embody it and there will be ways in which we'll move
gradually to widen that idea.
BUTTROSE;.. Prime Minister I was most genuine when I said I think
the Government is to be congratulated to have the guts to tackle
tax reform, dodged and not addressed by the previous Governments.
And I wondered now that the Government has its splendid reforming
image, I wondered if your next reform might be the Government
sector, because the Government sector as a whole chews up about
of our GNP, that's our gross national product.* And I wondered
if perhaps this might be the next reform issue that the Government
will address itself to.
PM: Well what you'll appreciate, Ita, is that we've already
acted in that area. In these three Budgets that we've been
involved with-now we have very, very substantially reduced the
levels of growth that have been taking place, so much so that
we've now reduced the deficit by several billions of dollars
and got it down to about half the proportion of the gross domestic
product it bad before. And-I mean that's been recognised by
the financial commentators more in this period to really
effectively cut down in this area than has' been done before.
Bu~ t more importantly into the future by imposing this constraint
of the trilogy upon us, we've made sure that having given these
great tax deductions we're not going to be able to finance
-Vk'IjY ME.~ rI; -3
PM cont...: additional expenditures by allowing the deficit to
go up. We're stopped from doing that.
BUTTROSE: Thank you very much sir for joining us this morning.
PM; Ita thank you very much indeed and your listeners.
ENDS ; I 514C
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