27. Jan. 93 17: 50 No. 039 P. 01/ 06
PRIME MINISTER
lRANS( CMRJ-FPTO ' LlE PRIVE M[ NL1TER, THE HON P J KEATING MP,
PRESS CONFERENCE, PXRTH, 27 JANUARY 1993
E& OE PROOF COPY
3: 1 ow important is the ouzome of this election to the-in of when you call the
fcdcral clcotion?
I'M: It's decidedly unimportant, because the Commonweah Government will decide
the election itself
1: 1 heard that Mr Dawkins was going to release today revised Budget forecasts. Is
chat oil?
PM: Not that I know of, no.
J: line Minister, whats your reaction to John flcwsons comments In Adelaide
on ABC radio this mornfn the fact that tax has which surfaced i the political
debate because you haven't got any policies to counterfight them?
PM: Tax surfaced in Lhu dcbawc bc4ause aournalist totany unconnected with the
Ouvvnunen, wrote a profl about John Hcwson' career, and has obviously
meticulously gone through his past. Thar's why ifs arisen. Notblng to do with
the Govcrnnment whatsoever.
J. And you've got no qulnu about somebody looking at your pigger?
PM: fve had Liberal Senators, at Dr I lewson's bchsi, looking at me, asfitg
qucstions two or three dmcs a day for 8 months. I didn't hear any indignation
from any of you about that process. The key point here I4 Dr -ewson has
made taxation the cenual feature of his campaign. He's saying that we have to
change the ta mix from income to expenditure. You all know that low paid
people, or unemployed people, or midle income people spend all of their
Inconic. So whuller you Lax thr income or expenditur ifs one in the same,
it's all spont. He says that's the way wo ought to raise the taxation we'll tax
virtually all of your income. But if the claims in the book am coC; he's also
TEL
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saying. opT! d~ n well tax you absolutcly when you spend, on cvuy
service you consume, evely good you buy, we2 lax you but on your income
tax, if you'rwe ld-Mave then we Otk W OK to txi-ntdmi So irs Dr
11awson's philosophy about taraion which Is impormn here. I Ufb whAfs
revealing about a this Is not whedtwhe claimed this or deducted that, but his
philosophy. He's saying tax i the leadng Issue of a nationl election from the
coaliton's side of politics. lie's sayin that all goods and Al services in the
community should be taxed absouioly at die poWit of purhase or talc. But fbr
income tax he seems to be sayn he thinks dct'ius for ax tnimbniadon am
OK. It's the philosophy that mullen here.
3: But you can we that he was quite within die law to do what he hadon. If the
philosophy was so wrong why don't you change the laws to make what he did
ileal?
PM: I didn' write this stuiTZ rm not privy to his income or his returns. He can rebut
this if he wishes, ho has'l to date. Therefore these were matters at the time for
the Commissioner of Taxaion. The point Is the point in principle.
Ie. id he woms ketut to dobate you on yowr taxation arranccnta, w ould you
oblige him?
PM: There's no debate, rm a PAYE tax payer. m the most simple case around
Let me just make this clear to youIf you want comparability, I bou& M a house
within one month of Dr Hewson buying his house. On my house al the
deductions are carried by me, As Im an. yours ar. That M, If you We in a
house as a domestic resldence, dw costs art not deductible. To paint the
picture, or to aiake an anfangcmcnt where one nuns a private deduction Into a
business expense, this Is the point her, is an arrangoment which minjirdaus tax,
In the comparable situation, 1\ v still got the house, I'm still ranying the interest
Costs on the mortgage, theyve never been doducte4
3; And for the record, your taxation rate is?
PM; rin a PAYE tax payer, it's as simple as dat
J: And thaf a at what rate?
PM; Pick up the scales and have a look.
3; Do you know the rare that you're paying as a PAE?
PM; LAA mc make ibkj clear to you there is no deduction I make that tries to turn a
privae expcmv, inu ~ a busines" expense that's the key poinL
J. ' then what rate
FM: Don't put words in my tate, I'm te1Iina you
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I: tm asking the question
PM: You've asked, so rm ivins you the answer. The answer is I do not seek tO turn
private expens into business epenses to masquerade privat expenses as
business cxptnrsas rm quite met al of you would be happy to tun your
mortgage costs into deductibic crxPancs.
1: Did Dr Iewson break thclaw?
PM: Thai's a mailer for hini, the Tax Commissioner, ct cetcra. rm just making the
point, as a matter of philosophy Dr Hewson says that taxation is the issue that
malturs in hs counity. He want to ux exendcitu absolutely at the point of
salt of goods or sorvlczs, but he's saYing in relation to income tax that he thinks
the lelity, tphe lophy of taxniiaionis OK. Thars thekey poiL
Can Ijust also say that we habtie fuldnibiiitioiis by Mr Downer ovrnigt
For 8 month, 8 months mind you therea a few Canberra jounal& ta here,
the know this to be Uue fbr 9 months qutions have been asked wktout
foundation. Questions with no foundation and proved to have no foundation,
questions were asked of me for 8 months. A lot of it was printed in de
newspapers. Someone unconnected with tho Govenument writes a book about
Dr Howson, his taxation becomes a public issue, and eftWr& away he's & ayflg
this is dirty pool, the ( overnnemn is up to dirty pooi. What about the
nconsistency of 9 months of this as Dr -ewon's beheat I think you should ask
Dr HewsoIn what was the point of his tactic7, did he think It was tight?, wa
Senator Baum, aing on his xpress inalnios? and, does he now regret this
1. Jb it the case that Dr Hewson is paying 15 per cent tax and you'rc paying 48 per
cent?
PM; I donit know what he's paying.
3: Are you paying the top margnal rate of tax?
PM: For a start I get rebates like you do, I get a rebate for dependent spouse and
children, But I'm not turning private expenses into business xpem= e. Do you
understand? ~ mars the key point rm not about " yingto tn a private
expenso, like the cost of my mortgag, into a business expense.
JAr eyou giving Dr IIcwson back what you
PM. No, this Isue arose not by us but by a bo*, Mikrhistiwr,-WaUkpc has made
this point But Dr Tiewson has taxation as the primmay issue tn a national
election whorc he says, Australia has been ineficient and lazy and they've got to
do moro, and they think they should be taxed at the point of sale of their goods
or thvir servicos, but to take the view that income taxation should be available
for ininimisation duough devises. In other words, if you're a wage or satiny
varnar you pay absolutely, but if you're well-advised you can minkmise your tm
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Tisx Lq a question of philosophy. IV,, Dr Hcwsofl Who's runn* n On taxation not
the Government.
J; You're apparently feluotant to nam
PM4: YouNVe had enough, ato tr any more qumstiw?
J: I wAsjult goigto ak y01r atin& uanyu telus what your uaadw ra
is?
pM. i r'd have to average If's inmateial what miy rate is. IIIl tell yoU this I have no
ClaRM tha turns a private expense into a busines expense,
3: DO YOU think tats morally wrong.
PM* Pardon? Do you think, morally, rnii isation could be aeon as a ( inaudible)? Is tha
what you bdlicvc?
PM: Nc ncvcr Sought to do it, I bought a houst the same tinw as Dr J1owson, I
didWnI Uip it into a company.
J: Why not?
PM; Isecause I don't thinik such a private oxpense ought to masquerade, as a busines
expoense. That' why.
J; Do you thinkpay as you carntax payrv) amben, paying for corpor
Austraia?
PM: Before I becamnc Treasurer, the tax system was subject to MAssiVo
haemclTh&& zg through tax avoidance and evasion as well as minitnistn and
most of thr. minimisation and & vidance scheMV3 had a captal gain underneth
thmm I introduced the = aaMon of capitains in this coUnbry. I inb* odtAcd the
taxation of bingo benefits into tis country, As a resut, peopl now pay their
fair share of tax, which was nover the case When Dr Hewsont was advisig Mdr
Howard. lIn those days the taxation syste was in a state of accelerated
hamorrhaso.
3: Ame you prepared to hav; your taxes debate in Parliament along side Dr
I lowfions?
PM: Listcn, minec havc bcen debated for B nmths. You might have not noticed, or
uhuscn not to notic, they were debated for s montis.
I. Prinir Minister, rcgleas of the detailg of who started it, do you tink t
clectoriaic of AUstralA is lnitetC4 t you and Dr Hewson's pemonal ian
matters? TEL
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PM-No, I don't think thay amc, but I th" n they ame MeY intereted iA the philooph
of taxaio which D~ r Hewson is p~ omting 28 the fhzt issue in owr dational
Politics. He's gaithat ansres and goods hould be t" cat IS parcent
all oxpendtwoe. You know that for Wage and saay earners that MGMn 100 per
Cent of their Income, because their income And . xpendinire Is the sante, they
don't save. They don't have enough money to savC 90it mCAns that their
incom~ e and expcnditur is one and tho samne, and he says therefore we'l tax
thoue. But one oan dnw the obvious point that in teMM Of In1COMe tax, AS
distinrct from consumption or expendIture tP.. .11rT T iniflim . f VA,' f. w. Al-
J; Mr XeAtin.
PM: Comc on, you've had mnorc than your rAir So.
l: D~ o you expect tho Parliament will have the oppoiwiiy to debate ti inanor
Weore shc ce dn
PM: Yes, it will havo the opportunity to debate ThotPuziament Is schedulad to
contC back in the third week of Februaty, it it not? In that p~ uiod all thinp wig
be dcbWAtd
3: Scheduled to come back before ihz elcuion?
PM: At thi stagc if~ s cosing back, absolutely.
3: M Keating, apart from your pononal tax and your busbin hterrsts., have you
nerver souht u) mi'nimie your tax in your business interests?
IPM: No, this was another fiaphy yesterday. The, thing about the Liberals, heme they
were saying~ of me, Senator flaumne was askin these questions beeaus ft Was
the ro~ t thing to do to elicit information on the need to know basis, but when
thc Goverment says what about your position Dr Hewson? Shocking, this is a
b wat p, ih gte o itical OK fortelbesto do itfor 8months, noM
OK for the L~ bor Pailyto doIt for 8minutes. lhbarthie point
3: What about the advantage to you tha tho perception may arise that it Is a
Cuuaudible)?
PM: ThAt'. for you to report and nuke clear, that the issuc of substance is his wish to
tax the Australian clvctorate wit a conpsulon tax against what is apparently
his record in relation to income tax. As far as, this Lady here asked me about
my Affairs, yevivrday's statement woe a total flirphy, Thome is a thin in the tax
provision callvd ' 1rouping. Companies today no lunge need to rn their
mtaiing and tir production witbin the one company. You can have a
prodution copanuy and a rtail compaty and the merge together in the end.
1' otake the profita of one and saytat in smeway itsnot hMnWit s taxp aKd
to i~ iorc the costs of the other is of course a total joke.
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J: Do you onaidor your txhtion affai are prdvatt 4min?
PM: I tonoidvr dLcrn to be totally in order. Mine wore ai& diid by a public auditor
and placod of the public record of the ASC. So you can go down there and
punch a screen and go and road about thom Go and ask Dr llewson will he
make his available,
J: Mr Koating, you've called It a lrphy, but to the public at large who may not be
intimate with the laws of taxacol do you ( inaudible) of what the Opposidon Is
saying?
PM: No, why would they? Thtrets not any basis in this whatsoever in this, nothing.
Apparently a number of people today on radio have made that point quite clear.
The Vrouping provisios mean, in the old days people used to have a company
that had income and run all the costs against it een if the companies had
diferent functions. After & ouplng proisions were Invroduced, you could then
havvi a company which was a reta company and a company which was a
prodation compuy, 100 per cent owned within the group. You can't look at
the prolits of one and not include the costa of the other. lb1ats what they tied
to do lat night knowing that moat of you wouldn't be on to it to ty to save him
some ombarrasanint.
J; John lewson wants changes to the debating situation, he doesn't want a panel
ofjoumnaista he just wans a moderator. What's your reaction to that?
PM: Wc'U negotiate a sot of anrangoments, rm not sure cxaiutly what weve asked for,
I thitk a panel Is probably bcst.
Why did you change your mind about a wonsunption tax?
PM. rm not h10V to giva you an cuonornic history lesson. OK
cnd