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LIEBMANN:
Prime Minister, good morning to you.
PRIME MINISTER:
Good morning, Steve.
LIEBMANN:
I'll get you to get to the sooner rather than later election
prospect much later, but can I begin by asking you whether this
is it, is the package now cast in stone or are you prepared to negotiate
with the package's critics and lobbyists?
PRIME MINISTER:
Well, Steve, we have already said that there is a mechanism in
relation to some of the fine detail where we did listen to what
people have got to say and try and assimilate their points of view.
But the thrust of the package and the main elements of the package
took months to put together and we're not going to, suddenly
over the next few days, say, oh no, we're going to alter that
and we're going to put it to that. It is a very carefully put
together package. The most important thing I want to say about it
is that it is good for Australia's future. That is the most
important thing about it. And it's fair to individual Australians
but, most importantly, it will give us a stronger economy, make
us a better country, give us greater growth and generate more jobs
and that's its great appeal to me.
LIEBMANN:
Okay, so, essentially though, no backflips, it's a case, by
and large, of now you have it, take it or leave it.
PRIME MINISTER:
Well, it's not take it or leave. I mean, I don't mean
to say to the Australian people, you know, you've got to have
this because I say so. It's not a question of that at all.
We have put together a total plan and we're asking the Australian
people to listen to it. We're going to explain it and we ask
them, at an appropriate time, along with other things, to support
it. But the primary goal I have over the weeks ahead is to explain
this plan to the Australian people, to answer their questions, to
point out where I think the criticism is wrong and, of course, to
point out how it will benefit them and benefit their country.
LIEBMANN:
All right. The reason I asked that question, though, was because
last night the Democrats, Meg Lees said that the Democrats are still
in the game but they want to negotiate with you and they want to
push you to convince you that you should abolish the GST on food.
PRIME MINISTER:
Well, we've considered that and the situation is that once
you start leaving big items like food out, you go back to the problem
of the wholesale sales tax. And the reason that you have rates of
22 per cent on family cars at the moment is that you don't
have it on a whole lot of other things and therefore you've
got to have very high rates on the things that do attract tax. And
the simplicity of a broadly based GST is that you can have a lower
rate if you have a broader base. And the way to look after low income
people with food is to compensate them, to give them good tax cuts,
to increase the pension by more than the cost of living increased
from the tax changes. That is how you help the people. And I'm
encouraged by the reaction of many people in the welfare sector.
I was encouraged by some of the comments made on behalf of the Salvation
Army. I was encouraged by, I thought, a very balanced response from
ACOSS, there are bits of it they don't like it but there are
other bits that attract them. I think the response of the welfare
sector so far has been very encouraging because this is a fair package.
I mean, we have laboured long and hard and caringly to make certain
that the low income people are protected.
LIEBMANN:
And yet ACOSS this morning is sort of reserving its final judgment
on the package and it's saying and so are other commentators
that low income earners and pensioners could end up the losers
in this, that their earnings and their spending is substantially
skewed towards food and clothing and they're worried about
that buffer.
PRIME MINISTER:
Well, Steve, I can understand people taking time to have a look
at it. And the fact that ACOSS has reserved its position is good
news, as far as I am concerned, because a year ago they wouldn't
have reserved their position. A year ago they just would have flatly
rejected it. Now, I think ACOSS has played a very constructive part
in this. I can say to them and to others who are concerned about
low income earners, we're not just compensating them for the
price effect, we're adding, in relation to pensioners, 1.5
per cent, guaranteed buffer over and above the price effects of
these changes.
LIEBMANN:
Michael Raper told Tracey earlier this morning on the programme
that ACOSS believes that if you closed all the loopholes, all the
minimisation loopholes, the revenue from that would enable you to
abolish the GST on food.
PRIME MINISTER:
Well, Steve, part of the problem with this sort of discussion is
that one man's loophole is another man's investment incentive.
And there are a lot of people who believe that if, for example,
you got rid of negative gearing you would destroy the rental market
in Sydney and you would drive up rents to an unacceptably high level
for the poor because nobody would invest in rental property. So
you've got to be very careful that, as I say, one man's
loophole is another man's investment incentive.
LIEBMANN:
Prime Minister, earlier this morning you hit the road to sell the
package. Before it was unveiled yesterday 47 per cent of voters
opposed a GST, 46 per cent felt it was bad for Australia, 65 per
cent feared that they'd end up paying more. Can you change
their minds?
PRIME MINISTER:
Well, the polls have been a bit wishy-washy on this issue. I don't
believe that people are permanently against a GST, unless you see
it as a GST on its own. I mean, I'm not in favour of a GST
on its own. I'm in favour of a whole approach, a new plan,
a new way of doing it, and that's what we've produced.
And we'll be asking people, not to say whether they're
for or against a GST, we'll be asking people to support our
total plan. And that includes private health insurance, getting
a new tax subsidy, it includes the personal tax cuts, it includes
the huge reduction in fuel costs in the bush, it includes the $4.5
billion of costs taken off our exporters which will generate jobs
and more export income. You've got to look at the whole plan,
not just the GST. That is a part of it, an important part of it,
but it's only part of it.
LIEBMANN:
All right, before the package was unveiled yesterday and
I know you think I'm dwelling on the GST but a lot of
people were worried, 10 per cent now, what's it going to be
three, four, five years down the track. And you've unveiled,
as part of the package, this mechanism to cap the GST at 10 per
cent. New South Wales Treasurer, Michael Egan, says a 10 per cent
GST is going to slug the average family of four $6,000 a year, and
he goes further and says it might be 10 per cent now, or when it
comes in in 2000, but it will just keep going up and up and up.
PRIME MINISTER:
Well, Mr Egan, better than anybody should know how difficult it
is to get an agreement between all of the six States of Australia
on anything, let alone with the Federal Government and the two Territorys.
We have got a lock in mechanism which says the rate can't go
up unless every State government, the Federal Government and both
Houses of the Federal Parliament agree. Now, presumably if this
comes in, Mr Egan is not saying that he's going to favour an
increase in the rate, is he?
LIEBMANN:
I'm not sure, you'd have to ask him.
PRIME MINISTER:
Well, he's implying that by what he said.
LIEBMANN:
Just on that mechanism and I know it might strike you as being
a minor point, but some people have suggested there is no mechanism
to lock in the mechanism, if you know what I mean.
PRIME MINISTER:
Well, what they're saying is that the mechanism is under an
act of the Federal Parliament, yes. But you know as well as I do
that if this plan is introduced and passed into law, but no government
in the future, certainly no government of our persuasion is going
to want to increase it and you've also got the very strong
likelihood of the Senate not wanting to change, and once it gets
embedded there, the chances of it disappearing are absolutely zilch.
LIEBMANN:
The bottom line to all of this is surely, the question, whether
the voters believe you, the Treasurer, your Government, whether
they trust you all. Could it be they might end up saying, look,
this is simply too good to be true?
PRIME MINISTER:
Well, Steve, that is something that ultimately we'll find
out and I will accept the judgement of the Australian people whenever
it is delivered. In the meantime, I'm going to go all around
the country and pour myself into explaining this plan because I
believe in here that it is good for our country and that is why
we're doing it. People are not foolish, they do understand
the present tax system is broken down. It does need changing, it
is unfair. And we're putting forward a comprehensive plan.
It's not just a grab bag of ideas, it's an integrated
plan. It looks after poor. It gives incentive to middle income earners.
You can now go from $20,000 to $50,000 in income without going into
a higher tax bracket and that's 60 to 70 per cent of the entire
Australian community. It does have a lot of incentive for middle
income earners. It's very good for country people. And it's
very good, overall, for the country because it makes our exports
cheaper and it makes our business costs cheaper and, therefore,
there's more resources for business to employ people. Now,
that is a message that I will take to the four corners of this country
over the weeks and months ahead. Now, if at the end of that the
Australian people believe it's good for Australia, they support
it, if they don't, they won't, and I will accept their
judgement because I have great confidence, total confidence in their
commonsense.
LIEBMANN:
Do you have total confidence, though, in the surplus because that
is also a big gamble, that the tax cuts are based on future surpluses
and given forecasts about the state of the world economy, the Asia
meltdown, are the tax cuts and the benefits going to be sustainable
when we get to 2000?
PRIME MINISTER:
Well, they are going to be sustainable because there is still plenty
of surplus left after the contribution being made to this plan.
And it's very interesting that people should now be saying,
talking about the surplus, that the cry until now, particularly
from the Labor Party, is that the surplus has been too big. I mean,
it would be interesting now if Mr Beazley and Mr Evans turn around
and say, oh, the surplus is in danger. For the last couple of years
they've been saying that we've gone too hard to get into
surplus, that we've done it too quickly, we've been too
tough and we've accumulated too big a surplus. Now they say,
oh, careful it's risk. I mean, they should make up their mind.
We've got it right. We're taking some out of the surplus.
One of the reasons why we can afford these personal tax cuts is
that as well as getting money from the surplus, the GST itself produces
a dividend out of the black economy. There's $3 billion there
that you can't get out of the black economy without a GST.
So when you, once again, put it all together as an integrated plan,
you see the logic of it and you see how the one bit depends upon
the other. And it's not a question of putting and taking and
saying I'll take that bit, I'll take the tax cut but I
won't take that bit over there, you can't do that.
[COMMERCIAL BREAK]
LIEBMANN:
Prime Minister, just on the general question of income taxes, they
could rise between now and the year 2000 or, indeed, after, could
they not? I mean, what I'm getting at is...
PRIME MINISTER:
Well, they won't under us.
LIEBMANN:
But the...
PRIME MINISTER:
Well, they won't under us. I mean, of course they won't.
I mean, we've been through two and a half years of turning
a budget deficit of $10.5 billion into a surplus of $2.7 billion
and we've done that without increasing any taxes.
LIEBMANN:
And you...
PRIME MINISTER:
Well, if we've done it against that background, if we've
been able to avoid tax rises, why on earth would they occur under
us in the future? If there were a change of government, they will
go up, but not under us.
LIEBMANN:
And you couldn't foresee circumstances under which, under
you, as you say, you would have to go to the people and say, look,
when we announced the tax reform package, these were the exemptions
but we may have to exempt...
PRIME MINISTER:
Steve, I don't foresee those circumstances. This is a very
careful package. It does have generous personal tax cuts, so it
should, because we're asking the Australian people to accept
a fundamental change. But it's very carefully balanced. I mean,
the people who are going to offer you the big tax cuts, the magic
pudding, are the Labor Party. They're going to do what Mr Keating
did in 1993. They're going to say, we can give you a tax cut
without a GST.
LIEBMANN:
Well, in fact, that's what Opposition Leader Beazley is saying
this morning.
PRIME MINISTER:
Of course, that's right.
LIEBMANN:
He's saying he can beat you hollow on tax, offer bigger tax
cuts and a fairer system without relying on a GST.
PRIME MINISTER:
But Mr Keating and Mr Beazley did that in 1993. And when they won
the election they took away the tax cuts and they increased the
wholesale sales tax and without compensation. And the increase in
the wholesale sales tax in 1993 after that election was almost exactly
the same impact as the changes that we announced yesterday. There
were no income tax cuts. There was no social security compensation.
There was no tax deduction for private health insurance. So, I would
say to the Australian public, beware of a Beazley offering you a
GST-free tax cut.
LIEBMANN:
Your most vocal critic so far appears to have been the Housing
Industry Association and it is saying this morning that a GST applied
to all homes after July 2000 will add more than $17,000 to the cost
of a new home and destabilise the industry.
PRIME MINISTER:
Well, I think that's wrong and I'll tell you why it's
wrong. To start with, the industry's never had it better because
interest rates are at a 30-year low. And Ron Silberberg and the
Housing Industry Association know that the greatest driving influence
on real estate and housing is the level of interest rates and this
government has cut interest rates by $300 a month for the average
homebuyer. The impact of the GST on an average house is about 4.7
per cent in price, not 10 per cent because a whole lot of items
that now go into a new house, like baths and basins and things like
that, are subject to wholesale sales tax. Now that will disappear.
And, on top of that, we're going to give every new homebuyer,
every first homebuyer, whether it's an old house or a new house,
if it's your first house you'll get $7000 home savings
grant. And that will, in our view, adequately cover the situation.
LIEBMANN:
Not in the Association's view. They're saying that $7000
falls short of the mark.
PRIME MINISTER:
Well, Steve, it is understandable that if you are a lobby group
for a particular section and you've wanted something you will
go on arguing your ambit claim. But I ask Mr Silberberg's members
and the HIA's members to understand the other benefits of this.
I mean, all of them are small business operators. They will all
now be able to get the taxes paid on their inputs back. Their operating
costs will be lower, lower than what they are at the present time
because one of the virtues of a GST is that it will take about $10
billion in costs through rebated input taxes off the operating cost
of all businesses.
LIEBMANN:
Prime Minister, I'm playing devil's advocate in part
here this morning. The New South Wales and Queensland Labor governments
have criticised the package and you would probably say, well, you'd
expect them to...
PRIME MINISTER:
But they're not serving the interests of their people.
LIEBMANN:
But what happens if Labor Premiers, Bob Carr and Peter Beattie,
say, listen, we're not going to be your salesmen, we're
not going to be part of this? Can they say that?
PRIME MINISTER:
Well, they will do so at the peril of being repudiated by their
own electorates because this plan will offer something to the States
that they've asked for for generations, and that is a growth
tax. We're giving them all of the proceeds of the GST and that
means in the years ahead they will all have more money to spend
on roads and health and education and hospitals. Now, are they going
to say to the people of their States: we don't want this extra
money, we're not going to provide those extra services. Over
a 10-year period, from the turn of the century, this plan will give
the States $25 billion more than they will get under the existing
arrangements. Now, are Beattie and Carr going to say: we don't
want New South Wales' and Queensland's share of that?
LIEBMANN:
But why then is Peter Beattie saying, as recently as on this programme
this morning, up until now we were a low tax State, John Howard's
just changed all that?
PRIME MINISTER:
Well, that's just wrong. I mean, he's got to sing Federal
Labor's tune. He's got to sing from the same hymn sheet
until the election. Now, if we win the election I make the
prediction now, if we win the election and we have our Special Premiers'
Conference, Peter Beattie and Bob Carr will go along and they say,
well, we didn't like it but, you know, we have to be good Australians
and we've got to accept it. They'll grab it with both
hands after the election. And they need to because it is good for
their States. I mean, Queensland not only gets the extra money through
the Federal-State change, but that diesel fuel change, the lower
fuel costs are of greater benefit to Queenslanders than any other
State. Because Queensland is a big State and it's a heavily
de-centralised State and, therefore, it relies more heavily on heavy
road transport to bring goods from one part of the State to the
other. And the benefit for Queenslanders in this change is proportionately
greater because of that simple fact - Queensland's the only
State in Australia where the majority of people live outside the
capital city and, therefore, Queenslanders, by that definition alone,
are going to get proportionately more out of this and Peter Beattie
should understand it. I can't wait to get to Queensland to
start campaigning for this.
LIEBMANN:
Two final quick questions. If you get re-elected, can you get this
through the Senate?
PRIME MINISTER:
Well, my view on that, Steve, is simply this that if the Australian
people say, yes, to this at the next election, whenever it is, the
opposition parties in the Senate are under a moral imperative to
let it through.
LIEBMANN:
And final question, Prime Minister. What is adequate time for public
discussion?
PRIME MINISTER:
Well, I can't put a day or a week or a month on that. No,
I can't, Steve. I don't know yet.
LIEBMANN:
Are you telling me that the thought of going to the polls hasn't
even entered your mind?
PRIME MINISTER:
Oh look, the generic thought is always there, it's always
there from the moment that you are elected. But I do not have a
date in mind, I have not made up my mind. Obviously, like any other
Prime Minister, I want to get re-elected. Of course I do, I'm
not going to say to you I don't, of course I do. But I don't
take the Australian public for granted. We have put forward a bold
and visionary and imaginative long-term plan which is good for the
country. I want to devote myself, in the time immediately ahead,
to explaining it, to going around the country. Further down the
track I'll think about other matters.
LIEBMANN:
You haven't made an appointment with the Governor-General,
you're not thinking October 10th, 17th.
PRIME MINISTER:
No, I have not made...I mean, people have been playing games
with me, inviting me to dinner parties on particular Saturdays in
October and November and we're happy to accept all the invitations.
LIEBMANN:
Prime Minister, we appreciate your time this morning and thank
you for joining us.
[Ends]