E&OE.............................................................................................
JOURNALIST:
It's the biggest tax reform ever, certainly since World War
II and on the hustings, if I can use that term, the old snake-oil
charmer himself, the Prime Minister, John Howard to sell his tax
reform package which includes a 10% GST. As we call it Mr Howard
a great spot Townsville. Would you agree with that?
PRIME MINISTER:
It is a great spot. I went for a walk this morning and it's
a great spot.
JOURNALIST:
On the new refurbished Strand to be completed shortly with some
of your money.
PRIME MINISTER:
There's always plenty of Commonwealth money. Peter Lindsay
here is always makes certain that there is a steady stream of Commonwealth
money coming to Townsville.
JOURNALIST:
Now, I've got to ask the question: are you a thrill seeker
putting out a tax reform package when people say tax that's
more money we have to pay?
PRIME MINISTER:
Well, actually this plan will collect less tax than is being collected
at the present time, so the first thing that should be said about
it as far as the level of tax is concerned there'll be lower
tax collections under this plan than at the moment. The country
needs tax reform everybody knows that, deep down everybody knows
that we can't go on forever with the present system and what
we are putting forward is not just a lazy tax cut I mean
anybody can offer a lazy tax cut and say look here's a few
dollars. We're doing more than that, we're offering dollars,
but we're also offering generational change and reform for
the long term benefit for the country. And the thing that I want
most known about this plan is that it is good for Australia because
it will reduce the cost of producing goods and services in Australia
by about $10,000 million a year, it will boost our exports by reducing
the cost of producing them, and all of that has to be good for the
whole Australian economy so it's in the name of the entire
Australian economy, more than one individual group, that I ask the
Australian public to support this plan.
JOURNALIST:
Okay now ten indirect taxes will go
PRIME MINISTER:
Gone completely. The wholesale sales tax ...
JOURNALIST:
But who watches that? Who monitors to make sure it ...?
PRIME MINISTER:
It will be a condition of the introduction of the GST that they
all go. I mean the wholesale sales tax will be abolished by the
Federal Government, in full without deduction in total, and we'll
be saying to the States who will get the full proceeds of the GST
revenue, you can't get that money unless you get rid of your
bank account debits taxes, those that have them, and financial institutions
duty, your stamp duty on shares, stamp duty on business conveyances,
stamp duty on bills of exchange, stamp duty on cheques, promissory
notes, a whole list of things and the best thing of all, of course
for regional Australia, for the bush, is that we are going to make
fuel much cheaper by reducing the fuel excise on heavy trucks and
rail from 43 cents a litre to 18 cents a litre. Now you know how
big Australia is, you know how far Townsville is from other parts
of Queensland and other parts of Australia, and the greatest single
thing that you can do reduce costs in regional Australia is to cut
the price of fuel. And by reducing the excise on diesel from 43
cents a litre to 18 cents a litre, that's a huge boost to the
bush.
JOURNALIST:
Okay.
PRIME MINISTER:
Now the Labor Party incidentally is against that. Their environment
spokesman said it would be bad for the environment so he's
against cheaper diesel for the bush.
JOURNALIST:
On the subject of the Labor Party you've flushed them out
though haven't you because they've got to respond to this?
PRIME MINISTER:
Well of course they have to respond and I think the Australian
public will want to know...
JOURNALIST:
So we're going to go to an election on tax?
PRIME MINISTER:
....whether all the Labor Party offers is a lazy tax cut or
do they have a real plan for Australia's future?
JOURNALIST:
But given the Labour Party's performance it doesn't become
L-A-W, does it?
PRIME MINISTER:
Well it will. I mean, I bet now Mr Beazley will do what Mr Keating
did it in 1993. When we had a plan in 1993 what Mr Keating and Mr
Beazley did was to say we won't have a GST, we won't reform
the system, we'll offer you a tax cut. What did they do? They
got into office on the strength of that, they immediately took away
the tax cut and they increased every single indirect tax they could
put their hands on. The 20% went to 22, the 10% went to 12%, 30%
went to 32%. Now left with the existing system they will be forced
to do that again if they win the next election. The only way you
can avoid putting up existing indirect taxes is to change the system.
It's either higher indirect taxes off the back of the wholesale
tax system we now have, or it's the GST. That's the choice
in the indirect area, you don't have another choice because
the Government has got to get some revenue from somewhere and the
indirect tax base is eroding the whole time. I mean this idea that
the GST is going to hurt the welfare sector couldn't be more
wrong because unless you protect the indirect tax base you won't
have the resources to help the welfare sector.
JOURNALIST:
On that subject ACOSS deliver their final verdict on the tax reform
package this morning in Canberra. Now they've been very guarded,
do you think they'll give it the thumbs up or will they say
there needs to be some change?
PRIME MINISTER:
Well I don't know, but I understand that they're going
to be critical of a couple of things, they're going to raise
questions about the calculations that we have made.
JOURNALIST:
Tax on food?
PRIME MINISTER:
I'll come to the tax on food in a minute. But as far as the
calculations are concerned they've been made by the Federal
Treasury, they've got the best economic modelling capacity
in Australia and we in fact said to ACOSS if you have any concerns
or questions about the modelling, we're prepared to talk to
you and make the Treasury people available to explain the basis
of it and to respond to your queries. Well, they haven't taken
that up so we're a little surprised if they are concerned about
the calculations that they wouldn't come and talk to us about
it.
Now the question of food. People say it's tough on the poor
to include a GST on food. I'd say a number of things about
that. If you leave food out of the GST there is a solid argument
that says that that will advantage the rich as much, if not more,
than the poor and the reason for that is that if you leave food
out you have to go the full bit. You can't just say we won't
include fresh food in the GST. What do you do about restaurants?
What do you do about McDonald's? I mean if you say that food
is exempt from the GST are we going to exempt McDonald's or
are you going to put it in? If you exempt McDonald's are you
going to exempt other restaurants? If you exempt other restaurants
it means that very well-off people who spend a fortune dining out
don't pay any GST. Now is that fair to the poor? Of course
it's not fair to the poor. In Canada you have the ridiculous
situation where they're arguing over whether a pie in a supermarket
should be GST free, but a pie heated in a takeaway food shop is
free of GST. I mean what's the equity of the commonsense in
that? So the only way that you can only really fairly deal with
this thing it to put all of it in and have a lower rate of indirect
tax. I mean the trade-off is a broad base with everything in and
a lower rate, or a lot of things out but a much higher rate. I mean,
which we have at the present time. I mean, a lot of people don't
understand they go into, they pay 12% tax on things like flavoured
milk and biscuits. You can pay 22% on soaps and detergents, you
can pay 32% on televisions and videos. I mean that's what we're
paying at the present time. Now under our system you get rid of
all of that and you replace it with a single rate 10%.
JOURNALIST:
Would it be fair to say though that people concerned and confused
about will it stay at 10%. Is that justified - that scare-mongering
out there?
PRIME MINISTER:
Well all I can say is this, that it will be legislated at 10% and
the law will provide that can't be altered unless you have
the unanimous agreement of every State and Territory Government,
the Commonwealth Government and both Houses of Parliament. And I've
been in politics 24 years and I can tell you those eight Governments
have never agreed on one thing, let alone on something like this.
JOURNALIST:
Okay.
PRIME MINISTER:
Now, if you think there's a better mechanism than that, knowing
Australian politics, tell me what it is.
QUESTIONS
CALLER::
Good morning Mr Howard.
PRIME MINISTER:
Yes Les, good morning.
CALLER::
A couple of simple questions. I'm a pensioner. You're
going to get a lot of trouble with this I think. I'd like to
know medications, prescriptions...
PRIME MINISTER:
GST free.
CALLER::
As you know, all people that are fairly old are being sick people,
getting sick people. Now we will have to pay this. Now is there
going to be any rise, or anything whatsoever in our prescriptions
in going to the chemist?
PRIME MINISTER:
Well, look, your prescription drugs you just raised are GST free,
and on top of that your pension will be permanently 1.5% above any
increase in the cost of living as a result of these changes, and
we've put that 1.5% there as an extra buffer. So whatever the
price impact is, and we calculate it to be 1.9% across the board
you will always have this buffer of 1.5%.
CALLER::
But listen, Mr Howard, what does this stand for? I'm talking..
PRIME MINISTER:
Well I'm just telling you what the facts are. I mean you will
have your view and you're entitled as an Australian.
CALLER::
It's not a matter of view I just want you to listen to this
just for a moment.
PRIME MINISTER:
Well I answered your question.
CALLER::
I happened to see the lady on 6o Minutes' talking
to you the other night, the lady pensioner herself. I'm not
talking about pensioners that have some money in the bank.
PRIME MINISTER:
I understand that.
CALLER::
I'm talking of us people that have all these things to pay
on improving your health. I myself am getting $162 a week and so
is my wife. Is it going to affect that money or how much more money
would I get then.
PRIME MINISTER:
Well you'll get a 4% increase up front on the 1st
of July in the year 2000.
CALLER::
What would 4% be on $162.
PRIME MINISTER:
Well [inaudible] calculations, we'll do it.
CALLER::
Well there's I'd like to say to you, I hope you don't
get upset.
PRIME MINISTER:
Well you can say anything you like, it's a free country. But
could I just answer, I'm sorry but you did ask me question
and I hadn't finished answering it. You get 4% and then the
guarantee is that whatever the CPI impact of the changes are, and
we calculate them to be 1.9%, you will always be 1.5% guaranteed
above that CPI increase.
CALLER::
I see.
PRIME MINISTER:
So that is how it works.
CALLER::
Well okay. That other lady the other night, as I say, on television,
she was going to explain to you about going into a supermarket and
the prices, now I worked in a supermarket, I've just retired
after 20 years, and everything that lady said is true. You people
and Mr Costello and all you sitting up there, none of you know what's
going on in supermarkets. Youse want to get around, get into a supermarket
instead of getting into the mall today, and have a look at the prices.
PRIME MINISTER:
Sir, I'm very interested, andI'd just like you to stay
for this. You say you worked in a supermarket?
CALLER::
I did work in a supermarket.
PRIME MINISTER:
No, I believe you. Sir I'm not disbelieving you. So you'll
therefore know that 20% of the cost of everything that lands on
a supermarket shelf, particularly in a distant area like Townsville,
is made up of transport costs.
CALLER::
We realise, yes.
PRIME MINISTER:
And do you realise that the sector that gets the biggest single
price cost reductions under this package is the transport sector,
because of the reductions in fuel excise? And it's because
of those reduced transport costs that the price of many articles
on supermarket shelves will fall and that the increases in relation
to others will be a lot less than 10%. And that is why you ought
to believe me when I say that the across the board increase is only
just under 2% rather than 10%.
CALLER::
Well what I was trying to stress to you Mr Howard, you just made
a statement. All right that is true possibly. But I'm going
to ask you again, I repeat...
JOURNALIST:
Hang on Les...
PRIME MINISTER:
I think you've done well. You asked me one, I asked you one
and I think we're square.
JOURNALIST:
Okay, we've got to move on. Thanks for your call. Bye bye.
Wayne, hello.
CALLER::
Yes good morning Mr Howard.
JOURNALIST:
Good morning Wayne.
CALLER::
How are you today?
PRIME MINISTER:
I'm all right thanks, nice to be in North Queensland.
CALLER::
It's a beautiful place isn't it?
PRIME MINISTER:
It's a fantastic place and it will be even better under this
tax plan because transport costs will be a lot cheaper.
CALLER::
Well fingers crossed, yes. One question: I was listening to an
article on the radio the other day regarding the cost of a bottle
of wine. Now wine has a 22% sales tax I understand.
PRIME MINISTER:
Well actually the...I think the wholesale sales tax on wine is
41%. It's a special rate. Anyway we're changing all of
that. Anyway go ahead, I'm sorry.
CALLER::
Okay. Those wholesale taxes are going away aren't they?
PRIME MINISTER:
They are going away but they're being replaced by a wine equalisation
tax. The effect of this is essentially that the standard 4 litre
cask will go up by about the normal CPI rise of 1.9 and in relation
to medium and higher price bottles the increase will be slightly
more. But generally speaking what we've done is in line with
what the wine industry has put to us. The price of ordinary beer
on a per stubby, per unit basis will simply rise by the CPI adjustment
and the price of light beer will fall a little. And what happens
to whisky, it remains the same. It's already heavily taxed.
And that's essentially it on alcohol.
CALLER::
Getting back to the bottle of wine, now the wholesale or the indirect
taxes are coming off, the 10% tax is going on, the GST, so by rights
that should make a bottle of wine cheaper than what it is now.
PRIME MINISTER:
No, well, we took the view that if you are having a situation where
there were some price adjustments in relation to other items it
wasn't justifiable to reduce the price of wine. Wine is already
particularly, cask wine in Australia is cheap, very cheap by world
standards. The great boon to the wine industry out of this of course
is that there exports will be GST free and that is a huge boost
to the Australian wine industry.
JOURNALIST:
Okay Wayne, have to leave it there. Thanks for your call, bye bye.
Graham good morning.
CALLER::
Good morning Mr Howard, how are you?
PRIME MINISTER:
I'm very well Graham.
CALLER::
Welcome to northern Queensland. I've got two quick questions.
If I was a primary producer and I was selling my items to the wholesaler,
would there be a 10% GST on that?
PRIME MINISTER:
Yep, he gets it back.
CALLER::
Sorry.
PRIME MINISTER:
He gets it back.
CALLER::
He gets it back. And what about when the wholesaler sells it to...
PRIME MINISTER:
Well, there's another one but he then gets it back too. I
mean the way a GST works is that it is imposed at every point in
the chain. But all the intermediates get it back and it's borne
at the point of consumption.
CALLER::
So in other words, what it boils down to it's just on the
retail price of the food.
PRIME MINISTER:
That's right. It's borne at the point of consumption,
that's right. And you see that's the great virtue of it.
For a farmer or anybody else in business you will now get all of
your inputs tax free. Where as now, even people who have special
exemptions from the wholesale sales tax, there is a manufacturers
exemption, but even those people, they pay wholesale sales tax on
some items but don't enjoy the exemption. I mean a typical
example is a computer. There aren't many businesses now that
don't have computers and I think there's a 22% wholesale
sales tax on computers. You don't get that back now, but under
this system you'll pay only 10% and you'll get it back....
CALLER::
Oh yeah, well that sounds...
PRIME MINISTER:
...because it's a business input. And when you go and buy
petrol, forget about, even apart from the diesel arrangement, if
you need petrol to run your business, and most businesses need petrol,
it will be 7 cents a litre cheaper because what we're doing
with petrol is that we're reducing the excise on petrol to
the extent necessary to allow in the 10% GST and that equals a 7
cent reduction per....7 cents every litre reduction in excise
and you get the whole of that back because the GST is fully rebatable.
So that means that every litre of petrol used in business is 7 cents
cheaper.
CALLER::
So what about the average man on the street, he still pays the
same?
PRIME MINISTER:
His price, the ordinary motorist will not pay any more for petrol
but of course they won't get that reduction. They won't
pay any more though. They won't pay any more. It won't
go up. The price at the pump will be the same and he'll have
a tax cut. So in relation to petrol his way ahead, and the businessman
is even further ahead because he gets the seven cents a litre cheaper
because it's a business input but he also gets the tax cut,
unless he's, you know, cheating or something.
JOURNALIST:
Thanks for your call Graham, bye bye. Ross good morning.
CALLER::
Yes good morning Mr Howard, how are you?
PRIME MINISTER:
I'm very well.
CALLER::
That's good. Just a quick question for you: now I earn $30,000
a year and according to an advertisement in the Sunday Mail last
week I get a $7.30 increase. Now what I've done is I've
gone over the last two grocery lists and allowing a 10%...
PRIME MINISTER:
Do you have any dependants?
CALLER::