E&OE....................................................
SATTLER:
Good morning Prime Minister.
PRIME MINISTER:
Good morning, very nice to talk to you Howard.
SATTLER:
Thanks for joining us.......
PRIME MINISTER:
I'm getting a bit of echo, but maybe the technicians will
remove that as we go along.
SATTLER:
We'll pass the message on.
PRIME MINISTER:
Thank you.
SATTLER:
Little sir echo. That's me.
PRIME MINISTER:
Never say that.
SATTLER:
All right, now come on, tell us, will a goods and services tax
or its equivalent be part of the Government's next election
policy? We want to know.
PRIME MINISTER:
You can't reform the taxation system in a big way without
addressing the need to get rid of the present indirect taxation
system and replace it with a broadly based one. So if you're
really serious about tax reform you've got to look at that,
because the present system does include an enormous range of hidden
taxes. I'll bet most of your listeners don't pay, don't
know that they pay a 32% wholesale sales tax when they buy a television
set. They don't know that they pay a 12% wholesale sales tax
when they buy such things as soap and detergent. They don't
know that they pay a 22% sales tax when they buy a lot of other
household goods. And of course, they probably do know that they
pay a 22% wholesale sales tax if they buy a family car, yet the
one or two people listening to this program who can afford to buy
a lear jet, don't pay any wholesale sales tax on that at all.
Now that is a plainly unfair, increasingly unworkable, old-fashioned,
out-of-date system. And any scheme to fundamentally reform the Australian
taxation system would take an axe to that sort of approach and have
a more broadly based, but obviously, much lower rate of tax.
SATTLER:
All right well you've almost, and why don't you just
declare yourself that you're going to get rid of the wholesale
sales tax which we don't......
PRIME MINISTER:
I'm not, I'm obviously not declaring myself about the
whole package until we're ready to release the whole package.
I mean I've said all along, Howard look, I'm not going
to play those games.
SATTLER:
No, but you've convinced me that the wholesale sales tax system
should go and I guess you want to influence the electors.
PRIME MINISTER:
Well of course I will, and part of the process of reforming the
tax system is to point out the weaknesses of the present system.
I mean apart from anything else, the present wholesale tax system
exempts some things totally (we're still getting the echo)
and, but, has a very very high rate on a whole lot of other items.
And the worst feature economically is that it penalises our exporters.
SATTLER:
How badly?
PRIME MINISTER:
Well very badly. It makes them on average much worse off than their
competitors from other countries, because what we do is we tax the
inputs to those things that we export overseas. I mean the process
of goods being made for export overseas, the people who make them
have to pay tax on the things that go into their manufacture, whereas
under the tax systems against which our exporters compete, from
the exporters, against the exporters from other countries, under
those alternatives tax systems, and the alternatives to ours, there
are no such taxes on inputs. So the worst feature from an overall
economic point of view for Australia is that the present system
is a penalty on exports and that alone is a very powerful argument
for reforming the Australian taxation system.
SATTLER:
And almost everyone of those economies has got a GST.
PRIME MINISTER:
Well they don't call it that, they call it all sorts of different
things.....
SATTLER:
It doesn't matter what you call it.
PRIME MINISTER:
....they have an indirect tax system that doesn't penalise
their exporters. We have one that gives a rabbit killer to our exporters
every time that they manufacture something for export. Now that
is a stupid taxation system and people for years have recognised
this. The Labor Party new this in the mid 1980's. I mean Mr
Beazley and Mr Evans in 1985 were very strong supporters of Paul
Keating's push to have a change to the tax system and to have
a broad based consumption tax. They were very strong supporters.
SATTLER:
Okay, are you going to set up a system that also allows the States
and yourself to get rid of those little insidious taxes like FID
and BAD, and payroll taxes and that sort of thing?
PRIME MINISTER:
Well I said when we started this exercise, Howard, that one of
things we would do is address some of the weaknesses in the Commonwealth
- State financial relationship and the ones that you've mentioned
are part of that are there are some other issues and I believe that
at the end of the process that what we produce will be something
that the States will see as a very significant advance on the present
system. Now I've had some discussion with State Premiers and
I certainly expect to have some more with them before the tax package
is finalised. Because although at the end of the day, we have to
take the decisions, we are keen to have the views of the States.
We're keen their input. We're very keen to discuss various
options with them and that's part and parcel of the process.
But I do want your listeners to understand that the goal of taxation
reform is not some kind of revolution. We're not trying to
turn the system on its head. What we're trying to do is to
reform the tax system as the next thing we have to do to provide
greater safety and security and stability to the Australian economy.
SATTLER:
Okay, you're going to put more money in our pockets?
PRIME MINISTER:
There will be lower personal tax.
SATTLER:
How much lower?
PRIME MINISTER:
Well I can't tell you that, and I'm not even going to
speculate. But one thing I want to make crystal clear is that we
will not be introducing a GST, or anything else that parades under
that name, on top of the existing system and we certainly won't
be introducing taxation reform that does not include very significant
reductions in personal income tax.
SATTLER:
Would you raise the threshold because at the moment.....at the
moment you go into paying almost half of your dollars to the Government
when you get to one-and-a-half times the average weekly wage. I
mean, about 20 years ago it was about 10 times...
PRIME MINISTER:
Well that is one of the weaknesses in the present system. What...
SATTLER:
It saps incentive?
PRIME MINISTER:
Well of course it saps incentive. I mean years ago you had to be
earning in today's dollars, the equivalent of about $500,000
- $600,000 a year, and there aren't many people who do that,
before you'd pay the top marginal rate of tax. If we go as
we are under the present system, by the year 2000, you'll be
hitting the top marginal rate of tax if you're earning less
than $1000 a week. And the average wage earners....
SATTLER:
(inaudible) wharfies would be hit by that.
PRIME MINISTER:
Indeed. Indeed they would.
SATTLER:
But you see....
PRIME MINISTER:
I'm still getting the echo.
SATTLER:
Yep, we're trying to work on that. I'm not but someone
else is. But the unions for a start are going to line up with your
opponents. Now, what do you say about that.
PRIME MINISTER:
Well I don't think they're serving the interests of their
members because a lot of trade unionists in Australia resent the
fact that somebody on average weekly earnings is now losing 43 cents
in the dollar on every additional dollar he or she earns. And if
that situation is left unchecked it will be even worse by the year
2000. And I don't think a lot of union members will appreciate
the fact that the unions are going to oppose reforming a system
that allows a lot of people to cheat on it in the black economy.
Now there's a significant amount of revenue lost through the
black economy in Australia and one of the advantages of reforming
the existing taxation system is that you get stuck into the black
economy and it's much harder to evade. And, so I would say
to rank and file trade unionists, if your leaders start attacking
our reforms, look to your own self interests. Ask yourself whether
you are better off with the present system which has all these hidden
wholesale taxes at very high levels like 22% and 32% on household
items, or would you be better of with a reformed system that gave
some relief to the average wage earner at the margin, and also allowed
the collection of tax from people who are now evading their responsibilities
under the existing taxation system. And the other thing I would
say to rank and file trade unionists is that in 1993, the Labor
Party campaigned against John Hewson's Fightback program and
basically said.....
SATTLER:
And won by the way.
PRIME MINISTER:
They won, yeah, but they won by saying this Howard. They won by
saying we will give you income tax cuts without a GST.'.
After they won the election, they did the exact reverse. They didn't
give us the infamous L-A-W Law personal income tax cuts, but to
make matters worse, they introduced their own version of a GST via
huge increases in the wholesale tax system. They were monstrously
regressive increases, hurt the poor and were accompanied by absolutely
no compensation at all for the people who were affected by those
increases. So what they said before 1993 was personal tax cuts without
a GST. What they did after 1993 was the exact opposite. I think
that is a very strong warning to the Australian public as to what
the Labor Party might say before the coming election.
SATTLER:
The Prime Minister's told me he'll take some calls, so
we'll take a break and then we'll be back doing just that.
SATTLER:
And we're talking with the Prime Minister of Australia and
he's offered to speak with you as well. Are you there Prime
Minister?
PRIME MINISTER:
Yeah, I am indeed. And the echo's gone.
SATTLER:
There you go.
PRIME MINISTER:
Howard minus the echo.
SATTLER:
Just before our first caller whose name by the way is Pam, I just
wonder how much of what you go on with at the end of the day is
going to depend on the elector feedback of the Queensland election.
That will be the first opportunity for people to really I guess
have a say about a prospective direct tax like a GST.
PRIME MINISTER:
I'm not too sure about that Howard. I think the Queensland
election will largely be decided by State issues. I don't subscribe
too strongly to the view that State elections are dominated by Federal
issues or vice versa. I wouldn't see the outcome of the Queensland
election as expressing any view on taxation reform. I see it as
very much an expression of the voters views up there about the performance
of the Borbidge Government. I believe the Borbidge Government will
get back, I believe it deserves to get back. And ...
SATTLER:
With the help of One Nation?
PRIME MINISTER:
Well, I don't know what is going to happen to One Nation preferences
but could I say this that I thought that the Anglican Archbishop
of Brisbane, Archbishop Hollingworth, had something very sensible
to say last night regarding people who might be contemplating voting
for One Nation and he wasn't expressing a view as to whether
they should or they shouldn't, and he said something very similar
to what I've said for a number of months and that is that there
are a lot of people in the Australian community who for one reason
or other have been affected by economic change and they feel perhaps
that they are being unfairly affected by that change and they are
therefore very receptive to simplistic solutions being mouthed by
people who have not had previous experience of political office,
or who pretend that complex issues can be resolved by snap-of-the-finger
simplistic solutions, and there is a simplistic approach in many
of the utterances of the One Nation people and I think what he was
saying to them, and what I'd be saying is that don't imagine
that somebody who comes along with a simple populist solution has
any better capacity to solve the difficult problems of the 1990s
than say the National Party and the Liberal Party in Queensland.
Because Pauline Hanson's group has no magic wand answers, it
has no answers that haven't been looked at before and the idea
that a Party, simply because it is trying to draw on public discontent
against mainstream political parties, the idea that that party has
some easy solution to difficult problems is a myth and people will
find that by supporting it, that they perhaps might get burnt by
the myth and in the process they might be voting for some other
policies that are not in Australia's interests.
SATTLER:
Okay but you are not in Queensland today so...
PRIME MINISTER:
Well, you asked me the question.
SATTLER:
Yes I did. All right here we go. Pam's your first caller.
Hello Pam. You are able to talk with your Prime Minister.
CALLER:
Yes, I'd like to speak to him about the GST, as far as the
pensioners are concerned, and also too I think that is exceptionally
wrong that he can't tell us about about... that he will definitely
take off the taxes that were already on the things....
SATTLER:
It's part of the tactics Pam, don't worry.
PRIME MINISTER:
Look, I'm sorry, I have made it very clear that we are not
going to put a new indirect tax, whatever you might call it, on
top of the existing indirect tax system. That would be crazy, it
would represent an increase in the tax burden and it simply won't
happen. So the answer is, I have told you.
SATTLER:
So the Wholesale Sales Tax would go, Prime Minister?
PRIME MINISTER:
Look, of course if you are going to bring in a new indirect tax
system, you'd replace the existing one. Of course.
SATTLER:
All right Pam, thanks very much for your call. And Joy is next,
Prime Minister. Good morning Joy.
CALLER:
Good morning both of you. What I'm after is to find out why
all this money we are sending to Indonesia when Soeharto's
got $40 billion put away and our people, the pensioners have to
go on a measly $6.50 rise which I'd like to see you people
in power to live off of every week. Especially when you have ....
that you have to buy and get expensive medication and then you've
also got the low wage earners, we have quite a lot of people here
who are down below the poverty line just as well as Indonesia and
I think charity starts at home. I think you should try and live
on what we live on.
PRIME MINISTER:
Well, I understand the view that charity does begin at home, I
also would ask the listener to understand that in order for this
country to do well and to provide jobs for its citizens and decent
wages for its citizens, it does need to sell goods and services
overseas. We can't live without trading and the reason that
we have helped Indonesia is that it is in our own national interest
to have a stronger Indonesian economy. It is in our national interest
to make certain that the countries of the Asia Pacific region are
strong enough economically so they can continue to buy goods and
services from Australia.
SATTLER:
But Prime Minister, do you think the Soeharto family could have
done a lot more for their own country?
PRIME MINISTER:
Obviously the answer to that is yes. Obviously there are practices
in many countries around the world with which I do not agree. I
have certain constraints placed upon me as Prime Minister as to
what I can say in relation to those things. On the other hand, you've
got to think of the aggregate impact on the poorer sections of those
populations and also the aggregate impact on Australia of a ...I
mean, if we allow the nations of Asia-Pacific to be impoverished
by the current economic turmoil, that will damage Australia, it
will reduce living standards in Australia, it will put Australians
out of work and it will reduce our capacity as a Government, for
example, to give the pension increase that the lady referred to,
to provide the Senior's Card which was announced in the Budget,
to a quarter of a million self-funded retirees, and it will reduce
our capacity to deliver the interest rate reductions that the Australian
community has enjoyed over the last couple of years.
SATTLER:
But Prime Minister how do you feel when I tell you, and this is
fact, that a member of Soeharto's family, a very direct member,
was down here gambling at the casino last week. I mean, where would
that money come from?
PRIME MINISTER:
Well, ....
SATTLER:
This at a time when his country is in turmoil.
PRIME MINISTER:
Howard, I don't know the particular circumstances of that
and you know that I can't get in...
SATTLER:
I know but it makes people angry.
PRIME MINISTER:
Well, I understand that and I do understand that anger, but I ask
those people in their anger to think for a moment as to whether
it is in Australia's interests for the nations of the Asia
Pacific region to go down hill economically, because we sell altogether,
we sell 33% of our exports to Japan and Korea alone, and we gave
assistance to help the Korean economy and that will come back to
us in more than the measure of what we gave, through the increased
exports, through the jobs that those export industries... and speaking
to a Western Australian audience which exports an enormous amount
to Japan and Korea, I ask your listeners to understand that if we
allow those countries to go down hill, if we allow them to fail
economically, we are hurting ourselves. Now, that's the reason
why, the major reason why we've given the assistance. I am
very conscious that it was not in the short term a politically popular
thing to do, but in the long term interests of our country we have
to sell abroad. I mean we can't survive on our own and therefore,
you need economies abroad that are able to buy our goods and services
and it is in our interests to help those countries just as it was
in the interests of nations like the United States after WWII to
have a Marshall plan that resurrected Europe and meant that Europe
in time was able to buy goods and services from the United States.
If they had refused to engage in that Marshall plan immediately
after the war the American economy would not have boomed in the
way that it did through the 1960s and the 1970s.
SATTLER:
Okay, I want to squeeze a couple of more calls in because you've
got to go in a minute. Good morning to you Mark.
CALLER:
This is a question to the Prime Minister regarding a GST rate.
Is it going to be fixed at 10% or is it just going to keep increasing
like it has done in England. You know, GST started in England in
single digit figures.
PRIME MINISTER:
Well, I haven't talked about any particular rate but you can
rest assured...
CALLER:
Well, we heard it's 10%.
PRIME MINISTER:
Well, you hear a lot of things, I wouldn't believe anything
you....
CALLER:
But whatever rate it is going to be....
PRIME MINISTER:
Look, whatever we, if we introduce a new broad based indirect tax,
you can rest assured whatever it is introduced at it will stay at.
SATTLER:
All right thanks for that, and Ian good morning.
SATTLER:
Ian we are going to have to put you on hold because we won't
get him. But Tony we can get you. Hello Tony.
CALLER:
G'day Mr Prime Minister.
PRIME MINISTER:
How are you Tony?
CALLER:
I heard you talking about One Nation and I want to let you know
that I am not