E&OE...................................................................................................
Well, thank you very much, Mr Spence; to Sarah and Paul; to Elizabeth
Grace, the Federal Member for Lilley; to my State colleague, Santo
Santoro, principals, ladies and gentlemen. And particularly can
I address some remarks to the final year students of Clayfield and
Nudgee.
Our youngest son is doing the equivalent examination within the
New South Wales system, the Higher School Certificate, and is in
the midst of his trials so I feel for you, I also feel for your
parents. And I have some experience of what it is like and I wish
you well.
And can I particularly thank those who entertained us. And can
I join Mr Spence in congratulating those Australian families who
have demonstrated the unwavering tolerance of the Australian community
towards people of all races and all cultures. It is one of the distinguishing
characteristics of modern Australia that we have been so receptive
to people from all around the world and nothing angers me more when
I hear people selling short the willingness of Australians to be
tolerant and to be accepting of different races and different cultures.
We are amongst the most tolerant, open people in the world and we've
had a marvellous demonstration this afternoon of that in practice.
And I would also like to particularly commend Mr Young and Drug-Arm
for its involvement in putting together this afternoon's gathering.
Because a few months ago I had the opportunity to launch, in one
of Brisbane's best known churches, the second installment of
our Tough on Drugs' campaign under the auspices of Drug-Arm.
And on that occasion the forum was marvellous and the event brilliantly
organised and this afternoon is no exception.
But this afternoon I'm here to say a few words in general
about the tax plan that I launched on behalf of the Government last
Thursday with particular reference to its impact on Australian families.
Can I first of all say that the most important thing and the most
important reason why I hope the Australian public supports what
the Government is putting forward is not because of the personal
income tax cuts, not because of the goods and services tax, not
because of this or that element of the plan, but rather that the
plan as a whole is in the long-term benefit of Australia and of
Australian families. And the plan is in the long-term benefit of
Australia because it is going to make the Australian economy more
productive and more competitive and because of that we are going
to generate more jobs and sell more goods and services abroad and
compete more effectively against imports from abroad.
And the reason that that comes about is that the essential reform
of the taxation system that is involved in the plan, and that is
the sweeping away of the existing wholesale tax system and no less
than nine State and Territory taxes that are very inefficient, and
their replacement with a single rate goods and services tax will
bring about a major reduction in the production costs which are
involved in producing goods and services within the Australian economy.
And if I leave but one or two thoughts with you this afternoon
and I hope to do better than that can I leave with you that
simple thought, that the fundamental reform involved in this plan
will make the Australian economy work more efficiently because it
will lower the cost of production of goods and services. And that
means we will be able to sell more competitively overseas and we'll
be able to compete more effectively against imports. And that is
the major reason why we are pressing ahead with this plan. And it's
the major reason why we have foresworn the soft option of just offering
a tax cut without offering tax reform because I don't think
that, in the long run, is going to do any good for the Australian
economy. You can always find an excuse for a tax cut. You need to
have a long-term plan about the future of Australia to find the
argument and the courage for fundamental reform of the system.
And it is only fundamental reform of the system that is going to
make the Australian economy work more efficiently. And there has
to be a reason, my friends, as to why for almost every year of the
24 years that I've been in Parliament, politicians on one or
other and on occasions on both sides of politics have thought about
the idea of reforming the tax system. I entered Parliament in 1974
and the year before I entered Parliament there had been commissions,
an inquiry into the Australian taxation system and it duly reported
in 1975, and it was known as the Asprey Report and some of
you in the audience may remember that name and that report
and do you know what it recommended in 1975, 23 years ago, it recommended
the introduction of the equivalent of a goods and services tax and
it recommended that the goods and services tax should replace the
wholesale tax and some other taxes and that its introduction should
be accompanied by some reductions in personal income tax. And it's
very interesting that for 23 years the debate has gone on and it's
never gone away. And the reason it's never gone away is that
the idea is right. And there's nothing more powerful in the
world, whether it be politics or any other activity, than the force
of an idea whose time has not only come but which is absolutely
right and to the long-term benefit of the Australian community and
the Australian economy.
So we are first and foremost in favour of this reform because it
will be to the long-term benefit of the Australian economy. And
if you hear people saying: well, it mightn't be a bad idea
to reform the tax system but we really shouldn't do it right
now because there's a downturn in the Asian Pacific region,
could I say to those people, it's because there's a downturn
in the Asian Pacific region that we must go ahead with the reform.
Because the challenges from the outside world make it more necessary
that we get our own house in order, that we reform the things that
need to be reformed.
I am a politician who has a selective view, a deliberately selective
view about change. I am in favour of change which is beneficial
to our country's future. I am against change which is not beneficial
to our country's future. I, for example, am strongly opposed
to some of the more permissive views about drug taking within the
Australian community. I favour a zero tolerance approach to drugs.
I was against the heroin trial, very, very strongly opposed to the
heroin trial. And that was an example of somebody standing against
change that he regarded as bad. But by the same token, I am prepared
to fight vigorously for change that I believe is good and I believe
that changing our taxation system will make the Australian economy
more efficient.
Now, we've taken particular care in putting this package together
to give even greater recognition to the costs involved for Australian
families in raising children. It is fundamental to this package
and it is fundamental to my own personal, political philosophy that
the most valuable and the most cohesive unit within the Australian
community is the Australian family. It is not only the place from
which people derive warmth and love and emotional support and companionship
and guidance and understanding of what life is all about, but it
is also, put in another context, it is also an undeniable fact that
stable, united families represent the most efficient welfare system
that any nation has devised, and that the strain on society and
the strain on the welfare system of society of disintegrating families
is immense. And it follows then from that that whatever any government
can do through the tax and welfare system to help families and to
relieve some of the financial burden on them and to provide them
with more choices, then that government ought to do.
Now, I don't pretend that any government can legislate to
make families cohesive, that belongs to the human nature, the human
spirit and individual behaviour. But governments can declare their
support for families and they can devise taxation and welfare systems
that support families. And I'm very proud of a couple of changes
that we have made in our tax plan that particularly helps families.
The first of those changes is that we have recognised that one
of the weaknesses of the present system is that the way the tax
system and the social welfare system interacts, that there are very
powerful disincentives for low income families to get off welfare
and to get back into the workforce. And that many low income families
in Australia face marginal tax rates with the interaction of the
withdrawal of family benefits and the payment of taxation, as you
move into the workforce, withdrawal rates of something like, at
the margin, 85 per cent.
So what we set out to do, amongst many things in the plan, was
to remove or, at the very least, ease what are known in the trade
as poverty traps. And that is situations where you might earn a
little bit more money but because of the way in which the tax system
worked and the welfare benefits were withdrawn, you would end up
very little out of it. And we've got examples at the present
time where you might earn $100 a week and you end up taking extra
and you end up taking home only 15 out of that 100. Now, that is
a ridiculous state of affairs. You're not paying a tax rate
of 85 per cent but by the time you pay the tax on the extra income
and you have the special family allowance subsidy withdrawn, that
is the effective impact. So the first thing we set out to do for
families was to do something about those poverty traps. And we have
significantly increased the low income families, the point at which
special social welfare benefits start to be withdrawn so that the
marginal tax rates and the withdrawal rates are a lot less.
The second thing we set out to do was to provide Australian families
with more choice about the caring arrangements of their young children.
Now obviously attitudes towards family arrangements have changed
over the years. There will always be debate within the Australian
community about what are the best caring arrangements for young
children and the role of Government and my own personal philosophy
is that that should be a matter of individual choice for parents.
It is not for the Government to say that every young child should
be looked after full-time by either the mother or father of that
child while the other parent is out at work, or alternatively that
those children should be committed to full-time childcare.
I have my own views and those views are ones that I have practiced
in relation to my own family and we certainly have no regrets at
all for a moment about the choices that we made in relation to that.
But I respect that in a free society it is for individual parents
to make decisions and I also accept that it's going to vary
from family to family. And what we have set out to do is to enlarge
the choices that are available to recognise now that it is more
often than not the case that women will wish to pursue careers as
well as raising families.
I often say that the three women who have influenced my life the
most - my mother, my wife and my daughter were all born in different
stages of society's attitude towards these things. And that
I often talk to my wife and daughter about the sort of family arrangements
that used to exist, exist now and will exist into the future. And
although they were born those three people who have profoundly influenced
my life into different ages with profoundly different attitudes,
there's been a common thread and the common thread is that
each of them has as befits responsible members of their generation
were very strongly committed to the bonds of family and the importance
of family. And what we have sought to do in this package is by the
changes we have made to improve the choices. Some people are running
around and saying Howard wants women back in the kitchen, Howard
has an old-fashioned view. Howard doesn't want women back in
the kitchen, Howard does not have an old-fashioned view. Howard
has a very contemporary view and the contemporary view is that we
should respect individual choice and that just as we should no longer
stereotype a particular pattern of family arrangement whereby the
mother's ceased any participation in the workforce when children
were born, equally we should not embrace this ideal that in some
way it's an inferior role for a mother or father to be a full-time
homemaker whilst children are young. And unfortunately the attitude
of some in the community represents the swing of the pendulum from
one side of the argument profoundly to the other which is quite
unacceptable.
And what we have done is by the new taxation scales and the doubling
of the tax-free threshold for single income families we have built
a lot more choice within the taxation system. Under the plan I announced
last Thursday it will, for example, be the case that a single income
family with at least one child under five will have an effective
tax-free zone of $13,000. And the new tax-free zone for a single
taxpayer will be $6,000. So effectively that single income family
with at least one child under five will have more than double the
tax-free threshold of two single taxpayers in a similar situation.
Now this doesn't represent turning back the clock, it hasn't
been done at the expense of double income families. It is simply
a small additional contribution towards evening up the financial
position of families who may make different choices in relation
to the caring arrangements for their children.
Let us take the case of two families, one which decides with say
the husband having an income of $30,000 a year, the wife having
an income of $20,000 a year that when the first child is born the
wife decides to drop out of the workforce for a period of a year
or two while that child is young and that family's income drops
very dramatically from $50,000 to $30,000. Whereas the family next
door with the same arrangement they decide to adopt a different
approach with after a very short period of time the wife returning
to work, the mother returning to work and the child being put into
full-time childcare. Now if you look at the benefits that that family
gets in relation to its childcare expenses and the aggregate of
its two incomes with two tax-free thresholds then to suggest that
the modest additional support that we are going to give to the first
family by virtue of lightening its tax burden a little bit by giving
it two and a bit tax-free thresholds, to suggest that the second
family is disadvantaged to the profound benefit of the first family
is to simply ignore the figures and to ignore the facts. And the
figures and facts that I use and are very typical of literally hundreds
of thousands of Australian families because the great bulk of Australian
wage and salary earners earn less than $50,000 a year.
We have calculated that something like 60 to 70 per cent of wage
and salary earners earn between $20,000 and $50,000 a year and we
have calculated that if you look at all taxpayers something like
81 per cent of them are less than $50,000 a year. So what we have
tried to do is to fashion a series of tax changes and benefits which
are designed to the maximum extent that we can and we don't
pretend for a moment that in these changes we have made we will
have given total choice to every family in the Australian community.
We haven't been able to afford to do that. But we have tried,
since we were elected to office, to alter the tax system to give
a little bit more justice and a little bit more choice for those
people who might decide that for them the desirable arrangement
in relation to their children is that for a period of time either
the mother or father is out of the full-time workforce. And then
as the child or children grows a little older the one that is out
of the workforce will re-enter on a part-time basis and then perhaps
a number of years into the future when all of them are at secondary
school she might return, or he, to the full-time workforce.
Now we are in the business of maximising that choice. We are not
in the business of saying: you should do this or you should do that.
And we are also not going to be intimidated against making these
changes by the noise of some who see but the tiniest acknowledgement
of the rights and the interests of single income families as some
kind of attempt to turn back a 30 year social revolution. It is
nothing of the kind. It is merely a recognition of the justice that
should be within our taxation system and a recognition that if governments
believe in the importance of family and they believe in the rights
of parents, not only to choose the education they want for their
children but also the caring arrangements that should exist in relation
to their children, then we should be prepared to legislate through
the tax system to provide that choice. Because before my Government
came to office there was no special recognition or not much special
recognition of the position of the single income family and the
disabilities under which they operated. And through the introduction
of the family tax initiative, we have recognised the, in an additional
way, the cost for all families double or single income of the cost
of raising children and through now the introduction effectively
of one additional tax-free threshold we have gone some distance
further in trying to redress the imbalance within the tax system
against single income families. Now these sorts of issues always
generate a fair amount of heat and often not a great deal of light
because some of the people who write about them and some of the
people who speak about them have their own political and social
agendas to run.
Can I say we are not in the business as a Government, nor am I
in the business as the Prime Minister, of engaging in social engineering.
What I am interested in doing is, first and foremost, expanding
choices for Australian families and for Australian parents. All
my political life I have supported choice in the education sector.
I am a proud product of the State Government education system in
New South Wales and I am very proud of the quality education that
I received in that system. And I was not reluctant to send my own
children to government schools at a primary level but to independent
schools at a secondary level. But I have fought all of my political
life for effective freedom of choice in education and I thought
one of the great things that was done by my Liberal predecessor,
Sir Robert Menzies, in the 1960s was to sweep away 100 years of
prejudice and bigotry and to introduce government assistance to
independent schools. And it remains one of the great legacies of
Menzies to politics within Australia and one of the great contributions
that that man made to greater tolerance and equality within the
Australian community.
And I am also very pleased that one of the first things that my
new Government did in the education area was to abolish the former
Government's new schools policy. And what that has meant is
that there can now be more low fee paying independent schools and
that the non-Catholic sector can establish a systemic arrangement
for their schools in the same way that the diocesan Catholic system
has been able to have in this country for a long period of time.
Once again, it was a question of expanding choice within the Australian
education system. Once again, a situation of saying to parents on
modest incomes who wanted the opportunity to send their children
to an independent school but couldn't afford to send them to
a higher fee paying independent school, having the opportunity of
doing so. But I couldn't for the life of me understand why
the previous arrangements had discriminated against that.
But ladies and gentlemen, I have digressed a little bit away from
taxation in saying what I have just said about education. But can
I say in relation to the tax plan that it is not just about personal
income tax changes although they are very extensive. I might remind
you in case you hear those who say that we're not taxing the
rich but we are taxing the poor, nothing could be more wrong. The
top marginal rate of tax remains at 47 per cent, although it doesn't
cut in until $75,000. We have introduced some anti-tax avoidance
arrangements which will mean that the abuse as distinct from the
legitimate use of trusts will no longer take place in the future.
We have cut the bottom rate of tax from 20 per cent to 17 and we
have increased the tax-free threshold from $5,400 to $6,000 and
we have made the changes to the poverty traps that I have mentioned
and we have introduced a number of special provisions in relation
to pensioners and to self-funded retirees. And, very importantly,
we have introduced a non-means tested 30 per cent tax rebate in
relation to the cost of private health insurance. And that means,
for example, if you have a $2,000 private health insurance policy
you will be able to get $600 of that back from the taxman or you
will be able to claim a direct refund from a government office on
production of the receipt for the payment of the premium.
Now those sorts of benefits are important to all families irrespective
of their arrangements. But the benefits of the plan for the broader
economy, of course, go beyond the family arrangements. The greatest
benefit for business, as I said earlier, of this new plan is that
their production costs will be lower. What is not understood by
many in the community is that about half of the Wholesale Sales
Tax that's collected at the moment comes from business. People
who think they have wholesale tax exemptions for running their manufacturing
businesses forget that the Wholesales Sales Tax applies to such
things as the purchase of computers. People don't yet understand
fully but they will over the weeks ahead that one of the huge benefits
of the new plan is that every litre of petrol bought by a man or
woman running a business in Australia will be seven cents cheaper
under the GST plan, under the tax plan, than it is at present. And
the reason for that is that we are reducing the excise on petrol
down to the level necessary to accommodate the GST at 10 per cent
without the price of the petrol at the pump going up. But because
the 10 per cent is fully rebateable as a tax on a business input
the cost of that petrol, litre of petrol purchased by the businessman
falls by seven cents.
Now, that is, in addition, my friends, to the huge benefit that
will be derived largely by, but not only, by the bush, by country
Australia as a result of the new arrangements concerning diesel.
Everybody knows how big Australia is. Geoffrey Blainey's evocative
phrase about the tyranny of distance may have been originally coined
to describe the distance between Australia and Europe but it was
quickly seen also as an apt description of the vast distances that
Australians must travel. And nowhere more so is that relevant than
here in the State of Queensland. Queensland is not only a big State
but it is the most decentralised State in Australia. The majority
of people don't live in Brisbane, whereas the majority of people
in New South Wales live in Sydney and the majority of Victorians
live in Melbourne. And that means that goods are transported more
frequently over longer distances in Queensland than in any other
State of Australia. That is why [inaudible] arrangement in relation
to diesel fuel that cuts the excise from 43 cents a litre to 18,
why that is such an enormous boom and why the maintenance of the
full rebate of that 43 cents a litre excise in relation to off-road
use for farmers and the like is of tremendous benefit. And what
we are doing by that one single act...by those two acts rather,
is to reduce fuel costs in Australia by $3.5 billion a year. And
the only two other figures that I will give you is that the total
effect of the plan will be to reduce the costs of expo