E&OE..........................................................................................................................
Well thank you very much Annette, to Mrs Joy Howley the President
of the Victorian Division of the Liberal Party, Senator Alston,
Senator Kemp, my other parliamentary colleagues, ladies and gentlemen.
Yesterday morning I took part in one of the most uplifting experiences
that I have had since being Prime Minister. I visited a Year 10
Government High School in Launceston - Brook High School - not in
a particularly wealthy part of Australia and I launched what they
call their "No Dole Programme" for 1998. And that programme
is a partnership between the local community and the local school
whereby the goal is that no student leaving that school should ever
be on the dole. And so committed are they to that programme that
at the end of the launch every Year 10 student signed a charter
committing themselves to not being on the dole. And that charter
was signed by the their parents and signed by leaders of the local
business community, and I was very privileged to be invited to sign
the charter myself. And I thought as I looked out on all of those
young faces around the age of 15 and 16, many of them from struggling
backgrounds, I thought to myself that the future of this country
is really what the tax plan that I released last week is all about.
And when I have been asked by university students and school students
over the last week what will the tax plan do for them, I have unhesitantly
replied that because the tax plan will result in the costs of producing
all goods and services falling quite dramatically once it is introduced
that over time this tax plan, more than anything, will generate
more jobs for young Australians. Because if there is one thing that
I would like the public to see in this plan, above everything else,
and above their own individual sectional interests - and they are
understandable and I will deal with some of them - but what I would
like them to see, above everything else, that this plan is a gutsy,
fair, comprehensive attempt to fix a taxation system in the long-term
interests of all Australians. It is not a plan for the business
community. It's not a plan for Liberal voters. It's not
a plan for one or other part of Australia. It is, above everything
else, a plan for the long-term future of all Australians. And it
is good for the long-term future of all Australians because its
most dramatic quality is really it's most simple appeal and
that is through the introduction of a Goods and Services Tax to
replace 10 other taxes and thereby dramatically simplifying the
tax system we will bring about a reduction of $10.5 thousand million
a year in the costs of producing goods and services in Australia.
And in that, one dramatic stroke we will do more to give an incentive
to the business community, the wealth generators of Australia, than
any other single deed that the Government could undertake.
In the years that I was Treasurer, in the years that I have been
Prime Minister, I have often been asked by men and women in business:
why don't you give this incentive to this activity; why don't
you provide a subsidy over here; why don't you give us some
encouragement through the taxation system to invest more and to
export more? Well this plan will reduce export costs by $4.5 thousand
million a year. I call it the greatest ever export market development
grant that any government has ever devised for the Australian business
community.
What it will do is to reduce the operating costs of every business
because what a lot of people in business still don't realise,
even those in manufacturing who say to me: oh well I am a manufacturer,
I have exemptions in relation to my manufacturing inputs. That is
true but there are a lot of things that you use to produce your
goods and services for which you don't have exemptions, things
like computers for example. Another feature of the package that
people don't appreciate is that because we are applying the
Goods and Services Tax to petrol and reducing the excise on petrol
by a commensurate amount so that petrol will not increase at the
pump in relation to any purchaser and because you will be able to
get the GST back as a tax paid on a business input, then for every
business man and woman petrol used in business will be seven cents
a litre cheaper after the goods and services plan comes into operation.
So it is, above everything else, an aggregate plan. It did take
a long time to put together and we addressed the fundamental weaknesses
of the Australian taxation system. And deep down our political opponents
know that what we are doing is right for Australia.
It's amazing what a political defeat does to liberate the
mind and the political spirit. I heard Gary Johns on radio last
night. Gary was a Minister in the Keating Government, he was the
Special Minister of State and he was the Assistant Minister for
Industrial Relations, and he lost a seat in Brisbane at the last
Federal election. And he was asked what he thought of the plan and
he said it was good for Australia. And he said he gave the Howard
Government 100 per cent support and he knew that it was a plan that
a future Labor Government would realise was good for Australia and
that any honest, decent government would realise was good for Australia.
The truth is, my friends, is that everybody knows our present taxation
system is limping towards near collapse, that our present taxation
system is outdated. It inhibits our competitiveness. It is driving
average wage and salary earners to paying the top marginal tax rate.
It is in need of fundamental root and branch change.
But you can't just do one part of it, you have to do the entire
job. It's no answer to just offer a tax cut. Anybody can do
that, particularly a Labor Opposition that thinks it can use some
of the surplus which it opposed the creation of after having left
a deficit of $10.5 billion that they can help themselves to some
of that surplus and in a lazy, slick way say: we'll give you
a personal tax cut but we won't do anything about reforming
the indirect tax system.
That happened in 1993. Mr Keating and Mr Beazley gave us a personal
tax cut offer in 1993. They opposed the Goods and Services Tax.
They won the election and immediately after the election they took
away the personal tax cut and they increased every single indirect
tax within the purview of the Commonwealth. And there was no compensation
provided to nursing home residents for that increase, there was
no compensation provided to the battlers or the pensioner to that
particular increase.
There is, in reality, no tax relief without tax reform. If you
want enduring tax relief you need to reform the whole system. Inevitably
in the wake of the release of the tax plan the usual suspects have
attacked the Government. Some of them out of political motivation,
some of them out of genuine concern, and many of them misguided.
And an attempt has been made by some of our critics in the media
to present the view to represent the attitude that in some way the
entire welfare sector and the churches of Australia are against
the Government's plan.
Within a few hours of ACOSS making its statement you had sections
of the media saying: once again, as in 1993, the churches are attacking
the Government. And in that context I was very pleased, indeed,
to see some perspective put into that part of the debate by His
Grace the Catholic Archbishop of Melbourne, George Pell, quoted
in The Australian this morning as saying that the tax package was
complex and a serious attempt to address the problems of an ailing
tax system. And he urged Catholics, and one could readily substitute
Christians, to make an informed assessment. There is no one Catholic
position on an issue as complex as taxation, he said. Tax reform
is needed, the system is inequitable and my personal point is somehow
the tax base has got to be broadened if we are going to have enough
money to provide the welfare services that are needed in a modern,
civilised society.
Now that doesn't sound to me like a denunciation by the senior
Catholic prelate of this city against the Government's plan.
I don't seek the sanction or the aid of any section of the
Christian church or any other branch of religious belief in this
country. I respect the fact that men and women of goodwill who have
religious beliefs will take different views on this policy of the
Government as they do on others.
But equally, I emphatically reject the attempt being made by some
of our critics to represent the view that the plan that we have
released is in some way in conflict with the doctrines of the Christian
church or is in some way unfair to the poor and the underprivileged
within our community. And I applaud the statement made by the Catholic
Archbishop of Melbourne as bringing real balance back into the debate.
He is not taking sides, he is speaking commonsense and he is saying
the obvious thing: let the individual Australian make up his or
her mind as to whether this is good for their country. Let no person
under the cover of some position in a church or a welfare organisation
invoke the name of that church or that welfare organisation to promote
their own personal criticism of the Government's taxation proposals.
This plan, as Annette said in her introduction, also contains a
quite historic attempt, which I hope will be successful to reform
the balance of taxation between the Commonwealth and the States.
For decades State Premiers have gone to Canberra, demanded more
than they believed they've got and I won't go into any
of the history of all of that. I have seen a lot of Premiers'
conferences, both as Treasurer and as Prime Minister. They are always
fascinating, they are usually predictable and they don't do
enormous amount to raise the esteem of the political process in
Australia.
And one of the real bonuses, can I say, as a veteran at Premiers'
conferences in Australia since the late 1970s, one of the real bonuses
of this tax plan is that there will be no more Premiers' conferences.
And that will be very good for my health politically and physically.
And the reason there won't be any need for Premiers' conferences
is that we have recognised the need to change the present system.
We have recognised the desirability of giving the States access
to a growth tax and what we are going to do is to dedicate all of
the revenue from the Goods and Services Tax to the States. We are
going to say to them: you can get the entire proceeds of the revenue
out of the Goods and Services Tax provided you abolish your financial
institutions duty, your bank accounts debit tax, your bed taxes
- those States that have them - your taxes on business conveyancing,
your taxes on share transactions, bills of exchange, promissory
notes, cheques and so forth.
And we will require, as part of the deal, that not only you abolish
them, that they stay abolished and if you try and bring any of them
back then the deal is off. And we'll go further, we will put
a provision in the legislation providing that the level of the Goods
and Services Tax can't be increased unless you have the unanimous
support of the State Premiers, the Chief Ministers of the Territories,
the Prime Minister and the two Houses of Parliament.
And can I let you into a secret - in 24 years of politics I can't
remember a single occasion on which all of those, ladies and gentlemen,
have agreed on an issue. And I can't think of a more fail-safe
device and a more politically effective device than that particular
way. And I really am very proud that part of this plan includes
this historic turning of the tide that began in 1942 in the necessity
of war when uniform taxation powers were assumed by the Commonwealth
Government. And it will restore greater accountability at the State
level and it will mean that the annual unedifying barneys'
that go on between Commonwealth and State governments in Australia
will substantially be a thing of the past.
I am sure I don't need to emphasise to an audience like this
the importance of us communicating to those with whom we do business,
to our friends and our family members, that what we are proposing
here is not a 10 per cent tax on top of all existing levels of taxation.
We are proposing, amongst other things, the introduction of a Goods
and Services Tax to replace the Wholesale Sales Tax and nine or
10 other taxes levied by State governments.
One of the most intriguing things about this debate is the degree
of ignorance in the Australian community about the levels of hidden,
indirect taxes on many everyday goods and services. I often take
the opportunity in radio interviews of going through the list. The
following items are taxed at 22 per cent: pet food, toothpaste,
shampoo, soap and other soap powders, wheelbarrows, lawnmowers,
ladders and garden equipment, children's toys, umbrellas, handbags
and luggage. And at 32 per cent: clocks, watches, TV sets, video
recorders. And at 12 per cent: Kettle chips, Cadbury family blocks,
Peters Natural Ice-cream, Berri Orange Juice and Berri Cordial.
And when I read that list out on the ABC this morning I was chipped
about commercial promotions.
Now, it does all of us well to recite that list occasionally, it
is a reminder of the absurdity and the stupidity of the present
system. And it is also a reminder of how wrong it is to say that
the result of this plan will be to increase the price of everything
by 10 per cent. Because not only is it self-evident because of the
disappearance of taxes on items like that that the price of many
things will fall, it is also the case that everything you take or
buy off a supermarket shelf has, as part of its costs, a contribution
of about 20 per cent from transport costs. And that brings me to
one of the most spectacular parts of the tax policy and that is
the dramatic effect it will have on the cost of transport within
Australia.
Geoffrey Blainey conjured a marvellous and evocative phrase when
he spoke of the tyranny of distance and how it had shaped the attitude
of Australians and the Australian national psyche. He had in mind
not only the distance of Australia from Europe but he also had in
mind the vast distances of the Australian continent. And our proposals
will do more than any other single measure to reduce the costs of
transporting goods over those vast distances.
We are proposing a reduction in the diesel fuel excise from 43
cents a litre to 18 cents a litre for heavy trucks and for rail
use. And we are extending the existing off-road exemption for the
use of diesel fuel. And it will not only be of great benefit to
primary producers but also of great benefit to many people in the
tourist industry.
And that particular act alone is very, very important to the rural
community of Australia and it is not surprising that the early indications
are that this package has won very wide support within the Australian
rural community. The bush likes it because it recognises one of
the fundamental and legitimate complaints of people who live in
country Australia and that is the high cost of the transportation
of goods and services to them.
So, ladies and gentlemen, it is a package, it is a plan, it's
a vision, it's a focus of hope and inspiration to all sections
of the Australian community. It does contain a fundamental restructuring
of a creaking old-fashioned system. It does contain very generous
reductions in taxation at the personal level to the tune of $13
billion. It offers the only honest response to Australia's
taxation malaise. And that is taxation relief accompanied by taxation
reform.
Our political opponents next week will offer the Australian community
taxation relief but they won't offer taxation reform. You cannot
have taxation reform in Australia that lasts and means anything
unless you are prepared to fundamentally reform the indirect taxation
system. Any other claim to reform is a complete mirage because it's
the inadequacy of the indirect taxation system. It's old-fashioned,
out-of-date character which is the single greatest weakness in the
Australian taxation system.
And in the course of providing personal taxation relief, we have
done two very, very important things. We have increased the benefits
for Australian families at the levels of low and middle incomes.
And very importantly we have introduced a top marginal rate of taxation
for 81 per cent of all Australian taxpayers. Eighty one per cent
of Australian taxpayers under this plan will pay a top marginal
rate of 30 cents in the dollar or less. Under this plan, you will
be able to move from $20,000 a year of personal income to $50,000
a year without going into a higher tax bracket.
You could almost call that part of the plan the bracket creep abolition
section of the plan. You can't have bracket creep if the rate's
the same between $20,000 and $50,000. And let us understand that
that is where the bulk of the Australian community lies. That is
where the bulk of wage and salary earners are. And your capacity
as men and women in business to offer those people your employees
the opportunity of overtime without going into a higher tax bracket
will represent an enormous change on the present system.
So my friends, it is a very broad plan, it's a very bold plan.
I know there were a number of people in the community, they've
certainly expressed their views to me over the months passed and
they probably would have to you as well when they have said: it's
too risky, it's too dangerous. Well, in the end you have a
responsibility to put forward something that is good for the country.
I know in here that this is very good for Australia and that is
it's most appealing feature. And I ask the Australian people
to judge it on its aggregate value to the Australian community.
Of course there will be men and women in this room who will think
I don't like that part of it, I wish they had gone a big further
over there, I wish they wouldn't be talking about something
over here, and I am still angry about something they did in the
first budget. Of course, that is human nature, but in the end as
an Australian community we have got to ask ourselves whether this
is good for the whole country.
We all know we need a new taxation system. We all know that sooner
or later this country has got to have a broad-based indirect tax.
I mean that's the fundamental reform that is needed. Mr Keating
knew it in the mid 1980s and he was strongly supported then by the
present Opposition Leader and the present Deputy Opposition Leader.
Mr Hawke knew it when he was Prime Minister. John Hewson tried to
do it with great courage in 1993 and he was beaten by a most villainous
fear campaign.
Now, we can't allow that to happen again and we won't
allow it to happen again. The Australian public will not be fooled
again as they were in 1993 when they were promised tax cuts with
no GST, they lost the tax cuts and they got the Labor version of
a GST without any social security compensation.
Now that's the choice. You either have honest, upfront tax
reform explained and put on the table before the election or you
have a re-run of 1993 and that's the choice that I will be
putting to the Australian people. I believe in this, I believe in
it very passionately because I know it is good for our country and
in the end I have enough faith in the Australian people to believe
that that is the thing more than anything else that will determine
whether or not they support it.
Thank you very much.
[Ends]