E&OE ..........................................................................................
Well, thank you Ian and ladies and gentlemen. It is for all of the reasons
for which you have been made aware, a particular pleasure for me to address
this gathering in Maclean. It is as it is described a mighty river and
it is in every way a delightful part of the world, and I can understand
why it is becoming increasingly attractive as a place in which to live.
I'm visiting Maclean, and indeed spending three days on the north
coast, the Northern Rivers area however you wish to generally describe
the district as part of a week long trip around rural and regional parts
of Australia. I have undertaken that week long trip because I have always
believed in the time that I've been Prime Minister, and indeed before,
that it is very important in a country as big as Australia that the leaders,
at a national level, ensure that they gain through regular visitation
a comprehensive understanding of the different elements that make up our
community.
And it is so very easy if you were born in Sydney, and grew up in Sydney
as I was, and if you spend as I do now a large amount of my time in Canberra,
and inevitably I am drawn because of the large population preponderance
to a lot of meetings and so forth in Melbourne, it is very easy to spend
so much of your time in that triangle. And that of course is a very big
mistake. And part of the arrangements I have in my office are to ensure
that whenever it looks as though my diary is getting a bit unbalanced,
a bit of a bell rings metaphorically speaking and reminds me that it's
important that I get around rural and regional parts of Australia.
That is the first reason, but the second reason is that I am very conscious
of the reality that in modern day Australia, although we are doing very
well at a national economic level, and we really are, we have very strong
economic growth, we have about 580,000 more jobs than four years ago,
we have a much lower rate of inflation and even after the adjustment yesterday
in interest rates, we'll have housing mortgages on average $266 a
month less than what they were four years ago, we've eliminated our
budget deficit and we're seen as one of the strong economies of the
world. Despite all of that there are areas of Australia that are not enjoying
as well as other areas the benefits of that national economic strength.
And some of those areas lie within the regions of Australia, indeed most
of them do.
But I am also conscious of the fact that as you go around rural Australia,
it is not all doom and gloom. Indeed there are a lot of good news stories
in the regions of Australia. I have seen a lot of them over the last few
days and it's very important that I get a balanced picture and it
is very important that we have a balanced understanding and a balanced
reporting of what occurs in the regional parts of Australia. It is true
that some of the regions have lost services and that that has caused a
lot of angst. People are understandably angry about the loss of government
services. They're also angry about the loss of banking services and
they also legitimately want the same access to medical services at an
affordable price that their fellow Australians in the cities have.
But there are some examples of where services are being put into an area
for the first time. For example, when it comes to the Job Network, which
has been the subject of a lot of debate. As a result of the second tender
in the Job Network, Maclean for the first time ever will actually have
one or two job providers under the job network, something that they've
never had before. Because one of the consequences of the new system is
that about three hundred small country communities around Australia will
have a Job Network provider helping the unemployed when they haven't
had them, either under the old Commonwealth Employment Service arrangements
or under the first tender of the Job Network arrangement. Now one service
swallow, certainly doesn't make a summer, but it is an illustration
of a determination on the part of the government, not only to recognise
the need to prevent the withdrawal of any further government services
from the bush, but also where possible to return or create for the first
time, services particularly in the smaller regional and rural areas of
our country.
I'm very conscious and I've had it reinforced to me that over
the past few years the position of traditional primary producers who rely
on what are regarded in this country as the traditional areas of agriculture
and primary production, that is wool and wheat and dairy and beef, that
all of them in different ways have been put under enormous challenge.
I know that this is, this has historically been one of the great dairy
areas of Australia. Of course there are far fewer dairy farmers now in
this part of the world than there were eighty or ninety years ago. I am
also conscious that the remaining dairy farmers in this part of New South
Wales, are grappling with the challenge of whether or not to support dairy
industry deregulation. This ultimately is a matter that has to be decided
by state governments, because it is the state government, and not the
federal government that presides over the quota system for milk and it
is the state government that is ultimately responsible for the decision
that will be taken. We have said at the federal level that we will support
a move towards dairy deregulation, provided the states, and in turn I
guess the majority of the participants in the industry, support it and
want it. We've said that we would implement to facilitate the change,
a dairy industry levy that would sustain the consumer price at a higher
level than would otherwise occur as a result of deregulation and we would
use the proceeds of that levy to finance the restructuring of the industry
so that those people whose quotas would disappear under dairy industry
deregulation would have compensation paid to them for the disappearance
of those quotas. In the end it is a matter for the industry and the state
governments to decide. We are there to help and facilitate and provide
the national legislative mechanism for the levy because it's not
fair to ask people to accept deregulation without financial cushioning.
And the industry at a national level at least has developed a plan which
they believe is the fair, the fairest and best way of achieving this outcome
and it is ultimately in the hands of the industry to decide whether or
not it's going to occur.
But of course, communities like Maclean and Grafton are not just built
on primary industry. They have now become, in every sense of the word,
communities that rely very heavily on service industries. They rely very
heavily on tourism, they rely heavily on educational services and increasingly
the attraction to people, particularly people in retirement of areas such
as this mean that we need to ensure there is an adequate level of not
only business, but also service provision that caters for a population
with that age profile.
I can't of course let the opportunity go by without saying something
very briefly about taxation reform. It's on everybody's lips,
and it is very important that we see taxation reform not in miniature,
but we see taxation reform on a very broad canvas. Taxation reform is
a total change for the better to our taxation system. In the words of
our original slogan, it is not a new tax, it is a new tax system. It is
a system designed to make the Australian economy more internationally
competitive. The reason that I've campaigned so strongly for it is
not out of any kind of ideological zeal, or not because it is some kind
of religion to me. It is because I believe that when it's implemented,
we'll have a better economy, we'll be more competitive, the
business community will have a better taxation system to deal with.
It includes a lot of things, it includes a $12 billion reduction in personal
income tax. It means that 80% of the Australian tax paying community,
that is those individuals who earn less than $50,000 a year, and that's
80% of all individual taxpayers in this country, that those people will
be on a top marginal rate of no more than thirty cents in the dollar.
It means for people in rural Australia, that there will be cheaper fuel,
because we are reducing the excise on diesel fuel by twenty cents a litre.
And that will be of particular benefit to people in rural Australia. It
means that our exports will be cheaper and more competitive. The return
to producers will not be lower but because the GST will not apply to exports
and because the embedded taxes now inherent in our wholesale tax system
will be removed that our exports will be cheaper by the tune of about
$4 billion a year. And that will make our exporters that much more competitive.
Our business operating costs will be lower because we will replace the
wholesale sales tax, the financial institutions duty and in time, the
bank account debit tax and a wide range of stamp duties with the goods
and services tax.
We will also for the first time be providing a new financial deal for
the state governments of Australia. You would imagine from some of the
politically inspired comments made by state premiers that in some way
the goods and service tax was a bad thing for the states. Well, let me
let you in to a secret. When we had the Commonwealth/state conference
when I called a meeting of all of the premiers and chief ministers of
the Commonwealth and the states and put to them the proposal for the goods
and service tax arrangement. And under the arrangement the states get
every last dollar of the revenue out of the goods and services tax, that
is the deal. So, that in time they will be able to have more money available
to spend on public hospitals, on roads, on government schools and police
services and all the other things that states governments are meant to
provide. And let me tell you that whatever they may have said publicly,
every last premier was absolutely determined to sign that Commonwealth/state
agreement. And I well remember Mr Carr saying, John I think this is an
outrageous proposition, but please where do I sign. Because it was a very,
very attractive proposition to the states. And if I were a state premier
the last thing I would do is try and stop this new arrangement coming
into operation.
Now, of course the focus of sections of the media, the focus of those
who want to make an easy comment, or have an easy go at something is naturally
on the GST. And I know with a change like this it is easy to generate
a fear campaign. I stopped along the way to Maclean and had a chat to
some people at a little town, and I wandered along the shopping strip
and talked to four or five of the shopkeepers and one lady called me in
and she . . . and I said how are you and she said business is not bad,
but she said what about the GST she said. And I said, well let me, tell
me about it. She said well over there I have got things that are subject
to the GST, and over there I have some fresh fruit and a few other, some
other food that isn't subject to the GST. And I said, well, and she
said, well what do I do? And I said it is very easy, I said. What's
over there? What percentage of your sales? And she said, oh about 80%.
And I said, what is over there? And she said, the other 20%. I said, well
under an apportionment proposal that the Tax Office is putting together,
a small business like you would simply add up its turn over and if it
is 80% of items subject to GST, and 20% not it means you remit 8% and
not 10% of all your sales on a three monthly basis and you claim back
all of the GST you pay on any of the things you buy to run your business.
It is as simple as that. She said, oh, that's all that's to
it. And I said, well in essence that is all that is to it.
And I think as time goes by, as people realise that it's coming
in on the 1st of July and they begin to focus on it and apply
their minds to it. I had another chemist in the same place, I asked him
and he said, oh well, and he banged the computer, you know that he'd
just bought and he said, look oh we are getting ready, he said it's
ok, he said, I've got a bit of paper out there that I was just reading
as you walked in and he said I'll get on top of it. He said it is
a much better system then the present one.
But we are going to be subject to a fear campaign. The opponents of change
can always run a fear campaign. I mean, I can remember when decimal currency
came in. Um, gees, a lot of people remember when decimal currency came
in. And I remember all the fear then. People said, oh how can you possibly,
you know, this is outrageous. You know, our beloved nineteen pounds, you
know, when shillings and sixpence and so forth and all of that, pounds,
shillings and pence. How will we ever get used to the new system? That
sort of concern lasted about ten days, and within a very short period
of time people were very used to it. Now, I'd have to say that this
is slightly more challenging than decimal currency, because there was
an inherent situation about decimal currency. But the principle really
is the same. It is easy to run a scare on change. And the easiest thing
for a government to do I guess is to throw up its arms and say look, we
won't worry about change, even though we believe it is for the betterment
of the country.
Now, I really do believe this new system will make Australia stronger
and better that is why I am in favour of it. And I believe that once it
is in and people have got used to it, it will be okay. And in a few months,
perhaps by October or November of this year, people will say what was
all the fuss about. And this was the experience in New Zealand. But I
do accept that over the next few months, people are going to run fear
campaigns. You are going to have a scare a day in some of the tabloids
and you can run a campaign, if you look at something in isolation, and
you can say, well you know, this shirt, all men have got to wear shirts,
so therefore we should have no GST on shirts. Now, in isolation that sounds,
oh yeah, that sounds alright, yeah, in isolation. You can mount an argument
about having no tax at all in isolation. But of course that's not
realistic.
We do need to raise taxes to provide government services. Not only to
provide the army and health services, but also the other government services
we want. So, you've got to devise a tax system that works better
than the present one. And the principle of the GST is that you have a
general, single rate at a reasonably low level on virtually everything.
We started off, we wanted to have it on food and other things, we couldn't
get that through the Parliament, we settled for 85% of what we wanted
and now it is set in concrete. There will be some exemptions in relation
to food and other items, but by and large it will apply to everything,
and the exemption in relation to food will only be in relation to fresh
food, it certainly won't apply to things like restaurant meals.
But the important thing is that the more you exempt, the more the system
breaks down. If you exempt one item, then there will be pressure to exempt
another item. And everytime you, I've learnt this in politics, everytime
you agree to the entreaty of a special interest, you create a natural
incentive for a new special interest to fill the void created by the satisfied
first special interest. That is how the law of increasing political demand
on government works. And it has always been thus and it ever will be thus.
And over the months ahead, we are going to have to deal with requests
to leave things out, but everytime you leave things out you create that
ripple effect and that undermines the goal that you have in mind. And
if you go too far down that road you then reach a point where you can't
implement all of the other reforms.
I know there are a lot of self-funded retirees in this area. There are
special arrangements in the package to cater for your situation. Those
who get the pension, there will be a front-end loaded increase in the
pension of 4% on the 1st of July to accommodate in advance
any price increases flowing from the introduction of the GST. There will
be a savings bonus for people on the pension of a thousand dollars and
there will be additional savings bonus for people who are self-funded
retirees. If you are a self-funded retiree you'll benefit from the
total abolition of provisional taxation, which I know is the bane of the
existence of many self-funded retirees in the Australian community. And
of course you will also benefit from the reductions if you are in the
income tax bracket, you'll benefit from the reductions in personal
income tax. You'll also benefit from a thing, I know it sounds complicated,
called dividend imputation credits. You might, for example, have shares
in a company, and you might get paid franked dividends and the tax may
be deducted at say, 36 cents in the dollar now, it will be 30 cents in
the dollar. But you mightn't pay 30 cents in the dollar on your tax,
you might only pay 20 cents in the dollar and at present, you really get
gypped the 10 cents, the difference between the 20 and the 30. And what
we're going to do under dividend imputation credit is to pay you
the difference. We take the view that if your tax rate is only 20 cents
in the dollar, and it's being deducted under imputation at 30 cents,
or 36 cents in the dollar, that is not full value for you. And you want
to get paid the difference. And we're going to do that. And that
is one of the particular benefits for many retired people whose taxable
incomes may not be very high and therefore they're not paying the
same rate as the company which issues them with the franked dividend.
Now these are many of the, might I say, no pun intended, fringe benefits
of the taxation reform which are particularly tailored. Now, you don't
read about dividend imputation credits, or the abolition of provisional
tax, or bonuses for self-funded retirees. You don't read about those
on the front pages of the newspapers and I can understand that because
it is not, it is a good news story. And that doesn't generate a little
bit of fear.
Now what I am putting to you my friends, is that this is a total reform.
It is a once in a lifetime opportunity to give this country a better taxation
system and that is why we we're doing it, we're going to stick
with it, we're going persevere against the criticism and the growing
choruses from particular people, but I think falling on increasingly deaf
ears in the Australian community. There's a bit of noise as you go
around, but there's also a lot of people who say, gee this is for
the longterm benefit of the country. We had a debate about it at the time
of the 1998 election, the Government got returned. They told us they were
going to do it, they've done it, let's get on with it and get
it behind us. That is the attitude I get. People are saying to me, look
let's get it in, let's get it behind us and get on with something
else. And that is very much the attitude of the government. And that is
very much, I think, increasingly the attitude of the community.
But, ladies and gentlemen it is great to be amongst you. It's nice
to be in Maclean. It is a beautiful part of the world. Thank you very,
very much for your very warm welcome.
[Ends]