Subjects: Centenary of Federation trip: Tax reform
JOURNALIST:
Good morning Prime Minister.
PRIME MINISTER:
How are you? Good to see you again. Can you hear me all right?
JOURNALIST:
Yeah, I certainly can. Very nice to talk to you this morning. Prime Minister this week · you travel to the United Kingdom for the Centenary of Federation celebrations. It's going to cost tax payers about $2 million dollars. How do you justify spending that amount of money in the United Kingdom?
PRIME MINISTER:
Well we don't actually spend it all in the United Kingdom. A lot of it goes to an Australian airline for airfares. It doesn't go to the United Kingdom. I mean ..,
JOURNALIST:
There should be about 200 people over there.
PRIME MINISTER:
Well there is a Federation guard and look it's a very important event and it's very easy for people to take pot shots at it,but it is one of the three decisive moments involved in the Federation of the Australian colonies in 1901. The passage of the Constitution through the British Parliament and there is a whole week being set aside which will enable me to promote in the United Kingdom, the Australian economy. You've got to remember that Australia invests more money in Britain than any other country, more mpney in Britain than any other countzy.Britain is either the best or se ;ond best investor in Australia. Many Australian industries such as the wine industry are the flavour of the month no pun intended, in the United Kingdom. It's a very important bilateral relationship.
I mean some junket, I arrive there on Tuesday morning within a couple of hours, I'll be seeing the Prime Minister, the Chancellor of the Exchequer. I'llbe delivering a major speech to the leaders of the British business and financial community encouraging them to see Sydney increasingly as a financial centre in this part of the world. Now I just think the criticism of this trip, which is politically opportunistic is unjustified. I did invite the Premiers and fanner Prime Ministers to come because there is an entire week given over, it's called a celebration of Australia.Now aren't we all about promoting this country, wherever the opportunities arise. It is an important historical event and I think it is entirely defensible.
And I might remind you on the subject of sending guards overseas, when Mr Beazley was Defence Minister in 1988, he sent a guard to London of the same number at the same expense as on this occasion to mount a guard at Buckingham Palace and he proudly put out a press statement saying what a fantastic thing it was and how proud all Australians should be. He is being on this issue, a complete opportunist.
JOURNALIST:
Iam sure you don't want us to measure you on his standards.
PRIME MINISTER:
I am just ... . I am just pointing out a televant fact. I am not asking to be measured on any other standard, other than my own and I am quite prepared to meet my makers politically and that is the Australian people and they will judge me on what I've done and of course that includes the things that they're critical of as well as the things they're happy with.
We've got a huge bilateral relationship with Britain and I've had one bilateral visit to Britain in four and a quarter years. Iwent to Edinburgh in addition for the Commonwealth Conference. During that same period, Ihave been to Japan on three occasions. I've been to the United States twice. Ihave been to New Zealand three times. I have been to Indonesia three times. I mean we have go to keep this in proportion.
JOURNALIST:
Yeah I know this isn't just a nonnal visit. This is an extravaganza. I just wonder what the average Australian would see as the benefit to him out of this expenditure.
PRIME MINISTER:
Well you could say that about any visit. Any visit. I mean if you put it in those straight terms, I can't say well there is X dollars of value, but what I can say is that everything that contributes to maintaining one of our most important bilateral relationships. I mean people might say, what benefit did we get out of spending millions of dollars as a conununity in celebrating the millennium. We will spend a lot of money on fireworks next year. Next year we will spend a lot of money on all sorts of celebrations and you might well ask what you get out of that.
JOURNALIST:
On Monday, Australians wil1 be struggling with their first full day of business under the GST and you'll be flying to the United Kingdom, Do you regret the timing?
PRIME MINISTER:
Well I don't think you can hold the framers of our constitution responsible for not knowing that a hundred years later we d be introducing tax reform. I mean this is one of those accidents of history.
JOURNALIST:
It's clearly not their fault thats for sure.
PRIME MINISTER:
Well it's an accident of history. What are you saying that I should delay tax reform? Look, it was a difficult choice, I knew Iwould get criticised. I will be here when it's introduced. I will be gone for eight days. As far as the Government's decisions are concerned; they've being taken. I mean the die is cast. The die was cast months ago when this legislation passed through the parliament and I welcome the onset of Saturday because people will then be able to realise that so many of the scare stories that we've had from the Labor Party in particular; who have played a relentlessly negative, obstructive, backward looking role in this whole affair. At no stage has the Labor Party accepted that we took this to the Australian people at the last election and we won that election. I mean it's one thing to oppose something in an election campaign. It's one thing I suppose to oppose it even when it's gone through parliament. But they will do everything they can to scare people. They will do everything they can to be negative. They will do everything they can to paint the blackest possible picture. I mean Mr Crean this morning is out there exploiting the fact that some hacker alleges that he has got in to the system to do with some aspect of the new tax system.
JOURNALIST:
Well has the hacker got in?
PRIME MINISTER:
Well there are allegations that that's occutred. But where is Mr Crean's condemnation of the illegality of it.
JOURNALIST
Are you ...yeah sure but are you worried the personal details of ten thousand Australian businesses may have been ...
PRIME MINISTER:
Look of course l don't like that happening. but this is not the first tirne a hacker has got in to a system. It's not the first time it's happened. But of course instead of in a responsible way saying, well we condemn whatever our differences with the Government may be on tax, we condemn the fact that somebody's behaved in this illegal fashion. The Labor Party is helping itself to the political embarrassment it thinks it might accrue of the Government, might accrue to the government as a result of an illegal act. Well that is about as irresponsible as you can get. It's absolutely irresponsible. I mean he should be condemning this. He shouldn't be trying to exploit it politically.
JOURNALIST:
Prime Minister, we will take a break. Maybe we can come back and you can talk to some of our listeners.
MURRAY;
We're talking to Prime Minister John Howard. Good morning Lorraine.
CALLER:
Good morning, am I speaking to Mr Howard?
PRIME MINISTER:
Yes you are.
CALLER:
Mr Howard, I was really pleased with what I thought was the original GST concept which was,·spending being taxed instead of eamings being taxed. Which would kind of give a big incentive to people to work hard, maybe do overtime, pay off their horne and all that sort of thing. But instead I feel ifs been done, it's like penny pinching way, it's not really going to give anyone any extra incentive at alL Like I earn $25,000 I save $10 a week roughly in income tax. Lot's of other things go up. There is no incentive there, it's a nothing.
PRIME MINISTER:
Well, I don,t agree with that. I don't know all of your circumstances. But if you earn
$25,000 a year, one of the incentives is this that you will be able to go to $50,000 a
year without going into a higher tax bracket.
CALLER:
That's right, but I don t earn this amount ...
PRIME MINISTER:
I know.
CALLER:
I only earn $25,000.
PRIME MINISTER:
But just a moment. You said a moment ago you thought the idea was to give people incentive to work harder.
CALLER:
That's true.
PRIME MINISTER:
Yeah well, the way you give people incentive to work harder is to say to them, that if you work harder and earn more money you don't go into a higher tax bracket. That is one of the, I mean one of the really great features of this new system is that you'll be able to go from $20,000 to $50 000 a year, and that covers most people, without going into a higher tax bracket. 80% of Australian taxpayers will be on a top marginal rate of no more than 30 cents in the dollar, compared with 43 cents now. And that is an enonnous benefit. I don't think people
CALLER:
You know I think that is right ...
PRIME MINISTER:
Understand, but you see you talk about incentive and getting ahead and incentive and getting ahead is all about giving people the encouragement to do so and the present taxation scale particularly for middle Australia when you hit 43 cents in the dollar on a still modest level of income, they've got no incentiVe at all. And that's one of the things that we have tried ve.ry hard in this package to address.
MURRAY:
Ok, thanks a lot Lorraine. Good morning Barry.
CALLER:
Good morning, ah John?
PRIME MINISTER
Yes Barry.
CALLER:
How are you going?
PRIME MINISTER:
I am going very well, how are you? How's the roadhouse?
CALLER:
Well put it this way, I am like one of many thousands of small business people who are absolutely spewing over what you've done. Ok, first of all how can you bring in a GST when I still haven't got, well how am I supposed to comply to the GST on fuel when I still can't get the correct formula? I was talking to the oil company yesterday, they were supposed to ring me back this morning. And the GST comes into force on Saturday, I still can't get the compliance. I got the cigarette supplies yesterday about 12 o'clock. Now I am supposed to have all of this into a computer, organised and up and running by Saturday. For the love of me, anyone who's got any , you know who's getting hours upon hours now just trying to become compliant and are unavailable because of the lack of information being supplied by the ATO. Now you say to ring up the ATO hotline, I have done that for over an hour and couldn't even get through on that many occasions it's become a joke.
PRIME MINISTER:
Well Barry, rve spoken to a lot of small businessmen over the last few weeks,
CALLER:
I did ask the questions about how you can become compliant.
PRIME MINISTER:
No, well you've asked me the question, I am answering it. And I am answering it by pointing out that the experience you are relaying to me is not typical of the experiences that have been relayed to me by many small business people with whom I've spoken. Now that's what Iam doing. Now you talk about not getting infonnation from the oil companies, and not getting information. Now I don't know if that is the fault of the oil companies or the fault of the Government. Without knowing all the circumstances of
your case, I am not going to plead guilty on behalf of the Government. I would also point out to you that a lot of the legislation that brings the system into operation has been slower going through the Parliament than it should have been, And that's not been the fault of the Government because we have met obstruction at every turn from the Labor Party. We've had quite a lot of cooperation from the Australian Democrats on many things, not on everything. So unless I know all of your circumstances I'm just not going to accept that your, the difficulty you describe to me is all the fault of the Goverrunent. It might be the fault of other people and in any event I have to say to you Barry that your experience is not typical of the experiences that have been relayed to me by other small business. And mate I'm sorry ifs not. Many small businessmen I've spoken to which have got similar compliance challenges to you do not tell that kind of story. They are, generally speaking although they admit there's a lot of work and I acknowledge that. And can I say Barry if people make innocent mistakes they're not going to get into trouble. We're not in the business of pouncing on people who make inadvertent errors.
CALLER;
Okay where's the question? When was the compliance brought in so we can become GST compatible? When will that happen. We will it happen for the lines of different kinds of spirits- brandy, mixers, cigarettes?
PRIME MINISTER:
Bany when you talk to me about brandy and spirits. I have just been to a large liquor place this morning in Canberra and that bloke is completely ready. I read in the press yesterday, you talk about liquor, that the Australian Hotels Association has released its recommended prices for hotels throughout Australia and the reaction of publicans is that the increases are not nearly as much as they were told by the Labor Party and others. And the general reaction of the press report I read yesterday, admittedly it was on hotels in South Australia, was that the publicans thought the whole thing would come and go without too much of a ruffle. Now as I say Barry I don't know all of your details. You're putting a line, I'm responding. I can only draw on the knowledge that I know of other people and I think you're painting an W11lecessarily negative picture if I may say so with great respect,
MURRAY:
Okay Barry I think you had a fair go at the PM there. G'day Graham.
CALLER;
Hello Paul. Hello PM.
PRIME MINISTER:
G'day Graham.
CALLER:
John, just a couple of questions if I can and give me the right to come back.
PRIME MINISTER;
I'll try. I'm not running this show, Paul is.
CALLER:
No worries.
MURRAY:
I heard him.
CALLER:
John, like, you know we, fair enough, we voted the Liberal Party in on the basis of a GST. That doesn't mean we've voted you in on what you've presented to us. What the public is now saying is yes we want a GST but you've been too greedy in how you've brought it in and that's what the Government has been. It's been too greedy for the lower income people the people under $50,000. And the point that I can justify this by everybody's running around saying how the new car sales have dropped. And they have dropped not because of the GST. If you look at the average cars they've dropped but the increase in the luxury cars in the last eighteen months, I think the figures I read in the West Australian two weeks ago was that increase luxury car sales have increased by 35% in the last eighteen months. Now that indicates to me that the rich people are getting far too rich and the poor people are getting screwed far too hard. That's what's coming out and I think the Government should look at that. You know, like ...
MURRAY:
Give the Prime Minister a chance to respond here Graham.
PRIME MINISTER:
Am I able to make my speech?
MURRAY:
That's not a bad idea.
PRIME MINISTER:
Look Graham with respect if all those increased you know luxury car purchases are the fault of the GST you talked about, it happened before the GST. And I'd point out to you, under the GST there's a special additional luxury car tax. You talk about people below $50,000. There were quite a number of changes imposed on the systetn we took to the election by the fact that the Labor Party wouldn't support anything despite what the people said. And the Democrats only conditional on certain changes. And none of the changes disadvantaged people earning under $50,000 a year. The tax scales that you say you voted for in the last election, those tax scales for people under $50,000 a year have not been altered to the detriment of those people. In fact the Democrats believe and in some areas we go along with it that the changes made after the election further helped people under $50,000. You can't, with great respect, one thing you cannot sustain is some kind of claim that the changes made from what you say you voted for and what we are now going to implement on Saturday that those things have disadvantaged people under $50,000. The paring back of the tax cuts that occurred was in relation to people earning over $50 0000 a year, not under.
MURRAY:
Okay. Thanks a lot Graham. Hi Morris.
CALLER:
Oh, g'day Prime Minister. I do own a small business and I can't believe that you haven't had any small businesses tell you that they're having trouble. I mean I work that many hours and then there's this paperwork, the printing, everything. And I've got a very simple small business fixing cars. I would hate to be a deli owner or something like that, And you can't blame the Labor Party. This is what you wanted to bring in and I don't think 49% of the vote constitutes a mandate.
PRIME MINISTER:
Well can I reply to that speech as well? I haven't said for a moment Morris that every small businessman I've spoken to has cheered it. What I'm saying is that the great bulk of small business people that I've spoken to indicate that they are ready. And the first person I spoke to, I think it was Barry, his complaints and may I say yours too are not representative of the feedback I'm getting from small business. But we shall wait and see.
MURRAY:
Okay thanks Morris and we better make it quick here Sue. What would you like to ask the Prime Minister?
CALLER:
Oh1 I feel he's too hard on the retirees and retirement villages. Our village is taxed at 10%. A big number of us are pensioners and we have a lot of setbacks with our health. It gets very expensive and I think it should be lowered if he's going to tax us. Lower it please.
PRIME MINISTER.:
Well Sue once again I don't know all of the circumstances. I don't know whether you're in a nursing home or it's a hostel or a combination. I would point out that nursing home fees as such are not subject to the GST. I would also point out of course that your pensions are going up by 4% wjth effect from Saturday. That there'll be further adjustments to ensure that the pension is always 2% ahead of any increase in the cost of living and that will accommodate any of the ultimate price impact of the GST. So in addition to that we have some savings bonuses for people on the pension and bonuses for self funded retirees.Now I know that there's been a systematic attempt to scare people. I ask you to give this a fair go have a look at it, experience it. We will obviously very closely monitor its operation over the months ahead. We believe the original plan was very fair. We've added additional compensation in the discussions that took place with the Democrats after the election. We are satisfied about its fairness but we intend as an earnest of our good faith to monitor its operation particularly on retired people.
MURRAY:
Prime Minister thanks very much for your time today. We'll be broadcasting your address to the nation at 5.30pm tonight. I thank you for your time.
[ends]