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Transcripts from the Prime Ministers of Australia

Transcript 10653


Photo of Howard, John

Howard, John

Period of Service: 11/03/1996 to 03/12/2007

More information about Howard, John on The National Archive website.

Release Date: 14/08/1998

Release Type: Interview

Transcript ID: 10653



Prime Minister, good morning to you.


Good morning, Steve.


I'll get you to get to the sooner rather than later election

prospect much later, but can I begin by asking you whether this

is it, is the package now cast in stone or are you prepared to negotiate

with the package's critics and lobbyists?


Well, Steve, we have already said that there is a mechanism in

relation to some of the fine detail where we did listen to what

people have got to say and try and assimilate their points of view.

But the thrust of the package and the main elements of the package

took months to put together and we're not going to, suddenly

over the next few days, say, oh no, we're going to alter that

and we're going to put it to that. It is a very carefully put

together package. The most important thing I want to say about it

is that it is good for Australia's future. That is the most

important thing about it. And it's fair to individual Australians

but, most importantly, it will give us a stronger economy, make

us a better country, give us greater growth and generate more jobs

and that's its great appeal to me.


Okay, so, essentially though, no backflips, it's a case, by

and large, of now you have it, take it or leave it.


Well, it's not take it or leave. I mean, I don't mean

to say to the Australian people, you know, you've got to have

this because I say so. It's not a question of that at all.

We have put together a total plan and we're asking the Australian

people to listen to it. We're going to explain it and we ask

them, at an appropriate time, along with other things, to support

it. But the primary goal I have over the weeks ahead is to explain

this plan to the Australian people, to answer their questions, to

point out where I think the criticism is wrong and, of course, to

point out how it will benefit them and benefit their country.


All right. The reason I asked that question, though, was because

last night the Democrats, Meg Lees said that the Democrats are still

in the game but they want to negotiate with you and they want to

push you to convince you that you should abolish the GST on food.


Well, we've considered that and the situation is that once

you start leaving big items like food out, you go back to the problem

of the wholesale sales tax. And the reason that you have rates of

22 per cent on family cars at the moment is that you don't

have it on a whole lot of other things and therefore you've

got to have very high rates on the things that do attract tax. And

the simplicity of a broadly based GST is that you can have a lower

rate if you have a broader base. And the way to look after low income

people with food is to compensate them, to give them good tax cuts,

to increase the pension by more than the cost of living increased

from the tax changes. That is how you help the people. And I'm

encouraged by the reaction of many people in the welfare sector.

I was encouraged by some of the comments made on behalf of the Salvation

Army. I was encouraged by, I thought, a very balanced response from

ACOSS, there are bits of it they don't like it but there are

other bits that attract them. I think the response of the welfare

sector so far has been very encouraging because this is a fair package.

I mean, we have laboured long and hard and caringly to make certain

that the low income people are protected.


And yet ACOSS this morning is sort of reserving its final judgment

on the package and it's saying – and so are other commentators

– that low income earners and pensioners could end up the losers

in this, that their earnings and their spending is substantially

skewed towards food and clothing and they're worried about

that buffer.


Well, Steve, I can understand people taking time to have a look

at it. And the fact that ACOSS has reserved its position is good

news, as far as I am concerned, because a year ago they wouldn't

have reserved their position. A year ago they just would have flatly

rejected it. Now, I think ACOSS has played a very constructive part

in this. I can say to them and to others who are concerned about

low income earners, we're not just compensating them for the

price effect, we're adding, in relation to pensioners, 1.5

per cent, guaranteed buffer over and above the price effects of

these changes.


Michael Raper told Tracey earlier this morning on the programme

that ACOSS believes that if you closed all the loopholes, all the

minimisation loopholes, the revenue from that would enable you to

abolish the GST on food.


Well, Steve, part of the problem with this sort of discussion is

that one man's loophole is another man's investment incentive.

And there are a lot of people who believe that if, for example,

you got rid of negative gearing you would destroy the rental market

in Sydney and you would drive up rents to an unacceptably high level

for the poor because nobody would invest in rental property. So

you've got to be very careful that, as I say, one man's

loophole is another man's investment incentive.


Prime Minister, earlier this morning you hit the road to sell the

package. Before it was unveiled yesterday 47 per cent of voters

opposed a GST, 46 per cent felt it was bad for Australia, 65 per

cent feared that they'd end up paying more. Can you change

their minds?


Well, the polls have been a bit wishy-washy on this issue. I don't

believe that people are permanently against a GST, unless you see

it as a GST on its own. I mean, I'm not in favour of a GST

on its own. I'm in favour of a whole approach, a new plan,

a new way of doing it, and that's what we've produced.

And we'll be asking people, not to say whether they're

for or against a GST, we'll be asking people to support our

total plan. And that includes private health insurance, getting

a new tax subsidy, it includes the personal tax cuts, it includes

the huge reduction in fuel costs in the bush, it includes the $4.5

billion of costs taken off our exporters which will generate jobs

and more export income. You've got to look at the whole plan,

not just the GST. That is a part of it, an important part of it,

but it's only part of it.


All right, before the package was unveiled yesterday – and

I know you think I'm dwelling on the GST – but a lot of

people were worried, 10 per cent now, what's it going to be

three, four, five years down the track. And you've unveiled,

as part of the package, this mechanism to cap the GST at 10 per

cent. New South Wales Treasurer, Michael Egan, says a 10 per cent

GST is going to slug the average family of four $6,000 a year, and

he goes further and says it might be 10 per cent now, or when it

comes in in 2000, but it will just keep going up and up and up.


Well, Mr Egan, better than anybody should know how difficult it

is to get an agreement between all of the six States of Australia

on anything, let alone with the Federal Government and the two Territorys.

We have got a lock in mechanism which says the rate can't go

up unless every State government, the Federal Government and both

Houses of the Federal Parliament agree. Now, presumably if this

comes in, Mr Egan is not saying that he's going to favour an

increase in the rate, is he?


I'm not sure, you'd have to ask him.


Well, he's implying that by what he said.


Just on that mechanism and I know it might strike you as being

a minor point, but some people have suggested there is no mechanism

to lock in the mechanism, if you know what I mean.


Well, what they're saying is that the mechanism is under an

act of the Federal Parliament, yes. But you know as well as I do

that if this plan is introduced and passed into law, but no government

in the future, certainly no government of our persuasion is going

to want to increase it and you've also got the very strong

likelihood of the Senate not wanting to change, and once it gets

embedded there, the chances of it disappearing are absolutely zilch.


The bottom line to all of this is surely, the question, whether

the voters believe you, the Treasurer, your Government, whether

they trust you all. Could it be they might end up saying, look,

this is simply too good to be true?


Well, Steve, that is something that ultimately we'll find

out and I will accept the judgement of the Australian people whenever

it is delivered. In the meantime, I'm going to go all around

the country and pour myself into explaining this plan because I

believe in here that it is good for our country and that is why

we're doing it. People are not foolish, they do understand

the present tax system is broken down. It does need changing, it

is unfair. And we're putting forward a comprehensive plan.

It's not just a grab bag of ideas, it's an integrated

plan. It looks after poor. It gives incentive to middle income earners.

You can now go from $20,000 to $50,000 in income without going into

a higher tax bracket and that's 60 to 70 per cent of the entire

Australian community. It does have a lot of incentive for middle

income earners. It's very good for country people. And it's

very good, overall, for the country because it makes our exports

cheaper and it makes our business costs cheaper and, therefore,

there's more resources for business to employ people. Now,

that is a message that I will take to the four corners of this country

over the weeks and months ahead. Now, if at the end of that the

Australian people believe it's good for Australia, they support

it, if they don't, they won't, and I will accept their

judgement because I have great confidence, total confidence in their



Do you have total confidence, though, in the surplus because that

is also a big gamble, that the tax cuts are based on future surpluses

and given forecasts about the state of the world economy, the Asia

meltdown, are the tax cuts and the benefits going to be sustainable

when we get to 2000?


Well, they are going to be sustainable because there is still plenty

of surplus left after the contribution being made to this plan.

And it's very interesting that people should now be saying,

talking about the surplus, that the cry until now, particularly

from the Labor Party, is that the surplus has been too big. I mean,

it would be interesting now if Mr Beazley and Mr Evans turn around

and say, oh, the surplus is in danger. For the last couple of years

they've been saying that we've gone too hard to get into

surplus, that we've done it too quickly, we've been too

tough and we've accumulated too big a surplus. Now they say,

oh, careful it's risk. I mean, they should make up their mind.

We've got it right. We're taking some out of the surplus.

One of the reasons why we can afford these personal tax cuts is

that as well as getting money from the surplus, the GST itself produces

a dividend out of the black economy. There's $3 billion there

that you can't get out of the black economy without a GST.

So when you, once again, put it all together as an integrated plan,

you see the logic of it and you see how the one bit depends upon

the other. And it's not a question of putting and taking and

saying I'll take that bit, I'll take the tax cut but I

won't take that bit over there, you can't do that.



Prime Minister, just on the general question of income taxes, they

could rise between now and the year 2000 or, indeed, after, could

they not? I mean, what I'm getting at is...


Well, they won't under us.


But the...


Well, they won't under us. I mean, of course they won't.

I mean, we've been through two and a half years of turning

a budget deficit of $10.5 billion into a surplus of $2.7 billion

and we've done that without increasing any taxes.


And you...


Well, if we've done it against that background, if we've

been able to avoid tax rises, why on earth would they occur under

us in the future? If there were a change of government, they will

go up, but not under us.


And you couldn't foresee circumstances under which, under

you, as you say, you would have to go to the people and say, look,

when we announced the tax reform package, these were the exemptions

but we may have to exempt...


Steve, I don't foresee those circumstances. This is a very

careful package. It does have generous personal tax cuts, so it

should, because we're asking the Australian people to accept

a fundamental change. But it's very carefully balanced. I mean,

the people who are going to offer you the big tax cuts, the magic

pudding, are the Labor Party. They're going to do what Mr Keating

did in 1993. They're going to say, we can give you a tax cut

without a GST.


Well, in fact, that's what Opposition Leader Beazley is saying

this morning.


Of course, that's right.


He's saying he can beat you hollow on tax, offer bigger tax

cuts and a fairer system without relying on a GST.


But Mr Keating and Mr Beazley did that in 1993. And when they won

the election they took away the tax cuts and they increased the

wholesale sales tax and without compensation. And the increase in

the wholesale sales tax in 1993 after that election was almost exactly

the same impact as the changes that we announced yesterday. There

were no income tax cuts. There was no social security compensation.

There was no tax deduction for private health insurance. So, I would

say to the Australian public, beware of a Beazley offering you a

GST-free tax cut.


Your most vocal critic so far appears to have been the Housing

Industry Association and it is saying this morning that a GST applied

to all homes after July 2000 will add more than $17,000 to the cost

of a new home and destabilise the industry.


Well, I think that's wrong and I'll tell you why it's

wrong. To start with, the industry's never had it better because

interest rates are at a 30-year low. And Ron Silberberg and the

Housing Industry Association know that the greatest driving influence

on real estate and housing is the level of interest rates and this

government has cut interest rates by $300 a month for the average

homebuyer. The impact of the GST on an average house is about 4.7

per cent in price, not 10 per cent because a whole lot of items

that now go into a new house, like baths and basins and things like

that, are subject to wholesale sales tax. Now that will disappear.

And, on top of that, we're going to give every new homebuyer,

every first homebuyer, whether it's an old house or a new house,

if it's your first house you'll get $7000 home savings

grant. And that will, in our view, adequately cover the situation.


Not in the Association's view. They're saying that $7000

falls short of the mark.


Well, Steve, it is understandable that if you are a lobby group

for a particular section and you've wanted something you will

go on arguing your ambit claim. But I ask Mr Silberberg's members

and the HIA's members to understand the other benefits of this.

I mean, all of them are small business operators. They will all

now be able to get the taxes paid on their inputs back. Their operating

costs will be lower, lower than what they are at the present time

because one of the virtues of a GST is that it will take about $10

billion in costs through rebated input taxes off the operating cost

of all businesses.


Prime Minister, I'm playing devil's advocate in part

here this morning. The New South Wales and Queensland Labor governments

have criticised the package and you would probably say, well, you'd

expect them to...


But they're not serving the interests of their people.


But what happens if Labor Premiers, Bob Carr and Peter Beattie,

say, listen, we're not going to be your salesmen, we're

not going to be part of this? Can they say that?


Well, they will do so at the peril of being repudiated by their

own electorates because this plan will offer something to the States

that they've asked for for generations, and that is a growth

tax. We're giving them all of the proceeds of the GST and that

means in the years ahead they will all have more money to spend

on roads and health and education and hospitals. Now, are they going

to say to the people of their States: we don't want this extra

money, we're not going to provide those extra services. Over

a 10-year period, from the turn of the century, this plan will give

the States $25 billion more than they will get under the existing

arrangements. Now, are Beattie and Carr going to say: we don't

want New South Wales' and Queensland's share of that?


But why then is Peter Beattie saying, as recently as on this programme

this morning, up until now we were a low tax State, John Howard's

just changed all that?


Well, that's just wrong. I mean, he's got to sing Federal

Labor's tune. He's got to sing from the same hymn sheet

until the election. Now, if we win the election – I make the

prediction now, if we win the election and we have our Special Premiers'

Conference, Peter Beattie and Bob Carr will go along and they say,

well, we didn't like it but, you know, we have to be good Australians

and we've got to accept it. They'll grab it with both

hands after the election. And they need to because it is good for

their States. I mean, Queensland not only gets the extra money through

the Federal-State change, but that diesel fuel change, the lower

fuel costs are of greater benefit to Queenslanders than any other

State. Because Queensland is a big State and it's a heavily

de-centralised State and, therefore, it relies more heavily on heavy

road transport to bring goods from one part of the State to the

other. And the benefit for Queenslanders in this change is proportionately

greater because of that simple fact - Queensland's the only

State in Australia where the majority of people live outside the

capital city and, therefore, Queenslanders, by that definition alone,

are going to get proportionately more out of this and Peter Beattie

should understand it. I can't wait to get to Queensland to

start campaigning for this.


Two final quick questions. If you get re-elected, can you get this

through the Senate?


Well, my view on that, Steve, is simply this that if the Australian

people say, yes, to this at the next election, whenever it is, the

opposition parties in the Senate are under a moral imperative to

let it through.


And final question, Prime Minister. What is adequate time for public



Well, I can't put a day or a week or a month on that. No,

I can't, Steve. I don't know yet.


Are you telling me that the thought of going to the polls hasn't

even entered your mind?


Oh look, the generic thought is always there, it's always

there from the moment that you are elected. But I do not have a

date in mind, I have not made up my mind. Obviously, like any other

Prime Minister, I want to get re-elected. Of course I do, I'm

not going to say to you I don't, of course I do. But I don't

take the Australian public for granted. We have put forward a bold

and visionary and imaginative long-term plan which is good for the

country. I want to devote myself, in the time immediately ahead,

to explaining it, to going around the country. Further down the

track I'll think about other matters.


You haven't made an appointment with the Governor-General,

you're not thinking October 10th, 17th.


No, I have not made...I mean, people have been playing games

with me, inviting me to dinner parties on particular Saturdays in

October and November and we're happy to accept all the invitations.


Prime Minister, we appreciate your time this morning and thank

you for joining us.


Transcript 10653