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Transcripts from the Prime Ministers of Australia

Transcript 10655


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: 10655



Welcome Mr Howard.


Hi Kerri-Anne – it's good to be on your show again.


Great to have you with us. Well it really is like the main event

Mr Howard. It's a bit like the Melbourne Cup to me – a

lot of preparation, a long, hard race. What do you think your biggest

handicap will be?


I guess the reluctance of some people to change, but the change

that we're offering is good for the whole country. The reason

I want to change our tax system is that I believe that a new tax

system for a new century will make Australia a stronger country,

it will help boost our exports, it will help us compete in a difficult

world environment, it will give low and middle income people more

incentive to work and to save and it will just produce a fairer

system all round, because I think all of your viewers probably feel

deep down that the present system is unfair, it's old-fashioned,

it's not working very well. We've tried to tinker with

it in the past but that hasn't really fixed it up and at long

last the Government has come along and given a comprehensive plan

for change and I think it is, most importantly of all, it is good

for the country and Australians if they think something is good

for their country and they think it's fair to them, then they

will back it.


If one is using racing analogies it seems you jumped out of the

barrier quite well. Reading the editorials this morning, how did

you feel?


Well to use a cricket analogy we've had a very solid start,

we haven't lost a wicket yet and we're building for a

big score. I mean the sporting analogies are very appropriate. Look,

I think it's had a good reception because it's a very

comprehensive plan and it's a very fair plan. We've laboured

long and hard to make sure that low income people are protected,

there's a lot in it for retired people and getting rid of things

like provisional tax, introducing a 30 per cent tax rebate for private

health insurance – those sorts of things are particularly good

and it's very very good for families. But I don't take

the Australian people for granted. They expect of me that I will

go around the country, I'll talk to them about it, I'll

answer questions about it and I'll explain the detail of it.

I'm enthusiastic about it Kerri-Anne because I believe it is

good for Australia and that's the main thing that's driving

me. I want to devote myself over the weeks and months ahead to explaining

this plan because I think if we can get this in, it will be the

next thing that helps set Australia up for the 21st century.

We've got rid of that big deficit, we've got interest

rates at their lowest levels for 30 years, we've created 300,000

new jobs over the last couple of years. The next thing we've

got to do is to fix our tax system and I am really so committed

to it because I think it will be so good for the whole country.


You talk about being enthusiastic for it – it is all about

the sell. Can you sell your socks off, because while you're

selling a package a lot of people are seeing a new tax. Can you

sell it Mr Howard?


Well, the Australian public will decide, nobody else, whether they

want to support it or not. And it's not a new tax, it's

a whole new system.


But doesn't that come from an inspiration. People need to

be inspired to know that this is a whole package, not just a tax,

but that's what people are hearing and seeing.


Well, Kerry Ann, I believe that the way it's been structured,

that people will see it as a total plan and not just a GST, not

just a tax cut, or just this or that, but that they will see over

the days and weeks ahead, they will see that a government has been

willing to tackle the whole thing. And I mean, we've not only

re-written the tax scales, we've created a fairer system, we've

given a very big boost to the bush, we've taken $4.5 billion

off the cost of Australian exports. Right at the moment, the thing

that Australia needs as much as anything else is to sell more overseas

and if you can bring in a tax system that reduces the cost of our

exports, we'll sell more of them and we'll do better.

I mean they're the sort of things that we've been wanting

for a very very long time and they're delivered under this



But it is pretty difficult to sell it. Other people, Mr Howard,

have tried before. John Hewson for instance really came a cropper

when he tried to sell his tax, in fact, I'm sure you remember

this very well known piece of footage.

Journalist: "If I buy a birthday cake from a cake shop

and GST is in place, do I pay more or less for that birthday cake?"

Hewson: "Well it will depend whether cakes today in that

shop are subject to sales tax or they're not, firstly, and

they may have a sales tax on them. Let's assume that they don't

have a sales tax on them and that birthday cake is going to be sales

tax free, then of course, you wouldn't pay, it would be exempt,

there would be no GST on it under our system. To give you an accurate

answer I need to know exactly what type of cake to give a detailed



And that detailed answer went on for a few minutes and we talked

about candles and we talked about everything. What did you learn

by Mr Hewson's experience.


Well, I can tell you the price of birthday cakes will go up between

2 and 4 per cent under the plan, it depends on the particular type

of cake.


I've got one right here.


It will go up by between 2 and 4 per cent but you'll have

more money in your pocket with which to buy it.


As simple as that?


As simple as that. You'll be better off because you'll

get a tax cut or you'll get a pension increase or you'll

get an additional amount of money through the increased family benefits,

and you'll be better off and other things will come down in

price. I mean a motor car for example, now carries a 22 per cent

wholesale sales tax. I mean, the price of the average family motor

car will come down in price and there are a lot of things now that

will be cheaper, other things will be dearer. The reason some things

will be cheaper is they now carry very high sales taxes which are

hidden and motor cars are a very good example – 22 per cent

is a lot more than 10, and if you're running a business you'll

have uniformly cheaper fuel. Every litre of fuel you buy to run

your business will be seven cents a litre cheaper and all of that

will help business operate a lot better and all of that will generate

more jobs. And the tax cuts have been deliberately designed to help

people in the lower and middle income area to get the greater benefits,

particularly if they have children.


There are so many aspects to this package it is difficult to try

and analyse them today but for instance did you and your people

look at other examples and their applications of this type of tax

, for instance, New Zealand. Did you look at how that worked there

and what the hiccups might have been?


Yes, we looked to some degree, but every country is different.

I mean we have designed a tax system for Australia, to take Australia

into the 21st century. We're not slaves to any particular

overseas model, but we knew that if you wanted to get a proper indirect

tax system that was fairer than the present one, it needed to apply

to virtually everything. I mean it won't apply to doctors'

bills or dentists' bills, it won't apply to child care,

it won't apply to nursing homes or retirement hostels or to

hospital treatment. It won't apply to that. It won't apply

to education, it won't apply to child care – those things

are out of the question. You've got to have virtually everything

else in otherwise you are really left with the inadequacies of the

present system.


Do you think you will be surprised, as New Zealand was, and they've

said how they underestimated the enormous revenue from the black

economy, do you think you'll be surprised?


There's no doubt in the world the Australian tax payer will

benefit from the cash economy being brought into the net of the

GST - there's no doubt about that and in New Zealand that was

the experience and I'm certain the same thing will happen here

in Australia. One of the reasons we're able to provide people

with personal tax cuts is that under the new system, people who

are now escaping through loopholes and through the cash economy

will be caught up and the money they now have to pay – which

they should have been paying in the past – can help pay for

your tax cuts.


And when the electorate, who has heard in the past, L-A-W law,

we've heard non-core promises, the electorate is cynical, do

you think that's fair that we should be cynical?


Well, there is a difference between this and L-A-W law. L-A-W law

referred to the fact that before the 1993 election Mr Keating promised

tax cuts and opposed a GST. After he was elected, he took aways

the tax cuts and he put up indirect taxes, which was his own GST.

On this occasion, I'm laying out in front of the electorate

before the election my proposal for a total tax change, including

a GST, and there's a very, very big difference.


Well, Mr Howard, thank you very much for your time. You've

got an enormous schedule ahead of you and we do appreciate your

moments with us on Midday.


Thanks for having me. Very nice to talk to you again.


Ladies and Gentlemen, the Prime Minister of Australia, John Howard.


Transcript 10655