Doorstop Interview

South Adelaide Football Club

Noarlunga Downs, Adelaide

Friday, 1 July 2005
9.10 am

(Adelaide Time)

SUBJECTS: 1 July 2005 Tax Cuts, GST and State Taxes, US Interest Rates,

IR Reform, Drought

JOURNALIST:

Treasurer, July the 1^st tax changes, can you tell us something about

how they will work?

TREASURER:

Well, as from today every income tax payer will get a tax cut. It will appear

in your next pay packet, if that is fortnightly or if that is monthly, when

you get your next pay packet you will notice that less tax has been taken out.

The bottom marginal tax rate has been cut from 17 cents in the dollar to 15

cents and the thresholds have been increased. The consequence of that means

that every Australian will pay less tax from today, the 1^st of July

2005, it will appear in your pay packet when you are paid in a fortnight or

a month’s time and that will release more spending power into the economy.

JOURNALIST:

It is a bit unusual though isn’t it, given that the legislation hasn’t

even passed through the Parliament?

TREASURER:

Well, the Labor Party was able to block the legislation so it hasn’t

passed through the Parliament. But the Tax Commissioner has made schedules for

employers which show employers to deduct less tax so that the tax cuts can take

effect. And if the employers deduct less tax then when the Senate resumes in

August it can validate that decision and ensure that people have less tax from

the 1^st of July. So as from today, employers should be taking out

less tax. As a consequence everyone gets an income tax cut and that should appear

on your next pay packet whether it be fortnightly or monthly.

JOURNALIST:

Do Australians need to have any concerns about the Government taking control

of the Senate from today?

TREASURER:

Well, if the Government hadn’t got a majority in the Senate there would

be no tax cuts today because the legislation itself hasn’t gone through.

But it is the reality that when the new Senate assembles in August that it can

validate these tax cuts that means every Australian is going to get a tax cut.

So, this actually shows the good things you can do for the Australian public

with a majority in the Senate. It means that Labor was unable to stop tax cuts

– which they could have done – if the Government wasn’t able

to get a majority in the new Senate. But Labor was defeated, the tax cuts will

go through, there will be an income tax cut for every Australian as from today,

bank account debits tax will also be abolished as from today, the superannuation

surcharge will also be abolished from today and people will be given choice

in superannuation from today.

JOURNALIST:

What do you plan to do to make WA and New South Wales comply with the GST deal?

TREASURER:

Well, they have to do what the other States are doing which is abolish taxes

like stamp duties on mortgages, stamp duties on leases, taxes on business. They

have to do what the other States are doing as a condition of receiving GST.

All GST goes to State Governments. GST wasn’t introduced so States could

have GST and all their existing taxes, they could have GST instead of existing

taxes and WA and New South Wales have to understand that too, because if they

don’t then the people in those states will be doubly taxed.

JOURNALIST:

US interest rates have gone up, what does that mean for the Aussie Dollar?

TREASURER:

I don’t think the implications are that great for Australia, the reason

why interest rates are rising in the United States is their economy went through

a recession, interest rates came down very dramatically because they were in

recession in 2000-2001, their economy is now growing, interest rates are going

up again. But what is happening in the United States is related to the United

States conditions not Australian conditions and it doesn’t have an impact

on the Australian economy.

JOURNALIST:

Following yesterday’s process, is the Government a little concerned about

the growing feeling within the Australian community about workplace relations

changes and the impact that may have?

TREASURER:

I think that the Government wants to improve Australia’s economic output

because it will give people more jobs and higher wages and reforming industrial

relations is a big part of that. Not everyone will agree, the union bosses won’t

agree, but the important thing I believe is to get a system which will make

business more profitable, create more jobs and increase wages. And that is what

this is designed to do.

JOURNALIST:

But you have got to sell that message to the community first, don’t you?

TREASURER:

Sure, it is important to argue the case and we know the union bosses will be

arguing against it but I want to say to the Australian people that this is all

about a stronger Australia, more jobs and higher wages. That is why we are doing

this. Last question.

JOURNALIST:

Do you think the rain is going to affect the Australian economy?

TREASURER:

Well it is great isn’t it, to see rain because a lot of Australia has

been in drought for a very long time. This has been terrible for farmers, for

farmers’ incomes, for farmers’ production. If rain gives them the

chance to plant a crop and earn an income that is good for them, it is good

for their families and it will also be good for national economic output.

JOURNALIST:

But does it affect any of the drought packages that have been announced?

TREASURER:

No, it doesn’t affect the drought packages. They are still available

for people who are in drought, but of course if you are not in drought, then

you will have a crop and that is a much better thing than to have a drought

assistance package. Thanks.