Transcript No. 99/07

Hon Peter Costello MP

Doorstop Interview

Wednesday 17 February 1999

8.35 am

E&EO

SUBJECTS: Anglican Church, tax reform

TREASURER:

The taskforce of the Anglican Church has endorsed GST and raised questions about the adequacy of compensation. I make it clear, first of all, we welcome the fact that the taskforce has endorsed the Governments indirect tax reform and I think it is probably the first time that I know of that the Anglican Church has endorsed GST. So I welcome that, I think it is a very big step forward, and I appreciate that fact. In relation to compensation theyve made the point that youve got to make sure that people are adequately compensated for tax changes, and they are. The best way to make sure that people are adequately compensated is to do what the Government has done; increase all pensions. I want to make it clear, part of the Governments tax reform package is to increase all pensions by 4 per cent and to give a pension increase to keep pensioners 1.5 per cent in advance of Consumer Price Index. The Government is also increasing all family allowances for families, and the Government is also cutting income tax. So when you put all those together, this more than adequately compensates all classes of the Australian public in a fit and proper and valuable way, and that means that with adequate compensation the tax changes will do a lot for the country.

Anglican leaders also say that food should be GST exempt. Isnt the Government facing mounting pressure to take the GST off food?

No. The Anglican leaders were divided on that question. I think that was pretty clear. They said, just so that I am not misrepresenting anybody, a majority of the Committee said that. Now, since the Committee, I think had four people, what it clearly shows is that the Anglican Church was divided on the issue, and that there was support on that Committee for the Governments position. Now, lets also go ahead and say what the majority said, the majority said, weve got to be very clear about this, the majority said that if you take food out what you would have to do is increase income taxes or raise the rate of the GST to 11 per cent. Now this Governments not going to be raising the rate, and this Government is not going to be taking away peoples income cuts. So the fairest way to do this is to have the broad base and adequate compensation, which is the Governments position.

Have you got any room to move to increase compensation?

Well look, let me make this point. Everybody has been over this tax package. Done it on a CPI basis, Household Expenditure Survey basis, the ACOSS has commissioned two of its own reports. Nobody has yet identified any group of persons that will be worse off. So to talk about adequate compensation is basically to talk about a 4 per cent increase in pensions, increases in family allowances, income tax cuts, aged persons saving bonuses, all of the parts of the package would more than adequately compensate for the tax changes. Thats the point. I mean, why would you be talking about more compensation when the facts show that you are already over-compensating each class of persons thats been affected.

Do you think your friends in the Senate will be paying any attention to the thoughts of the church?

Oh I dont know, I dont know, I mean, you know, our Party believes in having God in the preamble so we always pay attention to those sorts of things.

So there is no compromise, there is no room to move on the GST regardless of more opposition to certain elements of it.

Well actually, I think this is probably the strongest statement you have ever seen from a church in favour of GST. What it says, is Anglican Church says yes to GST. I dont think you have ever seen a statement like that before. Then they divide on the question of food, right, and then those that say take out food, and I dont think they could have been serious about this, said increase the rate. I dont think the Anglican Church is seriously saying that the Government should be increasing the rate. You know, we have just been to an election in October, we gave a cast iron assurance to the people of Australia that that rate will not move, and it wont move. So where does all the logic go? The logic goes to adequate compensation. What does the package show? Adequate compensation.

Thanks.