Transcript No. 2000/79

For two years now the Labor Party have had a time bomb ticking because they have been

trying to maintain the pretence that in a modern sophisticated economy like Australia we

didn’t need tax reform. And that, alone of the western democracies in company with

Swaziland, Australia could keep wholesale sales tax. And whilst that was ticking away for

the last two years they were always at risk that somebody would tell the truth, would bell

the cat, would let the cat out of the bag, which is what Mr Della Bosca did yesterday.

Because Mr Della Bosca yesterday acknowledged that tax reform was necessary for Australia,

and the Government was right to do it. Now, in most organisations if you tell lies you get

sacked, but in the Labor Party you get sacked if you tell the truth. And so Mr Della

Bosca, who, according to the Bulletin yesterday is acknowledged for his acuity and the

superiority of his political judgement, was given his marching orders for exposing the

truth on tax reform. Remember this, Mr Della Bosca was the one that told them they were

wrong to try and increase capital gains tax in the 1998 election. He was the one who told

them they were wrong to try and get rid of four-wheel drives, and after the election they

all acknowledged it. They said, Della, you were right and we were wrong. Well,

Della’s right again. And you might as well hang a sign over the ALP Presidency which

says “truth tellers not wanted here”. That office is now open only for

pretenders. They won’t have trouble finding one, but what we’ve learned in the

last 24 hours is truth tellers need not apply for the ALP Presidency. And all this is

being done so that Beazley and Crean can maintain the pretence.

They’re in a state of denial that Australia alone of the western democracies can

keep with a narrow indirect tax base and a wholesale sales tax. They’re in denial

that Australia never needed tax reform. They’re in denial that somehow they can stop

the modernisation of our economy.

Well, the world is round, the sun comes up, Elvis is not in supermarkets and tax reform

is good for Australia. And that’s basically what Mr Della Bosca was saying yesterday.

And the sooner Beazley and Crean get out of the state of denial and recognise that fact,

the less problems they are going to have.

You know, you just can’t stomp on everybody who wants to acknowledge the truth.

And this suggestion that somehow he can roll back GST and make it simpler is like saying

that he’d like to head in a northerly direction by walking south. Mutually

incompatible, it’s inconsistent, it can’t be done. Della Bosca knows that.

Anybody who’s dealt with taxation knows that, and at the end of the day I don’t

even think Kim Beazley believes it. It’s just a convenient line for him to try and

keep up the pretence, to try and pretend to the public that tax reform is not needed when

it is and to try and pretend to the public that leadership is not needed, when it is.

So, all this talk today that you’re getting about how somehow Della Bosca,

acknowledged by Premier Bob Carr as a genius, acknowledged in the Bulletin for the

superiority of his political judgement, somehow made an error is just part of the great

pretence. He acknowledged the truth. That’s why Mr Della Bosca got into trouble. And

the Labor Party will continue to get into trouble until Mr Beazley and Mr Crean

acknowledge the truth.

JOURNALIST:

In acknowledging that Mr Della Bosca was right, do you also agree with his statement

that there should be across the board 10 per cent GST on food?

TREASURER:

No I don’t because we have put in place tax reform. It’s taken us now two

years since we released the Policy and a Federal election and legislation through the

House of Representatives and tortuous negotiations through the Senate, and we finally got

it in place. And far from the world ending, the public accepted the need for reform for

Australia. The worst possible thing you could do, would be to now try and change

everything. What this tax system needs now is certainty and that’s why Mr

Beazley’s comment that he’s going to roll it back, can’t tell you when,

can’t tell you how, can’t tell you how much it’s going to cost, can’t

tell you what on, all he can tell you is he is going to change it. All that will do is add

to complexity and uncertainty. Nothing could be worse. What this tax system needs now is

continuity and certainty. It does not need change.

JOURNALIST:

What has this latest development done for Mr Beazley’s leadership?

TREASURER:

Well, you see the problem is, this latest development illustrates the problem. This

latest development illustrates that there is no leadership from Mr Beazley. The last time

there was leadership in the Labor Party on tax was in 1985 when the Labor Party supported

a broad based consumption tax, too high – 12.5, and Mr Beazley was a follower and he

supported it because there was a leader. His problem is he’s still a follower.

He’s a follower who they’ve now put in control.

And the test of leadership for Kim Beazley is now this: can he stand up and say tax

reform was needed for Australia, yes it was hard, I tried my best to take every cheap

political point but I haven’t succeeded, it’s now been introduced, I will now

give it support. But it was because he tried to take the weak way, the cheap way, for two

years pretending this wasn’t necessary and he’s now in trouble, and nothing will

get him out of that trouble until he actually makes an acknowledgment. He’s done his

best. He was wrong to embark on this campaign but he would be stupid to continue.

He’s done his best, he eked every cheap vote that there was and now tax reform is in

place and it’s time for him to end this cheap campaign. He’s got to snap out of

this state of denial. If he really honestly, deep down, believed that GST was wrong he

would be pledging to repeal it. The fact that he won’t repeal it, as I’ve said

all along, just indicates that this was a strategy to eke out every cheap vote while it

was going, until such time as it was implemented and then to attempt to take advantage of

it. The campaign was wrong to begin with and it would be stupid to continue.

JOURNALIST:

Mr Beazley vowed this morning to continue with it. Can he win the next election with

this strategy?

TREASURER:

I don’t think he can sustain it. You see, Mr Della Bosca put out this statement

last night: “I’ve always opposed the GST and therefore believe no product should

be subject to it”. Now, I’m genuinely perplexed. If no product should be subject

to GST why doesn’t the Labor Party repeal GST. As Graham Richardson said, the

weakness in our case is, if we are so opposed to it, why aren’t we repealing it. And

then the second thing they say is, oh well, we’ll keep it although we’re totally

opposed to it, can never be made fair, we’ll keep it and we’ll make it simpler

by more exemptions. It’s a fundamental point in indirect taxation; the more

exemptions the complex. So we have myriads of contradictions and of course the one thing

that you never actually hear from the Labor Party, is what this roll back actually means,

what’s it on, when’s it going to happen, how much does it cost and how is it

going to be funded. I said Sunday week ago, if it’s only a 50 per cent roll back,

let’s suppose it’s only a 50 per cent roll back, that costs $12 billion which

means everyone’s tax cut is abolished. If it’s only a one-third roll back, and

that costs $8 billion, that means petrol will go up 24 cents a litre. Now, this strategy,

this strategy of denial, you know, it’s like when people were trying to sort of

suppress the truth that the world was round. Someone would pop their head up and say the

world was round, they’d take his head off and the argument would go quiet for a few

months and then somebody else would pop up and they’d take his head off and the world

would go quiet. But you can’t stop it forever. You cannot maintain this pretence that

somehow tax reform is unnecessary in Australia. And their position is now so riddled with

inconsistencies that he’s just going to have problem after problem. And the problems

started yesterday, not with Mr Della Bosca making a gaffe, but with Mr Della Bosca telling

the truth. You can only suppress these truths for so long, that’s Mr Beazley’s

problem.

JOURNALIST:

Mr Costello have you seen the Westpac Melbourne Index Consumer Confidence figures?

TREASURER:

I saw it briefly. I think it showed a lift in consumer confidence, it was about 10 per

cent, which I think they said, did they not, was the largest lift in consumer confidence

that they had ever recorded. Look, let me preface my remarks by saying these surveys

bounce around.

I never tie myself to one month’s figures, but I think that there was a lot of

confidence in the community over the last week. Tax reform went as well as anybody

expected. People found out that many prices in fact fell, as we said they would, people

found that there were significant income tax cuts which is a big part of the problem,

you’ve seen reflected, I think, on every front a mood of confidence in the community

over the last ten days, and I think this is just another indicator which shows it. Look,

I’m not in that camp that says, you reform your taxation system on day one and you

never have a question thereafter. I think that we’ve got to work through all of the

issues of tax reform, but I think I can say that over the last ten days that tax reform

has gone better than most expected. Certainly a lot better than Mr Beazley predicted and

hoped for, and I think we’re seeing some of that reflected in consumer confidence.

JOURNALIST:

Do you agree with Mr Della Bosca when he said that the simplest thing to do would be to

put food back into the GST?

TREASURER:

I don’t agree with putting food into the GST, no I don’t. Because we wrote

this policy two years ago, we went to an election, we put the legislation into the

Parliament, we negotiated it through the Senate, it’s now been enacted. And the worst

thing you could possibly do now would be to change it. We are ten days into a new tax

system. What the new tax system needs is certainty and consistency. And anybody who says

they’re going to change it ten days in, is only going to add to that sense of

uncertainty, and anybody who says they are going to move further exemptions is going to

add the complexity. One simple truth in relation to indirect tax – and let me make this

point – we don’t go it alone on this, 150 countries in the world now have a

value-added tax or a GST. And to my knowledge the only one that adopts Labor’s

preferred option of wholesale sales tax still, is Swaziland. Now, all of the work that has

been done on these value added taxes or GST’s, work that’s been done, the IMF

work that’s been done, the OECD, says this: that exemptions add to complexity. Roll

back equals complexity. 150 studies around the world say that, and for Mr Beazley to now

be talking about simplifying by exempting, it’s totally contradictory, totally

mutually inconsistent. The best thing you could do, to add to simplicity now, is to say

we’ll bed it down, we’ll give people certainty, the base will not be changing,

the base will be the same, so that people know where they’re going. Thanks very much.