Transcript No. 2000/65

TRANSCRIPT

Treasurer

ABC TV

Full transcript of interview with Heather Ewart

Sunday, 25 June 2000

Recorded at 3.30 pm

Paris

E&OE

JOURNALIST:

Peter Costello, I know its Australias turn to host the OECD but you

do have a lot of other things on your plate at the moment. Is the timing

Would you have preferred different timing if that was possible?

TREASURER:

Its not our turn. You dont get a turn. You have to be elected. And

because we were elected, I was elected, it was my responsibility to do

it. If you said to the developed countries of the world that you couldnt

chair a forum because value added tax or goods and services tax, a reform

which most of them accomplished decades ago, was on the agenda they would

lift their eyebrows a little bit. But this is a great opportunity for

Australia. Were singled out by the OECD as one of the six growth economies

of the world, weve had some major economic achievements and we are recognised

for those achievements. And if we can build on those achievements with

trade interest and foreign investment interest, Australia will be a much

stronger place.

JOURNALIST:

So it would be an insult if you didnt, an insult to the OECD, if you

didnt go ahead and chair it.

TREASURER:

No, look Ive been elected the chairman of the OECD and it gives Australia

a terrific opportunity to showcase itself amongst the developed economies

of the world. Weve had some great achievements. They are recognised.

Were recognised as one of the six growth economies of the 1990s. And

frankly it would be a bad opportunity to miss. You dont get elected to

chair these Council meetings that often.

JOURNALIST:

Now could I just clarify one point with you on the GST. Treasury did

definitely have, a model did exist, showing that petrol companies could

make this 1.5%?

TREASURER:

Yes. All the modelling that we do in the Treasury is done on a model

which is called Prismod. The Prismod model as I recall was constructed

by the Treasury under the Labor Party and the Prismod model shows that

by abolishing wholesale sales taxes, both direct and embedded, and by

reducing transport costs and by all of the other changes associated with

tax reform, you get reductions in the production of petrol, just like

you get reductions in the production of all sorts of other goods cars

or electronic goods. And those savings have to be passed on to consumers.

Just as the savings to car manufacturers have to be passed on to consumers,

the savings on electronic goods have to be passed on to consumers, nobody

should be arguing, least of all the Labor Party, that oil companies dont

have to pass on savings. They have to pass on savings the same as anybody

else.

JOURNALIST:

The Prime Minister I think on the Sunday programme this morning said

that you would release this Treasury model, release the figures. Do you

think you will be doing that?

TREASURER:

Well the figures were released as part of the Prismod modelling, as part

of the policy. Prismod is a macro model that applies to the economy as

a whole. It was developed under the Labor Party originally to attack Fightback,

as I recall. And when you model the changes in relation to the cost of

production of petrol, just like the cost of production of cars or the

cost of production of hardware or the cost of production of electronic

goods, then you get savings. Look, people have got to remember this. Goods

and services tax comes in after the abolition of wholesale sales tax.

Wholesale sales tax applies directly and indirectly to most goods in the

community and when you abolish that you get savings. You get the savings

first, you pass them on to consumers and its the net effect of those

savings and the GST which affects price in the tax aspect.

JOURNALIST:

Just finally, at the time of the last election, though, there was no

suggestion I dont think that the petrol companies would be asked to make

this sort of [inaudible].

TREASURER:

Oh yes. Oil companies were expected to pass on the savings. Look, this,

oil companies can no more capture the savings than any other company.

Were not going to let a car company do it, were not going to let an

electronics manufacturer do it, we wouldnt let somebody do it in relation

to hardware. They have to pass on the savings, direct and indirect savings.

And to not require the oil companies would be to say alone, of all the

companies in Australia, the oil companies get the privileged right to

capture cost savings, right. Those savings go to consumers and they have

to be passed on.

JOURNALIST:

Thank you.

TREASURER:

Thanks.