TRANSCRIPT
of
THE HON PETER COSTELLO MP
Treasurer

Doorstop
Canberra
Friday, 22 March 2002
9.15am

 

SUBJECTS: Distribution of GST; abolition of petrol excise indexation; Senator

Heffernan

TREASURER:

Today is the day in which the GST, which has been put in place as part of the

New Taxation System, will be distributed to all of the States and the Territories.

There will be $26 billion distributed which will pay for all of the school teachers

in all of the classrooms in all of the schools and all of the policemen on the

beat. And we will have six Labor States and two Labor territories rolling up

to get their share of GST, in fact fighting for their share of GST. And I want

to make this point, that every last dollar of GST revenue will go to the States,

every single last dollar, with increases this year between something like 7

per cent and 11 per cent in the amounts which are going to be distributed, so

that is a good deal for the States. They have never had a deal like this before.

JOURNALIST:

But you are making them pay for the ending of petrol excise indexation, aren’t

you. Why are you breaking that agreement?

TREASURER:

We are not breaking any agreements let me make that clear. The Commonwealth

from 1997, collects eight cents a litre, for and on behalf of the States and

that 8 cents a litre was indexed up until March 2001. But indexation was ended

in March of 2001, so that eight cents is not being indexed, it is not being

collected, it won’t be paid.

The remaining thirty odd cents that the Commonwealth took from petrol is not

being indexed, it is not being collected, it won’t be paid. And if any of the

States are demanding the return of petrol indexation, if they are demanding

the return of petrol indexation the Commonwealth will not allow it. The Commonwealth

abolished indexation and it will not allow the States to re-introduce it.

JOURNALIST:

It was your decision though, why shouldn’t you pay for it?

TREASURER:

It was our decision to end indexation…

JOURNALIST:

And why shouldn’t you pay for that?

TREASURER:

…and it has ended on both the State and the Commonwealth component. Now,

if the States want to re-introduce indexation, bear this in mind, if the States

want money from petrol indexation you would have to put up the price of petrol

to recover it. You would have to put up the price of petrol to recover it. Now

we will not allow the price of petrol to rise. In other words, the States will

continue to get their eight cents a litre indexed until indexation was abolished.

Now there is no point in the States saying we would like to be paid indexation,

which does not exist, which isn’t actually collecting anything. And when you

hear the States saying that they want indexation of petrol, the consumers of

Australia ought to bear this is mind…

JOURNALIST:

They don’t want indexation they want (inaudible) to pay for it.

TREASURER:

…they want indexation of petrol. The States are claiming they want to be

paid petrol indexation. Petrol indexation doesn’t exist. There is only one way

that the States can be paid petrol indexation, that is if the consumers of Australia

are forced to pay more and the Commonwealth will not allow this.

JOURNALIST:

(inaudible) you were collecting on their behalf…

TREASURER:

And paying for them.

JOURNALIST:

…did you consult them before you took a decision to end indexation, because

that was going to directly affect what they get?

TREASURER:

Well, it was going to reduce the costs for the consumer and as a consequence

cut revenues to both levels of government which were receiving it, the Commonwealth

which was receiving indexation on thirty cents, and the States which were receiving

indexation on eight cents. You can’t, a State cannot receive indexation on petrol

when indexation doesn’t exist unless indexation is re-introduced and it won’t

be. We will not allow the Labor States to re-introduce indexation of petrol…

JOURNALIST:

But why wasn’t this made clear to them at the time?

TREASURER:

Well, it was made clear absolutely when it went through the Parliament when

indexation was abolished. Once indexation was abolished it couldn’t be paid

to government. It was absolutely clear. Once you abolished indexation, once

it was no longer being collected it couldn’t be paid to anybody, it couldn’t

be paid to the Commonwealth or it couldn’t be paid to the States. And as I recall,

most of the States, certainly I recall Mr Brumby, were demanding an end to indexation.

JOURNALIST:

But Treasurer, under the Inter-Governmental Agreement the States aren’t supposed

to be worse off under tier funding, clearly they are worse off.

TREASURER:

The States are all better off under the GST revenues, under the First Home

Owners Scheme, under all of the revenue replacement, every State is better of

now, today, than it would have been under a simple FAGS system…

JOURNALIST:

But your letter yesterday said they would be missing out on $166 million?

TREASURER:

No, no, no, my letter yesterday said that since the consumer is no longer paying

indexation there is no indexation to be paid to either the Commonwealth or the

States…

JOURNALIST:

Victoria is…

TREASURER:

You can’t pay indexation unless the consumers of Australia are charged more.

The Liberal Government will not allow them to be charged.

JOURNALIST:

Is Bill Heffernan’s refusal to quit Parliament going to affect Liberal Party

fundraising?

TREASURER:

Whether Senator Heffernan resigns from the Senate or not, is a matter for him.

JOURNALIST:

Do you think he should stay in the Senate?

TREASURER:

That is a matter for him. It is not something that I would make a decision

on, it is a matter for him.

JOURNALIST:

John Howard says he should, why won’t you say the same?

TREASURER:

Well, it is a matter for Senator Heffernan. He obviously regrets very deeply

what happened, this week. It should never have happened. I want to make it clear

that should never have happened, and Senator Heffernan has done what I consider

to be the right thing, that is, he has issued an apology, the Judge has graciously

accepted it. Senator Heffernan’s further political career is a matter for him.

JOURNALIST:

Victoria is threatening to put up taxes including, possibly, re-introducing

the FID in response to this cut of petrol taxes to the States. What’s your response

to that, wouldn’t that undo some of the good work that the tax (inaudible)?

TREASURER:

If Victoria should seek to re-introduce FID then that will be deducted from

their payments to the Commonwealth. You have got to remember this, the Commonwealth

pays Victoria every dollar that it would have received from FID. Victoria didn’t

suffer the loss of a dollar when it abolished FID. If Victoria wants to get

into the business of re-introducing FID, the Commonwealth will not pay it for

its abolition, firstly, so it won’t be better off, and secondly, if Mr Brumby

wants to increase Financial Institutions Duty in Victoria, and I am sure that

the number of businesses that would move interstate would mean that Victorians

would be much worse off. Now this is an absolutely irresponsible threat by Mr

Brumby, it won’t work and it would damage Victoria. And, I think it probably

calls into question his judgement.

JOURNALIST:

What do you think of the fact that Michael Yabsley has asked for Senator Heffernan

to resign?

TREASURER:

Well I don’t know that he has.

JOURNALIST:

Do you concede that this will damage the Party donorship?

TREASURER:

Look, I said earlier, Senator Heffernan shouldn’t have done what he did. There

is no question about that he should not have done it. When he became aware that

his allegations were false he apologised. The Judge graciously accepted it.

Senator Heffernan, obviously, is the only person who can decide on his future

career, but I want to make it clear on behalf of the Liberal Party, that the

Liberal Party was given no advanced notice, it did not approve and it did not

authorise this, and we made that entirely clear by the dismissal of Senator

Heffernan.

JOURNALIST:

Is it going to damage the Party financially or otherwise if he continues to

sit on the Government backbench?

TREASURER:

Look I think, I think the Liberal Party has supporters throughout Australia,

who support it because it is a good economic manager, we have presided over

the strongest economy in the world in 2001, and I think people in business appreciate

that.

Thanks.