Interview with Neil Mitchell

3AW

Thursday, 30 March 2006

8.35 am

SUBJECTS: Smartcard, GST, tax, fuel, bracket creep

MITCHELL:

Peter Costello, good morning.

TREASURER:

Thank you very much Neil.

MITCHELL:

Now, you are not the bloke Kim Beazley called a complete ‘dropkick’, are you?

TREASURER:

No, I am not. It was a bit of a colourful day but I managed to stay right out of the action yesterday, Neil.

MITCHELL:

Do you know what a dropkick is?

TREASURER:

Well, it is the kind of thing Billy Barrett used to do from the centre of the MCG.

MITCHELL:

Do you know what a ‘big bellowing cow’ is?

TREASURER:

I have seen a few of those.

MITCHELL:

What do you think about John Howard as a ‘rutting dingo?’

TREASURER:

I think that is absolutely offensive, absolutely offensive.

MITCHELL:

You think it is seriously offensive?

TREASURER:

Yes, I do. I think it is absolutely offensive and you know, I am not sure what newspaper published this in Indonesia but it doesn’t do them any credit.

MITCHELL:

Okay, now the smartcard. If I set up a secure system now, the hackers would be through it within hours, so how do you make them secure?

TREASURER:

Well Neil, there are things that can be made secure, it takes a lot of technological expertise. For example, banks, internet banking is an area that is secure, military intelligence and communications is secure if you are prepared to invest enough with the expertise you can make these things secure against hackers.

MITCHELL:

Okay, what information would you have on it? I assume you are now a supporter of it?

TREASURER:

Well this is (inaudible). First of all we should say what a smartcard is. If you go down to Centrelink to claim a disability pension they will want to know your income because it is income tested. If you go to the Family Assistance Office to get a family payment they will want to know your income. If you want to get a healthcare concession card as a pensioner so you can get subsidised pharmaceuticals, again, they will want to know your income. So, every time you go to see a government for different benefits of that nature you have got to fill in the forms, you have got to give your income statement, you have got to keep it updated and the Government has got to keep track of whether or not you are still entitled to these benefits. The idea of a smartcard is that this can be put on a card so that when you present at Centrelink or Family Assistance or at your local pharmacy, the information is there and it is recorded and it says your eligibility.

MITCHELL:

Did you oppose the Australia Card at the time in the 80s?

TREASURER:

I can’t remember, I wasn’t actually in Parliament and you know, I was just trying to think back myself as to what my view was, I wasn’t involved in the debate, I was probably pretty suspicious of it to be frank.

MITCHELL:

So what has changed? Why do we now need it and why should we now accept it?

TREASURER:

Well this is not an identity card this is a smartcard for dealing with the Government on

MITCHELL:

But what is the difference, really?

TREASURER:

well health, DVA is another one, Veterans Affairs, Family Assistance and pharmaceuticals.

MITCHELL:

But what is the difference of an identity card?

TREASURER:

Well an identity card I think was more for you know security type reasons and tax type reasons.

MITCHELL:

But you are telling me you wouldn’t be asked to present the smartcard as proof of who you were for any reasons?

TREASURER:

Well look, I am not going into the details of all of this because this is not something that has been decided by the Government, this is something that is being looked at by the Government, and I said yesterday that a card which could contain that information has great merits (inaudible) and I think people would want it. And I do think, by the way, it would give a big benefit to the public because we come across people who receive multiple pensions under different names. There are people all the time who are going up before the courts that have registered, the fill in these forms in one name, they go to another place and they fill them in in another name, they go to another place

MITCHELL:

So it would save a lot of money?

TREASURER:

it would save a lot of money, there is no doubt about that.

MITCHELL:

Any projection on that?

TREASURER:

Oh, billions.

MITCHELL:

Really?

TREASURER:

Yes.

MITCHELL:

Billions?

TREASURER:

Yes, over time.

MITCHELL:

How much in a year?

TREASURER:

Well look, I am not at the stage where I can give you solid reliable figures, but by cutting down on welfare fraud, lots of money.

MITCHELL:

Okay, is it, some people see it as Big Brother, what is your answer to that?

TREASURER:

Well you see, all of this information is required at the moment it is just provided in paper form and that enables you to give different pieces of paper to different Government departments and that opens the way for welfare fraud and that is why I think this would be an advantage. Now, the funny thing is Neil, I was launching a book on privacy last night, I took the opportunity to talk about this, I think it is the sort of thing that we ought to have a conversation with the public about and see what the public thinks about it.

MITCHELL:

I guess the question is, a key question whether it changes who has access to that information. At the moment all of my tax details are at the Tax Department, medical details at Medicare

TREASURER:

That is right.

MITCHELL:

if they are all put together, can Billy Bloggs at the Tax Department see whether I have had a cold in the last (inaudible)?

TREASURER:

Well that is, you would have to have absolute assurances of privacy, but you are quite right, the Government has your tax affairs at the ATO, it has your health records at the Health Insurance Commission, it has got your child care records down at the child care centre, it has got your family assistance down at the Family Assistance Office, it has got all of these things but because they don’t talk to each other if you are smart enough you can register in different names at each one of them and milk the system.

MITCHELL:

Okay, something else, you must be partying today, petrol is up to $131.9 in Melbourne, how many more millions are you getting in GST? Plenty.

TREASURER:

Well the Federal Government as you know doesn’t get any GST.

MITCHELL:

Oh, here we go.

TREASURER:

No, no, Neil, let me tell you how much GST the Federal Government got last year. None. How much will it get this year? None.

MITCHELL:

Well how much extra tax is being taken out of our pockets today?

TREASURER:

Well, what the Federal Government charges Neil, is there is an excise of 38 cents a litre

MITCHELL:

Yes, we have had this argument before

TREASURER:

No, no

MITCHELL:

And there is the GST on that.

TREASURER:

it is a fact. And whether the price is $1 or $1.31, it is 38 cents a litre. Now you asked me you know, how happy am I about it, very, very unhappy. Very unhappy. It doesn’t do anything for the economy, it doesn’t do anything for revenues as I said and it won’t help consumers, so I am very unhappy. What would I like to see happen? What I would like to see happen is world production of oil increased because that is the only thing that is going to bring the price of petrol down.

MITCHELL:

Do you see any hope of that?

TREASURER:

Well you see we have Iraq which is still a difficult place, we have other countries which are experiencing problems like Nigeria, Venezuela and you have strong demand coming out of China and while you have all that strong demand and restriction in supply the oil prices are going to be higher.

MITCHELL:

The other tax issue on the OECD report today, 11.8 per cent increase on tax on income in Australia, we have gone up and the rest of the world has gone down, does this mean tax reform is inevitable?

TREASURER:

Well let me go through why you get these changes not because tax rate rates went up, tax rates went down, what went up was Australian wages.

MITCHELL:

Yeah it is called bracket creep and it is disgraceful.

TREASURER:

It is not bracket creep because inflation is 2 per cent, it is real wage increases. In this country people are getting real wage increases whereas in a lot of the world they are getting no increase or real wage decline. Rates actually went down in Australia in the last year, it is that we got more people in the workforce on higher wages.

MITCHELL:

Well then indirect taxes they are up 3.8 per cent, that is ahead of inflation we have gone backwards.

TREASURER:

Well you would have to look at all of those indirect taxes

MITCHELL:

(inaudible).

TREASURER:

but my feeling is that property taxes in this country are quite high and have followed property prices up so indirect taxes probably did rise.

MITCHELL:

The tax on the average worker is up 0.4 per cent according to these figures, comparable countries 0.1 per cent down. Is that argument to introduce further tax reform?

TREASURER:

Well let me say Neil we cut taxes in 2000, 2003, 2004, 2005. If we can cut taxes in 2006 consistent with good economic policy of course that is what we will try and do. What did the OECD show? It showed that Australia has the eighth lowest tax burden of the thirty developed countries of the world. Okay now if we can get to seventh or sixth we ought to try and do so.

MITCHELL:

It also showed we have the third highest reliance on personal income tax.

TREASURER:

Absolutely you know why?

MITCHELL:

Is that good?

TREASURER:

Let me tell you why? Because most of these other European countries have less of a reliance on income tax because they have GSTs of 17 and 21 per cent.

MITCHELL:

So you are happy with the mix, you are happy with the take, it is all fair and reasonable?

TREASURER:

Let me make another point – one of the things that OECD showed is that another reason why we have a comparatively higher reliance on income tax is that our petrol taxes are so low by world standards. Now I don’t think you would want me to put petrol taxes up?

MITCHELL:

No I think you should be taking them down.

TREASURER:

That is right. So what Australia does is it takes more weight on its income tax system because it has a lower GST and lower petrol taxes.

MITCHELL:

So have we got the balance right? I mean we have got more than 13,000 a year the average family losing?

TREASURER:

So what I think Neil is that we have made big strides, on the league table we are 8 out of 30, but that doesn’t mean we can relax, we have to keep working at it.

MITCHELL:

Okay, Thank you very much for speaking to us – James Hird ?

TREASURER:

Tragedy.

MITCHELL:

It is very sad, isn’t it?

TREASURER:

It is, you know if this is going to be his last year and to lose him for up to a month it is a tragedy for him and it is a tragedy for the fans.

MITCHELL:

Did you watch the Footy Show last night?

TREASURER:

No unfortunately I am in Canberra, Parliament was

MITCHELL:

Playing with (inaudible)

TREASURER:

sitting well I heard your introduction was it worth watching?

MITCHELL:

I didn’t watch it but it has been criticised, it hasn’t improved.

TREASURER:

Perhaps they should bring Eddie back?

MITCHELL:

Don’t do that we will have Eddie on the phone. Thank you for talking to us.

TREASURER:

Thanks.