Transcript No. 99/47

Hon Peter Costello MP

Doorstop Interview

Canberra

8.35 am

Wednesday, 23 June 1999

SUBJECT: Democrats, Tax Reform

TREASURER:

Well I welcome the fact that agreement has now been reached between the Government and

the Australian Democrats on the shape of the new tax system. This brings to an end an

argument which has been running in Australia, probably for 15 years or more. And Australia

will finally get a new tax system, new indirect tax system, new income tax system, new

Commonwealth-State relations, new family assistance. And I hope that the legislation can

be put through by the beginning of next week so that we will have 12 months to educate and

explain to people, particularly business, on the operation of the new system. The

Australian Democrats have played a constructive role in all of this, unlike the Labor

Party, which has had nothing but negative abuse, has come up with no policy really in two

years, not a policy yet. And they of course dealt themselves out of tax reform, something

they will always have to wear, but the Australian Democrats, I think, can be pleased that

they made a constructive contribution.

Does this hot and cold issue though, bring up the thermometer issue again?

No, the rules in relation to food are that food will be taxable in restaurants, food

will be taxable if it’s take away, food will be taxable if it’s a pre-prepared

meal like a pizza or something like that. But other than that food is generally tax free

and that should mean that food prices fall. I make this point, it’s a very important

point. At the moment there are taxes embedded in the price of food, they will be taken

out. So apart from your restaurants and your take aways, the price of food should fall,

will be lower because we’ll be taking out the Labor tax that currently applies in

relation to food.

So you won’t be arming the food police with thermometers?

The take away food will be taxable and take away shops know whether they’re take

away or not. It’s not a question of inspectors, it’s a question of the shops

themselves applying the system.

So would the package have been harder to sell with the chicken anomaly?

Look, this is a decent compromise. In politics where you don’t have control of the

Senate, we don’t, and you have an obstructionist Opposition, you’ve got to

negotiate. All this starts, and lets not forget this, all this starts because Beazley has

no policy. Because he has no policy he votes against everything. Because he votes against

everything the only way you can reform anything in Australia is with the constructive

involvement of minor parties. We were able to do that here. B-ut don’t walk away from

the fact that that becomes necessary because of Labor’s problems. If Labor had a

policy they wouldn’t have to vote against everything. When they vote against

everything you’ve got to seek compromises with minor parties, and this has been a

decent compromise.

So the Democrats have agreed to help you guillotine debate to get it through by early

next week?

Well, I’m not going into the mechanics of all this, but I’m optimistic and

confident that we will pass the legislation by the beginning of next week. Thanks.