Transcript No. 59

Hon Peter Costello MP

Doorstop Interview

Monday, 26 October 1998

3.45 pm

SUBJECTS: Tax reform

TREASURER:

Well I saw the announcement today by the Labor Party that they would not be supporting Democrat amendments to the Government’s tax plan and I think that’s right. The Democrats got 6 per cent of the vote in the Federal election, they didn’t put out a tax plan, they didn’t receive a majority in the House of Representatives and they have no mandate in relation to any tax plan. It’s the Government that has a mandate in relation to tax. The Government said before the election precisely what it intended to do in relation to tax and we intend to do it precisely. We are saying to the Labor Party and the Australian Democrats, we ask nothing other than to be able to deliver, in full, on what we promised. Some of the Senators have forgotten that normally when they try and vote down Government legislation it’s because a Government won’t do what it promised. This is a Government that wants to do what it promised and the Senate has no mandate to vote down Government legislation which is entirely in accordance with what it put to the Australian people and what it wants to deliver in totality to the Australian people. So I think the Labor Party is right to vote down Democrat amendments, I think that means that the Democrats have the obligation to support the Government’s proposal and the Labor Party should be recognising the decision of the Australian people on the 3^rd of October.

Mr Costello does the Senate have any right to amend Government legislation?

The Senate has no right to prevent a Government implementing in full policies which it put to the Australian people and were endorsed by them, no right at all. If a Government puts a policy and a Government wins a mandate and a Government seeks to implement it in full, the Senate does not have the right to stop it.

What do you think of the proposal today to give low income, to stop award wages rising for low income earners, and replacing that with tax credits, would you be a supporter of that?

Well there are a couple of elements in that plan. One is the economists today were making the point that if you put up wages in national wages cases you will be putting people out of work or preventing new jobs being created, that is true. The Government has recognised that point. Economists say that you might be able to deliver benefits to people in other ways, that is also true. We are, of course, seeking to deliver benefits to people in other ways. One of the points of our tax plan is to cut income tax rates. So the Government has a policy which is moving on many of these fronts already, so we notice that there is an interesting way in which they’re put together but we are already moving substantially in a number of these areas.

Would that way cut unemployment by 2 or 3 per cent do you think?

Well I don’t want to put quantities on it but the truth of the matter is that if you push wages up you restrict the creation of new jobs. The Government knows that, the economists know that, it’s always been the case. That’s way we have always put the case in national wage cases and elsewhere that you have got to have a view to employment consequences when you’re fixing wages. We’ve also always put the case that a better system of industrial relations will generate better job outcomes.

Mr Costello have you started having post election discussions with the Democrats on tax reform?

No we haven’t had any official discussions, I see Democrats in airport lounges and we exchange pleasantries. We haven’t had any substantial discussions on changes because……the Government is going to put it’s tax plan into the Parliament and the Government expects the Parliament to legislate its tax plan. We foresaw before the election that getting a new tax system for Australia would be a difficult thing and so we said this, let’s put it to the Australian people. If the Australian people voted for that tax plan, as far as we are concerned the Parliament now has an obligation to legislate that tax plan.

Have you spoken with the independent Senators yet?

I haven’t spoken, other than to exchange pleasantries, I haven’t spoken with any Senators in relation to tax because as I said, as I said, we are now drawing legislation to implement that policy in full. We are going to put that legislation into the Parliament and we expect the Parliament to legislate it. When you go to the people at an election and you say this is our policy, vote for us, let us implement it, you don’t say oh we’d like a let-out clause to let us off our promises. This is not a case where we want to be let off our promises, this is a case where we want to be held to our promises, let’s make this clear. This is a case where the Government wants to be held to its promise for a new tax system. The Australian Democrats used to say that they were there to keep Governments honest, keep us honest, please keep us honest on this. Keep us honest on the goods and services tax and the income tax. Let us actually implement what we put to the Australian people.

Isn’t there a danger that if the Democrats are confronted with all or nothing on the GST, that they’ll choose nothing?

Well I don’t think they can because they have said they are in favor of a GST, they have said that. They also know that they did not win a single seat in the House of Representatives and they know that the Government has a majority of 12 seats. Let’s go right back to the basics of how Governments work in the Westminster system: the Government is a government because it holds a majority in the House of Representatives. That’s how it works, that’s how it’s always worked in a Westminster system and this idea that in a half Senate election, in a Senate which is representing states where you don’t have one vote, one value, you somehow get the right to unpick an elected Government on a clear issue on which it sought and received a mandate is an incredibly novel proposition. It’s a novel proposition which runs counter to the system of Government which operates in this country. So we think that the question of Australia’s new tax system was resolved on the 3^rd of October. It was resolved by millions of Australian voters and now we think this Parliament has the obligation to enact it, to deliver to the people what they voted for.

Treasurer, back to the independent Senator Mal Colston, you say that you have only exchanged pleasantries with these independent Senators, how pleasant will you conversation be with this man who the Prime Minister thinks has been treated like a criminal before he’s been convicted?

Well it will be pleasant, Matt.

Do you rule out a negotiated settlement or agreement with the Democrats on GST?

I’ve said it several times and I’ll say it again. We are now drawing legislation to implement the new tax system in full, we are going to put that into the Parliament and we expect the Parliament to pass it.

Treasurer does that mean that you will or will not cooperate with a Senate inquiry into tax reform along the lines foreshadowed by Senator Harradine and Democrats?

We don’t think you need a Senate inquiry, we think you had a five week inquiry before the Australian public and you consulted what, 8 million voters, can I make the point why do we have elections in this country? Do we do it for the sake of our health? No, we have elections in this country so that the people can decide political issues. Never was there a clearer political issue before the people of this country. There was our document precisely worded, precisely costed, the Government was returned and the Government says we want to implement it precisely. Let’s put this in a totally different category to previous categories that you’ve seen where the Senate says oh the Government won’t keep its word and gets obstructionist. No the Senate is getting obstruction because the Government wants to keep its word, we are three weeks after an election, I think it’s three weeks since we had an election in this country. Right out there, completely clear, the dominant issue of the election campaign debated day in, day out. How could a Senate, only half of which came up for election incidentally, say three weeks after the election it counted for naught. I mean that election counted. We had it to decide this particular issue.

Why have a legislature Treasurer if it’s not going to legislate, should it just do what the executive tells it to all the time?

No, no, no it should do what the public votes for.

Is this unrepresentative swill in action do you think?

Oh Matt, you’re always trying to ask me provocative questions.

Treasurer is there scope for an arrangement for the Olympics at all, hasn’t Jackie Kelly pointed out there might be an area of….(inaudible)…..there?

Again the policy is going to apply in relation to the Olympics as it was explained before the election. It’s going to apply in relation to, as I have already made clear, tourists that are coming to Australia. And what mugs we would be if when people come into Australia they weren’t paying a fair share of Australia’s taxes. When our people go off to Athens, they are going to pay value added taxes in Greece. Australians are going to be paying taxes to the Greek Government. When American tourists or Japanese tourists come to Australia and Sydney they should be paying their fair share of tax to the Australian Government.

What about the pre-paid services?

We’ve already made that clear again in the document in relation to matters that have already been paid before the tax is applied, a tax doesn’t apply, of course, where there has been pre-payment in relation to those things. But in relation to all of these matters we set out the principle and the point I made, and I make it over and over again, is this: when an Australian goes to Europe they pay value added tax. When an Australian goes to New Zealand they pay GST, when an Australian goes to Canada they pay GST. My view is when Canadians come to Australian they ought to pay GST, when Europeans come to Australia they ought to pay GST, when New Zealanders come to Australia they ought to pay GST and if you’re getting your fair share from people that are coming into the country, that means that Australians will pay less tax. I mean this is an important point, every other country in the world is doing this to Australians. We’re the only mugs in the world that are going to say that we’ll give everybody a free ride.

The broadcast rights will be GST free?

Well look there are different categories of service and we’ve made it clear and we are going to make it clear again to them all how it applies, you have no danger about that.

Will you commit your officials to give evidence to a Senate inquiry once it goes ahead?

Well I’m not sure it’s going to go ahead because I saw Senator Brown say, I think it was Senator Brown, he doesn’t think that there needs to be an inquiry and so I’m not entirely sure it will go ahead at all. Okay thanks.