Transcript No. 56

Hon Peter Costello MP

Doorstop interview

Cresthaven Residential Aged Care Facility, East Malvern

Friday, 21 August 1998

10.30 am

SUBJECTS: Tax reform package

JOURNALIST:

Mr Costello, the Labor Party claims the tax package is coming apart at the seams with changes being foreshadowed and the like. How many changes is the Government considering, and will make to the package?

Well, the Labor Party, as usual, is wrong. You can’t rely on anything that they say.

How much do you think Australian pensioners are spooked by the prospect of their pension increase being eaten up by things like higher nursing home charges?

I made this point yesterday that under a new tax system nursing home fees, if anything, should fall. It is very important to bear this point in mind that nursing home fees are GST-free. What that means is that you get back all the taxes you pay – for a nursing home proprietor – on the things that you buy in for nursing home care. You don’t get back all of the taxes that you currently pay that you buy in for nursing home care. And so as a consequence of that, if anything, nursing home fees should fall; certainly wouldn’t be going up. And what that means is that in relation to pensioners who, under a new tax system, will be getting higher pensions, they would be entitled to that full increase, if not more of it.

Mr Costello, you challenged someone to come out with some figures showing an Australian family or an Australian individual worse off under your package. Now the ACTU brought out a document yesterday. Have you had a chance to look at it, and what is your response?

Oh well, I’ll look at it in due course, but I didn’t see that it was any particular analysis. The point I actually made was that the ACOSS, which had studied the tax package for a week, itself says it didn’t know of anyone worse off. That’s the Australian Council of Social Service itself conceded that after studying it for a week they were unable to find anybody worse off, and that’s right. At the end of the day remember this. Under the new tax system the Government collects less tax, and under the new tax system it collects more tax from tax avoiders and people that are currently not paying their fair share. So for honest, decent taxpayers the new tax system gives them a better deal. Now you could find someone who is currently avoiding their tax who will be worse off under the new tax system – tax avoiders, people that are in the cash economy, will be worse off. But of those decent ordinary people that are complying with the tax laws at the moment, none of them will be worse off because over all less tax is going to be collected. It’s just going to be collected in a fairer way.

Are you going to spend more of your time trying to reassure some of those who believe they will be worse off, particularly in the aged area?

Well, look I am available to answer questions, and I am always going to be answering questions and getting the facts out. You’ve got to remember this, that the Labor Party said it was opposed to tax reform even before it was announced. Remember that. The Labor Party announced, I think it was last year, that they were going to oppose tax reform. So when we announced the new tax system, is it a surprise they campaign against it? No. Is it a surprise that they try and scare people? No. Because if they can’t put forward anything positive and they are opposed to tax reform, of course they’re going to try and scare people. Now, all I can say is, to older Australians, don’t be taken in by scares. It’s a pretty heartless thing to try and do for political gain to try and scare older Australians, but I can assure older Australians that under the new tax system they’ll be better off. And I want to make one other point which I think is very important not to lose sight of in all of this. At the end of the day we need a good tax system to run a good social security system. We are going to really care for older Australians, not just now but in 10 or 20 or 30 or 40 years’ time, you’ve got to have a tax sytem that is going to last for 10 or 20 or 30 or 40 years. That’s what the new tax system is all about, a new tax system for a new century. But I’ll tell you this. If we stick with the 1930’s tax system it’s not going to last in 2010, 2020, 2030. That’s why we’ve got to move to a new tax system.

Are you relishing the prospect of Parliament returning to sell your message and dismantle Labor’s that will be released next week?

I always relish Parliament, you know that, Michael. You’ve seen me, I relish Parliament.

Do you expect it to come back before the election?

Well, the Prime Minister always announces the date of the election and I obviously don’t know what date that is, but you know, I’ve got my ticket booked back to Canberra for Parliament, I’m ready to go. To the extent I like going to Canberra I’ll be there. I always like coming home and it’s great to be in the electorate today.

Do you fear Parliament’s resumption would expose the Government to too many risks in terms of questions times and the Labor Party exploiting various parliamentary procedures?

No.

A week down the track, are you happy with the sales strategy so far?

Yes, look this is big reform. This is a new tax system, a new tax system for a new century. The current Australian tax system was put together by people in the 1930’s. Let’s be clear about that. Wholesale sales tax introduced in the 1930’s, Income Tax Assessment Act – 1936. The Australia of the 1930’s, the between-the-war depression Australia is not the Australia of the 21^st century. Now we were lucky that they had a bit of interest and go so that they got a tax system together in the 1930’s. They were more adventurous than the no sayers of the Labor Party and One Nation, the people who say we can’t do things in this country and oppose reform, even in the 1930’s. But we’ve got to take that spirit of building Australia again and renew it for the 21^st century, because if we don’t the tax system will run haywire. You know, this is the time for building. This is a new century. Are we going to build a new tax system for a new century, or are we going to stick around with what was done in the 1930’s, because the short-sighted political opportunists won’t build Australia? Well, this Government’s going to build Australia, I tell you this. We are going to build Australia and we are going to build a new tax system for a new century.

Thank you very much.