East Timor, Tax reform, Referendum

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Address to the ICAA/ZURICH Business Awards
September 14, 1999
Review of Business Taxation
September 17, 1999
Address to the ICAA/ZURICH Business Awards
September 14, 1999
Review of Business Taxation
September 17, 1999

East Timor, Tax reform, Referendum

Transcript No. 99/63





16th Asialink Lecture

Questions and Answers

Victorian Arts Centre


Thursday, 16 September 1999

SUBJECTS: East Timor, Tax reform, Referendum


Mr Costello you mentioned that the crisis in East Timor is going to provide us with, or

present us with, considerable budgetary constraints in the future. Do you believe that

these will in any way, reduce the opportunity for further income and company tax cuts?



Well, before we start focussing on the next round of tax cuts, lets bear in mind that

the Government has legislated income tax cuts from 1 July next year. And those income tax

cuts are of the order of $12 billion. They are part of the hitherto legislated tax reform

which abolishes many inefficient State indirect taxes, abolishes the wholesale sales tax

and replaces it with a Goods and Services Tax. We are currently looking at business

taxation, we’ve had a report from Mr John Ralph and we are nearing the announcement

of our deliberations. And that gives us the opportunity to reform business taxation.

Looking down the track, I’ve made the point in the past that if we are able to

eliminate Commonwealth debt, we would have further scope for tax reduction. We’re

talking about something pretty big here.

The last three years we’ve been engaged in reducing Commonwealth debt, in the next

three years we could engage in the elimination of Commonwealth debt, and if we were to

eliminate Commonwealth debt, we would have opportunity to relieve taxation burdens. But

that’s something that I don’t see on the horizon until 2002/2003, and I

certainly don’t see on the horizon until such time as the Senate consents to the full

privatisation of Telstra. So lets digest this meal of tax reductions before we start

salivating over the next one.



Mr Costello, unfortunately I can’t get away from tax either, but perhaps putting

it in more of an Asian regional context is the possibility raised in the paper this week

of Australia imposing taxes on greenhouse emissions. Obviously there was a fairly negative

reaction from the energy and mining sector in Australia, who get a lot of Australia’s

economic strength from exports into the region, and the potential erosion of their

competitive position as a result of that sort of tax being imposed. Perhaps you would be

able to give us a little bit on the Governments thinking in terms of greenhouse emission

taxes, whether the Government thinks there’s a need to provide incentives to

Australian business to actually reduce greenhouse emissions, just where the

landscape’s going to be in terms of the political and popular, I suspect, support for

the reduction in greenhouse emissions, but obviously the clear conflict that causes in

terms of our Asian trade position and overall economic strength in Australia.



Sure. I won’t go into detail into greenhouse reduction targets because these are

matters properly for my colleague, Senator Hill, who has done a very good job negotiating

Australia’s position internationally. But, you do give me the opportunity to comment

on how you started the question about consideration of carbon taxes and so on. I think

there was a story on the front page of one of Australia’s tabloids, the Financial

Review, two days ago talking about how the Treasury was working on a carbon tax, which was

news to me. And I made some inquiries, I found out that a paper had been presented by

somebody employed in the Treasury, who had presented a paper at a conference stipulating

that this was his own private work and not part of his job at the Treasury, which he

presented at a conference in July.

And the tabloid breathlessly reported it two days ago. It had been reported earlier on

page 36 of The Australian and suddenly became a front-page lead on the Financial Review

some time afterwards. So I can tell you that was no part of any official work, and I think

The Australian probably had it right on page 36 rather than the tabloid on page 1. Now

people are entitled to do what work they want to and present papers, and if they make it

clear it’s their own private work, it should be reported as such. But I wouldn’t

put too much store on that being an indicator to official thinking by either me or my




Mr Costello do you think the Australians will vote for the referendum in November? And

the second question, what is the relevance of the republican debate in the Asian region?



I made a speech at the Constitutional Convention in which I said, I don’t think we

should change our constitutional arrangements for what others think of us, I think we

should change them for what we think or ourselves. And if we think this is good for

Australia, we should do it. I happen to think it is a step forward for Australia.

What affect does the current instability have, well not much really. I don’t know

that it counts one way or the other. When you’re looking at constitutional

arrangements I think you should look first and foremost at constitutional arrangements

that work, plainly the current ones do, and in my view plainly the current model would


I think you also ought to look really at the symbolic nature of the arrangements and I

think in symbolic terms it would be a step forward for Australia to recognise what I think

is probably the thinking. Now I don’t think monarchism has the appeal, the hold on

our public that it might have had a hundred years ago, or fifty years ago, or forty years

ago or twenty years ago. And if you hold onto the weak link longer than you should it can

start to undermine other more important things, this is my point, and I think there are

other more important things. I think the Parliamentary arrangements, I think the stability

of the Parliamentary system is very important, I think that is well worth defending and I

intend to defend it. I think it can be defended in a stronger way as part of a renewal of

symbolism. Now, having said all of that I would like to see the change, I can live under

the current arrangements, I have done for a long time, I’m sure I can live under the

new arrangements and I think the important thing as people focus their minds on this is to

focus their minds on what they think is the best for us, because it’s really we as

Australians that have to determine our own constitutional arrangements.