Economy; Taxation; National Water Initiative; Mental Health Funding; Labor’s Tax Hoax; Tax Office Compliance – Interview with Alan Jones, Radio 2GB

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Economy; Taxation; National Water Initiative; Mental Health Funding; Labor’s Tax Hoax; Tax Office Compliance – Interview with Alan Jones, Radio 2GB




Interview with Alan Jones


Thursday, 23 September 2004

7.15 am


SUBJECTS: Economy; Taxation; National Water Initiative; Mental

Health Funding; Labor’s Tax Hoax; Tax Office Compliance


And the Treasurer, Peter Costello is on the line in Canberra. Treasurer,

good morning.


Good morning Alan.


Treasurer do you ever shake your head during campaigns like this and wonder

what it’s all about? Because you have been there for eight years, you have

created 1.3 million new jobs, you have seen savings of more than $500 a

month on interest repayments on the average home loan since you’ve been

Treasurer, you’ve cut the debt from $95 billion to $27 billion, you have

taken the average inflation rate from about five and a bit per cent to two

and a bit, you have taken the average interest rate, average, from 12.7

per cent to 7, you have taken days lost in industrial disputes per 1,000

employees from 198.4 to 71.1, unemployment has fallen from 8.2 per cent

to 5.6 per cent, there are now 27.2 cranes per hour being moved on the waterfront

as opposed to 16.9. We were talking about skills yesterday, there are now

407,000 kids, not enough, but in apprenticeships and traineeships, there

are 142,000 when you became Treasurer, real wages have gone up by 13 per

cent, the average in the previous 13 years was two and a bit.

You have cut company tax from 36 to 30 per cent. Now in all that catalogue

the cry is, we will get rid of Costello and Howard. Do you ever shake your

head and wonder what’s going on?


Well look, over the last eight years we have made enormous

strides Alan. It hasn’t been an accident. It has taken hard work and tough

decision making and we have got some results to show for it. And there are

some people that say, oh well, you know, all of this just creates itself.

There is something about Australia that makes it different to every other

country in the world. It just creates itself. Can I say it doesn’t. It takes

a lot of work. It takes strong economic policy. It takes a cool head and

decision making. And if people sit back and say, oh well, we can now afford

to take a risk on somebody who has got no experience and an erratic policy

there would be a nasty shock in relation to economic management coming for

them around the corner.


Well a pensioner rang me this morning, now this is the flipside, and he

wanted me to ask you about the possibility of a cap on the fuel tax. Because,

I mean, you have done well, growth is good and we are talking about projected

forward surpluses of $25 billion. And he is saying of course rising fuel

prices by definition stick more money into Treasury coffers. And Patrick

is a pensioner and he said, can he give us a break? Things are very expensive,

fuel at the top of the list. What about a cap on the fuel tax?


Well the Commonwealth has capped the fuel tax. We have capped it at 38

cents. It doesn’t rise. It doesn’t rise, it doesn’t even rise with inflation.

So, in real terms it is actually declining.


So the fuel tax is an amount not a percentage?


The fuel tax is 38 cents a litre. It is not rising.

It does not go up. It doesn’t even follow inflation. It is capped at 38



Okay. That is the answer to that question. What then, let me ask you, and

I have asked you this before about infrastructure. I know there is a water

programme, a National Water Initiative that the Prime Minister has talked

about, but we’re in a water crisis, we spend billions, you know that, on

drought relief, what about building dams, building weirs, harvesting water,

desalination plants, grey water, water everywhere, we need to get it to

where it is needed. Shouldn’t this be a project for tomorrow?


I think so Alan. The Prime Minister has announced a national water policy

in this election putting together a fund of $2 billion and that fund will

be available to support projects such as desalination, recycling grey water,

smarter uses of water, and of course in relation to our river system, it

will also be available.

But for the first time the Commonwealth Government has announced this fund

which can come in and support some of those projects. And in particular,

deliver some of the technology that would help us save water and use it

much more wisely. I think this is going to be a great initiative and if

we get elected this will really change the way in which we look at water

and manage it as a resource.


I spoke earlier this week and I would be happy for you to see the mammoth

pile of emails in response about the problems of the mentally ill. There’s

a shortfall in New South Wales alone of over one thousand beds. I spoke

to the world authority on Alzheimers, last year an estimated 162,000 Australians

affected by dementia, the total cost to the community apparently over $6

billion and they say the worst is yet to come. Now all these people want

is a piddling $250 million over five years for research consistent with

their conclusions in Dementia Vision Australia. Could you as Treasurer say,

well look I will give you this money, we have got to do something to alleviate

the problems facing the mentally ill?


Well, I don’t know that particular project, but what

I can say to you is, we have funded the National Health and Medical Research

Council. We have increased its fundings. It has more money than ever before.

And people who are doing research put in bids to this Council. The Council

allocates the bids on the basis of the projects which it thinks are most

important. And if this is a good project, which it sounds like it is, and

if it’s strongly scientific with good beneficial results I would have thought

it would be very eligible for funding.


But isn’t it appalling in a rich country that there’s a thousand people

mentally ill in this State who don’t have a bed, a proper psychiatric bed

to go to. We have had this failed policy of half-way houses. We have sent

them into the community. Many of them sleep under the Harbour Bridge, then

they commit crime as a result of their psychotic behaviour and they finish

up in jails. In a civilised society we have got to do better on that front

haven’t we?


I think that the policy, the policy as you know, was to get people out

into the community. That changed some time ago. I don’t think that policy

has been a great success.


It hasn’t.


We have had people who are out in the community, I mean that is good if

they can cope, but there are a lot of them that are unable to cope and as

you say, they get into trouble, they can’t sleep except in public parks,

they can get into crime and I think Alan, that whole policy has got to be

re-thought. Now it is a New South Wales Government policy so I am not holding

myself out as an expert in relation to it but just as an ordinary citizen

like you, it would seem to me that this is an area where a lot of re-thinking

has got to be done in relation to policy.


There are 2 point something, 2.1, 2, 3, depending on to whom you speak,

families in Australia, Mark Latham conceded now only that seven out of 10

will get anything from his Family Tax and Welfare package, that would mean

that there are over 600,000 families who either go without or who are worse

off. Now, amongst all of that of course is the abolition of this $600 per

child per annum Family Tax Payment. Do you think that $600 has been sold

adequately to the public, that they know exactly what they are getting?


I think the families do, Alan. Families who receive this payment got $600

per child before the 30th of June. Now in a family with three

kids that is $1800 in respect of the current year as they are filing tax

returns they will be getting…


…and the next year and the next year.


…another $600, and if our Government is elected then that $600 per

child per annum will continue forever. Now, Mr Latham’s policy is to abolish

it. If Mr Latham is elected, this is the last $600 payment that you will

ever see. As a consequence of abolishing that payment, families, particularly

low income families who have numbers of children, it is not that they are

not going to be better off Alan, they are going to be actively worse off.

Now let’s take an example, Dad is earning $35,000 and he is supporting Mum

and three kids. Do you know what Mr Latham proposes to do? Take money out

of his pocket. Now you think about a Dad who is earning $35,000, going out

to work 40 hours a week, he is trying to support Mum, pay the mortgage,

support the children – he is not rich – but under Mr Latham’s

policy, Mr Latham wants to take away family assistance. He wants to actively

reduce his budget. He wants to squeeze that family. And of course if the

family had a fourth child, he would squeeze it even more.


Do you think this is because someone has put all of this package together

without a clear understanding amongst the leadership of the Labor Party

what the detail is about?


Yes, look, what happened, Alan, is that Mr Latham promised a policy back

in May, he didn’t do the work, he cobbled it together at the last moment,

it has got all sorts of weaknesses, when those weaknesses were pointed out,

he should have said, well look, hang on, I will have it re-done and come

back to you with a proper policy. He has got caught in the middle of the

campaign, he won’t put the policy in for costing, it has been out there

for 16 days, for 16 days he refuses to allow it to be independently assessed

under the Charter of Budget Honesty. The election Alan, is in 16 days time.

And all he is doing is just letting day after day click over, hoping that

there won’t be the scrutiny that is required before people can figure it

out on the 9th of October.

But I want to say this to your listeners, particularly to your listeners

who have children where Mum is looking after the family at home, you must

know this: if Mark Latham’s policy is implemented you will have money taken

out of your budget. It is a deliberate policy to try and force those mothers

that are looking after children at home into the workforce.

He says that is his policy, he wants to get them, stop them staying at

home and looking after the children, they have got to get out into the workforce,

he needs to get them into the workforce because he wants to get additional

taxes, he needs those taxes in order to fund his policies. So I would say

to those families, and a lot of these Alan will be Labor voting families,

they will be people who have always voted Labor throughout all of their

lives, you must understand that this Labor Party is a Party that has a policy

that will punish low income families with children where Mum is at home

looking after them.


You have had a lot of letters because I know that I have sent some to you,

from small business who are saying, look this GST is too damn complicated

whether we have got to file GST reports regularly, you then said, alright,

let’s change all this, the annual turnovers can be, the whole reporting

of GST can be done on an annual basis. Why would Labor want to dismantle

that, I would have thought that would have been an easier thing for small

business to accommodate?


Well that is an easier thing and because it is an easier thing it will

save small business around $330 million. Why does Labor want to dismantle

it? Because it wants to grab the $330 million back from small business in

the current year and it wants to use it to spend on some of its other policies.

It is just a proposal to make small business pay more so that the money

that they have been, that they are raising and paying to the Government

can be used by Mr Latham for some of his other policies and small business

ought to know this.


Well they say they are putting $25 million a year into the Tax Office’s

compliance programme and by greater compliance they will be able to save

$225 million, that is a multiple you are saying, of $1 spent on compliance

will get $9 back. Now when you are drafting Budgets, what multiples do you

use? Do you use 9:1 or 5:1 or 4:1? Is that a legitimate multiple?


3.5:1 and sometimes 1:1 but 3.5:1. Look, if Mr Crean is right…


So does that mean his $50 million won’t get him back the $225 million?


Of course it won’t. If Mr Crean is right and if you give the Tax Office

a dollar it will make you $9, why doesn’t he give the Tax Office $100 million?

He would make $900 million. This would be a good business, wouldn’t it?

Give them $1 billion, he would make $9 billion, why don’t you give them

$10 billion, you will make $90 billion. This has got to be an incredible

money tree, this is unbelievable, why haven’t we thought of this one before,

Alan? I mean, I must be so silly, mustn’t I?


Well on that note I will let you go.


Thank you very much Alan.


We will talk again between now and the election, I appreciate your time.


Thank you.