Transcript No. 2000/01

TRANSCRIPT OF

TREASURER

Well, I’ve just been here on the Gold Coast addressing some business functions and

having some discussions about some particularly interesting ideas for the innovation city,

which is one of the objectives of the Gold Coast and discussions about economic policy

generally. There has been a very, very useful exchange of ideas with local leading

business people this morning. And some of the ideas which we’ll be able to take back

to Canberra and insert in some of our decision making.

How does the Gold Coast rate in terms of an information technology base, do you think?

I think the thing that impressed me about the Gold Coast was that there seems to be a

real focus on making it an innovation centre and a technology capital. And if you do have

that support and you have the infrastructure with good business organisations, institutes

of higher learning, universities, and you attract that kind of research you can actually

get a lead in these sorts of areas. And I was quite impressed with some of the things that

I heard this morning.

Treasurer, how can the public be expected to understand the intricacies of the GST when

clearly senior members of the Government don’t understand it?

Well, I think senior members of the Government do understand it and you’ll always

get teething problems as you move to a new tax system. But the important thing is that

we’ve modernised Australia’s taxation system. Let me tell you. Australia

won’t go far in the 21^st century if it relies on tax concepts which were

thought up in the 1930’s. All that will do for Australia is, it will condemn

Australia to the past. We want to build Australia for the future. One of the great things

about tax reform is that from 1 July next year income tax is dramatically reduced. And for

average wage earners who can be paying 43 per cent of their income in tax, their tax rate

comes down to 30 per cent. Now, that is taking, you know, nearly a third of the marginal

income tax rate burden off them. Huge reductions in income tax. As we modernise our

taxation system, people have more to spend – that’s the important point.

(inaudible) GST details as handled by the Acting Treasurer, particularly in the

question of rounding up prices?

Well, the acting Treasurer is Senator Hill. And I’m not sure that he’s made

any statements.

What about the acting Finance Minister?

Well, I don’t know who the acting Finance Minister is. But if your question is the

Minister for Financial Services and Regulation, he is responsible for consumer affairs

matters. And I think he’s done a very good job in those areas.

But there’s a lot of confusion surely, I mean how can you say that he’s doing

a good job?

Well look, I don’t think that, these matters are debated from day to day with

interpretations put on particular words. I think the important thing is the principles.

And what are the principles? Dramatic cuts in income tax. Halving capital gains tax, which

the Government has already introduced. The abolition of wholesale sales tax, followed up

by the abolition of financial institutions duty. And the introduction of goods and

services tax. Now let me make this point. I think there are 150 countries in the world

that have a value added or goods and services tax. The Labor Party would tell you, 150

countries can do it – Britain can do it, France can do it, Germany can do it, Japan can do

it, Singapore can do it – and the only country that can’t do it is Australia. Of

course we can do it. Let me make this other point. The Labor Party are running around

saying, “what about this, what about that?” They say they’re against the

GST and what they intend to do if they’re ever elected is, to keep it. They’re

so opposed to it that they want to keep it. Now, you’ve just got another example of

people who will run around, squawk and try and create trouble. But at the end of the day

they want the Government to do the hard work because they know this is going to build

Australia’s economy for the future.

(inaudible) allowed to round up beyond the 10 per cent level?

It’s been made entirely clear that with the abolition of wholesale sales tax, not

only direct wholesale sales tax but embedded wholesale sales tax, and the introduction of

goods and services tax at a level of 10 per cent, that prices will not be rising beyond

that. In fact many prices will be falling. You have to go a long way to find all of these

price rises without finding price falls. Can I tell you, one of the discussions I’ve

been having with a major industry in Australia over the last couple of months, is not how

to cope with price rises, but what to do about price falls. Some goods are going to go up,

some are going to go up marginally, some are going to go up more, but people will have

income tax cuts which will mean they have much more money in their pocket to cope with any

price rises and at the end of the day will be better off. That’s the important thing,

at the end of the day be better off. And if you don’t want to reform the tax system,

what you would be arguing for in this country is higher income taxes. Let me make this

point, taxes are going to come from somewhere and if you are going to give people more

incentive to work and save, more money in their pockets, you’ve got to make sure that

you have a modern taxation system, that can give you the revenues required for decent

social services.

This figure of $20,000 from the Ernst and Young Report compliance costs. How realistic

is that for most businesses?

Most unrealistic, that it would cost anything like that. One of the points about tax

reform is that we are collapsing PAYE, fringe benefits tax, prescribed payments system,

company tax, wholesale sales tax, all of those reporting obligations into one reporting

obligation which is going to dramatically cut paper work. I didn’t read anything

about that, in Ernst and Young. I didn’t read anything about the reductions in

compliance under PAYE and fringe benefits tax and group tax and company tax and RPS and

PPS and all of those systems that are going to be collapsed into one. You know why I

didn’t read anything about that? Because that’s in fact the Labor Party policy.

It’s the Labor Party’s policy to have quarterly returns which, in fact, are the

GST returns, to reduce all of those payment systems, because they adopted our policy

because of the reduction in costs that it would lead to.

But will the cost be somewhat more than the $200 voucher that you offer now?

Well, let me make it clear what small business that are getting vouchers have at their

disposal. You’ve got a voucher, you’ve got buying opportunities for bulk buys to

reduce costs and you’ve got full tax deductibility. Full tax deductibility for

anything that’s bought. But let me ask the Labor Party this question. How much was

given to business when wholesale sales tax was introduced? How much was given in vouchers

to business when the FBT was introduced? How much was given to business when wholesale

sales tax was introduced? How much was given to business for compliance in relation to the

prescribed payments system? Mr Carr might be able to answer those questions. All Labor

taxes. All introduced by the Labor Party and if my memory serves me right the amount given

to help business comply to those systems was nothing. Now Mr Carr, Mr Carr can run around

and, you know, he makes these points. At the end of the day, all revenue from the GST goes

to the State Governments. I have never seen anybody sign up for a share of GST revenue

quicker than Mr Carr. I mean, he was like the Road Runner. He raced up to the desk, to

sign up for the revenue from the GST. Now he sits back and he says ‘oh what about

this?’ All of the revenue from the GST is going to State premiers like Mr Carr.

That’s the first point. Second point is that this Government is doing something which

has not been done before, we are giving assistance. And the third point is this. That we

are collapsing multiple reporting systems for business into one. Where you have a

quarterly report from the GST, we’re going to be able to use that to do all of the

assessments in relation to group tax, in relation to company tax, in relation to

reportable payments if there are any, in relation to the prescribed payments system;

dramatic reduction in paper work costs for business. So good incidentally that the Labor

Party said they would like to take the system even without the GST. Because it’s such

a great benefit. Now I go back to the point I made earlier on. 150 countries, seem to be

able to cope with tax reform and Australia’s one of those. The argument that

Australia is somehow, is not as good as 150 countries including France, Germany, UK,

Japan, Singapore, New Zealand, United States it is just people who are trying to

(inaudible) for political reasons, they have no interest in tax reform. Proof is in the

pudding, they say if they’re ever going to get elected they’ll keep it.

Thanks