Transcript No. 99/93

TRANSCRIPT OF

The Hon Peter Costello MP

TREASURER

Interview with Fiona Reynolds AM

Melbourne

Tuesday, 7 December 1999

8.30 am

SUBJECT: GST & Charities

Treasurer, how soon could we see this issue of charities resolved with the Democrats?

I think most of the issues are now in place. This consultative committee was set up to

iron out most of these things and I think they’re in agreement on nearly all of the

issues. There’s one or two things about thresholds that we’ll look at during the

course of today. But the point about it is, that any charity that’s turning over less

than $100,000 on their lamington drive or their pie drive won’t even come into the

system. So, it would have to be a pretty substantial operation selling pies or lamingtons

to get over $100,000. And if they’re under that limit and they can structure their

drives to be under that limit they won’t even come into the system.

How politically wise is it though to go head to head with charities?

Well, there’s so much good as part of the tax reform for the charities. Not only

are their services GST-free, but they get all embedded taxes back – something

they’ve not had before. You don’t get embedded taxes back at the moment if you

happen to be in the charitable sector. They’ve got full exemptions from fundraising

as a result of the $100,000 turnover. And let’s make this point, and I think

it’s a very important point. At the end of the day, by broadening the tax base and

securing revenue, the Government’s going to be able to fund charitable services. And

there are a lot of people in the charitable sector, I think quite rightly, who supported

tax reform. Because I’ll make this point. If we don’t reform the tax system, you

just won’t be funding the kind of social needs that we need in the future. So on the

one hand, charitables have a real interest in tax reform. It’s been made so that in

relation to them they have better treatment than business. They have some of the best

treatment to get embedded taxes back. And as we move to the overall new tax system there

are enormous benefits for them.

So the charities that say, their operations are under threat, have they got it wrong?

Well look, I think that . . .

Are they squealing unnecessarily?

. . . various views that people put forward in the charities, and some are sort of

negotiating hard and others are very much part of the implementation of the system. And I

think those that are working on these consultative committees positively and productively

will just see that this has been a very productive process. Here we are, we’ve got a

consultative committee which has been set up to look at all of these things. And the

people that are on it, I pay tribute to them because they’ve done a great job.

In the earlier story we heard where some charities don’t want to sign contracts

until they’re sure of their independence. Is the Government threatening the

independence of charities? Is it a “cash for comments” affair as the Opposition

is alleging?

Well, let me make this first point. I mean, cute line from the Opposition isn’t

it, “cash for comment”. The whole objection I think in relation to “cash

for comment” was that people didn’t disclose that they were being funded. So we

put a clause in a contract requiring them to disclose. And what the contract says is, if

you are running a seminar explaining GST you must acknowledge that you’ve received a

grant from the Commonwealth to do it, if that is the case. But . . .

But Treasurer, it says, favourably acknowledged. Does that stop . . .

Hang on.

. . . some of these charities criticising the GST?

The whole objective was to make that clear, right. So you put a contract in to say that

there’d be nothing hidden about it and you get criticised for doing that. So the

whole objective is to get that out and to make that clear. That’s the first point.

The second point is, it doesn’t require anything in relation to the policy, I think

as the ACOSS President, Mr Raper, said. He feels totally at liberty to criticise the

policy. All it says is, if you are running a seminar, if you decide to run a seminar on

tax compliance and the Commonwealth Government has funded that seminar then you should

disclose that. Now, you can say what you like about policy and as you’ve seen there

are many charities that feel no inhibition whatsoever about saying about policy. But the

point is this. If you are running a seminar funded by the Commonwealth on tax compliance,

you have to acknowledge the funding. Now, the other point I make is this. People say, oh

well look, they’ll look at your material. Well the only reason for that is that you

are here dealing with compliance with the tax laws. And the last thing you’d want is

if somebody was putting on a seminar which was giving false information, which down the

track people would say, well look, I’ve not complied with the law or I’m subject

to a penalty and the reason is I was given wrong information by your funded programmes. So

it’s very important that people who could be liable to penalties of some kind are

given the right information. And nobody is saying, you know, that you have to comment on

the substantive tax laws. This is a question of getting information on how to comply with

the law as it’s been put through the Parliament.

Treasurer, thank you very much.

Thank you.