Transcript No. 2000/67

TRANSCRIPT

Treasurer

Good morning Treasurer.

TREASURER:

Good morning Philip.

WILLIAMS:

As you drove to the studios this morning, past the pubs, the service stations,

supermarkets, the cafes etc., were you thinking, this is one of the greatest days of my

life, or was there the tiniest part of you saying, oh my god, what have I done?

TREASURER:

Well, as I drove I was watching prices mostly. I bought my cup of coffee at 7-Eleven,

which is normally $1.20, and it was $1.30. And my local service station was selling its

petrol at 86.9, which I though was pretty good this morning. And I was thinking to myself

that we now have accomplished the change that has alluded Australia probably for the last

25 or 30 years. And this is the greatest reform of the taxation system, well, ever, in

Australian history, and it’s pretty exciting to see it become a reality.

WILLIAMS:

And yet so many thousands of Australians, hundreds of thousands, will be saying, will

be perhaps cursing you today, saying, this and that’s gone up. How do you convince

them that this is actually a great day?

TREASURER:

Well some things will go up, we don’t make any bones about that. Some things will

be the same. Some things will get cheaper. I heard the patron there at Filthy

McFadden’s, talking about digging into his pocket to pay a price rise on his pint of

Guinness, and as he digs into his pocket he’ll find there’s more money there

because his income tax has been cut. And if he has children then he’ll be getting

more family allowances as well. So, that really is the whole idea. You dig into your

pocket, you find there’s more in your pocket, you’re taxed as you spend, and

that gives you more incentive to work and to save, and to keep the products of your

labour. And it’s a much better taxation system, encourages work and saving, and it

makes sure that everybody pays tax, because everybody in our society is a consumer.

WILLIAMS:

There are still contentious areas, and fuel is one of them. How can the Government be

on the one hand increasing its fuel excise take when you strip out what was given to the

States, and on the other, accusing the oil companies, not passing on GST savings to

motorists?

TREASURER:

Well, we’re not increasing the take. This is the first cut in excise ever. A cut

of 6.7 cents in excise. No Government in the history of Australia up until today, has ever

cut petrol excise. So, we’re not taking more out of petrol. There is a rearrangement

of the Commonwealth and State taxation responsibilities so that part of that excise, which

was collected by the Commonwealth and paid over to the States, is still collected to the

Commonwealth, and what’s paid over to the States is the GST. But there is no net

increase in petrol excise. In fact, as I said earlier, the first and only Government in

Australian history to cut the petrol excise by 6.7 cents.

WILLIAMS:

But at the end of the day, the Commonwealth used to end up with about 35 cents. Now

it’s going to end up with about 37 cents. That’s an increase.

TREASURER:

No, no. At the end of the day the Commonwealth was collecting 43 or 44 cents,

that’s what it was collecting. And now it’s collecting 6.7 cents less. It used

to pay over to the States financial assistance grants, and the equivalent of part of that

excise. It now pays over to the States GST. That fully replaces the income which the

States now receive from the Commonwealth, and the overall petrol excise falls.

WILLIAMS:

Okay, when people see the service station figures going up, should they be dobbing in

the service stations today?

TREASURER:

Look, let’s not single out petrol stations. Let’s say in relation to any

price today, if people see a price today go up by more than 10 per cent, and if,

especially if somebody says to them, oh, that’s gone up as a consequence of tax

changes, then they should, and there are lots of advertisements in today’s paper,

they should look up the hotline of the Australian Competition and Consumer Commission, and

they can make a complaint, and that will be investigated. I’ve spoken to the Chairman

of the Australian Competition and Consumer Commission, Professor Fels, this morning

already, we’ve had our first conference. He’s ready, he’s got his lines

open. And if you see a price move by more than 10 per cent, and especially if somebody

says to you, oh well, that’s a consequence of tax changes, get onto the Hotline.

WILLIAMS:

The Prime Minister says that he hopes that people will hold fire in their judgment, and

that in time the pain will pass, but small business will be reminded at every ring of the

till, and with every Business Activity Statement. Now the first one’s due in

November, that’s another danger period for you, isn’t it?

TREASURER:

I think that there are going to be two aspects to tax reform. There’s the aspect

of the consumer. And I think from the consumer’s point of view, things are going to

settle down very quickly. I think if you went into a supermarket this morning, as I said,

I went into a 7-Eleven, you’ll see the prices there, prices won’t have changed

much. In fact, in relation to fresh food you may even see some savings. From a business

point of view, the businesses will have to remit their first quarterly statement at the

end of the first quarter, as you said. And I think, like any remittance that will take a

bit of effort. The first one is always the hardest. But when they make this remittance,

this quarterly remittance of course, it’s not just going to be a GST on that Business

Activity Statement, it will be their company tax too, for many of them their group tax for

employees, if they’re in prescribed payments, the Prescribed Payments Scheme,

Reportable Payments Scheme, all of those things are now being centralised on one form, so

we cut down the number of forms, are all being centralised on one form. And as I say, I

think the first one, which will be new, will take a bit of effort. I think by the time we

get to the second one, which will be by the end of the year, people should be in the swing

of it.

I think we’ll look back on these changes, and I said this yesterday, in much the

same way as the change to decimal currency. When Australia changed from pounds, shillings

and pence to decimal currency in 1966, it changed prices. People were worried about price

increase, they were unfamiliar in the shops with the currency, but it was a change that

had to be done. And no one would now think of going back to pounds, shillings and pence.

There were people at the time that said, oh this is terrible, this is going to dislocate

everybody’s buying patterns, we don’t know how to cope with it. But it was the

right decision. It had to be done. And GST’s the same. When we look back in 10 or 20

years, we’ll think that the people who spent their last 24 hours or 48 hours saying

that Australia should stick with wholesale sales tax alone in the developed world,

they’re a bit like the flat earth society of 1966, who said, Australia should stay

with pounds shillings and pence (inaudible) . . .

WILLIAMS:

If you’re wrong, you’re out of office though, aren’t you? And are you

prepared to take that gamble? I mean, the Prime Minister seems quite comfortable about

that, are you equally comfortable with that gamble?

TREASURER:

Well, we have taken the gamble of tax reform. Too late to ask the question, are you

prepared to take the gamble of tax reform, we’ve done it, it’s reality. Today

there is no wholesale sales tax, it’s been abolished. Today the company tax has

fallen from 36 to 34. Today the largest income tax cuts in Australian history have come

into effect. Today, family assistance has been increased by $2.4 billion. On Monday,

I’m going to instruct the Reserve Bank to make the first payment to the States of

their entitlement under the GST system. This is the new world today. It’s not a

question of saying, will you take the gamble of tax reform? We have taken it. It’s

now in place. And the important thing is to secure the benefits for Australia.

WILLIAMS:

Treasurer, thanks very much for your time.

TREASURER:

Thank you.