Transcript No. 2000/70

TRANSCRIPT

Treasurer

Well during the weekend the New Tax System has come into operation raising the

political stakes to a new level. John Howard and Peter Costello will hope that they can

minimise any fall-out whilst squarely casting Kim Beazley in the role of alternative Prime

Minister. The Treasurer is demanding a greater scrutiny of the ALP and its leader but at

the moment the focus is on him, like it or dislike it he’s in our Melbourne studio

and on the line. Good morning Treasurer.

TREASURER:

Good morning John, how are you?

LAWS:

Okay. What about you?

TREASURER:

Oh not too bad thanks.

LAWS:

What’s the feeling after the first weekend of the GST? To soon to tell anything

definite, I know. But what’s the general feeling?

TREASURER:

Look, I think it went better than people expected really.

LAWS:

Better than you expected?

TREASURER:

Well, I thought there would be some more glitches to be frank. I was wandering round the

shopping centre in my own electorate, particularly with small business and they were well

prepared. They’d been to their seminars, one of the mixed businesses had it’s

till operating, sold me a number of items, properly accounted for the GST. I think

Woolworth’s and Coles did terrific jobs. I was pleased to see that in the capital

cities the petrol price actually came down rather than what was predicted and for all the

hype over the last two years, and this has been going on for more than 2 years about how

there’d be riots in the street and shop keepers would be attacked and that people

would die of starvation and that the poor would be thrown out of their homes, the weekend

passed pretty peacefully.

LAWS:

The fact that fuel prices in some areas came down of course had nothing to do with the

GST.

TREASURER:

Well, everyone said that when the GST came in it would force petrol prices up and you

went from 11.59 on the Friday to 12.01 on the Saturday, and the tax took effect and they

actually came down. It at least disproved all of those people that said the price of

petrol would go up as a result of tax. Now I’ve always said the price of petrol

varies on a lot of things and the most important thing is the world oil price and the

Australian dollar exchange rate. And this is what really influences prices, but I think

the one thing you can say is as a result of the tax change on midnight on Friday night

coming into Saturday morning it didn’t push the price of petrol up.

LAWS:

The brewers show precious little sign of softening their campaign against excise hikes.

Is that campaign of theirs starting to bite a bit?

TREASURER:

No. Look the brewers take the view that they should be special. That although all of

Australian business is becoming part of the New Tax System, they’re continuing to

fight it. Their complaint is that the price of a beer across a bar, remember we are not

talking about packaged beer here, the price of a beer across a bar would go up 20 cents.

We say yes that’s anticipated, that was always our policy, that it would go up 20

cents. People have income tax cuts and increased family assistance for the average family

which has got about another $40 a week to spend. Paying 20 cents extra for their beer is

something that they can afford.

LAWS:

Yeah but I don’t think that the brewers see themselves as something special. Or if

they do see themselves as something special it’s only because the Prime Minister made

them feel special by saying that the price of beer wouldn’t go up.

TREASURER:

Oh no, no, no. The brewers do see themselves as special.

LAWS:

We do to. We like their beer.

TREASURER:

Well, you know, we might like beer, we might like bread, we might like pies, we might

like doughnuts. I like hotdogs. Now hotdogs are going up in price and …

LAWS:

Well, I’m sure you can handle that.

TREASURER:

Well I can because at the end of the day I have an income tax cut which give me more

money to spend. This is the whole idea.

LAWS:

But there’s no excise on hotdogs.

TREASURER:

The price of the, and there’s always been excise on beer, and there’s always

been wholesale sales tax on beer, and wholesale sales tax is abolished and the excise is

increased to make it up and the price moves John, by 20 cents a beer.

LAWS:

Yeah, that’s right. But the point is that the Prime Minister said the price

wouldn’t move. And that’s why the brewers are taking the line that they are

taking and it’s fine to say that the price of beer that you buy when you buy a carton

of beer or something, the price will come down. That’s not going to do much for the

hoteliers, is it?

TREASURER:

Well, just to go back over it the Prime Minister didn’t say that the price of beer

wouldn’t move. Now what we said was, and it’s all published, you just got to go

to the written documents which I noticed the brewers never do. We said the price of

packaged beer would move by 1.9 per cent and …

LAWS:

Well that wasn’t true.

TREASURER:

Packaged beer? The price of packaged beer is not going up by more than 1.9, in fact

there are some people saying that it’s going up by less. Then you go to the question

of the beer across the bar.

LAWS:

Yeah.

TREASURER:

Now the beer across the bar has a service component.

LAWS:

Well so does the carton of beer. Somebody, you don’t just walk in and take it,

somebody serves it to you.

TREASURER:

Yeah, but, but John, we all know this. That if you get a beer across a bar it costs

more than if you pour it yourself out of a stubby. Right.

LAWS:

Yeah, but there’s still a service component in buying a carton of beer?

TREASURER:

Sure but there’s much greater across the bar. That’s why it costs more, so

that when you have a 10 per cent value added tax, because the beer across the bar is a

higher price, the price moves more than it does if you pour it out of the stubby yourself.

LAWS:

Isn’t it more to do with the excise hike than the GST?

TREASURER:

GST taxes the service component and the full value of the price. Now we said that the

excise had moved so that a packaged beer went up by 1.9 per cent. That’s in the

written document. It’s all there, its published, the brewers know it, you’ve

just got to go to the policy. Now when you go to the bar across the beer, because

it’s a more expensive product, it’s like the meal in the restaurant it goes up

by about 7 per cent they say. Which is 20 cents a pot. And at the end of the day we say

yeah it will go up at 20 cents a pot, 20 cents a middy I think it is I should say, but

you’ll have more money to pay for it.

LAWS:

But the excise has risen from 18 cents to 33 cents.

TREASURER:

And the wholesale sales tax of 37 per cent has been abolished.

LAWS:

Well, Peter, what’s an excise if it’s not a tax?

TREASURER:

Well, John, that product was taxed at 37 per cent. And that went from 37 per cent to

zero. And that’s why the excise was moved up from 18 …

LAWS:

. . . from 18 to 33.

TREASURER:

That’s right from 18 to 33. So 37 per cent off. Excise goes from 18 to 33. The

price of a packaged beer as we said it is, no higher than 1.9 per cent. The price of a

middy, 20 cents across the bar which we always…

LAWS:

But the fact of the excise…

TREASURER:

…. When, we actually think that 20 cents across the bar is the right amount. And

people have, what happens to the money? People get cuts in their income tax so that

they’ve got more money if they want to buy a beer across the bar to pay for a 20 cent

price increase.

LAWS:

So really they can reduce, if they’re a beer drinker, they can reduce their tax

cuts by that amount?

TREASURER:

20, well if you want to spend your $40 a week on paying 20 cents more for a middy you

can, yeah.

LAWS:

But the point is that its that, excise that has caused the increase in price, not the

GST and the excise is just a hidden tax.

TREASURER:

No, no John, it’s a combination of three things. It’s the abolition of 37 per

cent wholesale sales tax, right, 37 per cent to zero. It’s the consequence increase

in excise and it’s the introduction of a goods and services tax. Now why do you get a

difference in price between a packaged product and a served product. It’s the same

reason why you get a difference in price between let’s say buying a frozen pie and

buying a hot pie. If you buy a hot pie its more expensive. You know if you buy it in a

milk bar than if you buy it frozen in the supermarket. It’s been heated and served.

Because it has a higher price the goods and services tax moves that price more. At the end

of the day lets go back to it, a packaged beer, a stubby of beer no more than a rise of

1.9 per cent, in fact people are now saying possibly less. In fact I’ve seen some say

it might actually come down. Your standard drink, your middy, your pot, whatever its

called, 20 cent increase, that’s what its going up, that’s what the brewers say

its going up, that’s what we say its going up. Where’s the money go? Income tax

cuts. So that whether you’re buying a hotdog, whether you’re buying a middy of

beer, you’ve got more money to buy it with.

LAWS:

Those new excise rates haven’t been approved by the Parliament yet have they?

TREASURER:

Well, they’ve been raised in accordance with the customs act or whatever it is and

they have to be approved by Parliament in the next 12 months.

LAWS:

Okay, Democrats and Labor oppose them.

TREASURER:

Well, we’ll see. We’ll see.

LAWS:

Well they do, don’t they?

TREASURER:

Well, there’s been a lot of talk going on, I can assure you of that.

LAWS:

Does that mean they don’t oppose them?

TREASURER:

Well, we’ll see.

LAWS:

That’s very mysterious Peter.

TREASURER:

We’ll see.

LAWS:

Have you done a deal with the Democrats or the Labor Party?

TREASURER:

We’ll see what’s happening, we’ll see what’s happening.

LAWS:

I think it’s sort of a little more important than “we’ll see”, from

the public’s point of view.

TREASURER:

Oh well, it won’t change for the public.

LAWS:

It won’t?

TREASURER:

No it won’t change for the public, as we always said a middy will go up 20 cents.

LAWS:

Why aren’t tax scales indexed the same way for inflation? I mean the HECS fees are

indexed for inflation, pensions are too, why aren’t the tax scales indexed the same

way?

TREASURER:

Because we’re reducing them, we’re not putting them up. We’re actually

reducing them. The income tax scales are being radically reduced so that if you’re

for example on 43 cents in the dollar at the moment, we’re bringing that right down

to 30 cents for people that are earning 50 000. Some have argued all you should do with

income tax scales is index them. We’re doing something much greater than that. We are

cutting them, dramatically cutting them. One of the reasons why…

LAWS:

But isn’t it true that bracket creep is going to eat into a whole lot of that and

will continue to do so. And bracket creep will increase with the rises that will take

place.

TREASURER:

Well bracket creep is what happens when you have a high inflation pushing people into

higher brackets. At the moment we, and since our government was elected we’ve had low

inflation as you know and we want to keep inflation low. And we want to actually reduce,

not index, reduce income tax rates. The largest income tax cut in Australian history John,

this is miles in front of indexation.

LAWS:

Well I think it might be the only…

TREASURER:

Well its an interesting point, you know, I was going back through my mind and a lot of

people in Australia have got no experience, no memory of tax cuts. Certainly no memory of

tax cuts . . .

LAWS:

No, I think this may well be the first one. But again let me say, the GST will put

inflation rates up. You’ve admitted that in the Budget Papers.

TREASURER:

Oh yes, the one-off change in relation to tax changes will have an impact on the

Consumer Price Index….

LAWS:

Okay, so that means…

TREASURER:

Inflation will, ongoing inflation will continue to be low at 2 per cent.

LAWS:

So that’ll have an effect on excise.

TREASURER:

Well that ….

LAWS:

Which is geared to inflation, so that means the price of beer and other things that

have an excise applied to them will increase.

TREASURER:

The proportion of tax to the product should remain the same.

LAWS:

Should. Should or will?

TREASURER:

Well it will. People have got to remember this about an excise. An excise is not a

percentage. An income tax is a percentage.

LAWS:

That’s right. But an excise, this excise is geared to inflation so alcohol,

cigarettes and fuel, all the same, they’ll rise won’t they?

TREASURER:

Let’s go through it. An income tax is a percentage. Let’s suppose you pay 20

per cent. If you’re on 100, if you’re on $6,000 you pay 20 cents and if it goes

to $6,500 you pay 20 per cent and if it goes to $7,000 you have to pay 20 per cent. So the

tax to income remains the same. An excise is an actual amount. So that as the price

increases unless you index it, the tax to price reduces, that’s why it’s

indexed. And the indexation was introduced, I think, under the Labor Government I think a

decade or more ago. Now that keeps the tax to the price of the product the same and

that’s why it was introduced and we’ve accepted that policy. We haven’t

proposed to change it.

LAWS:

But an excise is still a tax, isn’t it?

TREASURER:

Oh yes, an excise is a tax, the same as wholesale sales tax or income tax or capital

gains tax.

LAWS:

Yeah, you see but the tax scales to the prices are kept the same way, aren’t they?

TREASURER:

They are, that’s right. That’s the difference. You see…

LAWS:

From the moment we get the tax cut, inflation is going to eat into it.

TREASURER:

Well John, let’s put it this way. You dramatically reduce the rate. As you said,

in a way of which people have no memorable experience previously…

LAWS:

Yeah true.

TREASURER:

. … and there after, yes it is true as people’s incomes go up, because the rate

remains the same, they pay more tax. And it is also true at margins, you can actually slip

into a higher tax rate that is absolutely true. But the difference is this. At the moment

if you’re on average incomes in Australia you can be paying 43 cents in the dollar

and from Saturday you’re paying 30 cents in the dollar, so 43 down to 30, what’s

that? 13 cents out of 43 cents, what’s that about a 1/3, about a 33 per cent cut in

your marginal tax rate. Now it is true and it’s always the case as your income rises,

because you take the same percentage, you pay more income tax. But gee I’d rather be

paying income tax at 30 cents in the dollar than 43 cents in the dollar, wouldn’t

you?

LAWS:

Yep. Have you got time to take a couple of questions?

TREASURER:

Sure.

LAWS:

Okay. Tony are you there?

CALLER:

Yeah.

LAWS:

Okay, ask the Treasurer the question.

CALLER:

There are a significant number of people with disabilities that are, the Government

quite rightly is encouraging to live at home. But the tax seems to be forcing them to

reconsider this in that there is a GST on prepared meals. If they don’t have the

energy to have a balanced meal, their health is going to be affected.

TREASURER:

I think Tony, what you’re probably talking about is like when you buy a prepared

meal down at the supermarket like frozen, I forget what kind of things, you might buy

frozen pizza or you might buy a …

CALLER:

You can get complete meals.

TREASURER:

Sure I know, I’ve seen them you can buy frozen Thai curry or frozen something or

rather, in fact I’ve become a bit of an expert at cooking them myself.

LAWS:

TV dinners they’re called aren’t they.

TREASURER:

Frozen dinner. As part of the arrangement as you know, in securing the reforms through

the Senate the GST was applied to prepared meals but not to fresh meals.

CALLER:

Yes I understand.

TREASURER:

If you bought those things separately, that is, if you bought the meat and bought the

rice separately and you cooked it yourself then the GST wouldn’t apply. You’re

quite right about that.

CALLER:

There’s also the danger of cooking them too.

TREASURER:

You’re quite right about that and so you would expect some price effect in

relation to those prepared meals.

CALLER:

(inaudible).

TREASURER:

One of the things we’ve done Tony, as you know, is we’ve increased all

allowances including those for disabilities so that people have more pay in their pocket,

more pay in their pensions so they can cope with those price rises.

CALLER:

Well I think that’s going to frittered away very quickly if they’ve got low

income and they’re being taxed on food, which they need to use.

TREASURER:

They’re not taxed on all food, there’s as I said…

CALLER:

I’m talking about…

TREASURER:

… you might be taxed on a prepared meal, but you’re not taxed ….

CALLER:

That’s what I’m talking about.

TREASURER:

… on your apples and your oranges and your not taxed on your milk and you’re

not taxed on your bread and you’re not taxed on your orange juice. There is one item

of food if you buy prepared meals where there would be a taxation liability. There’d

be other things you’re buying that will be less expensive as a consequence, including

your milk and your bread and all of those things, they should actually come down. At the

end of the day the price effect is more than outweighed by the increase in the pension.

CALLER:

Well, I’d be interested to verify that.

TREASURER:

Well we’ve, we’ve looked at this up and we’ve look at this down and you

know we’ve done all sorts of modelling and I can tell you, even if you assume people

spend cent every cent that they get the price effect is less than the amount that their

pension increases by.

LAWS:

Okay Tony are you satisfied with that answer?

CALLER:

Not really, I think its, he hasn’t taken into account the extra cost that people

with disabilities have, you know like having to get their lawn mowed because they

can’t do it themselves. Having to do all these extra service things and quite frankly

with modelling originally we were told it was going to be what, $1, thinks it might go up

a $1.74 or something and with a model you just can’t be that accurate. And the Prime

Minister the other day was saying that when the Opposition or Democrats were raising about

models, he was saying oh they’re just models, you know you can’t believe them.

LAWS:

That’s a great help mate.

TREASURER:

Well, can I just say John, we have taken into account all of those prices . . .

LAWS:

But you see . . .

TREASURER:

. . . including lawn mowing . . .

LAWS:

. . . yes, see, I think that’s a, that’s a very important thing. I

wouldn’t have thought of that. For example, if Tony is disabled, I don’t know

whether he is or not, or he’s talking about somebody who’s . . .

CALLER:

Yes I am. (inaudible) and I’ve got a lot of colleagues that are and (inaudible) .

. .

LAWS:

But did you, Peter, did you take into things, account into things like getting the lawn

mowed . . .

TREASURER:

Absolutely John . . .

LAWS:

. . . and getting the house cleaned, and stuff like that . . .

TREASURER:

. . . absolutely. All that’s . . .

LAWS:

. . . because all of that is going to increase 10 per cent?

TREASURER:

. . . all of those service areas have been included. It’s the changes in relation

to all of those service areas, it’s the changes in relation to the fresh food,

it’s the changes in relation to the prepared food, it’s the changes in relation

to all of those things. And when you, you know, a much better way of doing it, and this is

the way we’re doing it, is, we’re increasing people’s disability pension so

that they have the money, they have it up front, they will be increased this week, this

week . . .

LAWS:

Tony . . .

TREASURER:

. . . with effect from 1 July.

CALLER:

Yes.

LAWS:

. . . can you hold on there when I terminate this call, which I’m going to have to

do, but will you hold on there so that we can get your telephone number, and in six months

or four months from now we’ll call you back and we’ll remind you of the

conversation you’ve had with the Treasurer this morning, and you can see how things

are looking in say, four months time.

CALLER:

Righto, okay.

LAWS:

Is that okay?

CALLER:

Yes, thanks.

LAWS:

Good boy. Hang on, don’t hang up. Just get some details there and then we can go

back to Tony and see how he’s feeling about it all. He might have a totally different

point of view in about four months from now. We’ll endeavour to do that. Treasurer, I

heard the Prime Minister being quoted at the weekend as saying, a cent a litre here or

there as far as petroleum is concerned doesn’t make a big difference. Do you go along

with that?

TREASURER:

Oh well, I like petrol to be as low as possible. I make no bones about that. We want to

keep petrol prices low. We keep pressure on the oil companies to make sure that it stays

low. I think what he was probably referring to is, and we’ve all had this experience,

that petrol prices can seem to be able to go up two or three or sometimes four cents in a

day and come back again.

LAWS:

Yes. Every cent a litre in excise is worth about $200 million to the Government,

isn’t it?

TREASURER:

More than that actually.

LAWS:

Yes, so, it’s okay for the Prime Minister to say, a cent a litre here or there

doesn’t make a big difference, it makes a big difference to you, doesn’t it?

TREASURER:

Yes, well, but I think what he was saying was, it’s not that the excise on petrol

goes up a cent or down a cent in a day. The excise on petrol is standard. It was 44 cents,

and we’re bringing it down by 6.7 cents. What moves the petrol price in a day, well,

let me tell you the factors. The world oil prices are the biggest determinant of petrol,

then the exchange rate, because that’s the price at which we pay the world oil price.

Then you get competition, and we all know that if there’s only one petrol station for

a hundred miles it charges more than if there’s one on the next corner, don’t

we, because you’ve got competition keeping the prices down. And then you have

subsidies which are paid by oil companies, and it just seems, don’t take my word for

gospel on this, but it seems to me that these subsidies sometimes get pulled out, you

know, the day before Easter, or the day before Christmas, and that can vary the price by 3

or 4 cents. And the one thing I will say, you’ve got to give credit where credit is

due. The oil companies could’ve taken the opportunity at midnight on Friday to push

prices up and try and blame the tax system. They didn’t because the prices actually

seem to have come down now. That doesn’t mean that they won’t do it at some

later occasion, but obviously we were worried that they would try and use the cover of the

tax changes to increase their prices for profitability levels also. And I must say,

you’ve got to give credit where it’s due, according to the Australian

Competition and Consumer Commission they didn’t do that.

LAWS:

Okay, just a quick call from Kate. Kate, talk to the Treasurer.

CALLER:

Yes, good morning John and Treasurer.

TREASURER:

Good morning Kate.

CALLER:

Good morning. I have attempted to find this out from your Department, from your Income

Tax Policy Unit with no success, it also concerns people on low incomes, where that income

is derived from an asset such as real estate, where the asset value precludes any form of

social security payments at all, where, and the gross income after tax would be of a

comparable value. Can you tell me why single people, for example, should pay income tax

under something like $12,000 if that is their income level, and to make some, some sort of

allowance for people who have low incomes from assets on which they can’t, that were,

live other than on that income.

LAWS:

Do you understand that Treasurer?

TREASURER:

Well, I think the question is about the tax you pay on income derived from an asset.

And the tax that you pay on income derived from an asset is according to the normal

taxation scales. And from Saturday. . .

CALLER:

I was suggesting that they need to be changed because it’s around about, say for a

single person, it’s about $7,000 that people start paying income tax. Now you

can’t live on $7,000 in Sydney. You can’t pay for basics like, you know, a

mortgage, rates, electricity, food, travelling, you know, the absolute basics to keep one

alive in the city, it’s just

TREASURER:

Well, I think Kate . . .

CALLER:

. . . impossible . . .

TREASURER:

. . . you’re making a very good point as to why income taxes should be cut.

CALLER:

Well, income taxes, I don’t believe, should be cut for high income earners. But

some equity should be achieved with very low . . .

TREASURER:

Well, we are actually doing that. Up until Saturday you paid tax on every dollar over

$5,400, and from Saturday the tax free threshold is extended to $6,000, so you don’t

pay any tax until $6,000 . . .

CALLER:

But Treasurer, you can’t live on . . .

TREASURER:

. . . now hang on, let me go through it. Up until Saturday you paid tax at 20 cents in

the dollar on every dollar over $5,400, and after Saturday you pay tax at 17 cents in the

dollar over $6,000. So, first of all the tax-free threshold has been increased by $600

from $5,400, which according to my calculations is more than a 10 per cent increase in the

tax-free threshold. Secondly, the rate has been dropped. It’s been dropped from 20

cents in the dollar to 17 cents in the dollar. And you pay 17 cents in the dollar up to

about $20,000. Now . . .

LAWS:

But I still don’t quite understand how Kate is in anyway advantaged by all of

that.

TREASURER:

Well, why? Because up until Saturday she paid 20 cents in the dollar on income above

$5,400, right?

LAWS:

Yes.

TREASURER:

Right, up to $6,000. So she was paying 20 cents on another $600. So 20 cents on $600 is

what, $120. She got $120 tax cut on her first $6,000. And then after $6,000 she was

paying, after $5,400 she was paying 20 cents, now she’s paying 17 cents in the

dollar. So, she’s got a tax cut of 3 cents in the dollar on every dollar above

$6,000. So, she’s got her tax cuts two ways. Firstly the tax-free threshold was

increased. Secondly her tax rate was cut. Now, Kate makes the point, you know, that she

would like those income tax rates to be cut further, and that is a legitimate point. But

John, this is the first tax cut we’ve had in memorable history as you’ve said.

You can only cut income taxes when you recover your taxes in other ways. We are recovering

the taxes through goods and services tax. If we hadn’t been able to do this, we

wouldn’t have been able to cut Kate’s income taxes. And the good news from Kate

is that she has got an income tax cut from 1 July.

LAWS:

Do you feel better off, or do you feel worse off?

CALLER:

No, of course not John. Thank you for making the point. As I said Treasurer, no one can

live in Sydney as a single person on $6,000 a year. And any, you know, any advantage in

what you’ve just said is absolutely minimal. And with a, for example, with a real

estate there’s major maintenance from time to time, and there’s 10 per cent

service charge being put on all services . . .

LAWS:

Okay, so . . .

CALLER:

. . . and I really don’t think you’ve given any real consideration to people

who aren’t moving up the sliding scale, but have a certain capital which has to last

them a lifetime . . .

TREASURER:

Well, let me say in relation to Kate’s capital, I’m glad you raised that,

because in September of last year we cut your capital gains tax liability practically in

half.

CALLER:

I don’t have one because I bought this property before 1986, so that’s not

relevant at all.

TREASURER:

Before 1985?

CALLER:

’85, that’s right (inaudible) . . .

TREASURER:

Yes, but if you sell this property and buy another one, or if you have other property,

I mean, do you work at all, are you married to someone who works?

CALLER:

No.

TREASURER:

You don’t work at all?

CALLER:

No.

TREASURER:

Are you retired?

CALLER:

I’m not intentionally retired, no. But that’s . . .

TREASURER:

Are you of retirement age?

CALLER:

Yes.

TREASURER:

Well, you should be on a pension then.

CALLER:

Well, you can’t get any form of pension when you have an asset greater than $125

odd thousand, and any house in Sydney would be worth more than that.

TREASURER:

You’ve only got one asset which is worth $125,000?

CALLER:

That’s right.

TREASURER:

And you’re getting what $6,000 return on it.

CALLER:

No, no. Closer to $11,000 or so, $10,000 perhaps. It depends on what expenditure.

LAWS:

(inaudible)

TREASURER:

Well, if you’re a self-funded retiree, I’d like to look at that, if you are a

self-funded retiree with only one asset and you are only earning $11,000, if that’s

all that your income actually is, then I would think that you wouldn’t be paying tax.

CALLER:

Well that’s the problem, one is paying tax, I mean, or should be paying tax. I

mean . . .

TREASURER:

But are you paying tax?

CALLER:

Well, when I can, but I mean, you know . . .

TREASURER:

No, but are you liable for paying tax?

LAWS:

Yes.

CALLER:

Well, one is, of course. Anything (inaudible) . . .

TREASURER:

Well, a self-funded retiree who is living off their savings, and your savings are in a

$125,000 property, and you are earning . . .

CALLER:

No, no, I’m sorry, it’s greater than $125,000. Any property in Sydney is

considerably more than that.

TREASURER:

Yes, but you’re a self-funded retiree with an asset, with an income, I think, you

said, of $11,000. I’d like to get your details because with the self-funded

retiree’s rebates, I’m not even sure that you are paying tax.

CALLER:

Well, I have rung you Department on numerous occasions, and the thing which is also

unfair . . .

TREASURER:

Can I also say Kate . . .

CALLER:

. . . is that if one’s income is from a pension, one would not be liable at all

for income tax.

TREASURER:

. . . well, we actually increased the rebates. This is the point I’m making. So

that the self-funded retiree, if that’s all your income, $11,000, gets the same

rebate as the pensioner. We’ve actually increased that. That’s one of the things

that we did some years ago. The second thing Kate, is, that if all you’re earning is

$11,000 you’re also eligible for the self-funded retirees savings bonus of $2,000 . .

.

CALLER:

Well, they told me that that was only applicable where one didn’t have assets over

a certain amount.

LAWS:

Okay Kate . . .

TREASURER:

No, it’s if your income is less than $30,000, which it obviously is, and you are

of retirement age, then you may well be entitled to that self-funded savings bonus, which

would be great.

CALLER:

So, it’s not assets tested, is that . . .

TREASURER:

But it’s tested in relation to income . . .

LAWS:

Not assets?

TREASURER:

. . . and the income is $30,000 of income.

CALLER:

Well, I was advised by somebody in your Department that it was also assets tested.

TREASURER:

Kate, why don’t you leave your name and address with John, and we’ll get it

and we’ll get in touch with you.

CALLER:

Alright, thank you.

TREASURER:

We might have some very good news for you.

CALLER:

But I also feel that if you could focus on people with a low income, and when one talks

about, let’s say 4 per cent increase in a pension, that isn’t very much actual

money. Whereas 4 per cent on someone, you know, $100,000 is a lot more money, and people

at that lower end are finding it extremely difficult just to stay alive, and that’s

not what relaxed and comfortable is Treasurer.

TREASURER:

Yes, but nobody is getting 4 per cent on $100,000, I can assure you of that. If you had

$100,000

CALLER:

Well, I’m sorry, I . . .

TREASURER:

. . . you wouldn’t be on a pension, it’s only the pensioners that are getting

. . .

CALLER:

. . . well I understand . . .

TREASURER:

. . . a 4 per cent increase.

CALLER:

. . . well, I understand that you yourself got a 7 per cent increase on your own

salaries.

TREASURER:

Oh Kate, it seems to me as if we’re getting into other areas here.

CALLER:

Well, I am talking about the business of talking of percentages. Surely, I feel this

whole GST is predicated on giving relief to higher income tax payers, and it’s not

about finding equity, more equity in the country.

TREASURER:

But hang on. You rang in and you asked me about self-funded retirees, many of whom are

high earners . . .

CALLER:

Or many of whom are not.

TREASURER:

. . . and if I may say so, there’s, you know, if you’re worried about people,

and it’s a fair point, there’s a lot of people that would say an investment

property of more than $125,000 didn’t make you that poor.

CALLER:

Well it does, in Sydney an average house, I don’t know what the figure at the

moment is, but the average . . .

LAWS:

I think about $280,000 or something.

CALLER:

. . . yes, I mean this is an average house . . .

TREASURER:

Yes, well . . .

CALLER:

. . . in Sydney . . .

TREASURER:

Yes. But your point is, as I originally understood it, was that you were concerned

about self-funded retirees with assets, and so am I. And . . .

CALLLER:

(inaudible)

TREASURER:

. . . I’ve said to you in relation to the self-funded retiree with assets, first

of all, they get an income tax cut if they are paying income tax. Secondly, we have

introduced a rebate so that they get the same taxation treatment as the pensioner.

Thirdly, there is a savings bonus which people are eligible for, and, you know, which

I’m quite prepared to try and get for you . . .

LAWS:

Now Kate, I think . . .

TREASURER:

. . . and . . .

LAWS:

. . . we’ll have to quit here, because well we’ll be here all morning

discussing this one issue. And I want to be helpful to you, but I think that the Treasurer

has made a reasonable offer. If you want to just hold on there and leave details, he will

have somebody from his own office, I presume, get in touch with you, and I don’t know

that you can do much better than that.

TREASURER:

Yes, well look, we need to get that today John, so if she could just leave her name and

her address, we’ll get somebody to give her a call today.

LAWS:

Are you comfortable with that Kate?

CALLER:

Well, I’ll discuss that with your people if you don’t mind. I’d rather

call them back . . .

TREASURER:

Oh no. I think you should leave your name and address Kate, so that we can really get

in contact with you today . . .

CALLER:

Well, I’d like to (inaudible) initially as a general issue . . .

TREASURER:

Oh, come on Kate . . .

CALLER:

. . . Treasurer . . .

TREASURER:

. . . if you’re really interested in the information . . .

CALLER:

. . . and I have not been able to find from numerous calls to your Department, and

anybody who could discuss the broad issues from income tax levels right up to changes in

service charges and so forth.

TREASURER:

. . . well hang on Kate, look, you rang in, you know, we’ve spent 10 minutes

talking about it, and I think if you really do want the information please, you will leave

your name, and address, and your phone number, and I guarantee we’ll have somebody

give you a call today. I think that’s only fair that you do Kate.

CALLER:

Well, I think I’d just like the information. And I’d just like, and someone

in your Department that I can contact to get actual information from, who has a broad . .

.

TREASURER:

Well, here’ actual information right from the office itself, Kate. I think

it’s only fair, that you’ve rung me up, and you’ve put your circumstances,

and you said that you’d been unable to get information, I think it’s only fair

that you give us your name and your address, and, you don’t have to give us your

surname, and, but you give us your phone number and we’ll ring you. And that way,

I’ll know it’s been done.

LAWS:

Is that reasonable Kate or not?

CALLER:

Well I would prefer to do it in the way that I would prefer to do it . . .

LAWS:

Okay, well look, I’ll let you talk to our receptionist about it.

CALLER:

Alright, thank you very much.

LAWS:

Okay, you just hang on there and somebody will come back to you. I don’t like your

chances there Treasurer.

TREASURER:

No, it struck me as one of those, if people ring you and say I’ve been trying to

get information and then you offer to give it to them, and, you know, if they won’t

actually give you a number to give it to them. We have had some experience of this before

John, you understand politics is a bit like that.

LAWS:

Yes, I certainly do. And as I say, I don’t like your chances there.

TREASURER:

No, I wouldn’t like my chances there at all.

LAWS:

But, I’d better let you go . . .

TREASURER:

But, it’s fair enough. We are here to give out (inaudible) . . .

LAWS:

. . . sure, I think that . . .

TREASURER:

. . . for genuine enquirers who really do want information . . .

LAWS:

Yes, and I think . . .

TREASURER:

. . . they will . . .

LAWS:

. . . I think your point’s absolutely reasonable. . .

TREASURER:

. . . and . . .

LAWS:

But as I say, I still don’t like your chances.

TREASURER:

No, I wouldn’t like my chances. I’m not sure that she really wanted the

information.

LAWS:

Anyway, she’s made the point that she wanted to make I presume.

TREASURER:

Well, she got a very good run.

LAWS:

Yes, well let’s see what the outcome of it is.

TREASURER:

Well, thanks very much for your time John.

LAWS:

Okay, it was always good to talk to you, and still is, and I hope I see you very soon.

And let’s hope all goes well with the GST, and that ultimately we’ll understand

it and we’ll feel comfortable about it.

TREASURER:

Okay, thanks very much John.

LAWS:

Good to talk to you Treasurer.

TREASURER:

Okay, bye.

LAWS:

Bye. Peter Costello.