June Labour Force, Inflation, ALP Presidency

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Press Conference Melbourne: Della Bosca, tax reform, Westpac Survey
July 12, 2000
Foreign Investment Proposal: Rio Tinto Limited/North Limited
July 24, 2000
Press Conference Melbourne: Della Bosca, tax reform, Westpac Survey
July 12, 2000
Foreign Investment Proposal: Rio Tinto Limited/North Limited
July 24, 2000

June Labour Force, Inflation, ALP Presidency

Transcript No. 2000/80





Press Conference


Thursday 13 July 2000

12.00 noon


June Labour Force, Inflation, ALP Presidency


Today’s Labour Force figures for the month of June which shows that unemployment

has fallen to 6.6 per cent are exceptionally good results, that I think all Australians

will welcome. Total employment in the month of June increased by 21,700 jobs, and perhaps

even better than that, was that full-time employment rose by 47,100 jobs in the month of

June. And unemployment has now fallen to 6.6 per cent, the lowest unemployment rate in

Australia for over ten years. If the Australian economy keeps growing, together with our

reforms in tax and our reforms in relation to industrial relations, we would expect over

the course of this financial year unemployment to continue to fall and it could be as low

as 6 per cent by June of next year. I also take the opportunity to comment on the

Melbourne Institute consumer inflationary expectations, which was released today. This is

good news that consumers are now expecting lower inflation than they were back in May.

Inflationary expectations fell to 4.6 per cent from 7.1 per cent in May, and in particular

it appears that this has been influenced by the introduction of GST, that many people had

believed the campaign of those opposed to tax reform, that all prices would go up by 10

per cent. It was never true, it wasn’t the case. What has happened as you’ve

seen over the course of this week, is, as the Government said, some prices went up, some

were the same and some came down, and people’s inflationary expectations accordingly

have come down. That is good news for the Australian economy. It means that there is no

basis for people to be chasing wage rises. As we’ve said that they have been more

than put in a better position by income tax cuts and increases in family assistance, and

Australia’s low, ongoing inflation rate, taking out the one-off factors of GST should

continue to be as we have forecasted.

So these are good economic figures, unemployment falling, 47,000 new jobs in the month

of May. Since the Government was elected in March of 1996, 733,000 new jobs have been

created in Australia, lower inflation expectations and the reform process of the

Government continues to roll on.


Mr Costello with signs that some businesses are absorbing the GST rather than passing

the full amount on, is the Government’s inflation expectations looking a bit too



Well, some businesses are absorbing the GST with the consequence that they are dropping

their prices. Where you see a business that is saying, you know, same price we pay the

GST, what that really means is that they have actually dropped their price. I’m never

going to complain about that. As a Treasurer, I think that’s a good thing, I think

it’s a good thing for consumers that a consumer is actually getting the benefit of a

price reduction. And we’ve always said in our forecasts of inflation you’ll have

a one-off effect because of the tax change, but both the Government and the Reserve Bank

are going to look through that one-off effect at the ongoing inflation rate. And it’s

keeping that ongoing inflation rate low that is important for the future of economic

policy. But I would regard these expectations really as reflecting what people have

experienced. They began shopping under the new taxation system from Saturday of last week,

they noticed that many prices had come down, in supermarkets they were paying less, as the

embedded wholesale sales taxes come out they’ll get the advantage of further price

falls. They will notice that some things go up, some things remain the same, some things

go down, but there never was any basis to the false claims that everything would go up.


Isn’t it too early to judge the effect of the GST or the acceptance of it yet

though, until people start getting their telephone bills and other bills with the extra 10

per cent on, their footy club memberships etc.?


Well, people are at the moment getting the largest income tax cuts in Australian

history. And not only the largest income tax cuts in Australian history but $2.4 billion

increase in family assistance, and for pensioners a 4 per cent increase in the pension.

Now, let’s make this point, if the Government had not engaged in tax reform, nobody

would be getting an income tax cut, nobody would be getting increased family assistance,

nobody would be getting a pension increase. Tax reform has enabled all of those things to

occur. And at the end of the day people have more money to spend, some of their prices go

down, some of their prices the same, some of their prices go up, but they have more money

to spend and Australia has a better taxation system. And it’s not just that people

have more money to spend, we as a nation have a better taxation system and that’s the

important part of this.


Do you think these figures further ruin Mr Beazley’s week?


Well, Mr Beazley’s problem starts from the fact that he refuses to acknowledge the

truth. His problems start from simple deceit. The simple deceit is this: that tax reform

was not needed and that tax reform will not make Australia better. It’s because he

refuses to acknowledge that proposition that he gets himself into all of these

contortions. Kim Beazley is absolutely contorted on tax at the moment. What he should have

done is, he should have said he would join the Government in tax reform. He could have

acknowledged that Labor had wanted to do this in 1985, sure they’d been defeated, but

he could have said that if somebody is going to have the strength and the courage and the

leadership to do it, I, Kim Beazley will support it. But he took the weak road. The weak

road was to say, I will try and eke out every populist vote in preventing what’s good

for the country. And he failed. And now tax reform has been introduced, he acknowledges

that it’s here to stay. You see, if he really believed, if Mr Beazley really believed

that GST could not be made fair he would repeal it. I really am perplexed to this day how

the Labor Party can say, that GST cannot be made fair and by the way we want to keep it. I

really am genuinely perplexed about that. The Labor Party wants to keep the GST because,

one – they know that in a modern based economy you need a broad base for your

indirect taxes, two – they know that that’s the only way to guarantee the

revenue to fund social services. And the rest is pure deceit. The Labor Party simply

trying to eke out the politics of opportunism, make the Government do the hard work and

try and take advantage of that fact.


Are his contortions, as you put them, and his problems with Mr Della Bosca this week

prompting you to think about an early election?


Well, Mr Della Bosca’s, the problem Kim Beazley had with Mr Della Bosca was a

problem of Della Bosca telling the truth. Now, that’s the problem he had with Mr

Della Bosca. Now, I just want to make another point about this, Mr Crean was on television

last night saying, oh that Della Bosca had never warned them that this was his view. He

said, in all the discussions we’ve had with him prior to it, he was fully supporting

the Labor strategy. That is not true. That is simply not true. Paul Cleary reported in the

Sydney Morning Herald on the 31st March 1999: John Della Bosca telling Federal

Labor it should “drop its opposition to the GST.” Laurie Oakes reported on

Channel 9 on the 30th March 1999: “Mr Della Bosca one of Labor’s top

strategists came to Canberra to give Kim Beazley the benefit of his advice and he is

believed to have urged the Federal Labor Party to back away from its flat opposition to

the GST.” Della Bosca had been telling them this back in March of 1999 that this

campaign was futile, that they should give it away, that they had tried to eke out

political opportunism at the expense of the national interest and because Crean and

Beazley are in a state of denial the last thing they can bear is the truth. Now, Della

Bosca has been saying this before, we know that. He’d been saying it in March 1999.

The journalists know that, Della Bosca only said again what he’s been saying for

quite some time. But because they are in denial and won’t face the truth, because

they cannot now come clean with the Australian people, they run around and they make out

that this is all a big gaffe. This was political advice from somebody they acknowledged to

be one of their best brains.


Would Greg Sword make a good ALP President do you think?


Well, the important thing for the ALP is to get somebody as their President who will

not tell the truth. That’s the first criteria. And I said yesterday after the Della

Bosca incident, you might as well hang a sign over the ALP Presidency and say, ‘truth

tellers not wanted’, because that’s why Della Bosca is no longer a suitable

candidate for the post. So, I don’t think they’ll have any shortage of

candidates. The most important thing they need is somebody who won’t tell the truth

and will keep up the pretence. What is the pretence? The pretence is this: that 150

countries in the world now have a GST or a value added tax and the only country that

shouldn’t have it is Australia. The pretence is that a wholesale sales tax,

Labor’s policy, is somehow preferable to a GST. Now, if you happen to think that the

only other country in the world which has a wholesale sales tax, Swaziland, has got it

right and the 150 that have GST’s and value-added taxes have got it wrong you can

maintain that pretence. But it’s getting very, very hard to maintain that pretence



So given that would Greg Sword make a good ALP President?


Oh well, if Greg, if Greg can, one: make sure that he doesn’t let the cat out of

bag and, you know, if he is prepared to keep up the pretence and the denial that’s

one qualification. The second thing that Greg Sword has going for him, of course, is that

he is a union official and, as you know, the unions basically set the Labor Party policy.

So if you have a union official as President of the ALP you kind of cut out the middle

man. He can set the policy directly as a union official from that post. So, that probably

gives him some qualification as well.


Will the Government actually consider an early Federal election?


Oh look, I’m not speculating about early Federal elections. Now is not the time to

ask questions about those. We are now, what 10 or 11 days into a new tax system. It’s

the biggest reform Australia’s ever had. We have to make sure that the tax system is

properly bedded down and we have to make sure that it works for the benefit of the nation

and that’s what we are working on. We’re not thinking about anything else. Not

thinking about anything else at all I can assure you of that.

Thank you.