Press Conference

1.45 pm

SUBJECTS: Labor’s 70 per cent union front bench, risks to business, economic management, tax cuts, Australian dollar, GST

TREASURER:

This week the Government announced an ambitious tax reform plan which will modernise the Australian taxation system.We laid down a five year goal which will build the capacity of our economy and allow us to employ more people and give our young better opportunities in life.

All of this would be put at risk by the election of a Labor Government.Labor has no plan for the tax system, Labor has no plan for the economy and Labor would be the most union-dominated government that Australians have ever seen.Whilst unions cover 15 per cent of employees in the private sector, the ALP requires all of its Members of Parliament to be union members.70 per cent of Labor’s frontbench are former trade union officials.And ACTU Presidents and secretaries like Crean, Ferguson and George are soon to be joined by Greg Combet.

This union-dominated Labor Government would control areas of policy of direct relevance to ordinary Australians.Education policy would be dominated by the teacher unions.Health policy would be dominated by the health unions.Energy policy – dominated by the ETU.Transport policy – dominated by the TWU.

We now have in Australia the lowest level of days lost to industrial stoppages ever recorded.And yet, a union-dominated government would open the door again to industrial disputation and stoppages.We are already seeing in Victoria nurses voting to strike and teachers intimating strike action against the State Labor Government.

It was Labor’s Deputy Leader, Julia Gillard, who warned business that politics was a contact sport.She was basically threatening that if business didn’t do what she and the trade unions wanted, they could expect retribution.That is the union way.That is what small business fears.When small business sees the union boss come into the factory or into the shop they know they are not there to help.These people regard small business as the enemy.They do not regard small business as a friend, they do not understand how critical small business is to create jobs.And a union-dominated Labor Government would be a risk to business, to jobs, to economic growth and to Australia’s economic future.

That is why the Coalition is launching a new information campaign to warn Australians about the extent of union domination in any future Rudd Labor Government.And I now ask that that information campaign be launched.

[AD PLAYS]

I think Australians would be surprised just how dominated a Rudd Labor Government would be by the trade union movement and by trade union bosses.This is a worrying thing for Australians and their future and it would be a terrible thing for the future of the Australian economy.Are there any questions?

JOURNALIST:

The Labor Party suggested that you are going to go negative early, do you have any concerns that this sort of negative advertising campaign might turn voters off?

TREASURER:

Well this is fact.This is truth.You can’t run away from this.This is the awful truth about what a Labor Government would look like.And people need to know before they cast their vote, what a Labor Government would look like and the risk that it would be to the Australian economy.

JOURNALIST:

In terms of Julia Gillard though, are you talking about her involvement in the Australian Union of Students?

TREASURER:

We are talking about her involvement as a union lawyer and as an organiser for the Socialist Forum – the Socialist Forum which was an extreme left-wing group, a large part of which were the remnants of the Communist Party.

JOURNALIST:

Treasurer, just wondering, there were a couple of headshots you had at the end of that ad – Greg Combet and Bill Shorten – their public profile in the last couple of years has been more positive than negative, James Hardie and Beaconsfield.How do you square that public perception (inaudible)?

TREASURER:

Well Greg Combet is the former ACTU Secretary.You will recall that Greg Combet was the one who said that the unions used to run the country and he didn’t think it would be a bad thing if it happened again.They were the words of Greg Combet.I have never heard such a clear statement as to why he is going into politics: ‘We used to run the country, it wouldn’t be a bad thing if we did again.’Now Mr Shorten is also a career trade union official who is a power broker in the Victorian ALP through his union.You have got to remember why the trade unionists have got so many of their people on to the Labor frontbench – they control the preselections.Bill Shorten controls the preselections in Victoria through his union and other unions, that is why he has engineered a safe seat for himself through the preselection process.And Bill Shorten is owned by the union movement just as much as every one of those other 70 per cent of ALP frontbenchers.

JOURNALIST:

In the unlikely event that Labor (inaudible) get up, wouldn’t you hope to (inaudible) economy which is union proof, that there would be nothing that a Rudd Government could do to dismantle what is a (inaudible)?Can you pinpoint some of the areas of economic policy where you think unions would undo some of your reforms?

TREASURER:

Well the first thing that they have made clear is they are going to abolish AWAs – they have made that absolutely clear – which of course would be disastrous for our mining industry.Everybody is talking now about the way in which the mining industry is helping the Australian economy – if you get rid of AWAs you will be closing down one of the really successful parts of the Australian economy.Moving back to union control in a workplace where there is one unionist, the union will have the right to become party to an award.This of course, by the way, would allow wage settlements to be passed from industry to industry and employment place to employment place.This of course would put pressure on inflation.It would put pressure on interest rates.This is the way in which previous periods of prosperity in the Australian economy actually ended, with wage claims, inflation and ultimately recession.That is the big risk and that is even before you start having the teacher unions running education policy, the health unions running health policy, the TWU running transport policy and all the rest of it.You know, this is a clear and present risk to the Australian economy and it is really quite surprising that Labor has narrowed its base so much over recent years to be so unrepresentative of the Australian community.

JOURNALIST:

Treasurer, about an hour and a half ago Julia Gillard has launched Labor’s $12 million family friendly policy to do with work and small business.It was launched at (inaudible) down in Cheltenham.Are you across that yet?

TREASURER:

Well I heard the announcement.

JOURNALIST:

Well what is your reaction to it?They say that they are committed to making family and work practices far more family friendly for Australian families.Do you think it is realistic?

TREASURER:

Well I would say this to small business.If you think that a trade union-run political party with 70 per cent of its frontbench made up of union officials is in the business of helping small business you ought to think again.None of these trade union officials who now represent the Australian Labor Party went into politics to help small business.They went into politics to help trade unions.That is why they are there.That is why motivates them.That is why they are members of the Labor Party.That is how they got through the preselection system.That is how they will get elected with the union members handing out the how-to-vote cards for them.Now, to try and overlook the elephant in the room and catch a glimpse of a butterfly would be a major mistake for small business.

JOURNALIST:

(inaudible) remaining $31 (inaudible)?

TREASURER:

I am sorry, what was the question?

JOURNALIST:

Is it okay to spend the remaining $31 billion MYEFO says is still there?

TREASURER:

Well I think, I don’t know that MYEFO says anything of that dimension.What the MYEFO says is that after fully funding and paying for an income tax cut which will cut tax for every Australian family, the Budget will still be in surplus to the extent of 1 per cent of GDP or greater.And we believe that it is important that the Budget be in surplus.That is why we have delivered ten surplus budgets.And that is why after fully funding and paying for an income tax cut, the Budget remains in surplus.

JOURNALIST:

Treasurer, can I ask a quick question on the detail of personal tax cuts?There seems to be a bit of a hollow spot (inaudible) 60 and $80,000, that income band.(Inaudible) then it sort of drops about $2 a week, I think that’s the shade out, the Low Income Tax Offset in the out years.Was there, when you were designing these (inaudible), was there a reason why you (inaudible)?

TREASURER:

No it is more the effect of the fact that people in that range are on a top rate of 30 cents.And the way in which you cut tax for people in that range is by increasing the threshold at which the 30 cent rate cuts in.Because we increased the threshold in the first year from $30,000 to $34,000, that front-end loads in the first year, and because it has still increased but not increased by as much in the second and third year, you tend to have the effect of a bigger benefit upfront trailing.

JOURNALIST:

When you published these tables, (inaudible) feedback from our newspaper (inaudible) how come I didn’t get as much as the person one being below me, is there a…?

TREASURER:

Well the answer to that George, is you know, is when you are cutting tax – and bear in mind we cut tax in 2003, 2004, 2005, 2006, 2007 and now 2008 – and when you show the latest round of tax cuts you show them off a base which has already been cut five times.And if you have cut the base five times, you know, it gets harder and harder to actually deliver additional substantive income tax cuts.So the best way of actually looking at it is historically, you saw in the historical table where we do the layers that there have been very extensive tax cuts through that region, around 30 per cent.But of course the biggest percentage cuts for low income earners around 100 per cent.

JOURNALIST:

So was that it for personal income tax cuts in this campaign or are you going to give us a bit more later in the campaign?

TREASURER:

This is fully funded, fully costed.It is a plan for Australia’s future, it has an ambitious goal to be reached in five years’ time.We can do it.

JOURNALIST:

So that is it?

TREASURER:

Well, that is the Government’s tax plan…

JOURNALIST:

That is it?

TREASURER:

…but there is an ominous silence about tax from the Opposition.And I would like actually to see if there is anything else on offer.The longer it goes, the longer it goes, day by day by day, the more I am concluding that they never had a tax plan.And they are desperately trying to think one up.

This is not an Opposition that is ready to govern, this is an Opposition caught on the hop.What Mr Rudd I think is good at, is he is good at focus group-tested slogans.He is not so good at policy.And let me tell you, if you want to be a Prime Minister or a Treasurer or run a government, it is policy that counts, not slogans.

JOURNALIST:

Isn’t is a bit dirty pool though to use the full resources of the Treasury and Government to dream up your tax plan and then expect the Labor Party to be able to do it during the election campaign without the (inaudible)?

TREASURER:

Not in the slightest.By the way, Stephen Smith said on the Sky News channel several weeks ago that the tax plan had been finished.Labor’s tax plan had been finished, it was done.So I can’t understand why it isn’t being released.He said that.

JOURNALIST:

Treasurer, the changes to tax consolidation, do you think that will affect any (inaudible) activity?

TREASURER:

Well it has been stated by the Assistant Treasurer, I think today, that those transactions that had been announced and were in the course of being completed would not be affected.So any effect that would come from that would be prospective.

JOURNALIST:

CSL today said that because of the strength in the Australian dollar it is going to wipe about $65 million from its profit next year, do you have any concerns for Australian companies operating overseas?

TREASURER:

Well the truth of the matter is if the Australian dollar increases, whilst it makes it good for Australians who are travelling overseas, it makes it harder for our exporters and of course those companies which earn income overseas when they bring it back into Australian dollars will also be affected.I acknowledge that.So the rising Australian dollar is a mixed blessing.We would rather people from overseas come and have their holidays here, rather than Australians leave here and have their holidays overseas.That would be much better for Australia’s tourism industry.But many Australians will see it the other way.They quite enjoy a strong exchange rate because it does give them the opportunity to travel overseas.

JOURNALIST:

Mr Costello the Liberal Party website states that mortgages go up I think, by $3,276 a year if a Rudd Government is elected, you might be able to correct me on the figure.How do you add that up?

TREASURER:

Well I would have to go and have a look at what is actually on the website and if I do, I will give you the information.

JOURNALIST:

But it is on your website though.You are claiming that mortgages are going to go up by a fairly exact figure if a Rudd Government…

TREASURER:

Well Sam, I will have a look at it, if you want me to have a look.You have asked me to have a look and see how it adds up.I will have a look at it and I will see how it adds up.

JOURNALIST:

The action on the tax cutting front in the last six or seven years, going back to the Ralph changes, have been on corporate tax, Capital Gains Tax, personal tax.Have you had the thought that you might bring the GST rates down, say 7½ or 7 per cent at a time of inflationary pressure?

TREASURER:

Well of course all GST goes to State Governments so that if you knocked the GST rate down, the State Governments would have less revenue.I would be very surprised if the six State and two Territory Governments agreed to that proposal, but George, let me say, if the six States and two Territories came to us and sought our agreement to cut the GST rate, well of course we would listen to them.But I don’t think between now and the end of eternity it is going to happen.Let me tell you a much bigger risk.What happens if six State Labor and two Territory Labor Governments go to a Labor Federal Government and ask for the rate to be increased?What happens then?For the first time in Australian history you have got nine Labor Governments.You need nine Governments to agree to change the rate.I don’t think the eight State and Territory Governments would come to the Federal Government asking for a cut.But if Mr Rudd is elected, I think it is very, very realistic that they will go to him and ask for an increase.

JOURNALIST:

Mr Costello, (inaudible) the cost of new houses will go up by $10,000 if a Rudd Government is elected.How do you quantify that sum?

TREASURER:

Well I think most things in the construction industry will go up if a Rudd Government is elected because the Rudd Government as we know, will be soft on building unions.It wants to abolish the ABCC.I know they have now said, oh well, they will let it go for a few years before abolishing it, but it is either good or it is bad.If it is good it should be there for good.If it is bad it should be abolished.I think it is good.Why does Mr Rudd want to abolish the ABCC?Because people like Kevin Reynolds and Dean Mighell and other militants on building sites have extraordinary influence in the Labor Party.They run numbers at ALP conferences.They control preselections.They decide who goes into the Parliament.And 70 per cent of those on Labor frontbench are union officials.Now they are, they don’t need to be all influenced by the organised trade union movement.They are the organised trade union movement, those officials.And they are now on the Labor frontbench and they would be in government if Mr Rudd gets elected.And if you want to let the unions loose back in the building industry and the construction industry, costs will rise and stoppages will increase.Thanks very much.