TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with Alexandra Kirk
ABC PM

Monday, 20 October 2003
5.10 pm

SUBJECTS: Labor’s Tax Proposals, Baby Bonus, Ethanol, Fuel Subsidies

PRESENTER:

Well, the Government has wasted no time at all in attacking Labor’s plans.

Treasurer Peter Costello has been speaking to Alexandra Kirk.

TREASURER:

When it says “savings,” what it means is, it is going to get

money with tax rises.

KIRK:

He said it won’t increase taxes though.

TREASURER:

By taking away the Baby Bonus, you are putting up the tax on mothers,

because the Baby Bonus allows mothers that come out of the workforce

to average their tax and get a tax reduction. If you take that away,

you are increasing tax on mothers.

Now, ethanol, what the Government did, is when it said that there would

be a 38 cents a litre excise on ethanol, it paid a production subsidy

to the Australian producers, so effectively there would be continuation

of a zero tax rate. If you keep the excise on but take away the production

subsidy, it is a 38 cent a litre tax rise on ethanol. Third area, if

you take away the fuel sales grants at 1 cents and 2 cents, which is

to equalise out the current taxation regime on petrol, it is a tax rise

for people in rural and regional Australia. So, let’s not dress this

up as so-called savings, Labor is proposing three tax rises. Now, anyone

can propose tax rises, but they ought to be honest about it and come

out and say they want higher taxes. The first step that they make, three

in one day.

KIRK:

But they say they are not going to increase the tax burden across the

board, that they will for example in the case of the Baby Bonus, they

will replace that with a paid maternity leave scheme. Isn’t it up to

them really to say what programs they will put in their place and offer

an alternative to the Government?

TREASURER:

What Labor is proposing to do is to increase taxes. At the moment, under

the Baby Bonus scheme, that if you are a working mother and you go out

of the workforce, you can average your income over five years and get

a tax reduction. They are taking that away.

KIRK:

If they are offering paid maternity leave to women who want to go back

into the workforce, or those who want to stay at home, that is another

alternative and it might in the end have the same financial effect, mightn’t

it?

TREASURER:

No, what you would be doing then is you would be saying, we want to increase

taxes and at the same time we will be increasing spending, but you are

increasing taxes. Let’s not call these savings. It is an increased tax

on working mothers, as an increased tax on ethanol and an increased tax

on petrol. Now, Labor ought to be honest, and instead of coming out and

saying it has savings proposals, it ought to be honest enough to say

it has tax rise proposals. So, we are not within sight of the election

and Labor comes up with three policies, three tax rises. People ought

to know that this is Labor’s agenda, it may well have an agenda to spend

more as well, but let’s be totally open about this, this is a tax rise

agenda.

KIRK:

But if you take away the subsidy for example, on ethanol, you are not

increasing taxes because currently the ethanol industry is in fact paying

an excise, isn’t it, it is just that, that is being offset by a subsidy?

TREASURER:

Well, at the moment, there is an excise of 38 cents, and a production

subsidy of 38 cents so that the product is not taxed. If you take away

the subsidy, the production subsidy and leave the excise in, the tax

rate rises to 38 cents a litre.

KIRK:

It is not on across the board tax rise though, is it?

TREASURER:

Well, it is an across the board tax rise on ethanol. Now, anybody can

raise money by increasing tax from zero cents a litre to 38 cents a litre,

but stop calling this a saving, it is a tax rise.

PRESENTER:

Treasurer, Peter Costello.