March Quarter Capital Expenditure, Brewers Campaign, Reconciliation, ACCC/Car Dealers

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March Quarter Capital Expenditure, Brewers Campaign, Reconciliation, ACCC/Car Dealers


Transcript No. 2000/60







Thursday, 25 May 2000

12.30 pm

SUBJECTS: March Quarter Capital Expenditure, Brewers Campaign, Reconciliation,

ACCC/Car Dealers


Well, today the capital expenditure figures were released by the Australian Bureau of

Statistics, and they show a welcome lift in business investment. In the March quarter,

business investment rose by 9.4 per cent. And more importantly, expectations of capital

expenditure for the next year, about 5 per cent higher than previous expectations. So,

this is a welcome indication that business expenditure on capital equipment is lifting,

that intentions are good for 2000/2001, and it means that businesses are ready to continue

their investment. After several years of strong investment it looks like business

investment could be continuing, even strengthening, into the next year. That’s good

long term news for the Australian economy, and continuing growth prospects. As you know,

the Government has forecast growth of 3 – per cent in 2000/2001, with continuing

employment growth and falling unemployment, and today’s figures are consistent with



Treasurer, what’s your response to suggestions that the brewers are planning a

mass campaign against the GST on beer prices? And how do you respond to complaints by car

dealers about the ACCC price guide?


Well, the brewers have been threatening to advertise against the Government for some

time now. They’ve made it entirely clear that if the Government introduces the policy

on which it was elected, they would campaign against the Government. They’ve been

showing their commercials around Canberra in an attempt to try and get the Government not

to proceed with its election policy. But, I say this, that the Government can’t be

pressured by big money interests to not introduce its policy. The brewers campaign is led

by the two companies – Lion Nathan, which is a foreign owned multinational; Fosters. These

are large corporations with lots of money at their disposal, highly paid executives,

they’ve made it entirely clear that they want the Government not to introduce its

policy or else they will try and advertise and inflict damage on it. But the Australian

Government can’t give in to money interests like that. The Australian Government will

be proceeding with its policy.


You’re not suggesting that they’re trying to blackmail the Government, are



Well, what I’m saying is, these are very large corporations with a lot of money at

their disposal which are prepared to try and use the money in an attempt to get the

Government to back off its policy. And it wouldn’t be right. I think ordinary

citizens would say that a Government shouldn’t change its policy because of money

interests. And however you dress it up, and I’m sure they’ll try and dress that

up, that they’re only sort of acting for poor beer drinkers, the truth of the matter

is they’re looking after their commercial interests. These are very large

corporations willing to spend a lot of money to defend their corporate interests.


Treasurer, why have you decided not to go on the Reconciliation Walk on Sunday?


Well, I’m going on the first day of the Corroboree, which is the Saturday, and

that is the main day, I think, where we’re having speeches from both sides. I intend

to be there, and I think one day shows my interest and concern rather than the necessity

to go on two days.


But are you concerned that your non-participation in the symbolic culmination of the

Council’s efforts will send a negative message to the community about the

Government’s commitment to reconciliation, in light of the fact the Prime Minister is

also not attending the walk.


No, I don’t think so. I am participating as far as I’m concerned. I have

changed my schedule to go to Sydney on Saturday to participate in the main day, the

speeches by the Reconciliation Council. I’m not able to do everything at once, but

I’m doing that because it indicates that I believe reconciliation is important.


Did the Prime Minister ask you not to walk Treasurer?


The Government position is that two Ministers, Mr Ruddock and Mr Herron, will be

representing the Government, and I’m quite comfortable with that. And I’ve

decided to participate in the events on the Saturday.


You haven’t answered my question.


Oh, ask it again Mr Bongiorno.


It was, did the Prime Minister ask you not to walk on the Sunday?


Look, I’ve discussed this with the Prime Minister, and I’m comfortable with

the decision of the Government, which is that Senator Herron and Mr Ruddock will represent

the Government. I’m entirely comfortable with that . . .


What . . .


. . . and I’m showing my support by going on the Saturday.


What did the Prime Minister put forward as reasons why you or other Ministers beyond

the two, who you’ve named, should not walk across the bridge?


Well, I think that rather assumes that reasons were put forward, Jim. Let me make it

entirely clear, that the Government’s position is that Mr Ruddock and Senator –

there’s Mr Ruddock there. I’ll start again. The Government’s position is

that Mr Ruddock and Senator Herron will be representing the Government. There will be

other members of the Liberal Party that will be walking across. I’ve decided that I

can best partake in the events by going on the Saturday, that’s all there is to it.


Geoff Clarke from ATSIC has said, that really there needs to be a lot of participation

from the community and the broader community in the walk to make reconciliation

successful. Do you think that the fact that there are only two members of the Government

participating could undermine the efforts?


I think there will be more than two members of the Government participating. There are

two Ministers that are representing the Government. But as I understand it, there will be

other Ministers and other Members of Parliament from the Liberal Party that’ll be

part of that. But at the end of the day, this is a two day Corroboree. The Saturday, as I

understand it, is the official programme where people from ATSIC, and people from the

Reconciliation, and people from Government talk. And on Sunday it’s, if you like, a

peoples day where everyone can participate. So, I hope that people do participate on the



But you had said that you wanted to walk Mr Costello.


No, I said, no, no, I had said . . .


You have indicated you would walk…


No, no…


. . . if your schedule permitted and was appropriate.


That’s right. I had said that I’d be happy to do it if my schedule permitted

and it was appropriate. And I’ve . . .


So which of these doesn’t apply?


. . . I’ve decided that it’s more appropriate for me to participate in the

main day on the Saturday, which is, after all, the formal event.


Mr Costello, getting back to your poor beer drinkers, there’s quite a lot of them

going to be thinking they’re shouting you a beer or two after July 1.


Well wait on. What the Government said before the election, let’s get this

entirely clear, was that it would apply the GST and change the excise rate in such a way

that packaged beer moved by 1.9 per cent. And that’s what it’s done. If you have

a served beer, which has a service component, with a higher value-added price, it moves

the price more. We think by about 7 per cent. Now, at the end of the day beer drinkers,

beer drinkers have more money to spend on their beers because they’re getting income

tax cuts, family assistance, pension rises, more money. The Brewers idea that regardless

of what we promised in the election, we should now introduce a totally new differential

excise regime which distinguishes between bottled and draught beer, because the one iconic

product in Australia that can never rise in price, is a beer across the bar. The Brewers,

apparently, are quite happy for childrens’ clothing to rise in price. What the

Brewers say, is, it’s only a beer across the bar that can’t rise in price. And

I’d say in relation to childrens’ clothing, people have more money to spend, and

I’d say the same in relation to beer. Now, the Brewers have been saying – alone of

the business community – they don’t accept the implications of tax reform,

they’re in a special case, either because they’re such large corporations, or

because they require such enormous profits, or because they have to pay their executives

such high salaries, that they alone have to be exempted from taxation reform. And the

Government is not going to be intimidated by money politics. And frankly, I’m very

surprised, I’d be very surprised if the Democrats get intimidated by money politics.

And what would you say at the end of all this, if you said, well, money politics from

Gordon Cairns and Ted Kunkel achieved a change in their product, who speaks for the

children of Australia? Because they didn’t have money politics speaking for them,

then tax reform applied in relation to childrens’ clothing? You can’t have a

situation like that. And this is the first big test, as I see it, of money politics . . .


Is it . . .


. . . in Australia trying to get a Government to change an election policy. And for my

part, I think it’s important that the money politics of Lion Nathan and Fosters

Brewing doesn’t succeed. Because if it does, politics in this country will just go to

whichever corporation has the largest resources, and I don’t think that will be good

for Australia. It might be good for those corporations.


Treasurer, will you encourage the ACCC to prosecute car sellers if after July 1, the

price of new cars rises rather than falls, as has already been indicated in some newspaper



I will encourage the ACCC to properly administer its statute. Now, its statute provides

this. That if somebody engages in false and misleading conduct, that is an offence. False

and misleading conduct occurs where you put a price up, or you decline to take a price

down, and you say it’s a consequence of tax changes when it’s not, when

it’s not. And that’s a matter to be investigated and prosecuted. And that’s

the brief that the ACCC has. Now, if people are complying with honest conduct, if they are

passing on the effect of tax changes in full, and if they are being very honest about it,

and they don’t commit an offence, than they shouldn’t be subject to prosecution.


So if prices should rise as a result of the operation of the market, that’s not an

offence, is that right?


If a price rises because raw materials change, or competition changes, or . . .


Or the market changes.


. . . or some reason other than tax, and you make it clear that the price is rising for

some reason other than tax, that is not an offence. What is an offence, is if a price

rises for some other reason, such as a profit margin, or something else, and you say to a

consumer, oh, that was a consequence of tax. That is false and misleading conduct. That is

an offence. But if businesses are honest with consumers and they say, this price is going

up because we wanted to increase our profit margin, or they say, this price is going up

because the cost of our raw materials has increased, or this price is going up because the

exchange rate has changed, that’s not false and misleading conduct. What is false and

misleading conduct is if the price goes up, and you say that is a consequence of tax

change. And the ACCC can investigate in that situation.


(inaudible) Mr Fels realistically then say, predict that the price of cars will go



What Mr Fels can realistically say is, all other things being equal – competition,

raw materials, exchange rates – all other things being equal, the tax change itself,

everything else was equal, the tax change itself would reduce the price. And that’s

what he’s saying. And I think it’s very important that people understand it. The

tax changes are one component of prices. In prices there are a whole host of other things

– exchange rates, you know, which feed into oil prices; profit margins; competition; raw

materials. And prices are always going to be influenced by all of those things as they

always have been. But, what you can say is, all other things being equal, if everything

else was the same, that the tax change would have that effect, and that’s what

they’re saying. Thank you.