Doorstop Interview

Ministerial Entrance

Parliament House, Canberra

Friday, 30 March 2007

9.10 am

SUBJECTS: Meeting State Treasurers, cutting tax

TREASURER:

Well, I look forward to the Intergovernmental Finance Ministers’ Meeting today which will be distributing between the States record amounts of GST, $41.8 billion, including this year, for the States, a $3.3 billion windfall.

Now with record amounts of GST being distributed to the States, plainly the reduction of other indirect taxes as agreed between the Commonwealth and the States can and should proceed.  And I will be standing up for Australian taxpayers.  There will be someone in the room today on behalf of Australian taxpayers pleading their case for a bit of tax relief and that will be the Liberal Government, that will be me.  The States have got all sorts of reasons why they do not want to cut taxes, but cutting taxes is not a bad thing.  It is a good thing.  It is not like having a tooth pulled out.   It is something that people will welcome and it will actually be good for the economy.

And, to have the opportunity to cut taxes is a good thing and we ought not to miss it.

JOURNALIST:

John Brumby has just told us that, you know, that while the amounts might be at record highs, as a percentage of gross national product, States have never been worse off.

TREASURER:

Every indication, including all of the papers today show that every State is in a windfall position.  And, if you want the proof of that, to my knowledge no State will be today offering to give back its GST, which presumably it would be doing if it was worse off under this system.

JOURNALIST:

Do you dispute these figures that now at 5.2 per cent of GDP rather than 6…..

TREASURER:

They don’t dispute these figures, these figures are wrong, completely wrong.

JOURNALIST:

So what is the share of GDP then?

TREASURER:

The share of GDP that the States are getting is 6.6 per cent.  This is completely wrong.

JOURNALIST:

So for the States…

TREASURER:

I don’t know where the figure comes from, but the Western Australian Government has produced the figures for this Council and what they show is that the SPPs have gone up.  So, you know, they will try and blindfold you with a lot of figures today including the suggestion that they are all worse off, but here is the proof in the pudding.  If a State is worse off why doesn’t it give its GST back?  Why doesn’t it demand to go back on the old system.  I will tell you why, because they have never had so much revenue and with this revenue, everybody in Australia knows this, the GST was introduced in order to cut other taxes and we ought to cut the other taxes.  The States, some of the State Labor Governments, carry on as if cutting taxes is a bad thing, like having a tooth taken out.  Cutting tax is a good thing.  People actually welcome it, they will actually like it.  And, what is more, it will be good for the economy.

JOURNALIST:

Well, if it is such a good thing, your revenues have also never been better, will you be cutting taxes again in the Budget?

TREASURER:

Well, I cut taxes by $36 billion last year, and I think people would welcome that.  There will be further tax cuts from 1 July as the cuts in superannuation tax take effect so cutting taxes is not a bad thing, cutting taxes is a good thing, that’s what good Governments do.  It shouldn’t be something you have to be dragged, kicking and screaming to do.  The public will welcome it and it will be good for the economy.

JOURNALIST:

Sounds like a good advertisement for another tax cut.

TREASURER:

Well, the Federal Government cut income tax in 2000, 2003, 2004, 2005, 2006.  So you know if you can cut tax that is not a bad thing.  The State Governments, they ought to try it.  If they tried it they would find that it is not a painful thing.  They might just enjoy the experience.

JOURNALIST:

So, what more can you do to pressure them to cut the taxes?

TREASURER:

Well, I give this assurance to the Australian taxpayer, we will be in their corner.  We will be arguing for the implementation of the GST deal in full.  Which is that the GST was to replace ten State taxes.  Just imagine if you didn’t have any Liberal Government in that room.  Who would argue the case for the taxpayer then?  That is the risk you have, if you have Mr Rudd in that room taking his orders from State Labor leaders.

JOURNALIST:

Treasurer, the dollar is still riding high, how much room do you think the Reserve Bank has on another rate rise at the moment?

TREASURER:

Well, I don’t think exchange rates are the determinant of monetary policy in Australia.  The determinant of monetary policy is our inflation target.

JOURNALIST:

…Australian dollar coming up and petrol prices are already on the rise is there anything the Government can do to stop motorists being hit from what seems to be just like an annual present they get every Easter?

TREASURER:

We will ask the ACCC to vigorously monitor prices in the lead up to Easter, and if they find any evidence of price fixing, they are entitled to prosecute and they have successfully fought some prosecutions and achieved very large fines against those people that have been found to be price fixing.

JOURNALIST:

Treasurer, would you consider withholding money if States only [inaudible]?

TREASURER:

Look, we will argue the case for the Australian taxpayer.  We will be in their corner.  Everybody knows the GST was introduced to abolish other taxes, and we will be reminding the States that that is their obligation, but not just their obligation.  If the State Governments tried cutting taxes they might actually find that the public enjoys it, they might find it is not the unpleasant experience that they feel, and they might find it is actually good for the economy.  Thanks.