Oil prices, economy, GST – Doorstop Interview, Hyatt Hotel, Canberra

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Oil prices, economy, GST – Doorstop Interview, Hyatt Hotel, Canberra

Doorstop Interview

Hyatt Hotel, Canberra

Saturday, 25 June 2005

SUBJECTS: Oil prices, economy, GST


…is there something you can do on petrol taxes particularly on the excise?


Excise is fixed, excise is fixed at 38 cents and it does not move, regardless

of the price of petrol. The thing that moves the price of petrol, of course,

is the world oil price. You have seen that world oil prices have gone up over

the course of the last month, they are at the highest dollar levels they have

ever been. This is principally because of world factors, the supply and demand

on the world stage. It is not good for the economy that oil prices are so high

and it is not good for motorists. But, unfortunately until you see the world

oil price come down petrol prices will remain high.


But what more can the Government do, what more can anyone do to keep the (inaudible)?


Well, the only thing that will keep petrol prices lower is if the world oil

prices fall. If supply is increased, particularly in countries like Nigeria

where there have been civil disturbances, there has been some talk of OPEC increasing

production and that would help, but these are international factors.


You will not look at changing the excise?


The excise is fixed. The excise that applies is 38 cents a litre, we cut it

from 44. It does not rise with inflation, and in real terms it declines year

after year.


…the Prime Minister be seeking when he goes to the United Sates next

month, what advice can the United States give Australia on this issue?


Well I do not know that we look for our advice from the United States. When

he goes to the United States he will be engaging in discussion with President

Bush on matters of national security and I imagine they will be discussing developments

in Iraq and important issues on the alliance between the United States and Australia.


He will also be talking to Greenspan. The Prime Minister seems to indicate

he will be asking for advice from Alan Greenspan. What sort of advice could

he possibly give?


I’ve had many discussions with Alan Greenspan, and when you have these

discussions you discuss the nature of the world economy, developments in the

two countries. They would be discussing the US economy. And I think Dr Greenspan

would probably be firmly focussed on how Australia is in a much stronger financial

position than the United States because Dr Greenspan has warned about the US

Budget deficit which is very large in the United States, unlike Australia which

has a Budget surplus. And I think actually Mr Howard would be able to share

a few things with Dr Greenspan while he is over there.


Treasurer, given the tax cuts that you have given out in the last Budget and

the surplus that the Government still has and the high price of petrol, is there

room to cut that 38 cent level further?


Well the Government cut it. We cut it from 44 to 38. It used to be indexed.

If it hadn’t have been cut and it had been indexed, it would probably

be well over 50 cents by now. We have cut it to 38 cents and I think that was

a responsible policy. It was a policy that we put down in the year 2000.


(Inaudible) double taxation, Treasurer. We have excise and then the GST floating

on top.


No, that is why we cut it Paul. We cut it from 44 to 38 so that as a consequence

of that the tax was less. Not more, less.


Treasurer, the Prime Minister said this morning that when it comes to reform

he feels like he is running a race where he never gets to the finish line. Do

you ever get that feeling in politics?


Oh absolutely, reform never stops. You have seen how our country declined through

the 70s and the 80s and the early 90s. You have seen how our country has come

back through the 90s and 2000s. We climbed the world economic ladder through

the late 1990s and into 2000. But we will not stay at the top of that ladder

if we do not continue reform. It is the reform that got us there, it was getting

our budget into surplus, retiring debt, cutting interest rates, bringing in

the GST, cutting income taxes, halving capital gains tax, cutting company taxes.

All of those things made us climb up the ladder, but if we do not continue with

industrial relations reform, with pro-competition we could just slide down the

ladder again and reform has to keep on going.


Will John Howard ever reach the finish line do you think Treasurer?


We are all working on reform, Jason, all the time. This is a great reform task

that we are embarked on and the greatest reform for the Australian economy at

the moment is industrial relations. I cannot say to you how important this industrial

relations reform is going to be.


Do you share the same dream as the Prime Minister, that recurring dream that

in politics you will never quite get there, you are always trying?


Well, look, let me tell you, Paul, when the first man ran through the four

minute mile barrier, it was the fastest mile ever run. If you ran a four minute

mile today you would not even get to the Australian national championships.

The standard goes up all the time, the economic reform never stops. We climbed

the ladder because we started reforming the Australian economy, if we want to

stay there we have got to keep on going. Thank you all very much for your time.


(Inaudible) you would be announcing some increased responses to some of those

recalcitrant states, can you expand on any of those?


Well, the State Governments receive all GST revenue. They receive that GST

revenue, as part of a deal under which they agreed to abolish other taxes. Taxes

like stamp duties on mortgages. Now, they cannot have both. They cannot have

the GST and the taxes it is designed to replace. Some States are making good

progress, other States are making no progress. We have to fight for the Australian

public here to get lower State taxes. Because the Australian public was promised

that with the GST they would get lower State taxes We have to fight with those

States, and we will be announcing measures that will help people in those States

get the tax cuts that they deserve.


Something specific to WA and NSW?


We will be announcing something to help get people get the tax cuts they deserve,

particularly in states like NSW and WA, but some of the other States have got

to go faster too.


So you cannot expand on that now? What those measures will be?


Well if I expanded now there would be no surprise for you later on Stephanie.

I have got to keep you interested and engaged and give you a happy second half

of the year. Thank you all very much.