Transcript No. 99/52

Hon Peter Costello MP

Doorstop Interview

Thursday, 8 July 1999

4 Treasury Place, Melbourne

12.35 pm

SUBJECT: Royal Assent for GST Bills, US lamb imports, employment, Brighton, car prices

TREASURER:

Well, today’s a very important day in the implementation of Australia’s new

tax system because today, the main GST bills received Royal Assent. And that means two

things follow. In 21 days time wholesale sales tax rates start falling. The 32 per cent

rate comes down to 22 per cent, 21 days from today. And that should mean that from 21 days

from today, items like watches, clocks, cameras, binoculars, tape recorders, video

recorders should be falling in price. The first wave of tax cuts arising from the

Government’s new tax system commences in 21 days. The second thing is, for all

businesses today is a very important day, because contracts that they enter into from

today have to make provision for GST, if the contract is going to be performed after 1

July 2000. This is a very critical day for businesses. Any contract that they enter in

from now on, which is going to be performed, they’re going to supply goods or

services after 1 July 2000, GST will apply after that date and they should be making

allowances for it in those contracts that are to come into effect after 1 July. So, today

is a great day in terms of the implementation of the tax system. Businesses have to start

factoring this into their decisions. Wholesale sales tax rates start to fall. We’ve

seen some wonderful news in relation to employment here in Australia today. The

unemployment rate has fallen now to a decade low of 7.2 per cent, 62,000 new jobs in

Australia in the month of June. Nearly half a million new jobs in Australia since March of

1996.

And you’re seeing now the benefits of reforms that were put in place three years

ago. And it’s the reforms that we’re putting in place now that will give

Australia the capacity to continue to grow and create jobs in the years which are to come.

And of course, the biggest reform that we’re now putting in place is tax reform.

Has the jobless rate bottomed?

Well, I’m very encouraged by today’s results. 62,000 new jobs for the month,

nearly half a million since the Government came to office in March of 1996. And what you

see now working out in the job market is extraordinarily strong growth. As Australia has

led the world in growth in the last year, you’re seeing it reflected in jobs. And if

we can keep growth continuing and if we can engage in the big structural reforms, tax

reform, industrial relations reform, I think as I’ve said before, in the years to

come, you’re going to see even better results in relation to the job market. But it

will only happen if you keep the reforms going. You’ve only got this because of the

reforms three years ago. What you’ll get in three years time is because of the

reforms you engage in now.

What impact will a GST have on jobs?

Well, what GST will do is, it will give us a broad base to fund social services in

Australia. It will also help our export industry and it gives us the capacity to abolish

other job destroying taxes like wholesale sales tax, like financial institutions duty,

like stamp duties on shares and the like, and to get a competitive economy. And a

competitive economy, a growth economy, is a jobs economy. Let’s be quite open about

that.

How much impact will the US lamb decision have on our exports?

Well, the Australian Government deplores the decision of the American Government to put

quotas and tariffs on Australia’s lamb exports. Look, these were exports which

Australians created. It was an export market which our producers generated. And the

Australian Government protests in the strongest possible terms and we have notified that

we will be going to the World Trade Organisation, lodging complaints with the World Trade

Organisation. And Australia’s lamb producers will have every support from the Federal

Government in protecting those markets.

Why doesn’t the Government consider retaliatory measures?

Well, we are a food exporting country so we don’t want trade barriers on food. If

countries put barriers on our food and we put barriers on their food, because we are a net

exporter we’ll lose more than they will. So, what we want is to stop barriers. Not to

impose them, but to stop them. And that’s why we’ll be protesting in the

strongest possible terms and going to the World Trade Organisation.

Treasurer, what does the Liberal Party constitution say about members in relation to

preselection?

Well, it just says what it says. I mean, you can all read it.

Do you think the Premier’s breached the constitution?

I’m not getting into those sorts of questions. I mean, you can all read it for

yourselves.

Is the battle of Brighton splitting the Party, Treasurer?

Well look, I’m here today to talk about a new tax system and I’m here today

to talk about Australia’s best employment results for a decade. And I like to stay on

the big issues. This is a great day for Australia. Lowest unemployment in a decade, Royal

Assent on a new tax system, and we’ve got the opportunity to build a new tax system

which I’m spending every waking hour engaged on.

So it’s a big issue if a Minister of the Crown get splattered against the wall in

a preselection fight though, isn’t it?

Well, as I said, look I’m not commenting on that. I’ve said I wouldn’t

and I won’t.

So the fate of Ministers . . .

No, hang on . . .

. . . is not a big issue?

. . . hang on, hang on. I said I wouldn’t comment on it and I haven’t and I

won’t.

Is that because of . . .

No.

. . . the constitution (inaudible)?

No, well no. No point in asking . . .

You’ve commented on it before though, Treasurer.

. . . there’s no point in asking further questions. I said I wouldn’t comment

on it and I won’t.

Would you like to see Mitch Fifield win on Sunday?

I said I wouldn’t comment on it and I won’t.

You have commented on it before Treasurer.

I said I wouldn’t comment on it, I won’t.

Well, why not?

Anyone want to talk about employment?

How about cars?

Sorry?

Did anyone ask you this earlier, whether you’re thinking of any easier way for the

car industry to deal with the GST?

Well look, the thing about those industries which are subject to wholesale sales tax,

is that, as wholesale sales tax is abolished their products will become cheaper. And we

have in place a way in which the price reduction is stepped down, particularly for

business in relation to cars. You deny input credits in the first year and then you step

down the input credits for business. Now the good thing about the car industry is that

it’s in very good shape, we’ve had some record sales. And I think long term,

with the abolition of wholesale sales tax, it will get even better. So, I think there are

good opportunities out there for our car industries and I think they’re going to have

wonderful export opportunities, in particular, in the years ahead.

But they have to wait until July 2000 for the lower tax to come into effect?

Well as I say, over the period of transition the price reductions will be stepped down

and that will provide an adjustment process. But, in the long term a reduction of

wholesale sales tax will help our manufacturing industry and full rebate for input taxes

on exports will be of particular advantage to the export of cars. So, this is a great tax

package which is good for the car industry.