Interview with Neil Mitchell

3AW

Thursday, 12 May 2005
8.35 am

SUBJECTS: Tax cuts

MITCHELL:

Federal Treasurer Peter Costello, good morning.

TREASURER:

Good to be with you Neil.

MITCHELL:

Will we get backdated tax cuts?

TREASURER:

Well, there will be no need for any problem at all if the Labor Party votes

for the tax cuts. Now we announced the tax cuts on Tuesday night, they are due

to come into effect on 1 July, the start of the financial year. Australians

want a tax cut. The Government believes that the tax cut is affordable. I am

introducing in 25 minutes the Bill into the House of Representatives to cut

tax and if the Labor Party has the decency to vote for the tax cut there will

be no problem.

MITCHELL:

What if they don’t? What can you do? What will you do?

TREASURER:

Well plan A is for the Labor Party to see sense.

MITCHELL:

Yes.

TREASURER:

Plan B is it is possible that some of the Labor Party will absent themselves

from the vote. Mr Beazley needs every one of his members to turn up and vote

against the tax cut to block it. There was a suggestion this morning on radio

that some of the Labor members themselves are so incensed about this that they

may just not turn up and vote. And if any two or three of them don’t vote,

it will go through.

MITCHELL:

What about plan C, if it is blocked in the Senate?

TREASURER:

Plan C, and I’ve had crisis talks with the Commissioner of Taxation last

night is to see whether he would be prepared for employers to collect less tax,

that is to give the tax cut on some kind of assurance that the tax cut will

eventually be legislated by the new Senate.

MITCHELL:

Gee, that would be messy wouldn’t it?

TREASURER:

Very messy. Extremely messy. And he doesn’t even know if that can be

done. And I’m awaiting formal advice from him this morning.

MITCHELL:

You’ll obviously get it through the Senate eventually, once you’ve

got control of the Senate.

TREASURER:

Yes.

MITCHELL:

Is it legally possible for you, if all else fails, to backdate the payment?

TREASURER:

Well I’ll give this undertaking, I will do everything possible to ensure

that Labor can’t deny people their tax cut. I give you that undertaking.

I didn’t expect this. It didn’t occur to me for a moment that the

Labor Party would try and stop tax cuts and I’ll do everything possible.

It may even be possible – I don’t know we haven’t looked at this

– to recall the Senate. You see, the Senate isn’t sitting until August.

But I don’t want it to get to that. I just say to Kim Beazley of the Labor

Party, for heaven’s sake, the tax cut is going to go through one way or

another, why just try and delay it. I really for the life of me I can’t

see why he is doing it.

MITCHELL:

I see your point. The Senate doesn’t sit until August. Even though you’ve

got control of it, you can’t get the legislation through until then.

TREASURER:

That’s right.

MITCHELL:

And by the time it gets through, people could miss out on a couple of months.

TREASURER:

Well, that’s right. The new Senate sits on the 9^th of August.

The tax cut is due to take place on the 1^st of July.

MITCHELL:

So you’d be looking at the end of August.

TREASURER:

Well that’s right. So we are very confident we can get this tax cut through

once Labor loses its control of the Senate. It’s just that the Senate

isn’t sitting until August and we want the tax cut off from the beginning

of the financial year, 1 July. So, you know, this is the point for Mr Beazley.

The tax cut is going to go through. He can’t stop the tax cut going through.

The only thing he can do is delay people getting their tax cuts. Why he would

want to delay people getting the tax cut which he can’t stop is beyond

me.

MITCHELL:

I know you need to get away but any idea what two months worth of tax cuts

would be worth to the Australian people. If it’s delayed two months, what

does it cost them?

TREASURER:

Well, next year the tax cut is worth about $3.5 billion. Two months worth would

be a sixth of $3.5 billion, what’s that? $600 million.

MITCHELL:

That’s what’s at stake.

TREASURER:

That’s what’s at stake.

MITCHELL:

Thank you for speaking to me.

TREASURER:

Thank you, Neil.