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Trade figures; economy; drought; financial markets; new economy; irrigation; income tax; GST; superannuation; noise levy; Ansett levy; insurance levy


Interview with Alan Jones, 2GB
Tuesday, 30 July 2002


SUBJECTS: Trade figures; economy; drought; financial markets; new economy;

irrigation; income tax; GST; superannuation; noise levy; Ansett levy; insurance



Treasurer good morning. 


Good morning Alan.


Thank you for your time.  I suppose you would have been disturbed yesterday

about those trade figures?


What they showed is that exports had come off and that had been particularly

in the area of rural exports.  What I think you are seeing now is you are

seeing, to some degree, the effects of drought come in, and that was a worrying

trend in relation to those exports.  Imports were pretty strong and capital

imports were pretty strong.


But when you’ve got a trade deficit for June of $1.09 billion and you have

got eight consecutive trade deficits, this really is debt and it’s got to be

funded somehow which is a significant concern.  Does this mean you have

got to slow down the economy, to slow down imports, because they are talking

about agricultural income being reduced by about 40 per cent as a result of

drought?  I mean managing the economy with those figures represents a whole

new challenge doesn’t it?


Oh, managing the economy is also very hard, it’s always hard.  You have

got the volatility on Wall Street, for example, huge volatility.  You have

got difficulties in relation to trade…


Do you see that, an end in sight there?


Well, Wall Street was, had a bit of a floor put under it overnight but, Alan,

I think there is a lot of concern about American companies and their reporting

practices, I really do.  And a lot of people have lost an awful amount

of money and if that flows back into the United States economy, which was in

recession last year, and that will have an effect on the United States economy,

how will that affect us?  Well, Americans will be able to buy fewer Australian



Yes, yes, but it’s only about six or seven months ago, isn’t it, that you were

being criticised and John Howard was being criticised for being managers of

an old economy, you had to get with it, you had to get with it, it was the new

economy and you were out of date.  Now all, I suppose, we can say in Australia

is thank God for the old economy.


Well, I, you know, I’d love you to go back and to pull out what some of the

so-called experts were saying 2 years ago about Australia and its prospects,

about how we had to be more like the United States, how what we needed was a

great technology rush like the United States.  And of course, they were

advising this policy on Australia just at the time that the technology bubble

was peaking in America and days before its crash.  You don’t hear any of

those experts, and you and I know who we have got in mind, demanding that we

get high-tech stocks going in Australia anymore.  It would have been precisely

the wrong thing to do.  What I was always saying back then is, what you

want is a balanced economy so that you can ride out international changes. 

The best kind of economy…


You want something that’s safe when the bad times come.


…best kind of economy is one that’s balanced between rural, mining, services,

finance, and yes, you need your technology companies that can give productivity

to all of those other industries.  But this idea of getting out of all

of the old industries, like agriculture and mining because they were weighing

us down, was nonsense then, it’s nonsense today and I think most people now

realise it.


Treasurer you mentioned drought.  Income in the agricultural sector on

those figures yesterday was forecast to drop by more than 40 per cent. 

Could I just read you one or two emails which are coming to me with great frequency,

and I’d like your comment on it. 

“Alan, I have listened to you for years now talking about watering Australia,

and the thing I don’t understand why it appears it was such a blatantly obvious

issue, nothing is being done.  This I believe is the most important issue

Australia faces.  The potential benefits from watering Australia may well

be beyond anything else we have seen or will ever see.  People become politicians

to make a difference.  One day I hope one of them will take this on board

and through the collective minds of engineers, scientists, environmentalists,

and social engineers will make this happen.  I can’t believe past and present

politicians have let this opportunity pass, but someone ought to become a folk

hero and make the greatest difference you have ever seen.  I would be interested

in you interviewing people with different opinions on how best to water Australia.”

What do you say about that and should we be putting some of our money in this

volatile investment environment, into, say, Government bonds, rather than some

of those high falutin’, high-tech avenues, to be used for investment in projects

which will make productive Australia more productive, and unproductive Australia



Well, I think there is room for a lot of investment in water, and in Australia’s

environment, and a lot is going on.  You have got to remember this, $1

billion out of the Telstra sale was put into the Natural Heritage Trust and

a large proportion of that went to the Murray-Darling Basin to try and fix up

some of the water flow problems in our greatest river system, which is the Murray-Darling

Basin.  We have now got a programme going on salinity, because salinity

is such a terrible problem for Australia.  And we are also trying to negotiate

water rights, well, really the states are primarily responsible, but we are

trying to encourage them to negotiate water rights for those great river systems. 

Let me say Alan, one of the great problems in Australia, is that if you are

upstream you can take your water rights, and if you’re downstream you can be

affected by all of that.


But see, isn’t the problem, we have got plenty of water.  Here we are

in the middle of drought, and I don’t know whether…you’re going shortly next

week to have a look at all of this in Queensland and you would be horrified

by what you see.  I mean cracks in the ground that you can’t ride a bike

over.  Now we have got a stack of water in the Ord River, in Lake Argyle,

in the Daly River, in the Burdekin River, in the Clarence River, why can’t we

take that water from where it is to where it’s needed so that next year and

the year after we aren’t fighting drought like we are fighting it today with

our hands behind our back?


Well, I’m not speaking against any of those schemes but I am making this point,

we have all seen the water in the Murray-Darling Basin, which would be our greatest

river system…




…and I don’t think we’ve been managing that water very well.  And I

think we have to improve the management out there…


We should dam it upstream and flood it when we need it, we wouldn’t have the

salinity problem.  I mean, don’t we need a big Snowy Mountains project

which would capture the imagination of Australia, increase our population capacity,

broaden our productivity base, and de-centralise our population?


Well, the Snowy River is a good example.  I think, you know, it was a

great project for its time.  I am not sure we got the environmental flows

right on the Snowy River.  There are a lot of people, actually, that think

that we ought to have more water going down the Snowy.  For example, you

have got to be very careful about the environmental effects of these schemes. 

Now I am not arguing against the schemes, I am just saying…


(inaudible)…to dam the water when we get it and use the water that we’ve



…I’m just saying, you have got to make sure…


You’ll see people next week when you go to Queensland with no water, you can’t

do anything without water.


Absolutely, and I am saying we have got to be very careful with the resources

that we have got.  And I am not sure that we are managing them well, and

the Government is putting an awful amount of money in to trying to get that

right, so I agree with you. 


Treasurer, do you reckon a person on $60,001 a year should be paying 47 cents

in the dollar in tax?


Well, under my tax plan they wouldn’t be.  We tried to lift that threshold

to $75,000 as you recall and it was defeated in the Senate.


But $50,000 you (inaudible) 42 cents, $50,000?


Yes, well, you recall that the Labor Party said that they wouldn’t allow the

increase in that threshold and they were joined by the Democrats, so, that is

why the threshold is at $60,000.


But see in Britain the top tax rate of forty…


You asked me whether I agree, patently I didn’t.  I had a tax plan to

change that and it was defeated in the Senate, so, I can’t turn round now and

say the Labor Party and the Democrats were right.  No, they defeated our

tax plan, that’s why the threshold’s at $60,000.  I wanted to take it out

to $75,000.  The only thing I can say is that before my tax plan was butchered

it would have been only $50,000.  So we managed to raise…


But even so, even so, in Britain, at 40 cents in the dollar you would have

to earn $255,000 Australian dollars before you paid 40 cents in the dollar. 

There’s not much of an incentive here to make a quid, is there?


Well, look, I think this is a very good economy to make an income, Alan, and

I am going to make that point at the outset.  You make the point that that

top threshold cuts in low, obviously I have to agree with you because I tried

to raise it.


Why not index the thresholds?


Well, I tried to raise it to $75,000…


But index the thresholds…


…but you have got to remember this, Alan, tax law has to pass the Labor-controlled

Senate.  A lot of people say to me, why don’t you fix this, why don’t you

fix that?  Quite often we have tried.  If you have a negative opportunist

opposition in the Senate they will decide whether or not those laws get passed.


But is the mix wrong, I suppose I’m asking…


And at the moment, by the way, opposing Budget measures, right, which would

give us the wherewithal to run our economy stronger.  Do I like it? 

No I don’t.


But, 15 per cent in the, 15 cents in the dollar in America for everyone earning

less than $102,000 Australian dollars.  Here we are paying 47 cents in

the dollar on $60,000, I mean it’s frightening.


And it was $50,000 until we got it, and it would have been higher if the Senate

hadn’t have defeated it.  But, you know, I think that’s a good question

to put to Simon Crean and Natasha Stott-Despoja, why they opposed those measures.


But, but, I’m just wondering where do you get the capacity to do something

about it.  I mean, for example, is the GST cast in granite?  We seem

to be taxing income savings and profit when we ought to be taxing expenditure. 

But while you hold the GST at 10 per cent you have got no chance for taking

any pressure off income savings and profit, have you?


Well a GST is a tax on expenditure, and that’s why we introduced it, and it

gave us the opportunity to lessen the burden of income tax, increase family

allowance, reduce company tax, cut Capital Gains Tax, abolish Financial Institutions

Duty, abolish Wholesale Sales Tax.  We have now got a plan to abolish Bank

Account Debits tax, stamp duty on shares.  So, it gave us the wherewithal

to do all of that and to keep our economy strong.  Now, you’ve asked me,

I think, do I believe that rate should increase?  And the answer is no.


You’ve got to say that, you have to say that otherwise there will be headlines

from one end of the country to the other, but there is no way you can relieve

any pressure on income or savings.  Now, for example, superannuation, people

preparing for retirement, 15 per cent you are taxed when you go in, 15 per cent

on its earnings, 15 per cent when you go out.  So when you are having a

9 per cent employer contribution, half of that goes in tax?


Well, when you say 15 per cent on the way in you have got to remember if the

money were actually received by the employee it would be taxed at 47…


But you’re wanting it to save…


Right, so…


…that’s why you want to put it into super.


…so, so, you put it into super where it’s taxed at 15.


Should savings be taxed at all?


You actually, you actually, the only point I am making, is, by putting money

into superannuation you actually get much better taxation arrangements.  

That is, lower taxation than if you actually took it by way of cash.  So

there is a big tax incentive.


But we want people to save, don’t we?


Well that’s why we give them tax incentives.


Sure, but you say to the bloke you save $10,000, he earns interest on the saving

and he’s taxed on the interest.


Yes, but there is a lot of people that say, oh well, I am somehow being penalised

by putting my money into superannuation.  The only point I am making is

this, that superannuation has a big concessional tax aspect to it.


It might have that, but if it’s in (inaudible) we’re taxing, if you tax something

you get less of it.  Tax savings, you’ll get less savings.




What about the bloke on $800 a week?  He’s paid his income tax, we’ve

been through that.  He then pays, he goes to the bowser and he’s paying

a tax on his petrol of 42.8 cents a litre.  Then he goes to the pub for

a drink, he pays an excise on his middy of 34 cents, then there’s the GST. 

I mean, how does this bloke make a quid?  Everywhere he turns there is

the Tax Office waiting for him?


Well, if I may say so, this is the Government that reduced petrol excise and

stopped its indexation, don’t forget that. We also reduced the tax on diesel

and transportation costs and income tax.  Now, you know, people still pay

taxes in this country, that’s right, but by the same token, as you know, the

community wants good services, whether it be health services…




…or pharmaceutical services, or disability support…


Yeah, quite.


…and, Alan, you have got to fund all of those things somehow.


All I’m saying is you need an expenditure tax rather than a tax on savings

and income.


Well we have got an expenditure tax, we’ve got a…


(inaudible)…but see Peter, he goes to the airport.  He thinks he’s buying

an airline ticket but he’s not, he’s paying ten bucks for an Ansett levy, he’s

paying $12.08 for an insurance levy, he’s paying $3.58 for a noise levy, he’s

paying $39.48 for GST, all his taxes and charges to go to the Gold Coast are



Well let’s got through them, Alan, let’s got through them.  Ansett workers,

do you think Ansett workers should have been left without their pay and holidays?


Well who created that problem…




…inaction from the Government.  You think the Transport Minister let

Ansett out of his sights.


Well, leave aside (inaudible)…




…the original blame…




Let’s leave aside the question of how Ansett collapsed.  When Ansett collapsed,

Ansett employees were left without their wages, sick leave, and holiday pay. 

And people said…


Must be something wrong with the corporate system that allows corporations

to rob employees like that…


But people said…




…Ansett employees deserve a bit of justice…




…right, and the government responded.


Yeah.  Air New Zealand are about to announce a $200 million profit?


Somebody wants to stand up here today and say that they think the Ansett workers

ought to go without…


No, we’re not saying that at all…


…then I’ll abolish the levy.


…I’m simply saying (inaudible)…


Now, let me come to the noise levy…


…I’m simply saying that the government took their eye off the ball which

was the reason the Ansett – Air New Zealand thing collapsed.


Okay, let me come to the noise levy.  Somebody wants to stand up today

and tell me that the people around Sydney Airport should put up with the noise

from the airlines, right, I’ll abolish the noise levy.  Now if somebody

wants to say to me today that in the wake of September the 11th,

aircraft should fly uninsured around this country so that if a terrorist attacks

them, or if they crash somewhere there is no chance of an insurance making up

the loss and damage, we’ll take off the levy for insurance.  All of these

things are two-sided.


But the bloke on $800 bucks a week doesn’t have much left, does he?


Well all of these things are two-sided.  On the one hand, Alan…


Brendan Nelson is saying yesterday, well you’re going to have to pay for your

university education.  Ian Thorpe doesn’t pay to go to the Institute, why

does someone have to pay to go to university when they are the best in the nation.


Well, do you think Ian should pay to go to the Institute?


No I don’t.  I think it’s an investment in the very best in this country.


Well, you see I spend half of my life with people telling me that the taxpayer

should pay for more things …




Right?  As you’ve just done, and then the other half being told they should

pay less taxes to fund them.


I’ve got to go to the news, you’ve got to go to a Cabinet meeting, but thank

you for your time.


Thank you very much Alan.