The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 08/07/99

Transcript No. 99/52

Treasurer
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.

JOURNALIST:

Has the jobless rate bottomed?

TREASURER:

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.

JOURNALIST:

What impact will a GST have on jobs?

TREASURER:

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.

JOURNALIST:

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

TREASURER:

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.

JOURNALIST:

Why doesn’t the Government consider retaliatory measures?

TREASURER:

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.

JOURNALIST:

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

TREASURER:

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

JOURNALIST:

Do you think the Premier’s breached the constitution?

TREASURER:

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

JOURNALIST:

Is the battle of Brighton splitting the Party, Treasurer?

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.

JOURNALIST:

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?

TREASURER:

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

JOURNALIST:

So the fate of Ministers . . .

TREASURER:

No, hang on . . .

JOURNALIST:

. . . is not a big issue?

TREASURER:

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

JOURNALIST:

Is that because of . . .

TREASURER:

No.

JOURNALIST:

. . . the constitution (inaudible)?

TREASURER:

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

JOURNALIST:

You’ve commented on it before though, Treasurer.

TREASURER:

. . . there’s no point in asking further questions. I said I wouldn’t comment on it and I won’t.

JOURNALIST:

Would you like to see Mitch Fifield win on Sunday?

TREASURER:

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

JOURNALIST:

You have commented on it before Treasurer.

TREASURER:

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

JOURNALIST:

Well, why not?

TREASURER:

Anyone want to talk about employment?

JOURNALIST:

How about cars?

TREASURER:

Sorry?

JOURNALIST:

Did anyone ask you this earlier, whether you’re thinking of any easier way for the car industry to deal with the GST?

TREASURER:

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.

JOURNALIST:

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

TREASURER:

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.