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 14/06/2005

Interview with Alan Jones
2GB

Tuesday, 14 June 2005
7.20 am

 

SUBJECTS: Tax Cuts, Tax Act, Remuneration, Chinese diplomat

JONES:

Peter Costello good morning.

TREASURER:

Good morning, good to be with you Alan.

JONES:

I apologise we are a bit late on all of this, but you can understand why, I am sure.

TREASURER:

Sure.

JONES:

Am I right in saying what I have said about the schedules? This is new, isn’t it?

TREASURER:

Yes, you are absolutely right. It is an Act that Parliament passed to make sure that both Houses of Parliament would get to look at any important instruments before they took effect. You are absolutely right, the schedules have been tabled in both Houses, as a consequence of that, they have been in the House of Representatives since May, the Senate hasn’t been sitting until today, so they will go into the Senate today. They would have gone in earlier except that the Senate hasn’t been sitting…

JONES:

This is separate from the legislation?

TREASURER:

…and the critical thing is whether or not the Senate votes to disallow them. If the Senate votes to disallow them there will be no tax cut on 1 July. If the Senate allows them to stand - that is doesn’t try and strike them down - if it allows them to stand then we will get our tax cut on 1 July.

JONES:

Now all the hoopla that has been going on with the Democrats and the Greens and Labor, are about amending the legislation, aren’t they? There hasn’t been any talk about what they are going to do to the schedules.

TREASURER:

Yes, the legislation really is not the point here because the legislation we know will past Parliament…

JONES:

Correct, correct.

TREASURER:

…when the new Senate comes in because Labor won’t be able to block the tax cuts anymore. So the whole argument here has been about the schedules. Now, we had good news over the weekend, the Greens announced that they won’t be voting to block the schedules. The Democrats are meeting this morning, and if they decide that they won’t vote to block the schedules, then we will get our tax cuts. But, Kim Beazley won’t make up his mind, he won’t announce a decision, he reserves the right to block the schedules so he is the big sticking point at the moment. But the good news is that if the Greens and the Democrats decide that they won’t be blocking the schedules, he is irrelevant, he can’t stop the tax cuts then.

JONES:

Right. Just on something else again, and I haven’t discussed this with you on air, but this whole business about the leadership of the Liberal Party. I see someone saying at the weekend that you have got no hope of becoming leader while you continue to bash up Kim Beazley as you have and virtually render the ALP hopeless in terms of winning the next election. Do you see the irony in all of this, cleaning the Labor Party Leader out, making yourself not look good?

TREASURER:

Well, I did read the article and I do have to hand it to Mr Beazley, he has been making a good job of it himself. Look Alan, the serious thing is you know, we can all sort of have a bit of a giggle about how bad Labor’s tactics have been but, the serious thing is this, for seven million Australians, they have got a pay packet coming after the 1st of July, that is only 2 weeks time, they need to know where they are and as importantly 850,000 employers have got to know what to do with each one of those pay packets. And he runs around with these little games and says, you know, I can’t tell you what I am going to do, I might or I might not. Well for 850,000 employers, it is hard enough being an employer in a small business already and now you are told, well we can’t actually tell you which tax rates to apply on the 1st of July.

JONES:

And that is why you have got to table two schedules, one is the existing schedule, because if the new schedule is disallowed, the existing schedule would have to be operative again from July 1?

TREASURER:

That is right. There are two there now and one is the one that should be applying on the 1st of July and the other is the one that will apply if Mr Beazley stops the tax cuts. Now, if you are an employer and these are all now on computer software, you have got to load two sets into your payroll, you don’t quite know which is the right one yet and all because Mr Beazley can’t tell you whether he will or he won’t.

JONES:

Just in relation to business, I am sure you as Treasurer are aware of the fact that at last the Australian self-employed army they are calling it - that is the shop owners, the consultants, the franchisees, the independent contractors – none the more in the nation now than unionised employees. Now, the Tax Office keeps bellowing there will be extra scrutiny in relation to work related expenses and rental property deductions, and here we are coming to the end of the financial year and everyone filling out their tax returns and the Tax Office sent out a Tax Pack telling you how to do it and it is 136 pages long. How the hell can small business navigate their way through all of this?

TREASURER:

Well, for work related deductions that is of course for employees and things are simpler for employees. For small business things are more complicated because they are actually in business but one of the pay-offs for that, of course, is you get a lower rate. And we have just introduced a new provision which will allow small business start-ups to actually get a 25 per cent discount on their tax. So there is a big incentive now. It is a little more complicated, but there is a big incentive if you are self-employed, you can actually get a lower rate of tax.

JONES:

But when is someone going to say, of your ability and influence able to say, listen, the Tax Act is a million pages long, every piece of advice about it runs into hundreds of pages, we do have to start again, this is absurd?

TREASURER:

We have got a Board of Tax Alan, which is looking at this very issue now and it is preparing a report to say that at least a third of the pages of the Tax Act are no longer relevant, that they don’t apply to anybody and therefore they can be deleted. I am waiting for that report. When that report comes up, as long as they are confident that they have got the right pages we will be working on that. We think we can delete a third of the pages of the Tax Act.

JONES:

Treasurer, what is your salary, because it is in the public place so we are not asking you anything that is confidential, but your salary is what, roughly?

TREASURER:

Well, it is in the public place, I think it is around about $200,000.

JONES:

That’s it? And the new boss of Telstra is on $11 million. Is the sum…

TREASURER:

He is 55 times better than me, Alan.

JONES:

…he must be 55 times better than you. Is there some point at which we say, the bloke, whoever he might be, running a national economy of how many billion dollars?

TREASURER:

Well the Budget is around about $160 billion and the national economy is now getting up around $800 billion.

JONES:

And that bloke is on $200,000 and someone running Telstra is on $11 million. Do you think politicians, I mean there is a lot of argument out there that politicians are overpaid, but at the same time if we want the best people to do the kind of complicated job that managing a national economy has become, do we have to re-think how we are going to get better people in and what we are going to pay them?

TREASURER:

Look, the thing about this is whenever these issues come up and the public looks at it, the public thinks that well, average wages are about $50,000, they think that politicians are well paid compared to that. So I think the best way of doing it is to put this off to an independent tribunal. This is what the independent tribunal has recommended and so we accept it. But I think it is important that it be done at arms length and done by an independent tribunal.

JONES:

Just one thing, a lot of things that I wanted to ask you but we have been beaten with time here, China and Chen and the asylum application by this man. Many people are saying that everything is conditional upon the fact that we have now got very major trade arrangements. We want to sell uranium to China, we are frightened to do anything to offend China. You are the Deputy Leader of the Liberal Party, is there an attitude that we really are stepping on eggshells in relation to Indonesia and China and therefore shut up all the critics including someone, Chen Yonglin, claiming asylum?

TREASURER:

I don’t think we should Alan. I think if he is genuinely in fear of persecution because of his beliefs and what he has done, he should be entitled to protection and we shouldn’t overlook his right to protection for trade reasons. And that is the issue that has got to be looked at, the issue of whether or not he is in legitimate fear of persecution and he should be protected if he is.

JONES:

Already no-one from the Federal Police, no-one from ASIO, no-one from any Government agency has sought any further information from him since he made these allegations.

TREASURER:

Well I don’t know about that but somebody from the Department of Immigration should be looking at his application right now and they are the people that should be investigating it.

JONES:

I would love to talk to you further, we had better go to the news, we will catch up again soon.

TREASURER:

Thank you Alan.