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 01/07/2005

Doorstop Interview

South Adelaide Football Club
Noarlunga Downs, Adelaide

Friday, 1 July 2005
9.10 am
(Adelaide Time)

SUBJECTS: 1 July 2005 Tax Cuts, GST and State Taxes, US Interest Rates, IR Reform, Drought

JOURNALIST:

Treasurer, July the 1st tax changes, can you tell us something about how they will work?

TREASURER:

Well, as from today every income tax payer will get a tax cut. It will appear in your next pay packet, if that is fortnightly or if that is monthly, when you get your next pay packet you will notice that less tax has been taken out. The bottom marginal tax rate has been cut from 17 cents in the dollar to 15 cents and the thresholds have been increased. The consequence of that means that every Australian will pay less tax from today, the 1st of July 2005, it will appear in your pay packet when you are paid in a fortnight or a month’s time and that will release more spending power into the economy.

JOURNALIST:

It is a bit unusual though isn’t it, given that the legislation hasn’t even passed through the Parliament?

TREASURER:

Well, the Labor Party was able to block the legislation so it hasn’t passed through the Parliament. But the Tax Commissioner has made schedules for employers which show employers to deduct less tax so that the tax cuts can take effect. And if the employers deduct less tax then when the Senate resumes in August it can validate that decision and ensure that people have less tax from the 1st of July. So as from today, employers should be taking out less tax. As a consequence everyone gets an income tax cut and that should appear on your next pay packet whether it be fortnightly or monthly.

JOURNALIST:

Do Australians need to have any concerns about the Government taking control of the Senate from today?

TREASURER:

Well, if the Government hadn’t got a majority in the Senate there would be no tax cuts today because the legislation itself hasn’t gone through. But it is the reality that when the new Senate assembles in August that it can validate these tax cuts that means every Australian is going to get a tax cut. So, this actually shows the good things you can do for the Australian public with a majority in the Senate. It means that Labor was unable to stop tax cuts – which they could have done – if the Government wasn’t able to get a majority in the new Senate. But Labor was defeated, the tax cuts will go through, there will be an income tax cut for every Australian as from today, bank account debits tax will also be abolished as from today, the superannuation surcharge will also be abolished from today and people will be given choice in superannuation from today.

JOURNALIST:

What do you plan to do to make WA and New South Wales comply with the GST deal?

TREASURER:

Well, they have to do what the other States are doing which is abolish taxes like stamp duties on mortgages, stamp duties on leases, taxes on business. They have to do what the other States are doing as a condition of receiving GST. All GST goes to State Governments. GST wasn’t introduced so States could have GST and all their existing taxes, they could have GST instead of existing taxes and WA and New South Wales have to understand that too, because if they don’t then the people in those states will be doubly taxed.

JOURNALIST:

US interest rates have gone up, what does that mean for the Aussie Dollar?

TREASURER:

I don’t think the implications are that great for Australia, the reason why interest rates are rising in the United States is their economy went through a recession, interest rates came down very dramatically because they were in recession in 2000-2001, their economy is now growing, interest rates are going up again. But what is happening in the United States is related to the United States conditions not Australian conditions and it doesn’t have an impact on the Australian economy.

JOURNALIST:

Following yesterday’s process, is the Government a little concerned about the growing feeling within the Australian community about workplace relations changes and the impact that may have?

TREASURER:

I think that the Government wants to improve Australia’s economic output because it will give people more jobs and higher wages and reforming industrial relations is a big part of that. Not everyone will agree, the union bosses won’t agree, but the important thing I believe is to get a system which will make business more profitable, create more jobs and increase wages. And that is what this is designed to do.

JOURNALIST:

But you have got to sell that message to the community first, don’t you?

TREASURER:

Sure, it is important to argue the case and we know the union bosses will be arguing against it but I want to say to the Australian people that this is all about a stronger Australia, more jobs and higher wages. That is why we are doing this. Last question.

JOURNALIST:

Do you think the rain is going to affect the Australian economy?

TREASURER:

Well it is great isn’t it, to see rain because a lot of Australia has been in drought for a very long time. This has been terrible for farmers, for farmers’ incomes, for farmers’ production. If rain gives them the chance to plant a crop and earn an income that is good for them, it is good for their families and it will also be good for national economic output.

JOURNALIST:

But does it affect any of the drought packages that have been announced?

TREASURER:

No, it doesn’t affect the drought packages. They are still available for people who are in drought, but of course if you are not in drought, then you will have a crop and that is a much better thing than to have a drought assistance package. Thanks.