JOURNALIST:
Mr Costello, petrol prices are racing away, the RACV is calling on both sides in this campaign to scrap the GST on the excise as a tax on a tax, you have reduced it, but will you scrap it?
TREASURER:
Well the Commonwealth has a 38 cent a litre excise which we cut from 44 cents. The GST on petrol does not go to the Commonwealth, it is received by the State Governments. All of the State Governments are now in a windfall position with the GST that they receive. Some States give a rebate in relation to petrol prices, Queensland is one, but any other State that wanted to follow suit could do the same thing. The GST is not received by the Commonwealth, the Commonwealth can't change the way in which the proceeds are allocated but it is open to any State Government if it so chose to do so.
JOURNALIST:
But you can change, you imposed the GST, you can change that.
TREASURER:
Oh no, the Commonwealth does not receive a single dollar of GST revenue. All GST revenue is received by State Governments. What the State Governments do with the GST revenue is up to them. The Queensland Government uses part of its revenue to have a petrol subsidy. A State Government can do that if it so wishes, but the Commonwealth doesn't receive a single dollar of GST revenue.
JOURNALIST:
The Commonwealth designed a scheme that does impose the GST.
TREASURER:
The Commonwealth does not receive a single dollar of GST revenues…
JOURNALIST:
You have an influence in imposing the GST…
TREASURER:
It is…
JOURNALIST:
…you could take that off if you wanted to, surely.
TREASURER:
…no, the Commonwealth does not receive a single dollar of GST revenue, GST revenue is received by State Governments, they are all in a windfall position, what the Commonwealth…
JOURNALIST:
But you run the GST, you impose the GST, I am not talking about whether, who gets the money, I am talking about who imposes the tax.
TREASURER:
…I am sorry, if you would let me finish?
JOURNALIST:
Sure.
TREASURER:
The GST is received by State Governments, every single dollar of GST is received by State Governments. Every State Government is now in a windfall position. What the State Governments do with the GST is their business. They can use it to reduce taxes, they can use it to pay subsidies in relation to petrol as Queensland does, they might use it in relation to their spending. The Commonwealth does not have the GST revenue, it does not receive a dollar from it. The only tax the Commonwealth has in relation to petrol is 38 cents a litre which we cut from 44 cents a litre, which does not vary as prices vary.
JOURNALIST:
Why don't you cut the excise further then?
TREASURER:
Well we did, we cut it from 44 cents to 38 cents, it is not indexed, as inflation rises it does not go up. In real terms the Commonwealth excise on petrol falls year after year.
JOURNALIST:
You do have the power to cut that excise though don't you?
TREASURER:
The Commonwealth cut the excise, the Commonwealth abolished the indexation factor, as inflation goes up year after year the Commonwealth tax on petrol falls.
JOURNALIST:
The price of petrol is racing away, you could offer some real relief beyond the inflation rate, you could actually take, make a real cut to that excise, couldn't you?
TREASURER:
Well we did…
JOURNALIST:
You could do it again.
TREASURER:
…we cut it from 44, the Commonwealth cut excise from 44 cents to 38 cents in 2000. The Commonwealth then abolished indexation so that the Commonwealth excise on petrol does not rise and as prices rise, the Commonwealth tax on petrol is falling in real terms. Now, the price of petrol has gone up because the world price of oil has gone up. The world price of oil has gone up above $50 a barrel. We don't welcome that. That is partly the consequence of supply factors coming out of the Middle East and partly the consequence of demand factors with China's economy growing strongly. The only thing that we can say is that if supplies could be improved, the difficulties which are currently occurring in the Middle East and in some other countries like Nigeria, you would expect the world oil price to come down. But the petrol price will be high whilst world oil prices are high.
JOURNALIST:
Treasurer the trade deficit is down to $1.9 billion new figures show today, what do you think is driving that?
TREASURER:
Well today's figures for International Trade in Goods and Services show an improvement in Australia's trading position. There was a fall in imports whilst exports remained steady. This is consistent with the Government's view that over the course of the year Australia's Current Account Deficit will decline. It will decline because as the world economy picks up, our exporters will have better export opportunities. What has been happening in the last year is that Australia has been growing faster than the rest of the world. As the rest of the world picks up then so too our trading position should improve because our export industries will get stronger and that will mean that our Current Account Deficit will decline.
JOURNALIST:
We saw that report from Access Economics which is out today, is spending in this campaign reaching dangerous levels?
TREASURER:
Well the Government's proposals in this election campaign are responsible proposals. They are consistent with keeping the Budget in surplus and keeping interest rates low. This year will be the seventh surplus that this Government has delivered which is a record, it is probably stronger than any other Government in Australian history and we intend to keep it there.
JOURNALIST:
There seems to be a growing concern from economists though, so are they wrong?
TREASURER:
Well I have brought down nine Federal Budgets, seven surplus Budgets, it is my determination to keep the Budget in surplus. Before I became Treasurer there wasn't surplus Budgets, there were deficit Budgets. When our Government was elected the Budget was in deficit by $10 billion. Having driven the Budget into surplus I intend to keep it there. We have got a strong record, seven surplus Budgets, it is a record as strong as any previous Government that we have had in Australia, we have got an experienced economic management and if this team continues then Australia's economic management, strong economic management will continue. If Mr Latham gets his hands on the Australian economy you could have some very bad outcomes.
JOURNALIST:
Are you worried about the impact of rising oil prices on the Australian economy?
TREASURER:
Well I wouldn't like to see the oil prices as high as they are and I certainly wouldn't like to see them as high as they are for a long period on time. People feel it at the bowser. It will affect not just our trading partners, but if it affects our trading partners in a very significant way, it could affect Australia as well. But the impact will be felt first in our trading partners, it is not a good outlook to have high sustained oil prices for the world's larger economies with whom we trade.
JOURNALIST:
Do you think there is there any substance to Labor's claims today that Treasury figures show that the Medicare Safety Net will blow out by $350 million within three years?
TREASURER:
No. Anyway, it is good to be here with Michael (inaudible), Michael Keenan, our candidate for Stirling, who is a great candidate and I am here campaigning with him today and I wish him all the best in the election. Thank you very much.
JOURNALIST:
(inaudible) on the scale on Ivan Milat?
TREASURER:
Mr Keenan, Michael Keenan.
JOURNALIST:
Mark Latham is delivering his vision for Australia I think right now, if, you wouldn't have any trouble if he promised to spend $6 billion, would you?
TREASURER:
Well I have trouble with all of Mr Latham's policies, I don't think he is outlining a vision for Australia, he is outlining division for Australia. I don't think he has the experience and I don't think he has the capability. Thanks.