TREASURER:
The IMF has today released its report on Australia, an annual report on Australia, and it is a very strong endorsement of economic management. It notes that the Australian economy has performed remarkably in the context of global weakness and the worst drought in a hundred years. And a large part of that is the strong fiscal position, strong Budget position, that the Government has put Australia in, and the determination to structurally reform Australia's economy.
Now, there are obviously continuing risks in the international environment, and the IMF notes some of the risks to Australia. But to put it in context, compared with all of the other developed economies, Australia continues to perform remarkably well, overcoming international weakness and domestic weakness. And growth is expected to strengthen in the course of 2004. But, that doesn't mean we can rest on our laurels. We have to continue to work, we have to continue to prepare for the ageing of our population, we have to continue with our structural reforms, it is the work of previous years that have got us to this position, it is the work of today that will strengthen our position for the years which are to come.
The drought has not yet broken, there are some areas in Australia where there will be good seasons, but there are still some areas which are in severe drought. The good news about the international trade figures which were also released today, was that it showed that rural exports have increased 11 per cent, so things might be turning in the rural area.
Although, rural exports have increased 11 per cent, they are still 19 per cent down on this time last year, so that will give you an indication as to how severely the drought has affected Australia's economy. There is not much we can do about the drought, but we have to continue working on structural reform in Australia.
JOURNALIST:
Treasurer, the IMF commended the strength of the Government's fiscal position. Are you attracted at all to suggestions from Government ranks today, for $800m in spending to increase the private health insurance rebate to 40 per cent and to remove the cap on childcare places, which I think are several hundred million dollars more in spending.
TREASURER:
Well, let me make the point about the Government's 30 per cent rebate on private health insurance. There was no incentive, no financial incentive to take out private health insurance until this Government introduced a 30 per cent rebate. And that is delivering over $2 billion back to people who take it out, and I think that is a very substantive, a very substantive encouragement. And when you look at the very large sums that are involved, it is hard to think how you could actually increase it, because it is a substantive, 30 per cent rebate. Now, in relation to spending proposals, no doubt Ministers, who have been given till the end of October, to put in their bids for next year's Budget, we will have numbers of them. But as in previous years, we will look very carefully. It is important that we keep our costs under control. We don't want to sit back now and give the game away. Sure, we have made great strides. But we are not going to give the game away, and we are going to continue to work hard on keeping our Budget in a strong position. And if we can fund decent social expenditures, if we can support our troops in the field, and if we can secure Australia's security, then we like to return, with a strong balance sheet, to the taxpayers. And that is what we did last Budget.
JOURNALIST:
Treasurer, the Liberal Senators made the point though that if you increased the rebate, it would lead to a decrease on demand of public hospitals. Does that interest you at all? Do you think that that would be worth putting the rebate up to 40 per cent?
TREASURER:
Look, it would lead to a decrease in calls on public hospitals. But the idea that somehow you could claw money back from public hospitals, after we have just entered into a five year agreement for the funding of public hospitals, I don't think is realistic. So, yes it would, there is no doubt about that, but it wouldn't be cost neutral. You wouldn't be able to claw that money back because we now have a five year agreement for $42 billion to the public hospitals of Australia. Try clawing that back.
JOURNALIST:
Treasurer, the RBA gave a very up-beat assessment for the economy, saying the outlook is looking better than in the last few months, do you agree with that and does this mean you will make any revisions to the Government's forecast for next year...
TREASURER:
Look, I think...
JOURNALIST:
...in MYEFO?
TREASURER:
...I think that growth will strengthen in 2004, and that will be because the international economy is improving. I have just been at the G20 Meeting in Mexico, and the US economy finally looks like it is turning the corner, and the drought is breaking. We have a few other things that will go against us, and I have made this point before. The appreciation of the Australian dollar means that it will be harder for our exporters, so that is a factor which is going the other way. So, you have got some international factors that are going for us, some domestic factors that are improving, some other factors that are going against us. I think there might be a gradual strengthening of the economy in 2004, but there are still the challenges that are out there.
JOURNALIST:
Can you as Treasurer tolerate Australian citizens using Swiss bank accounts to trade Australian shares, out of view of the regulator?
TREASURER:
Well look, the Australian Securities and Investments Commission has announced today that it is forming a special team to look at allegations which have been raised in today's press about Swiss bank accounts. And they will be liaising very closely with the Australian Taxation Office, because obviously, if there have been earnings, those earnings would be taxable. And the corporate regulator is very focussed on this issue. Its special team will be examining this to see if there is any new information. The corporate regulator will be expected to enforce the law without fear or favour. And you have seen the corporate regulator doing that in recent times, without mentioning any names at all, the Australian Securities and Investment Commission has not been averse to brining charges where there is evidence against high profile people and it has come under a lot of attack from some of those high profile people as a consequence. But it is not going to be deterred by that.
JOURNALIST:
But Treasurer, is the law good enough or does ASIC or the ATO require further powers to make sure that these sorts of examples like the Rivkin example don't occur again?
TREASURER:
I am not aware that there are any deficiencies in the law. I have made the point earlier that some very high profile people have been brought to trial in Australia recently, but if you want to have a look at a weakness in the enforcement of taxation law, we know where it stands - the secrecy of Swiss banks. Now let me make this point, the OECD has had a report which has been going on for some time against international tax havens and has been attempting to get the developed economies and the developing economies of the world to close down such tax havens and to share information. This is a project which Australia very much supports. Switzerland was not part and did not agree to the OECD work. And we know that Swiss bank accounts are the easiest way to keep information away from tax authorities, not just in Australia, but around the world. Now unfortunately the Australian Government has no control over Swiss law but we are working very, very hard in the OECD to try and encourage Switzerland to come into this project which would mean that it would exchange information with the Australian Taxation Office.
JOURNALIST:
(inaudible) for Telstra, will you be resubmitting the Bill in three months?
TREASURER:
The Australian Government will be calling on the Senate, yes, to pass its legislation. This has been a matter which has been debated on many, many occasions before and we will be putting that back to the Senate. Yes of course we will.
JOURNALIST:
Treasurer, are you concerned about the leakage of taxation revenues overseas?
TREASURER:
Well look, the Australian Taxation Office has been very well funded with a very substantial increase in its resources, not this year, but last year. You will have noticed that the Report of the Australian Taxation Office indicated how much of the black economy has been brought in. Even to the extent where I see some people are now saying, oh well that's increased tax collection in Australia. Yes it has. Yes, it is harder to operate in the black economy these days and we are now getting a pay-off from the GST, as the Tax Commissioner has himself said, it's given new mechanisms to cross-match between companies. And there has been an additional collection out of the black economy and there has been an additional collection internationally. But I make this point, that internationally you need other countries to share information. That is why we have been such a strong supporter of the OECD report. Now I have just been at a meeting of the world's 20 Finance Ministers and central bankers in Mexico where I put this very squarely on the table, very squarely. And there was amongst those 20 Finance Ministers and central bankers strong agreement. And our communique re-emphasised the need for all countries, for all developed countries to cooperate with this OECD project. And unfortunately some of the companies, some of the countries that are not cooperating were not there.
JOURNALIST:
Treasurer in past years you and Senator Minchin have told Ministers that new spending proposals have to be matched by savings. Are you doing the same this year?
TREASURER:
Oh look, it will be a tight Budget. They are always tight Budgets. We have had a very substantial drought, the world economy has been weak, it may be recovering, the exchange rate is probably working against Australian exporters and it will be a tight Budget. And we will, look, there are Ministers that always have wonderful new ideas, over brimming full with wonderful new ideas, but unfortunately in a Budget, when you are dealing with people's taxes you can't fund everybody's great ideas.
JOURNALIST:
(inaudible) the Mid Year Review Treasurer?
TREASURER:
Sorry, sorry, yes, what?
JOURNALIST:
(inaudible) question again?
TREASURER:
Well it will be a tight Budget and Ministers know that.
JOURNALIST:
The IMF...
TREASURER:
Yes, yes, last question.
JOURNALIST:
...recommended that the thresholds be lifted and that the top marginal tax rates be reduced. Do you agree?
TREASURER:
I certainly agree with lifting the threshold at which the top marginal tax rate applies. Yes I do. We went to an election promising to increase it from $50,000 to $75,000. We were elected. In my view, we had a mandate to do it. That was defeated by the Labor Party and the Democrats, who opposed our tax plan. Since then we have increased thresholds again so I thought $75,000 was appropriate back in 2000. If I had have had my, if the Government had been able to implement its tax plan, that threshold would be higher than $75,000 today. So, go back, from time to time, one reads the musings of Opposition Members who muse on the fact that that threshold should be higher. Lovely musings, one problem, when they had the chance to increase it, they voted against it. So don't report their musings, look at their votes. These are people who vote contrary to musings. They have such confused minds.
JOURNALIST:
Treasurer...
TREASURER:
Such confused minds. But we have always been very solid on this point. Not only did we propose it, we won an election on it. And when we won an election, we put the legislation in. We don't muse, we act. We act, and you know, I would recommend to you, go back to the muses and ask them why their musing didn't lead to voting. What happened? Where was the intellectual disconnect? And why did it come about? Thank you. Thank you very much.