4 July 2000

Interview with Fran Kelly, Radio National

Note

SUBJECTS: GST

KELLY:

Peter Costello joins us now from Melbourne. Treasurer, good morning.

TREASURER:

Good morning Fran.

KELLY:

Well, Kim Beazley says, your GST will divide this country because it will benefit big business and those of us on high incomes, and others will be losers. Will you be watching to make sure that prediction doesn’t come true?

TREASURER:

Well if Kim Beazley thinks it will divide the country he would be promising to repeal it, wouldn’t he?

KELLY:

Well, he says you can’t unscramble eggs. As we know, business has spent millions, if not billions, of dollars on revamping their computer systems. I guess they wouldn’t want him to take all that away and start again, would they?

TREASURER:

No Fran, it would be the easiest thing in the world. It’d be a one-line bill . . .

KELLY:

Really, it wouldn’t mean . . .

TREASURER:

. . . Goods and Services Tax is hereby repealed, and Wholesale Sales Tax Act is hereby enacted. It would be the simplest Act that the Parliament could pass. If Mr Beazley really thought that GST couldn’t be made fair, last night he would have said these words – I will repeal it. The fact that he doesn’t say those words Fran, tells you what we all know, is, that this is a reform that had to be done for Australia. It is irreversible. You would no more think of going back to wholesale sales tax today than you would think of going back to the pounds, shillings and the pence. And the big difference between Kim Beazley on Friday of last week when he was still a supporter of the wholesale sales tax, and Saturday morning, is that this tax which he said all along, he’s opposed to, can’t be made fair, he now wants to keep.

KELLY:

Well, he has opposed it all along, and he said he was going to come up with some rollback of the tax, and other changes to make it fairer and simpler. If he does come up with a rollback to give some people a greater buffer zone, or make some who perhaps feel they’re losers, feel like they’re not losers, would you look at matching that?

TREASURER:

I think this is another important point, Mr Beazley’s change, his flip-flop. He now talks about making it fairer. He told the ACOSS National Congress on the 6th of November 1998, we do not believe it can be made fair. He said in Port Adelaide on the 14th of May 1999, a tax that cannot be made fair. His whole campaign . . .

KELLY:

He’s still saying it’s not fair though. He’s said he’ll make it fairer . . .

TREASURER:

He, no, he said, it cannot be made fair. He said he was opposing tax reform because it cannot be made fair. It can’t be done. Now, of course, that the Government has taken the lead, and now, of course, that the Government has done all of the hard yards, the hard yakka, he’s changed his view – it can be kept, and it can be made fair. You see, he’s boxed himself into a corner. For the last three years, trying in a opportunistic way to oppose tax reform, saying, it can’t be made fair. When the heat comes on, and all he has to say is, I’ll repeal it, we would find out what he’s really been thinking all along. I’ve said this all along Fran, that he wanted the Government to do the hard yards. He wanted the Government to lead. And his greatest wish in the world was that once we’d done tax reform, he could get himself elected and take the benefits of it. That’s what this argument has been about for the last two or three years.

KELLY:

Well, you have done tax reform now, it’s in place. If Kim Beazley’s successful in rolling it back, if he can make it fairer for some people, if he can make it simpler for business, are you concerned that that will get him the points at the next election.

TREASURER:

Well, tell me how he’s going to roll it back, because . . .

KELLY:

Well, he said he will tell us in plenty of time for the election.

TREASURER:

Well, you’re asking me to comment on a policy of his which he can’t tell us about. And Fran, this rollback, this disappears by the minute. On Friday he was going to roll back 100 per cent. By Sunday he’s not even . . .

KELLY:

I don’t think . . .

TREASURER:

. . . going to rollback . . .

KELLY:

. . . I don’t think that’s a fair, I don’t think he was ever going to rollback 100 per cent . . .

TREASURER:

Oh no, no, Fran, no, that’s true. The Labor Party said that before it came in they would repeal it. Wayne Swan put out written material, so they would repeal it right up until the 30th of June . . .

KELLY:

Sure but, that’s saying . . .

TREASURER:

Now, now, on Sunday . . .

KELLY:

. . . they opposed it.

TREASURER:

. . . well, they opposed it . . .

KELLY:

They opposed the tax.

TREASURER:

. . . okay, they opposed it on Friday. Do they oppose it today?

KELLY:

Well, they say they can’t unscramble the egg, and they will rollback. Come the next election . . .

TREASURER:

Well you can . . .

KELLY:

. . . they will announce . . .

TREASURER:

. . . Fran, Fran . . .

KELLY:

. . . their rollback.

TREASURER:

. . . it’s a one-line bill. The Goods and Services Act is hereby repealed. The Wholesale Sales Tax Act is hereby enacted.

KELLY:

Okay, well look, let’s go to this bill . . .

TREASURER:

It’s a one-line bill, it can be totally repealed. If they really believed deep down, which they never did, that wholesale sales tax was preferable to goods and services tax, today they would be promising to repeal it. But they never believed that deep down, you and I know that. Deep down they always wanted us to do the hard work, and they wanted to take advantage of it.

KELLY:

Well Treasurer, let’s go to your promise, your promise that there would be no losers under this new tax except tax cheats. There are some people who don’t get anything through tax cuts or through your compensation benefits because they’re outside the tax net and social security net. You’re offering them a one-off payment of $120, now that’s just over $2 a week, how is that going to be enough to compensate these people for increased costs on a beer, on clothes, on rent, on petrol, on train fares?

TREASURER:

Well Fran, if you’re not earning an income, you are entitled to a pension or an allowance of some kind . . .

KELLY:

But you know there are some people who are outside those nets.

TREASURER:

Well, give me an example.

KELLY:

Well, migrants on a two year waiting period, people who are self-employed earning very little, some students, post-graduate students . . .

TREASURER:

Well, self-employed people who are earning are paying tax, they’re paying tax and they get tax cuts. If they’re not earning, they’ll be getting job search allowances. If they’re studying, they’d be getting Austudy allowances. If they’re families, they’d be getting family allowances. All of these allowances are being increased. Now what we’ve said is, if you could find these cases, and they have to be pretty unusual cases of people who don’t earn anything and somehow don’t qualify for a pension, then if they come forward we would provide them with some assistance. But can I say this. It’s never been done in the past, you know, in the past where there’s, if you could find people that don’t earn anything and somehow don’t qualify for a benefit, and the CPI goes up, as it did regularly right throughout the 1980’s and 1990’s, I never saw a Government before saying you could come forward and claim an additional benefit. So here we are, we’ve done, doing something that’s never been done before. Never, ever been done before.

KELLY:

Well Treasurer, we’ll have to see how it goes, this biggest shake-up of the tax system since World War II. Thank you very much for your time.

TREASURER:

Thanks Fran.