SATTLER:
Oh patience is a virtue, and as you know Im a patient person so Ive waited and Ive waited and Ive waited and now Ive got the Federal Treasurer. Hello Peter Costello.
TREASURER:
Hello Howard.
SATTLER:
Youve been a long time coming.
TREASURER:
Well, I always enjoy having a chat but, you know, youve got to do the rounds in the various States as you know.
SATTLER:
But stop going into the ABC all the time. Every time I see you at night you are sitting in an ABC studio.
TREASURER:
Oh come on Howard, that is not true.
SATTLER:
Ask the viewers. Anyway, moving right along to todays events. The interest rates have come down a percent, I suppose no surprise, but what immediate affect do you expect from that announcement?
TREASURER:
Well, banks have got to pass it on forthwith.
SATTLER:
What do you mean theyve got to?
TREASURER:
Well, what you find with the banks is that on some occasions when the official interest rate is dropped they take quite a while to pass it on to the home borrower and Im calling on them to pass it on straight away.
SATTLER:
And if they dont?
TREASURER:
Well if they dont those banks that do do it, and some of them will do it pretty quickly...
SATTLER:
Some have already.
TREASURER:
..go round and take your business, reward the bank that does the right thing. But, lets just focus on what has happened today. The official interest rate is cut by 0.5 per cent, that means that all interest rates, all borrowing rates, business and for home borrowers should be cut by 0.5 per cent. And when it is, if you are on an average mortgage in Australia, that would be a saving of $42 a month, $500 a year, so that is good news for home borrowers.
SATTLER:
Alright. But, I mean, is it a knee-jerk reaction or is it going to have a long-term effect? You know, in December you were pretty confident that things wouldnt turn down significantly this year, but only last week you seemed to change your attitude about that.
TREASURER:
Well, what Ive said recently is that the US economy has turned down, there is no doubt about that...
SATTLER:
And quickly, and quickly.
TREASURER:
...and that will have an effect on Australia.
SATTLER:
Mmm.
TREASURER:
And we dont live isolated from international events, the US economy is the biggest economy in the world, it effects every other economy in the world. That will have an effect on Australia. But weve been in difficult positions before. In the Asian financial crisis all of the Asian region went into financial collapse, weve just got to make sure that we continue to do the right things in economic management here. Its going to be hard but we need good economic management.
SATTLER:
But has the downturn caught a lot of people off guard? Has it happened quicker than you thought. Thats the impression I get.
TREASURER:
The downturn in the United States seems to have caught a lot of people off guard. In the United States it seems to have caught the American authorities off guard. Whether you put it down to the stymying of the political process coming off the Presidential election or whether you put it down to equity markets, people are not entirely clear. But in Australia weve had some pretty good news in recent months on the retail trade front, on the motor vehicle front, where motor vehicles were a record in January, and this is going to be good news for consumers. Inflation is low, interest rates have been cut, if you are on an average mortgage in Australia youre going to have $42 a month back in your pocket to spend, and it is going to be good for business.
SATTLER:
Do you think they should spend or should they save it?
TREASURER:
Well, ...
SATTLER:
Well, I mean, whats best, pay off your debts or go to the shops and just spend it?
TREASURER:
Well, it depends what your situation is. Look, spending is good, saving is good. And, you know, I cant advise everybody on their financial position. I would say if you are in debt it might be good to pay off some of your debt. But, its good news for small business too of course who have been suffering, you know, theyre out there in the market and this will be good news because not only do their costs come down but those consumers that are spending also get the opportunity to spend more.
SATTLER:
Yes, alright. Talking about small business, you know what Im alluding to now, the BAS. You dont seem to, you know, in your heart of hearts inclined to want to change the system?
TREASURER:
No, Howard. The Government is going to do whatever can be done to simplify the BAS.
SATTLER:
Well, make it annual.
TREASURER:
We are looking at all alternatives. Were not ruling any in were not ruling any out. And we are, we commenced two weeks ago looking at simplification measures, those simplification measures that can be done by the next quarterly payment, which is due in April, will be done. And those that can be done from the end of the year will be done and whatever can be done to simplify it I can assure you will be done.
SATTLER:
Well, the small business people on this program yesterday said that they had warned you or your office 18 months ago about how complicated this would be and time consuming and costly. And they said that 8 times they contacted your office about that and they got no response at all. I find that, if that was true, pretty appalling.
TREASURER:
Well, lets put this in context, 93 per cent of small business have done their returns and I congratulate them for it.
SATTLER:
What that was the first time around when they got an extension?
TREASURER:
Well, no that was the first time around within the periods that were allowed...
SATTLER:
(inaudible)
TREASURER:
...after the first one it was always announced that there would be an extension of, I think it was 3 weeks, and longer for agents.
SATTLER:
Thats right. With the extension.
TREASURER:
Yes, as was always provided and 93 per cent got in on time.
SATTLER:
Whats the percentage the second time around?
TREASURER:
Its higher.
SATTLER:
Higher than 93?
TREASURER:
Yes. The return rate at this stage, and theres still two weeks for tax agents, is higher than the first time. And when you say 93 per cent incidentally, that compares very favourably with other tax returns. Its actually been a very high return rate. Now, why do I say that? I say that to say to the small businesses that have actually put their returns in, and obviously theres been a big adjustment to a new system, that you know, we recognise the enormous amount of work that they have put in to it and the way in which theyve coped. Now that youve had those first two returns on the basis of the experience of those first two returns, theres obviously some people for whom it has been much more complicated and time consuming than it should have been. And having got that..
SATTLER:
Well its more time consuming for everybody, isnt it? It must be.
TREASURER:
Well it varies Howard...
SATTLER:
They didnt have to do it before.
TREASURER:
Well some people find it easier than others.
SATTLER:
Yes, but if its taking time out that they didnt have to spend before.
TREASURER:
Thats right, and to the degree that its taking more time than it should, it should be simplified and whatever can be done to simplify it will be done.
SATTLER:
You see the Taxation Institute has sent me a release today saying they also warned you, they drew your attention to the complexity of the requirements shortly after its introduction and they say our frequently repeated views were ignored.
TREASURER:
Well we have been collecting...
SATTLER:
Why would you ignore people like that?
TREASURER:
Weve been collecting feedback. We started working on simplification a couple of weeks ago for the next quarterly return. What can be done for the next quarterly return will be done for the next quarterly return, and all of the ideas with the experience that weve now got that are out there, I can assure you will be taken on board. Were not ruling any of them in, were not ruling any of them out.
SATTLER:
Yeah. But see youve had no small business experience have you?
TREASURER:
I was self-employed for...
SATTLER:
What as a lawyer?
TREASURER:
Yes. I was self-employed for seven years..
SATTLER:
Yeah.
TREASURER:
....and I used to deduct my group tax and I used to go down and buy my tax stamps. Ive been self-employed.
SATTLER:
Would you think that you have a knowledge of what small business goes through these days?
TREASURER:
Oh look Howard..
SATTLER:
You talk with the BHP chiefs and all those sort of people, what about the little corner store grocer, people like that?
TREASURER:
Sure. I mean, things are complicated for a corner store grocer as a result of the way in which the GST is applied to some of their items and not others.
SATTLER:
Mmm.
TREASURER:
And I recognise that.
SATTLER:
Ill blame the Democrats.
TREASURER:
No, I recognise that. Thats a complication that came into the system.
SATTLER:
Thats right, because of the Democrats.
TREASURER:
Because of the Democrats, okay, that is complicated.
SATTLER:
Im trying to give you a free kick.
TREASURER:
Well Im trying to be sort of above partisan...
SATTLER:
You wont get too many from me, but you will get that one.
TREASURER:
And okay that is complicated, and, weve got to do what we can to simplify things for the greengrocer. But I can assure you that it is in nobodys interest to have more complications than is required. We are, certainly not in the Governments interests, its not in small businesses interest. Thats why weve got everything on the table. You cant just sort of snap your fingers and say well do this, or well do that. People dont want sort of piecemeal changes or it will just confuse things. What people want is a statement about what will be done all in one hit, so thats certain and they know the time from which it occurs. Thats why the Governments going to make sure that it thoroughly looks at all the angles before it makes its announcement so that you dont have perpetual changes, you just have the simplification in a certain way that is required.
SATTLER:
Well when will they know?
TREASURER:
Weve already commenced that. I think the discussions will probably conclude next week.
SATTLER:
Next week. And an announcement? So they can know?
TREASURER:
Well, if we can get agreement, it could be from next week on.
SATTLER:
Excellent.
TREASURER:
The next payment is required in April so we want to make an announcement before then.
SATTLER:
Well ahead of that.
TREASURER:
And people have now got in, by and large their returns for - in February. The next one is in April, so we want to make one announcement before the next payment, which is due in April.
SATTLER:
And very quickly, do you think interest rates have gone as low as they can now?
TREASURER:
Look, you know, rates were cut this morning. Thats the good news. Lets just sort of try and get this one passed through to consumers and borrowers before we start speculating on what might happen in the future.
SATTLER:
All right. Westpacs the only big bank thats made an announcement. Youre calling on the others to do so ASAP.
TREASURER:
ASAP. And Id say to the other banks that, you know, its a competitive market out there and if one of the banks has cut its rates, its going to get a lot of good publicity and the best way for other banks to get the same is to match it, otherwise they wont be getting such good publicity will they?
SATTLER:
No. Thanks for your time and it will be nice to talk to you again soon.
TREASURER:
Thanks very much Howard.