WILLACY:
Mr Costello, just a couple of weeks ago you told Parliament that it was impossible to move to annual reporting because business had not been lodging returns for a year. What has happened since then, beside the Coalition drubbings in Western Australia and Queensland?
TREASURER:
The difference is this, that you could not go to an annual system of annual returns when you didn’t have four returns. But we have now put an absolutely break-through initiative, which is, we won’t wait for four annual returns. We think the December return is sufficiently representative to use that as the bench-mark, so that anybody who has filed their December return and wants to take advantage of this option can just pay the amount that was on their December return for April and July, and then lodge an annual return. The great thing about that, is, you don’t need to do another quarterly report, you don’t even have to have 12 months of quarterly reports. We can now take it off the second instalment, the December instalment, and that is the end of the quarterly return for those businesses that want to take it up. But can I just say, Mark, because I have had a number of people who have contacted me in the last 12 hours or so, and in the lead-up to this announcement, there are many businesses that have adjusted their systems on the quarterly reporting system.
They have said, you know, we have coped with it, it suits us, and I want to re-emphasise for those businesses, they don’t have to change. They can stay under the current system.
WILLACY:
Well, if we look at the original BAS, you defended it, you argue that it took most small business less than a couple of hours to fill out. If that was the case, why buckle to calls for change?
TREASURER:
Well, for most businesses the quarterly system, they had adjusted to it, and they work it, and I think many of those will continue with it. But, there was a significant group that didn’t adjust to it. For a significant group it was too much compliance and too much paperwork and we can’t overlook the fact that for those people they were not able to do it as quickly as others in business and so there is an option for them now. Those businesses that are under $ 2 million, all you have to do, and if I can just explain it again to business: you take the December payment, you make that in April and July, and then you will not have to do another return until your annual return, which will be due with your annual income tax return…
WILLACY:
(inaudible)
TREASURER:
…which for many businesses it is going to be as late as February 2002.
WILLACY:
The December quarter, though, if you take that, that is the biggest trading quarter for many businesses. Won’t you be paying inflated GST liability on that?
TREASURER:
We thought about that too. We couldn’t take the first quarter because there were so many transitionals in it, including wholesale sales tax credits, pre-payments, and that kind of thing. The second quarter, also, could not be the best representative sample. But, it is the best you have got if you want to free people immediately from quarterly returns. Now, for those businesses that think that December is not representative for them and they want to take this option, they can do a variation. So, you can do two things, you can take this option, with a variation, or you can pay your actuals, which is the continuation of the quarterly reporting system.
WILLACY:
Well, do you accept responsibility, really, for failing to foresee the complexity of the original BAS? It was in your hands.
TREASURER:
We accept responsibility for the fact that, the, a problem had arisen with a significant number of small businesses for whom the current system of quarterly reporting required too much paperwork. We accept responsibility and we fix it. And we fixed it. That’s why, if we see a problem and we fix it, that’s the announcement we made yesterday, I think, from the reaction that you have seen from business and from self-funded retirees, this has got enormous support. And…
WILLACY:
You were saying…
TREASURER:
…that’s what the practice of Government is all about, I think. Where you have a problem – fixing it.
WILLACY:
You said a significant number of businesses had a problem, but a couple of weeks ago you were saying most could fill it out in a couple of hours. What has changed?
TREASURER:
Well, the surveys show that most could fill it out in a couple of hours. But, a significant number of people…
WILLACY:
So were you just…
TREASURER:
No…
WILLACY:
So, were you just (inaudible) basically wanting to change it?
TREASURER:
No, no, no. Most could fill it out in a couple of hours, but a significant number couldn’t. For a significant number, it was taking them far longer than that, and for those people there was no point in sitting around and making them do hours of paperwork, that is not a system that is working well for those people. For those people they now…
WILLLACY:
Do you think…
TREASURER:
…have an option of not doing the quarterly return at all.
WILLACY:
Do you think any voters in the Queensland and Western Australian elections lodged a vote against the GST and the BAS, in particular?
TREASURER:
I think, I have always believed this, State elections are principally a contest between the two alternative Premiers…
WILLACY:
So, not one voter in Queensland and Western Australia would have voted according to their problems with the BAS and the frustration of that?
TREASURER:
Well, that is not what I said. I said most voters in State elections determine their vote according to who the alternative Premiers are and who the alternative parties are. And I think if you go into the Queensland election there was a clear choice between Mr Beattie and Mr Borbidge, or between Labor and National, National – Liberal. And I think that is what governs most of those elections. There are always cross-over issues, I am not saying that there are never cross-over issues. But I do not believe that Federal issues determine State elections. I never have, nor would I, incidentally, believe that State issues determine Federal elections. The Federal election will be fought on Federal issues, and it will be fought between alternative Prime Ministers – Mr Howard and Mr Beazley. And just as you won’t be casting a vote for Mr Beattie or Mr Court in a Federal election, you were not casting a vote for Mr Howard or Mr Beazley in a State election
WILLACY:
Well, you have proved you can listen to the electorate on the BAS, can you now rule out changing the petrol excise arrangement, is there any flexibility there now?
TREASURER:
Well, we have put in place a number of changes which, in particular, have helped business and rural and regional Australia on petrol. And I think that has been overlooked. One of the things we did, particularly in the argument about petrol prices in the bush, let me just re-state: farmers pay no tax for their off-road diesel, transport was cut by 24 cents a litre for heavy transport, and if you are using petrol in your business, as some people would be doing, you actually are paying less tax as a consequence of the changes. And I think some of those changes have been overlooked.
WILLACY:
So, are farmers complaining too much? Because we have got the NFF hitting the road to raise concerns about the diesel rebates, something you have said they have had a good deal on, are they whinging a bit too much on this issue? Should they, should they listen to the Government?
TREASURER:
Well, just for people, and I know this is a technical area, but people who say, well, you know, they are concerned about farming, can I say, if farmers are using diesel in their tractors or their headers, they don’t pay any excise. There is no excise for off-road diesel for farmers. None whatsoever, and since they are in business they can get any GST for any business input, back. So, they can actually get their petrol at a lesser price, as well. Now, the reason I say that, is in all of the argument about petrol prices, I think that has been overlooked, and the one point I would make is this – if Labor and Beazley had had their way, today you would be paying 24 cents a litre more for heavy transport, to and from every farm in Australia.
WILLACY:
Well, if we move on, National Party Leader, John Anderson, said in Corowa this week that, the Party had a very real concern about the effect of national competition policy on rural communities. What assurances can you give the Deputy Prime Minister on that?
TREASURER:
The assurance that competition policy, which is an agreement between six State Governments, two Territory Governments, and the Commonwealth Government - and it is run by agreement between all of those Governments - requires that first we try and get better prices for consumers. That is the first thing. And secondly, there are times when you will accept higher prices for consumers – a less competitive outcome for consumers - where that is in the public interest. But the public interest has to be tested. Prima-facie, the lower the price for the consumer, whether it be in airlines or whether it be in any other area, prima facie, you try and do the best thing by consumers unless, for some public interest reason, consumers’ interests should be put behind producers’ interests.
WILLACY:
Just briefly, it seems Liberal backbencher, Julie Bishop, has backed out of the deal to take over the leadership of the Western Australian Party. Is that a good move on her part?
TREASURER:
Well, I think, if Julie is determined to pursue a career in Canberra, I think she will have a very good career. I think she is very, I think she is very intelligent, I think she thinks abut issues very carefully, I think she is a good representative for the people of Curtin, and if her decision is to seek to represent them to the best of her ability, then I am sure she will have a very good career.
WILLACY:
Peter Costello, thanks for joining us.
TREASURER:
Thanks Mark.