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Costello to use Senate for tax reform -

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Costello to use Senate for tax reform

AM - Friday, 1 July , 2005 08:00:00

Reporter: Stephanie Kennedy

TONY EASTLEY: Today is of course July the 1st - a date heralding a new era for the Howard
Government with its majority in both houses of Parliament.

As well, Australian workers get a tax cut from today, and if the Federal Treasurer Peter Costello
gets his way, New South Wales and Western Australia will be forced to cut their business taxes.

He says the States have reneged on their GST deal to cut local taxes, so in the next 12 months he
plans to do something about it.

The Treasurer says changes to the Senate now allows the Coalition to bring in reforms it was unable
to introduce in the past.

The Federal Treasurer has been speaking to Stephanie Kennedy in Canberra.

PETER COSTELLO: We've laid down a program starting on 1 July 2006 for the States to observe the
intergovernmental agreement, and to abolish the nine taxes that are replaced by the GST.

Six of the States and Territories have come forward with a program. Some of them are reasonable
programs, some of them are a bit slow.

The remaining two haven't observed their obligations at all. They have no timetable for the
abolition of those remaining taxes, and between now and 1 July of next year the Commonwealth will
be announcing a response designed to get tax cuts for people in New South Wales and WA.

STEPHANIE KENNEDY: So tax cuts specifically for those two States?

PETER COSTELLO: Well that's because the other States have already agreed that they'll be doing it.
But we can't leave the poor people of New South Wales and Western Australia out. We can't allow
their State Governments to rip them off for State taxes and the GST. They'd be in a worse position
than people in other States, so we'll be announcing a response which is designed to get tax cuts
for people in WA and NSW as well.

STEPHANIE KENNEDY: Will they be tax cuts for business, or for the average salary earner?

PETER COSTELLO: Well they'll be tax cuts which are designed to implement the agreement to cut stamp
duties on mortgages, to cut stamp duties on leases, to improve the situation for business.

Look, Stephanie, everybody in Australia knows the GST was introduced to get rid of other taxes. Now
the GST's come in, it's been in for five years, there are two States which won't get rid of the
other taxes - they're WA and NSW.

We can't sit back and say oh the poor people in those States are going to have their State taxes
and the GST. They've got to be given the same justice as the other States. They've got governments
which have let them down, which are double taxing them, and the Coalition Government, the Federal
Coalition Government, wants to cut their tax burden.

STEPHANIE KENNEDY: If I could just move to the Senate. July the first marks a new era in the
Senate. The Government will have a majority of one. Already some of the new Senators are speaking
out against the sell-off of Telstra, the industrial relations legislation, and the scrapping of
university union fees.

How is the Government going to handle its majority in the Senate?

PETER COSTELLO: Well it... the Government will be very, very careful with legislative proposals. And
of course nothing is taken for granted in relation to legislative change. In order to get
legislative change through the Senate it will be necessary to take all of the senators with the
Government. It will be necessary to ensure that we argue our proposals well. And of course there'll
still be scrutiny from Opposition parties.

So this idea that somehow the Government just has a carte blanche, it can do whatever it wants,
actually the Government will be approaching this very, very carefully to ensure that we negotiate
through changes which are good for the Australian people.

STEPHANIE KENNEDY: Are you willing to negotiate with your own senators, your own National Party and
Liberal senators?

PETER COSTELLO: Well, as I said, the Senate is very finely balanced, and we're lucky that in
Queensland we were able to get three Liberal senators elected. This means that we do have the
possibility to do reforms that we haven't been able to do in the past. But we'll approach this
cautiously, determined to reform, but determined to do what's in the interests of the Australian

STEPHANIE KENNEDY: Given Petro Georgiou was able to soften the Government's mandatory detention
policy, do you think that sends a signal to others to hold the line if there's a chance that they
too can get what they want?

PETER COSTELLO: Well, in the Liberal Party anybody's entitled to speak their mind. That's one of
the rules of the Liberal Party. You can speak your mind. And the Party as a whole respects that.

But you've got to also bear in mind that the Party as a whole has to form a government, the
Government has to be able to govern, people want us to govern, they want us to get on with doing
things which are important for the public.

The first thing that's going to happen today is that every Australian's going to have an income tax
cut. That's because we brought down a budget which cuts income taxes. Labor tried to stop it. But
because we're going to get majority support in the Senate, people will get income tax cuts.

This is a point worth making, by the way. If we hadn't have got a majority in the Senate at the
last election, nobody would be getting a tax cut today. Nobody would be getting it, because Mr
Beazley would have been able to defeat it and so the greatest benefit which you see from government
being able to get legislation through the Senate starts today with an income tax cut for every

TONY EASTLEY: The Federal Treasurer Peter Costello speaking with Stephanie Kennedy.