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Tax rates 'always under review': Costello -

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(generated from captions) chairmanship from China. I had the

opportunity to meet the President

today. He is a good friend of

Australia. He knows

today. He is a good friend of Australia. He knows how important

the trade relationship is, and we

underlined the importance of China

both to Australia's trade and to

both to Australia's trade and to the world economy. There will be a lot

of interest among delegates there

of interest among delegates there as to whether China will move on itsds

exchange rate, whether it will

exchange rate, whether it will adopt a more flexible regime . What

a more flexible regime . What sense are you getting there? Well, China

are you getting there? Well, China is taking steps to a more flexible

exchange rate regime. The progress

is gradual, however, and I think it

will be some time before China has

will be some time before China has a floating currency as we know it.

But the important thing is - and

But the important thing is - and the President underlined this in his

speech to the conference today -

that China is increasingly going to move

that China is increasingly going to move towards integrating with the

world economy, towards market

flexibility, and the story of the

global economy at the moment,

Barrie, is that China is

Barrie, is that China is principally driving global economic growth.

That's how important it has become.

And I think as it becomes more prosper us,

prosper us Russ, then you will see

prosper us Russ, then you will see more flexibility on its exchange

rate. You will also hope that as

rate. You will also hope that as it becomes more prosperous Chinese

becomes more prosperous Chinese will start consuming more. Because that

will do a lot to redress global

trade imbalances. So is that an

acceptable timetable from your

acceptable timetable from your point of view, that sort of incremental

approach on the exchange rate?

Look, China has come a long way

Look, China has come a long way over the last decade.

Look, China has come a long way over the last decade. Let's not forget

it was a closed economy, communist

economy, and it's now embracing the

world economy, and increasing trade

liberalisation. I don't believe

that its financial system, as at

that its financial system, as at the moment, is sophisticated enough to

run a flee float of the exchange

rate, but I believe that as it

strengthens and its living strengthens and its living standards rise

strengthens and its living standards rise and as it attends to its

financial system, that will become

possible and over time that will

move that way. I think it would be

a mistake to go immediately to a

floating exchange rate. The

floating exchange rate tends to be

the end of the economic reform, not

the beginning. I imagine there

the beginning. I imagine there would be a lot of discussion in the

corridors about oil prices. Any

relief in sight there? Well, of

course, Saudi Arabia is represented at

course, Saudi Arabia is represented at the conference, and the Saudi

finance minister gave a report, as

he saw it, on the world supply

situation. He indicated that the

producing nations know that it's in

their interests that there be some

stablisation in the price. There

stablisation in the price. There is room for additional capacity. He

talked about the steps that OPEC is taking in

talked about the steps that OPEC is taking in relation to that. My

taking in relation to that. My view is that the incredibly high peaks

that we've seen will come off, but

that we've seen will come off, but I don't think we're ever going to see

a world again where you will get

a world again where you will get oil for $20 or $30 a barrel. You will

see it lower than it is today, but

you won't see it return to the lows

that we saw in the late 1990s, for

example. OK. Well, back home now and

example. OK. Well, back home now and to the industrial relations

changes, and clearly they are being

portrayed here as too harsh on

low-skilled and low-income people

low-skilled and low-income people in particular. Do you think you will

need to do something more to assure

workers in that category? I think

that the reason for the reform has

to be stated over and over and over

again. The reason for this reform

is to help people get jobs, and to so build

is to help people get jobs, and to so build an economy which is

productive enough to have wage

increases. The important point

increases. The important point here is that people will keep what

they've got. Now, we know in

politics, Barrie, that a negative

scare campaign beats a positive

campaign, antd only thing you can

campaign, antd only thing you can do about that is meet the scare

campaign with actuality. I

campaign with actuality. I remember going through the GST

campaign with actuality. I remember going through the GST scare

campaign. The world was going to

end if we had a GST, people would

end if we had a GST, people would be starving in the streets. The only

way to defeat that scare campaign

was to get into a situation where

the GST applied and showed them the

benefits and show them the fears

were overstated, and my view is

we've got to move through this

period, get the legislation enacted,

get it operative, and show people the

get it operative, and show people the benefits that you can get from

labour market reform. But one thing

you could do is to guarantee that

under your new arrangements, the

minimum wage, the minimum wage

minimum wage, the minimum wage won't be eroded in real terms. Why won't

you do that? Well, Barrie, you get

asked trick questions all the time

in an attempt to try and divert the

debate. That's hardly a trick question

debate. That's hardly a trick question - fairly basic. Well,

here's the guarantee: That improved

industrial relations, which lead to

a stronger economy, will produce

more jobs and higher wages. That's

the guarantee. For the Prime

Minister -- but the Prime Minister

says though his guarantee is his

record. But his record on that is

record. But his record on that is a poor one, isn't it, when you

consider the submissions that the

Government put to the IRC on Government put to the IRC on minimum wages?

Government put to the IRC on minimum wages? I don't think so, Barrie.

The Government has always put a

position which is regards as

consistent with developing a strong

economy. You know, let me make

economy. You know, let me make this point. This government was elected,

Barrie, since there have been 1.7

million new jobs created in

Australia. Now, the population of

the country is only 20 million. 1.

the country is only 20 million. 1.7 million new jobs in a country of 20

million new jobs in a country of 20 million where only a proportion of

the workforce seeks work, this has

been extraordinary growth period.

The Government has always argued

wage fixing, consistent with

creating jobs. We've got

unemployment down to 5.1%. It is

possible that unemployment can go

lower in Australia, but only lower

if you have a better labour market

arrangement. But surely you want to reduce wages and

arrangement. But surely you want to reduce wages and conditions for

low-income workers, so that

employers will be encouraged to

employers will be encouraged to take on more workers. That's how you

make new employment? No, people who

have low skills have the

have low skills have the opportunity to get a foot in the door, have the

opportunity to engage in training,

and have the opportunity to join

and have the opportunity to join the economic mainstream. Now... But

that's the same thing? No, it's not, because, Barrie,

that's the same thing? No, it's not, because, Barrie, awards specify all

sorts of apprenticeship tiff things

- classifications, duties - and for

some people that are outside the

labour market, that don't have work,

all of that print tiff thing is

all of that print tiff thing is just a barrier to them getting a job.

a barrier to them getting a job. If there is more flexibility on the

same wages, they will have an

opportunity to get in the door and

get the training that a job brings.

OK.

get the training that a job brings. OK. On taxation, what is the

status of the Treasury costings

status of the Treasury costings into a 30% top marginal rate? You

wouldn't ask for this work to be

done if you didn't at least give

this option some consideration.

Oh, Barrie, we probably modelled

10s, 20s, you know, probably more

options since 2000. We modelled a

lot of them before 2000 because we

were changing the whole tax system,

with the new tax system. We always

keep them under review. You always

make sure that in the circumstances,

you're on full top of the options.

When we looked at that particular

option, from memory, it cost $12

billion and 80% of Australians

didn't get a benefit, so you can

imagine why that never went

anywhere. But what Treasury did say

about the 20% rate, the flat tax,

about the 20% rate, the flat tax, it would be fairer, simpler, more

transparent and a stronger reward

for effort. What's holding you

back? Only one problem. It costs

$12 billion a year, would drive the

budget into deficit, put pressure

budget into deficit, put pressure on interest rates and wouldn't benefit

80% of Australians. How do you

think that would go? But it just

seems, as it stands, and put aside

the 30% rate - but you are the one person resisting

the 30% rate - but you are the one person resisting a reduction to the

top 47% rate, while all those

top 47% rate, while all those around you are clamouring for it. Oh,

commom on, Barrie! We cut income

commom on, Barrie! We cut income tax by $22 billion in May of this year.

What's that? Five or six months ago.

$22 billion. We cut tax the year

before, and we cut tax the year

before. And as I've said, if you

can balance your budget, if you can

pay for health and security, if you

can keep pressure off interest

rates, of course you want to keep

taxes as low as possible. I've

always said that. Here's the proof:

When we started reforming the

taxation system in 2000, people on

average wages used to face a 34%

rate, a 43% rate. These rates

rate, a 43% rate. These rates don't even exist anymore. The average

Australian - in fact, 80% of

Australians don't pay more than 30%,

and you don't pay top rates, or

you're not going to pay top rates

until you go one dollar above $125,

until you go one dollar above $125,000. An enormous amount of

work has been done. Is there one fix once

work has been done. Is there one fix once and for all for the tax

system? No, there isn't. A lot of

people on your side of politics are

wanting a reduction from the 47%?

Well, you pay 47% on your first

dollar over $125,000, OK, which

affects 3% of Australians. Now, am

I against cutting taxes for 3% of Australians?

I against cutting taxes for 3% of Australians? No, of course not. I

would love to cut taxes for 3% of

Australians, but I'm just as

interested in the 97% who don't pay

top rates. If all you did was have

a cut for the top rate for each

dollar over $125,000, you would

improve things, but 97% of

Australians would say to you, "Well,

what about me? I don't get anywhere

near $125,000. What about me?" And

the art of taxation is to keep the

burden as low as possible and when

you're cutting taxes, to bear in

mind the whole of the public, not

just a proportion of it. Well,

Malcolm Turnbull says that the

costings prove that the kind of tax

relief that he has been talking

about is affordable in the budget

context. Is he wrong about that?

Well, the document is released

Well, the document is released under freedom of information. I think

from memory. Had a one-year of $12

billion, enough to drive the budget

into deficit, but 80% of

into deficit, but 80% of Australians wouldn't get a benefit. So he is

wrong, they're not affordable?

Well, I'm not commenting on

Well, I'm not commenting on anything other than that option, which is

other than that option, which is why that option wasn't attractive. And

let me make this point: What the

Government did in the budget, was

Government did in the budget, was it cut tax, kept the budget in surplus

for this year and next year - and

that's what we're talking about,

that's what we're talking about, not the year gone by - this year and

next year - and every Australian

next year - and every Australian got a tax cut. 100%. Not 20%. 100%.

Is Malcolm Turnbull making a

worthwhile and constructive

contribution from the back bench?

>>Z oh, look, people are entitled

Oh, look, people are entitled to

Oh, look, people are entitled to put forward proposals all the time, and

they do. Many back benchers put

forward proposals and when I'm

forward proposals and when I'm asked to discuss them at back bench

committees, I do. I welcome them

all. There are many people who put

forward useful ideas. Why is he not

on the front bench, when you

consider he is a self-made

multimillionaire, he ran large

companies? You would think if

anybody was to jump the cue, skip

the apprenticeship, it would be him

Well, you would have to ask Mr

Howard that. You don't have any

influence over that? No, I don't

appoint the front bench. That's

done by the leader. In the years,

the Government would have

the Government would have introduced legislation, legislated to sell

Telstra and reform industrial

relations. What's left for him to

achieve as we go into next year?

Well, the important thing is to bed

down these reforms. Let's suppose

we pass the IR legislation by the

end of the year, Barrie. It won't

take effect until next year and the

bedding down period will take some

time. Nobody should think to

themselves that IR is going to be

finished at the end of this year.

The reforms will not even take

effect until next year and the

bedding-down of these reforms is

going to be probably as challenging

as the passing of the legislation.

So the big reforms are now done.

It's a question of bedding down

It's a question of bedding down what has been done? You know what I

think, Barrie? I don't think big

reforms are ever done. You know,

here we are, we introduced the GST,

we abolish 6 or 7 indect taxes, we

cut capital gains tax in half, we

cut company tax. We abal lished

cut company tax. We abal lished the 34 cent rate, the 47 cent rate. We

increased the

34 cent rate, the 47 cent rate. We increased the tax-free threshold to

$125,000 for the top marginal rate.

Does that mean the work is finished?

No. It means we've done a powerful

load. As every year goes by, you

just have to do more and more. Let

me just make this point: When you

get an international perspective on

the Australian economy, when 20 of

the most important nations of the

world meet, you get a perspective

world meet, you get a perspective on how far we've Combet paired to

how far we've Combet paired to other countries, but we got there by hard

work. We shouldn't forget where

we've come from, but we shouldn't

lose sight of where we want to go.

Treasurer, thanks for your time.

Treasurer, thanks for your time. Thanks very much, Barrie. I'm Robert Gordon and I live and own a property near Guyra in northern New South Wales.

While I was born in Sydney and spent my childhood in Sydney,

I have been on this property for 47 years, so I have had a long experience of the country life. Over the years I've been involved in representing farmers and was a member of the National Party for quite some years until I became quite disillusioned that the parliamentary tail seemed to be wagging the organisational dog and it was proving impossible to have any significant influence

over the policy the party adopted, and so I resigned. This week I noticed the Liberals and the Nationals up to their old petty squabbling