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Co-op Bookshop, Australian National University, ACT, 4 June 1999: transcript of doorstop [GST on books; R&D]



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LEADER OF THE OPPOSITION

TRANSCRIPT OF DOORSTOP, CO-OP BOOKSHOP, AUSTRALIAN NATIONAL UNIVERSITY, ACT, 4 JUNE 1999

 

Subjects: GST on books, R&D

 

BEAZLEY:

 

The first thing that I want to point out today is this: that there is no doubt at all the GST becomes a tax on knowledge when it becomes a tax books. But the significance of this was elevated by the Democrats when they gave an absolute undertaking, as clear as a bell, both during the election campaign and since the election campaign, that there’d be no settlement on anything, that incorporated a tax on books. The simple fact of the matter is this: there are many, many poor families and middle income families where the purchase of books, the acquisition of books, is a very real and difficult decision in their lives. For wealthier Australians - a ten per cent rise on the cost of books is neither here nor there. But for ordinary Australians it is an issue. And it substantially reduces the incentive, it reduces the capability of middle income Australians to buy books when an automatic price rise like that is imposed. Of course, as well as that there are, as with every other small business, and many of the bookshops are small businesses apart from the chains, they experience, as all other small businesses do, the extraordinary costs associated with organising for the Government at that tax collectors’ status. So, we are contemplating at the moment our tactics in these last few weeks of the debate. One thing we are absolutely committed to is voting against the GST no matter what amendments are made to it. But in this particular area it’s one where we’re contemplating supporting an amendment prior to that negative vote just to give the best possible chance to the kids who may have literacy problems, or ought to be introduced to a love of reading, finding it priced out of their range.

 

JOURNALIST:

 

Mr Beazley, you’ve said it’s going to be impossible to unscramble the egg once it’s in place. Why are you considering winding back some things now?

 

BEAZLEY:

 

Well, you can start walking it back. When the purity of that ‘original package’ was that it locked so many things in ways that were unlockable. It still is a difficult egg to unscramble. But the changed circumstances now make it possible to start a walk back. And if this tax goes through, and we are doing our level best to block it, then we’ll have a couple of years to think how we’ll start that process of walking it back because we do not believe in it at all.

 

JOURNALIST:

 

The Coalition only needs two Democrats to get through the amendments. So, what difference will it make if Labor votes against books, for instance?

 

BEAZLEY:

 

Well, we shall see whether or not there is honesty and integrity among the Democrats. I don’t think you can say that there is anything equivocal about the undertakings that were put there on books. I find it quite extraordinary that in the bargaining processes those are very abbreviated, very short bargaining processes that took place, that this was, for one minute properly considered by those Democrats who were party to that negotiating process. So, we’ll see.

 

JOURNALIST:

 

But is this anything more than a political stunt by Labor to try and drive a wedge through the Democrats?

 

BEAZLEY:

 

We want to give the defeat of this package the best possible chance we can. Our tactics have always been determined by that. We are an experienced political party and a hard headed one. And we’re not technically inept and we are doing our level best to see the promises that we gave the Australian people upheld and all our work in this regard is governed by this consideration.

 

JOURNALIST:

 

So, if certain areas were wound back, what would replace them? What would you put in their place in terms of raising revenue?

 

BEAZLEY:

 

Let’s worry about that when the time comes. We will always produce a properly costed package when the election comes around. Oddly enough, at the last election ours impinged far less on the surplus than did our political opponents. So, we’re not inexperienced at that either. But that’s two years down the track and the detail, if this gets through, of how we’d walk it back will await then. There’ll be plenty of opportunity to examine the impossibility of this tax and its application to ordinary people and we’ll respond to the worst elements of it first.

 

JOURNALIST:

 

And what are the key areas that you would look at walking back in?

 

BEAZLEY:

 

Well, we are worried about jobs and knowledge. We need a knowledge-based society. One of the reasons we’re opposing this tax on books is that it’s in keeping with our strategies for building a knowledge based society. Then those two areas are obviously of concern, but we’d also be looking at where the GST hits hardest in terms of its effect on the economy and its effect on people who are small business people and people who are going to be severely inconvenienced by what is no longer regarded by anyone as a tax reform.

 

JOURNALIST:

 

…books from the GST?

 

BEAZLEY:

 

As I said, we will, in the next two years, if this goes through, we will determine what our approach will be. But what we say now, and what this is all about, is in the first instance, trying to prevent the GST going through. In the second instance, trying to keep the Democrats honest. And, in the third instance, if it does go through, then this tax on knowledge isn’t part of it.

 

JOURNALIST:

 

Well, you seemed to be saying on radio this morning that a Labor Government would exempt all food. Is that right or wrong?

 

BEAZLEY:

 

People will put those considerations to us. Obviously, we’ll look at those areas. We will give a response at the appropriate time. But people know the cast of our thinking. We don’t want this tax. We believe this is a tax in the hands of our opponents which will be extended in its coverage and will go up. If we find ourselves in the situation of having to deal with it, it will go in the opposite direction.

 

JOURNALIST:

 

Mr Beazley, one week on from the deal, how much community anger are you seeing out there?

 

BEAZLEY:

 

The community anger is massive and basically amongst aspirational Australians normally associated with the Liberal Party. The Labor supporters have always been there. The Labor supporters have always known there’s a tax mix shift going on against middle Australia in this total package. The new kids on the block are the small business people of Australia. They know now many of them cannot handle it. And Jeff Kennett’s outburst yesterday was a direct product of his relationship to what is a traditional part of the Liberal constituency. He now knows, and this is out of the area of books into the area of food services, he now knows that there are in fact thousands of small businesses who simply cannot conform - it’s not a question of argument, it’s not a question of their state of knowledge, they have such confusion on their hands that they cannot submit accurate tax returns. And that’s going to produce, if this goes through, a raft of human tragedies. And Kennett knows it.

 

JOURNALIST:

 

Are you anticipating a shift, then in the small business vote towards Labor at the next election?

 

BEAZLEY:

 

Well, small business did not vote for us last time.

 

JOURNALIST:

 

Sure...are you suggesting they may shift their loyalties to Labor because of the GST?

 

BEAZLEY:

 

They may. From what we know of small business votes they run roughly like this: 60 per cent go to the Liberal and National Parties, 20 per cent go to Labor and 20 per cent go to third parties, like the Democrats, quite a lot to third parties, like the Democrats. And, normally, when the Liberals annoy them, they go in that direction in greater numbers, they don’t come to us. The 20 per cent who are with us are rusted-on people. But we’re going to find now that there is no way for them to go but to us.

 

JOURNALIST:

 

Are we going to see a concerted attempt made by Labor to try and woo those small business votes in the lead up to the next election then?

 

BEAZLEY:

 

That’s for the future. We’ve got one target now and that’s to knock this off. We are comforted in the knowledge that there’s not a serious economic journalist who believes that they have on their hands here tax reform any more. And we are comforted in the knowledge that absolutely nobody wants this tax, but the vast majority of people want tax reform without a GST.

 

JOURNALIST:

 

Would it be feasible to wind it back off food? Is that going to be a practicality, though, if it is in place?

 

BEAZLEY:

 

Let’s see if we confront that problem. But we will be putting, as far as we’re concerned, if it goes through, we’ll be looking at all elements of it. We acknowledge this, however, the effect of the changes if they go through that Mr Howard is putting in place in our tax system, will make the words ‘tax reform’ poison in politics for the next decade. Therefore, the changes that we will put in place, if we have to do it, to reform this tax, will be placed within the context of Labor’s overall objectives: what creates security for the Australian people, what creates jobs for the Australian people, what creates knowledge for the Australian people.

 

JOURNALIST:

 

Mr Beazley, do you agree with the Greens’ assessment that the GST will lead to cheaper firearms?

 

BEAZLEY:

 

Well, obviously, it will. I hadn’t thought of that, I must confess, that’s something they’ve worked out all on their own. But if firearms are currently subject to a 22 per cent tax then there is room for that movement I would suspect. I’d only put this qualification on it: I don’t believe any prices are going to fall when the GST comes in place. I cite as an example of that, the experience of Quik which in its strawberry and its chocolate classifications have different levels of wholesale sales tax. Go into the average supermarket around here and find if they’ve got a different price.

 

JOURNALIST:

 

Just on the R&D stats today, Mr Beazley, they show that business appears to be deserting its commitment to R&D. What do you make of that?

 

BEAZLEY:

 

We have warned against this. We said when the Liberals started killing business incentives to participate in research and development and develop new product then the statistics would start to fall. We are the only nation in the Western world going backwards on investment in research and development. This is central to business tax reform. And this dastardly deal that may go through in relation to the GST will limit the flexibility of the Commonwealth to produce a decent business tax package. The Commonwealth must change and go back to Labor’s level of R&D concession. This is now a national emergency. The collapse of people participating in research and development in our private sector and the downward trend, the unique downward trend, of Australian investment in R&D is central and core to the dumbing down of Australia. And in the future it means fewer decent, well paid jobs in this country.

 

JOURNALIST:

 

Are you saying that you’d like to make R&D a central point of the Ralph business review? Can you elaborate on that?

 

BEAZLEY:

 

Yes. The Labor Party believes in tax reform. We believe that people who are not paying their fair share of tax should pay it. Therefore, we support taxing trusts as companies. We support the changes to provisional tax. We support the business tax number. But, also, we support a lower business tax rate without annihilating the concessions which are critical to the future of this nation. We think the capital gains tax needs to change to have within it incentives for better investment in R&D and in new product. We think the R&D concessions need to change to be restored to something like the value they had when the Labor Party was last in office. If you don’t do the GST and all the compensation it requires you can do real tax reform in these areas.

 

JOURNALIST:

 

Mr Beazley, on reconciliation, should school children be required to recite an apology to Aboriginal and Torres Strait Islanders?

 

BEAZLEY:

 

School children are now getting, at last, after years and years of effort, decent curriculum on the true history of this country. This is the history of Australia and this is the history of any country. It has its good parts and it has its bad parts. And a whole clear thinking nation understands them all. And there is a better understanding now in our curriculum. I do think, from the kids I talk to, that there is a pride in Australia’s achievement and a desire to acknowledge errors where they have occurred. I don’t think the kids of this country will have the slightest problem with that particular area of concern and interest for the Reconciliation Committee.

 

JOURNALIST:

 

Mr Beazley, just one question back on business tax, the Democrats have put up a suggestion of a minimum 20 per cent level and we’ve seen a number of major corporations in Australia pay a much lesser amount. Do you support a threshold amount for businesses which are making profits, say 20 per cent?

 

BEAZLEY:

 

No, I don’t. Because I think being obsessed with the rates is the wrong thing. That’s just being obsessed with lazy capital. Giving people incentives to do interesting things with capital ought to be the central feature of a business tax regime.

 

JOURNALIST:

 

It would pay for a fair bit of R&D, would it not, if you could ensure that everybody who were, say, paying 12 per cent paid at least 20 per cent to Treasury?

 

BEAZLEY:

 

I think the truth is this: that unless you put in place incentives for R&D they won’t do it. There are other factors that are a problem for R&D in this country. One of those is the extent to which major business activity in this country is foreign owned. This is not a paranoid statement. I welcome foreign investment. But there is a substantial difficulty because people tend to do R&D at the home base. So, if it’s a company that is owned elsewhere, then they’ll do R&D there. That’s a simple statement of fact. Therefore, you have to put in even greater incentives in this country if you’re going to get businesses to do the work they need to do here. So, I’m for a reasonably low business tax rate. But I’m less concerned about that than I am about getting business to do the things that this country needs. And you’ve got to give people who are investing in new product and new ideas a massive advantage over those who are not.

 

JOURNALIST:

 

Just on Kosovo, do you share Mr Downer’s optimism that Steve Pratt and Peter Wallace might be released sooner rather than later following this peace plan?

 

BEAZLEY:

 

It’s got to be good. It’s got to be good for everybody the fact peace now does seem to be at hand. Whatever suspicions there may be about what Milosevic might in the end do. And in that environment it’s got to be better for Peter Wallace and Steve Pratt. And I would hope that they’re not lost in the wash on this particular matter, and it does seem that the negotiators do have their interests at heart and that you could be, not confident, but at least you could be optimistic, that their release would follow a conclusion of hostilities.

 

JOURNALIST:

 

Do you think that the indictments that have been taken out against Milosevic should be pursued by the Tribunal at this stage or should that become part of the peace deal?

 

BEAZLEY:

 

If we learned nothing else from WWII, national leaders ought to be accountable for atrocities. And, without prejudging whether or not he is guilty of these things, if a case can be made then the case should be answered. Now, of course, there would be no possibility of that in the practical terms short of Mr Milosevic exiting the country. I don’t anticipate that in the course of negotiating the peace deal that he would be doing that.

 

ends

 

 

rw  1999-06-07  11:39