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Transcript of news conference, ACTU house, Melbourne



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PRIME MINISTER

TRANSCRIPT OF NEWS CONFERENCE, ACTU HOUSE, MELBOURNE 11 DECEMBER 1991

E & OE - PROOF ONLY

JOURNALIST: Mr Hawke, the special Caucus meeting next week, will that decide your position?

PM: I wouldn't think so, no. I understand it's been a suggestion that it may be required to consider legislation. If that's necessary of course there should be one.

JOURNALIST: Are you concerned by reports the Queensland Right and the Left are shifting their allegiance to the alleged challenger?

PM: No, I have no reason to believe that I don't retain the substantial support of the Party.

JOURNALIST: Were your friends from the Left able to appraise you whether you've lost any support from that particular faction?

PM: I haven't been speaking to them recently. I would've thought if there was any problem I would've heard about it.

JOURNALIST: Were you able to give the ACTU any assurances about your leadership?

PM: They didn't ask for any. They were very very receptive to all that I had to say and I was very pleased with the substantial ovation I received at the end. They - as distinct from the media - they were concerned about issues of policy.

JOURNALIST: Well what did you tell them about the GST for example?

PM: Well I didn't really need to tell them a lot that they didn't know. But I emphasised of course that it was one of the cruellest hoaxes in Australian history. That what the GST is about is a massive transfer of income from the poor,

the disadvantaged, the low and the medium income people of this country to the more privileged. You don't need an economics degree to understand it. It's simply the fact that when the ordinary citizen goes into the shop to purchase something and pays the 15 per cent tax or has a

service or goes to the football or something and pays the 15

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH

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per cent, that person will pay the same amount as Bob Hawke and John Hewson or the wealthiest person in the country. And that is simply a calculated design by the conservatives of this country to shift the income and the wealth of this

country from the poor, the disadvantaged, the low and the middle income to the wealthier section. Now that is something which is basically unacceptable and it's

un-Australian. When that is associated with the fact that the tax reductions means that the person on average weekly income would get a 6.8 per cent increase in after-tax income, not enough to cover the increase in prices, and a person on $75,000, representing two per cent of all wage and

salary earners, would get a 14.7 per cent increase in after­ tax income, that is a situation which is unacceptable. Now these things we talked about and of course the ACTU agrees with the assessment that I make.

JOURNALIST: Have you found anything good about the goods and services tax package?

PM: There is nothing good about the goods and services tax concept. As regards the total package of the whole range of issues, there's one thing in it that we in fact had already moved on before the package came out and that's a matter of

factual record, that we started on it before their package came out. They talked about the desirability of removing the coal export duty. We'd in fact started on that and made the Cabinet decision the other day. So that is sensible. But of course it's a thing with a whole lot of bells and whistles. What you've got to go to is what is the guts of

the package and the guts of the package is very simply something which means that the ordinary Australian goes in and pays 15 per cent more, the higher income of us go in and we pay the same amount. That means that the burden is greatest upon those of us with the least capacity to pay.

That involves a basic redistribution of income to the wealthy when they are going to get a massively greater increase in their after-tax income on the income tax side. But apart from that that, on the economic side, it means

devastation for the Australian economy. Let's look at it very simply. What does it mean? It means that you're going to have a massive increase in inflation. On their own figures, in 1994 you would have twelve and a half per cent

increase in inflationary figure. But that's a minimum. It would be more than that. Now once you have a situation where inflation goes up like that and you've got a set fiscal policy, budgetary policy, and no wages policy, the

only way you can control the movement in inflation is to whack up interest rates. So immediately you would have the situation where we've not only lost our low inflation situation which we've got in this country now which makes us competitive, we'd lose that, and interest rates would go up

and the economy would be deliberately in those circumstances unnecessarily put into recession. It is a recipe not only for social divisiveness, social chaos, industrial chaos, but

also it is a necessary recipe for economic recession. And let me make the point, let me make the point, that we needn't be just theoretical about this. Remember this, that

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we have the advantage of the experience across the Tasman and this is a comparison which we are totally entitled to make because Dr Hewson and his colleagues are the ones who1 ve said let's look at New Zealand. They've been over

there. They've even couched their document in New Zealand terms. They've just pinched from the New Zealand document the actual words and put it in their own. So let's look at New Zealand. When Roger Douglas introduced the tax back in

1985, it became operative in 1986, he promised that with the introduction of the consumption tax there would be economic growth and employment growth. What has in fact happened is that they've been in economic recession ever since. Our performance has absolutely outstripped theirs in terms of growth and you know what their unemployment situation is. Their economic growth dived, their unemployment increased.

That' s the model that they have sought to use and what has happened in New Zealand with the introduction of the consumption tax would be precisely, precisely what would

happen in this country. So it is, as I say, socially divisive, it is a recipe for industrial confrontation and it is a certain recipe for economic disaster.

ends