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Transcript of intervew Dr John Hewson, leader of the opposition, Dallas Douglas



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Leader of the Opposition

18 December 1991

TRANSCRIPT OF INTERVIEW DR JOHN HEWSON, LEADER OF THE OPPOSITION DALLAS DOUGLAS, RADIO 4RK, ROCKHAMPTON

E & Ο E - PROOF COPY ONLY

SUBJECTS: Fightback - Coalition’s Economic Reform Package

Douglas:

And firstly this morning to federal politics, and joining me in the studio, Federal Opposition Leader, Dr John Hewson. Good morning Dr Hewson.

Hewson:

Good morning Dallas, how are you?

Douglas:

Very well thank you. Dr Hewson, topping the opinion polls this morning, as possible futute Prime Minister.

Hewson:

Yes, it is always nice to do well in the polls, but we don't pay much attention to them, because they come and go. Mine have gone up and down like a yo-yo since I became Leader, and they will go up and down like a yo-yo between now and the next

election. There is only one poll that counts.

Douglas:

And that poll, no doubt, is at the polls themselves. But since the introduction, or the blueprint for the tax reform package, how have the figures been then?

Hewson:

Oh, they have improved quite considerably. I think

principally because we are seen to have a positive alternative for Australia and the Government has floundered and not been able to address the issues that we raised and not been able, I think most importantly, to put up an alternative.

Douglas:

There still is a lot of confusion about the new tax package. What does it actually mean for the average person, say, in Central Queensland? ___________

Parliament House, Canberra, A.C.T. 2600 Phone 2774022 COMMONWEALTH PARLIAMENTARY LiBRARY" MICAH

Hewson:

Well, there a lot of particular benefits. Of course,

principally, we get a tax system that is competitive with the best in the world, which will give individuals lower tax and lower tax rates, much more incentive to work or to save, or to provide for their retirement.

Regional areas of Australia gain from a number of other aspects of the package, including the abolition of petrol excise and diesel excise. We targeted other forms of

assistance to the community as well. It depends where you live, but zone allowances have been increased, isolated children allowances have been changed, boarding allowances have been increased, it depends on the particular

circumstances of families. And we have of course also doubled family allowances for low to middle income families.

Overall, the change for an average Australian family puts them considerably in front, but more importantly, gives them the opportunity to earn more and keep more, or to save more and keep more. Which, if the average family works harder and

saves more, they do better and the country does better.

Douglas:

What does it mean for the man on the land?

Hewson:

Well, the reaction of the rural community has been

overwhelmingly favourable, and I guess the principle reasons are that we abolish sales tax and petrol excise, and they get a refund under the goods and services tax on the tax on any of their inputs. So, they are the principal benefits, I think,

from a cost point of view, they get significantly better cost structures. And other elements of the package that relate to waterfront reform and transportation reform, telecommunication reform, also give them lower costs. Overall, the package is

designed to help a farm as a business, like it helps other businesses to really lower their cost structure, make them more competitive.

Douglas:

And industry as well, say the coal mining industry in Central Queensland.

Hewson:

Well, we abolished the coal export levy, that is a particular benefit to the coal industry. It has been something that has been there for years and it is a tax that we think shouldn't have continued. Over and above that of course, they benefit

from the general lowering of cost structures in Australia that flows from the package. And again, they would benefit from

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Vransportation cost savings, or petrol excise savings, improved waterfront efficiency and so on.

Douglas:

And of course, Gladstone is a very busy industrial city and a growing industrial city. So, for Gladstone and that part of Central Queensland, what does it mean?

Hewson:

I believe that the focus on Jobs in the package and a more pro-development stance in the package, is probably very important for areas like Gladstone, where there is an emphasis on development and there is concern, of course, about unemployment. We think it is reasonable to aim to create 2 million Jobs over the decade.

Douglas:

Dr Hewson, we might go to our callers now. And Dr John

Hewson, the Federal Opposition Leader is in the studio, our talkback lines are open, the number is 279 333. And our first caller is John from North Rockhampton.

John:

Dr Hewson, I am a long term invalid pensioner, I am in my early 40's. Now, I am not interested in getting me off back in the workforce or all that, that is something else that can resolve itself. What my main concern is, is will you abolish

the fact that pensioners can't buy their own superannuation? I find it ridiculous, if I could have started five years ago with a little bit of money I can put aside, in another five years I would not need to be on the pension, I would have my own superannuation.

Hewson:

Yes, well our superannuation proposal really does help people like yourself. We encourage all people to enter

superannuation by giving them a tax rebate...

John:

...yes, but that is not the thing. Are you going to let

pensioners buy their own superannuation.

Hewson:

Sure, yes.

John:

But it is illegal now.

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Hewson:

Well, it is illegal under the Government system, we are scrapping the Government's superannuation system. And I think you should be able to save in a number of different forms and one of them ought to be super.

John:

Well, it would take me off the pension, if that was started five years ago.

Hewson:

Yes, that's right. But the way we do it is we allow people to put away money for their retirement and get a tax rebate for doing it.

Douglas:

John, thank you very much for your call. We will go to our next caller, who is Greg, calling from his car phone in Rockhampton. Good morning Greg.

Greg:

Good morning Doctor.

Hewson:

Good morning Greg, how's the traffic?

Greg:

Ah, there is plenty of it about. Doctor, first of all, let me congratulate you on the courage you have taken for your soon to be Government, your Party's coming forward with such an early release of the package. It is a good package from what

I have been able to ascertain. But, first of all, I have been a Labor voter, and that is the truth, for the last three elections, but I am not voting Labor this time. This time I am voting for your Party, I am tickled pink with the package,

from what I have been discover in it, and I have put a bit of time and effort in to it, because I am a business man. But, one thing that concerns me is the fuel excise and the

Government has put forward figures that suggest that your figures are unrealistic and that you won't be able to obtain the very large discounts in the cost of a litre of petrol.

So, can you just maybe go over that now and relax my mind a little bit.

Hewson:

Yes, well, we will abolish petrol and diesel excise and that will mean for a private motorist a fall in the price of petrol

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by 19 cents per litre. And for a business user 26 cents per litre. Now, we have said that we will not Impose, re-impose a petrol related road user charge on private motorists. So, you would still pay the goods and services tax on petrol, and that

Is why you don't as a private motorist, get the 26 cents benefit, you only get a 19 cents benefit, the 7 cents

difference is in fact, we think, an appropriate user charge for the private motorist. And that is consistent with the Government's own figures about how much private motorist already pay in excess of their usage of the roads - about 400 odd per cent more than their usage of the roads.

As far the trucking industry goes, we have said that there will be a road user charge for the trucking industry,

particularly the heavy trucking industry, but that will be done off a zero base. So, the trucking industry gains not only from the abolition of petrol excise or diesel excise, but the abolition of sales tax and refunds on goods and services

tax. So, they don't pay sales tax on their rigs anymore, they won't pay sales tax on the parts, they won't pay it on the lubricants and they won't pay petrol excise. So, they will start, if you like, almost a zero tax base, on which there will be a road user charge for trucking.

Now, the difference between the Government and ourselves is that while we are abolishing all those taxes and charges, the Government is going to add a road user charge to the existing fuel excise. And Bob Hawke has been particularly sensitive

about this, because he has raised in the life of his

Government, something like $30 billion more from petrol excise than he has given back in the form of roads. And in that

sense, you can see why he has become quite shrill and quite worried that in fact, we have identified a major weakness in their position - and we have.

I personally think it is ridiculous for a country that suffers the tyranny of distance, to add so many taxes and charges to the cost of transportation, which is so fundamentally important all over Australia. Of course, in regional Australia, I don't think anybody has ever really been able to

understand it.

Greg:

So, possibly the figures that the Government have come up with, really just pie in the sky?

Hewson:

Yes, he is just trying to frighten people. I mean, the Prime Minister has shown an unique capacity to misrepresent the circumstances and he continues to do it in relation to this. You can always tell when we have scored a good point, he gets

a bit shri11.

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Greg:

Yeah, well I run courier vans and the Impact for me in petrol costs alone will be fairly immense with the package. So, once again, congratulations, I think it is good, it is about time, and it is great that you have come out, in the open so early -

that has earned my congratulations.

Hewson:

Okay Greg, thank you.

Douglas:

Thanks for your call Greg, and our next caller Dr Hewson, Murial from ..(inaudible).. Good morning Murial.

Murial:

Good morning.

Hewson:

Good morning Murial, how are you.

Murial:

Oh very well thank you Doctor. I have quite a few questions that I would like to ask, but the main one that disturbs me, being associated with the rural life, all my life. I have been following a lot of the program on the radio and

television. Yesterday, it disturbed me to see our Premier walking around saying that one in five of all the people on the land would have to leave. His big problem was, was finding jobs for them, training them.

Don't you think this is a lot of waste of expertise for people to have to leave the land. I mean, what about our banks. I have always associated them with progress and couldn't they ..(inaudible)., and things like that, ..(inaudible).. After

all, these people haven't just suddenly gone into debt, this rural recession, we have had very bad conditions, droughts during the 80's. I think more or less, it is the economy that has really sent them ..(inaudible)..

Hewson:

Well, that is right, I mean, you are right. The rural

community has lived with ups and downs in their prices and sort of downs from the droughts. But this time, they have been hit with the third whammy if you like, and that has been these very high interest rates. And I think it is

fundamentally important that we get those interest rates down and keep them down. The banks I gather in some part of

Australia, are taking a more considerate attitude to lending, but it is the interest rates which are the outcomes of

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Government policy which have to be lowered. The other thing we have done in recent days, and you can't do a lot from

Opposition, but what we have done, is pressured the Government to make reasonable hardship conditions available in relation to things like family allowances and so on. So that people on the land can continue to get benefits that will perhaps tied them over and give them the chance of keeping the farms that

them and their family's have fought so long and so hard to build up.

And, it is a very difficult period. There are a lot of other things they can do of course, one of the problems is the international market practices and we have been urging the

Government to take high level trade delegations to the United States and to Europe, to see if we can't get better access for some of our agricultural commodities. There is an opportunity coming of course, President Bush is coming at the end of this month, into early next year, and certainly have foreshadowed

that I want to raise some of their farm subsidy programs with him again. I did that in the middle of this year in

Washington, I intend to raise it again. Because, I think it will be good for him to hear first hand, the magnitude of the plight of farmers.

You see the headlines today, a 75 per cent drop in farm

incomes. I mean, it is absolutely staggering and without doubt, the worst circumstances since the 1930's.

Douglas:

Well thanks for your call Murial. Our next caller is Geoff from Rockhampton, good morning Geoff.

Geoff:

Yes, good morning. Dr Hewson.

Hewson:

Good morning Geoff, how are you.

Geof f:

Good thanks. My...well, what I want to ask you is, when the GST comes in, now, Government control on wholesale and manufacturing cost here are virtually, as far as I can see, are non existence. Now, what is going to happen, well, what

is to stop wholesalers and manufacturers, who now pay the...have the wholesale tax, from changing that to another charge. Like, saying that the cost of the product is, be

increased by x amount, which virtually covers the, what is now the wholesale tax. Plus you have got the GST which will go on top. In other words, it means the products become a lot a dearer.

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Hewson:

You are right Geoff, it is an area that you have got to watch and what we have done is to keep the Prices Surveillance Authority, we would have, in our early policy position, we were going to scrap that. We have decided to reverse that policy...

Geoff:

Yeah, but is it going to enough teeth to do anything?

Hewson:

Yes, it is going to have teeth, it will have legal teeth and it will have additional money. And we think it is, you have identified one of the most important issues, and that is to make sure than when we abolish these taxes, like sales tax and

petrol excise, that that is passed on in the form of lower prices and that people do not take it as an opportunity to actually put their price up for other reasons. So, that will be monitored, people will be named, there will be legal powers

and we are very confident that on that basis, and it will be a very high profile exercise, where people will be monitored. We think we can ensure that those costs advantages will be

passed through.

Geoff:

Yeah, because we have got our own little small business here and, I mean, like when the 25 per cent was taken off the re­ cycled bags and this sort of thing. Now, the cost difference between those and ordinary bags now is virtually non existence. The 25 per cent is just put on as extra charges, extra costs and this sort of thing.

Hewson:

That is right. Well, we will make it a national issue, it will be a very prominent thing and it will be monitored on a day by day basis by the Price Surveillance Authority. And there is one other thing that we have allowed for in the

package, and that is the transfer from the wholesales sales tax system to the goods and services tax system. We don't want people trying to add the goods and services tax on top of the old wholesale sales tax.

Geoff:

..when it is abolished.

Hewson:

..that is right. So, we have set aside $400 million to allow us to refund the net amount. But basically, refund the wholesale sales tax so that people just impose a goods and

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-feervices tax, and that is another element of your problem Geoff, which we have taken care of.

Douglas:

Thanks Geoff, and our next call. Good morning Maurice.

Heweon:

John. Welcome to Central Queensland my friend, where it all happens. Listen, there is no doubt in my mind that you are going to be the next Prime Minister, the control media certainly putting it down that way, you can't miss out. But

the thing that concerns me, not so much your goods and

services tax and on the local level, but the ground swell that is through our country now, exposing this new world order. I mean, it is all over the place, information everywhere, and very concerned about where you are going to fit in on the global scene.

Now, the IMF are very much involved and they have looted and raped nations for a long time and we are going to have to answer to this $162,000 million debt. Someone has to pay it, our children will be harassed with it and I do believe there

is a global plan, call it what you will, and your involvement with the IMF for four years in Washington, before you came back to this country, it concerns me immensely. And my question is sir, are you going to join the grass swell roots

and fight this thing, expose it, or roll along with Bush and all the others that are going along with it?

Hewson:

No, well I understand the point you are making. And the argument that I put in the Fightback package very strongly, is we have to act ourselves and we have to act to get our own house in order, we don't want others coming in here and doing

it for us.

And that is why, you mentioned the debt of $162 billion, we have got to move and we have got to move quickly. Now, I

don't believe that we have any choice in Australia anymore, but to make major change in order to make sure that doesn't happen, to boost the capacity of all our industries to export more, to produce more and we will all have to pitch in and work a bit harder and save a bit more in order to get that job done.

Now, we can do and I don't think we want the involvement of others in Australia. I agree with you totally, that we have got to fight that every inch of the way and the grass roots concern is understandable, we have got to something about it.

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Douglas:

Dr Hewson, our next caller is Ian from Comet, good morning Ian.

Ian:

Good morning. Good morning Dr Hewson.

Hewson:

Morning Ian, what is Comet.

Ian:

What is Comet. It is a really big town in Central Queensland. You ..(inaudible)., can't miss it.

No, it is a little town between Blackwater and Emerald.

Hewson:

Is it. I see, I hadn't heard of Comet.

Ian:

Oh gee, you have missed out. You will have to improve on that if you are going to be Prime Minister.

Hewson:

Yeah, I'll have to get out there by the sounds of it!

Ian:

Listen, my question regards your GST. And it regards the refund of the 15 per cent tax on inputs. Now, currently when we purchase goods that are an aid to our production, we have just simply sign a form and write a couple of numbers on it

and that is about the end of it. We get tax exemption on

those goods when we pay for them.

Now, I have been led to believe that with the GST, we would be purchasing those goods and paying the 15 per cent and then we would take them home and we would have to fill out a heap more paperwork, which we are not real keen on, and then basically

claim that 15 per cent back.

Now, as far as I can see, that is sought of not as good a

system as we have got at the moment, with that part of it.

Hewson:

Well, we are having the precise nature of that transition reviewed, we have got a Committee of full time people, the accountants involved, major ..(inaudible)., accounting firms

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Involved, Just looking at the precise way in which we will collect the information from you and collect the tax from you. It is true that of course the way the system works now, it is to your advantage.

Although, you are probably paying a lot of other tax that you don’t realise you are paying, for which you would get a refund under the goods and services tax system. There maybe sales

tax on other things that are not considered an aid to

manufacture. Certainly, petrol excise and payroll tax get included in the price of a lot of things you use as Inputs, even though you can't identify the tax, and that cost

advantage will be there as well.

We are trying to make sure that the paperwork is as simple as possible. Now, in principle, all you need is sales and purchases and the difference is really what determines your tax liability.

The second point I would make, is that there can be some real cash flow advantages, I don't know what type of business you have got...

Ian:

..we are farming and cattle.

Hewson:

Yeah, you see, if something has got a long shelf life, it sits in the shop a while before it is sold for example, and you have...carry tax on the input, you can get the refund pretty much straight away, long before you sell the item. So, you

get a cash flow advantage. We would also have you filling a form less regularly, probably, than under the present system. So, they are the main elements that are presently being reviewed by this formal body we have set up, it is a body headed by Sir William Cole and it has full time staff

sponsored by the big eight accounting firms and we are now drafting the transitional arrangements. So, I will be able to make that detailed statement on that in due course.

Douglas:

Thank you Ian, and back to Rockhampton Dr Hewson, good morning Gloria.

Gloria:

Oh, good morning Dr Hewson. We are a small company in private enterprise, one of our sections of the company is development of housing land. Isn't it a fact that with high interest rates and your new tax, the goods and services tax is going to

effect every fasciate of our development. That it is going to be the final nail in our coffin, send us to the wall?

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Hewson:

No, not at all. I mean, there won’t be any GST on the sales of housing, or housing land.

Gloria:

But won't there be GST on services provided, like surveyors, engineers, earth work contractors etc.

Hewson:

Yes, there will probably be in most of the cases GST levied on those services.

Gloria:

So, that as well as high interest rates, that is really going to be the final nail in our coffin, isn't it?

Hewson:

No, you see, you have got to think of what we are doing, we are not about putting interest rates up and putting taxes on. What we are doing is really providing a mechanism by which you can have lower interest rates in Australia...

Gloria:

..are you going to guarantee that?

Hewson:

..the reason the Government put interest rates up, was that they had too much spending in Australia, they wanted to slow it down, so they put interest rates up. An alternative way of doing of it, is changing the tax system to discourage

expenditure, and that is really what we are doing in moving to a goods and services tax. It takes the weight off interest rates and they will be used less and they will always be lower under us, than they would be under the Government.

The other point that I would make, is there are a lot of other cost advantages to your business that would flow from our package, whether it is the tax changes themselves, whether it is the refunds you get on the cost of all your inputs, which,

you know, you get a refund of the goods and services tax. The abolition of petrol excise for example, maybe a major cost input to a business like yours, either directly or indirectly, so that overall, we think the package is going to be pro­

business .

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Douglas:

Thank you Gloria, and we are running out of time, Just a few more calls, next it is good morning Pelma, from Mount

Chalmers, good morning Pelma,

Pelma:

Good morning Dr Hewson. We have a small piggery operation at Mount Chalmers and I am concerned on three particular questions, I don't know whether we pay sales tax at the moment on the feed we buy, I don't see a sales tax figure on

any of the invoices, ..(inaudible)., concerned, will we pay sales tax on our grain?

Hewson:

No, sales tax will be abolished and any goods and services tax, it would be refunded to you, so you wouldn't pay it.

Pelma:

And then we sell our pigs to the butcher, do we collect a goods and services tax from him?

Hewson:

Yes, you would charge goods and services tax on the sale of pigs to butcher, but he would get a refund on that. That is how the system works, each stage there is a refund, it is only at the final level really, that the tax is paid.

Douglas:

Thank you Pelma, and our final caller this morning Dr Hewson, from North Rockhampton, good morning Brian,

Brian:

Good morning Doctor. Under GST would common, ordinary food stuffs be taxed?

Hewson:

Yes, groceries in supermarkets will be taxed.

Brian:

Well, what happens to people not on the pension, on fixed incomes, pay very little tax now, they are going to be stuck with, you know, income tax, we don't pay very much tax because our pension, not pension, the annuity is taxed at 2.5 per cent

or something for the first, you know...

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Hewson:

We have spent a lot of time on that group of people, retirees, principally supported by their financial resources, some of them in the tax system, getting a bit of a tax refund, others

not paying a bit of tax. What we have done is develop a new system called a goods and services tax credit, which will be the mechanism by which the compensation will be delivered to those people, so you will get maybe some tax cuts, you will get some goods and services tax credit and over and above

that, then there are a host of other benefits that are

targeted into people in your circumstances. For example, you maybe able, effectively get the price of private health insurance, if you can save at all, you will be able to save

probably tax free, interest on savings will be tax free. You will get the pharmaceutical benefits cards, which you perhaps are not eligible for at the present time, which is worth

probably about $5 a week to you.

So, we have targeted, we are sure that the goods and services tax credit system will significantly more than compensate for the impact of the goods and services tax and the price of

groceries and so on, and then over and above that, there are those range of other benefits which are targeted into assist the retirees group, who as you correctly say, are not

sufficiently in the tax system.

Douglas:

Brian, thanks very much for your call this morning, and Dr Hewson, we are running out of time. And it is just one week before Christmas, Christmas day next Wednesday, any good news for Central Queenslanders for Christmas?

Hewson;

I would like to wish everyone of course, a very Merry

Christmas and a very happy and prosperous New Year. My message would simply be, that we really do have to face the realities of our circumstances and I know most people out here understand that. We have got to make change and we have got

to do it together and let's hope that in 1992 we can get on and either force the Government to make the change that is required or get into Government and make it for them.

Douglas:

Dr Hewson, thanks very much for your time this morning.

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