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Leader of the Opposition' *

18 December 1991

TRANSCRIPT OF MEDIA CONFERENCE DR JOHN HEWSON, LEADER OF THE OPPOSITION ROCKHAMPTON, QUEENSLAND

E & Ο E - PROOF COPY ONLY

SUBJECTS: Fightback Package

Jrnlst:

Dr Heweon, the Financial Review this morning is quoting figures that there will be 13 per cent unemployment in New Zealand by 1993, is there similarity between your tax package and New Zealand's consumption tax?

Heweon:

Well, there is similarity between the tax, but it has got nothing to do with their level of unemployment. The tax in New Zealand, as Wally was just saying, is overwhelmingly favourably received. It has got nothing to do with the

unemployment rate, it is consistent with getting unemployment down. New Zealand has got a lot of other problems, it has got nothing to do with the GST in New Zealand.

Jrnlst:

What do you think is causing the unemployment in New Zealand?

Heweon:

Well, they have been in recession for five or six years and the way this country is going in Australia, Bob Hawke will have you approaching 13 per cent unemployment. In fact, if you add the real numbers, that is people who can't work as much as they want to you, we are already around 17 or 18 per

cent anyway. So these numbers that you guys run around with, don't make any sense.

Jrnlst:

What are the elements in your tax package that counter unemp1oymen t ?

CO M M O NW EALTH PARLIAMENTARY LIBRARY M ICAH

Parliament House, Canberra, A.C.T. 2600 Phone 2774022

Hewson:

Well, we boost the business community, that is where the jobs are going to come from. It is a simple proposition, we are abolishing major taxes, like payroll tax, which is an anti jobs tax, sales tax, petrol excise and of course, we lower other costs by about 20 to 50 per cent. So, the business

community can get on and employ people, it is the only way you are going to get jobs in Australia. You won't get jobs by Bob Hawke or Paul Keating, or John Kerin or Ralph Willis, or

whoever it is wondering around the country saying, you know, we will get jobs, we will get jobs. You have got to do the work, you have got to change the system to get jobs.

Jrnlet:

What about some other numbers, the opinion polls today?

Hewson:

Well, you know, I am not poll driven, I don’t pay much

attention. We have been up and we have been down, I happen to be up today, we will probably go down again before the next election, there is only one poll that counts and that is the one at the election. We have been working for about 20 months

now towards that goal, we have got about 18 months to go.

Jrnlet:

There has been some speculation this morning that there won’t actually be a Caucus meeting tomorrow to decide the leader of the Government. Do you know anything about that?

Hewson:

Well, it is about time the matter was settled. Either the Prime Minister settles it or the Mr Keating settles it, and I think given Mr Keating's been de-stabi1ising the Labor Party for a year, and destabilising Australia for a year. He ought to put up or shut up, it is time for Paul to put up or shut

up.

Jrnlet:

You must pretty happy with the way things are going though for you?

Hewson:

Well, we are pleased, obviously. But, you know, we see it as a three year job, Opposition, we have worked very hard to get where we are, put in an enormous amount of work.

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He are very pleased with the reaction, but we are not

complacent, we have got a long to go, we have got to go all over Australia, like we are doing here in Rockhampton, explaining ourselves, getting people to understand the benefits of the change, getting people to want change. We won't win by relying on Hawke and the others falling over, we

have to win in our own right, because people want us to govern thig county. And the only way you do that, is to get out and meet the people and we are spending every day and getting out either explaining ourselves or looking at the way Government policy has impacted on different parts of Australia.

And here in regional Australia, it is very important that we get that message and go back and take that into account as we design policies.

Jrnlst:

Well, in regard to road transport, will heavy vehicles pay more under your road user charge?

Hewson:

Well, we said that there will be a user charge, a road user charge, but we are doing that on the basis of abolishing petrol excise, abolishing sales tax. So, a trucking industry like this one here, will be significantly better off, that rig behind you cost nearly $300,000, there is $55,000 worth of

sales tax on that, on all the tyres, on the parts, on the lubricants, on the fuel, there is a fuel excise, there is payroll tax. Now, trucking costs will drop dramatically and off that base, we will then impose a road user charge, it is a

fair charge and reflects the road user, the road usage by heavy vehicles.

Now, compare that to Bob Hawke, he is hanging on to the petrol excise, which he has milked about $30 billion net. He is hanging on to the payroll tax, hanging on to the sales tax, he is going to put road user charges on top of that. Today in

Canberra, the Senate this afternoon will see the Government try and ram through this Road Transport Commission Bill. The trucking industry put a very strong case that they needed more time, they needed the idea of a national road transport

commission to be given more hearing, more consideration, the Government is using its numbers with the help of those very unreliable pollies, the Democrats, to ram the thing through. Now that is a disgrace, when you have a major industry like

transport, which is so fundamentally important to Australia.

Jrnlst:

Your road user charge won't simply replace the cut in fuel excise?

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No, there is a massive over taxing of the transportation industry. I have just mentioned three, sales tax, payroll tax, petrol excise are massive taxes on that industry. Now

the industry itself and we have met with the Trucking

Association, they are happy for a road user charge that reflects road usage, but not a road user charge on top of petrol excise and on top of payroll tax and on top of sales tax and so on, which are massive disadvantages to this

industry.

And you take a town like Rockhampton, I mean, so much of the food that is shipped in here, depends on road transport costs, and as one fellow was just saying, he will bring a packet a corn flakes from Melbourne. How many times does trucking get

involved in that? How many times does petrol excise counted in that final price? We expect that the prices of a lot of thing will fall quite dramatically when you abolish those charges and everyone accepts the fact that there ought to be a

road user charge.

On private motorists, we won't add any other road user charge, they already pay State registration and so on. We think the goods and services tax, which is about 7 cents I guess, per litre of petrol, is an adequate road user charge for the

private motorist, so they will get the benefit of a $0.19 per litre drop in the price of petrol. A trucking company like this will get a 26 cents in the litre drop in the price of petrol or diesel, depending what they use.

Jrnlst:

What about in regard to other farm inputs. What about in regard to a portioning the rebates on other farm inputs, such as power, phone use, all those sort of things which are part of the farm business?

Hewson:

Well, if it is a farm business, there won't be any GST on its inputs, they get fully refunded. So, if you are running a business, the goods and services tax is refunded to you. Whereas, under the present system you are probably paying

sales tax, payroll tax and so on. Petrol excise, either directly or indirectly in the price of a lot of your inputs. It is overwhelmingly in favour of business generally and farmers, and you can see the reaction of the Farmers

Federation and other farming groups, they have been unanimous in their support for the package, because they see a

tremendous cost advantages to farmers, coming out of the package as a whole.

Jrnlst:

So, the ..(inaudible)., will be clear?

Hewson:

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Oh yes, very clear. In fact, we have put down our view as to how they will work. in general they will just be refunded, depending on how often you file your return and if you are a small business, you might file every two months, every six months, maybe some once every year, Others may be doing it on

a monthly basis. But, they not only get the refund, they get a cash flow advantage as well, so they end up in some cases if they have, you know, if it is a shop for example, it has got stock on its shelf, they can get a refund on the input and the stock can sit on the shelf for months and they not pay any tax on that until it is sold. So, it has overwhelming advantages

for business and what we are about is of course, getting business to understand the nature of the change.

You see in countries like New Zealand, business has been very happy with it. It has given them a lot of advantages they didn't expect and, you know, the big thing is that you pay so much tax in Australia that the Government doesn't tell about. So, it is Indirectly in the price of a lot of goods, it is hidden in the price. And one of the advantages of a goods and

services tax, is that it is transparent, you know what it is, it is 15 per cent, all the other taxes have been abolished.

The same as the automatic indexation of excises, I mean, the Government has been ripping money of people for years by not declaring that they are putting the excise up, so we are scrapping that too. Bracket creep, you get pushed into higher tax brackets all the time, they take more tax money out of

your pay. Well again, we are going to make sure that bracket creep is identified every year and hand It back. You have got to have a degree of honesty and transparency in Government, particularly in relation to tax and that is why, as people get

to understand our package, they are getting to understand the tremendous benefits to them, as individuals, be they in business or be they family people or whatever,

Jrnlst:

How are you going to guarantee that those savings are passed on to consumers?

Hewson:

Well, we are keeping the Prices Surveillance Authority and we are giving it a very high profile role, we are giving it more resources. We are going to give it some legal power. They

have the capacity to name people, investigate people and make sure that those cost advantages are passed on. It will be a very high profile organisation, it will be very conspicuous and you would be taking a very big risk to try and beat the

system. And in that sense, I think Australians will work together to make the change, to introduce a goods and services tax and we look for a degree of co-operation out of people, but the Prices Surveillance Authority will be there to play

Heweon:

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the watchdog role that is essential to make it work.

Jrnlst:

..(inaudible)., too much interest, too much importance on the market forces to regulate it though?

Heweon:

No, no not all. Look, in a industry like trucking, very competitive, you will find the prices move pretty quickly, In other industries, where they are less competitive, of course, the Prices Surveillance Authority will play a larger part and keep a more watchful eye.

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