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Transcript of media conference: Wild World, Cairns, Qld: 17 December 1991: Labor leadership struggle; the black economy; tourism; tax reforms



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Leader of the Opposition

TRANSCRIPT OF MEDIA CONFERENCE DR JOHN HEWSON MP - LEADER OF THE OPPOSITION WILD WORLD, CAIRNS, QLD - TUESDAY, 17 DECEMBER 1991

E & OE - PROOF COPY ONLY TRANSCRI\034 IB:MM

SUBJECTS: Labor leadership struggle; the black economy; tourism; tax reforms

Dr Hewson, Parliament convenes on Thursday, and what do you think the likelihood of a leadership ballot. -

I hope they settle the matter. I don't know whether it will take a ballot, but we think it should be settled and settled quickly so that whoever's the Prime Minister can get on and govern the country.

Jrnlst:

Do you think we'll have another leader by Christmas.

Hewson:

Well, I don't know. I think Bob Hawke has dug in. He's obsessed with stopping Paul Keating getting the job. He seems to believe that Paul Keating will not only destroy the economy, as he's already done, I guess, but destroy the Labor Party as well. I

think the Prime Minister has a responsibility to settle it. He needs to bring it to a head one way or another and then on that basis get on and govern.

Jrnlst:

This week, though.

Hewson:

Well, preferably this week. We'd like to actually see them get on to by Thursday and have a major debate on the economy.

Mr Willis admitted yesterday that the economy is not going to match the Budget forecasts, that the world economy is certainly

Jrnlst:

Hewson:

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

COMMONWEALTH | PARLIAMENTARY LIBRARY I MICAH I

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growing a lot less than they assumed, that the Budget numbers are all wrong, and in that sense we're urging him to make his

economic statement on Thursday so we can have a full debate and in order to do that effectively they should have settled the leadership issue by then I would think.

Jrnlst:

What's your response to the figures from the government yesterday showing that the GST or the package is $1.1 billion over the mark.

Hewson:

They've just made it up. The best example of that is the fact that they assumed that the black economy will contribute nothing to revenue. I don't know what world they live in, but if you get

out around Australia, you see the cash economy, the black

economy, alive and well. And it's ridiculous to assume that you won't raise any additional money by a major change in the tax system that's in part designed to catch the black economy. But that's the sort of thing they've been doing. They're just bald­

faced liars.

They're not prepared to debate the issue, they're just trying to distract attention from their leadership problems and the fact that their economic strategy has failed. And I think it's very sad because the electorate wants them to get on and to present

an alternative and debate that alternative with u s . We put down a sense of vision, and a sense of direction, they don't seem to believe it, so what is their alternative. Let's have that sort of debate.

This incessant lying about the numbers doesn't do anybody any good. As far as we're concerned, the numbers we put down are watertight, they haven't put a scratch on any of the figuring. The only thing they've done is change a couple of assumptions or

deny the obvious and the obvious, I think, is that the black economy is alive and well in Australia and it needs a change like we've proposed to catch it.

Jrnlst:

Well why is it, do you think, that if they haven't put a scratch on any of the figuring and they haven't been doing a very good job of debunking the package, why is it you think that more

people, according to the newspoll today, still think it's not a good idea.

Hewson:

Well, if you ask people do you want a goods and services tax

they'll obviously say 'no'. If you say do you want a goods and services tax with personal tax cuts, and doubling family

allowances, and genuine reform and two million jobs, some will say 'yes'. So it depends what question you ask.

Jrnlst:

Don't you think that most people yet understand that or yet associate the goods and services tax with the entire package.

Hewson:

I think the package has had overwhelming support, tremendous support around Australia and the best example of that is all the Labor voters that come up to you and say they're going to switch their vote for the first time in their life, they've always voted Labor, but, you know, Bob Hawke's lost his way and Paul Keating's done all the damage, so we'll vote for an alternative. So we are very confident that over the next six or twelve or eighteen months, however long we've got, the great bulk of Australians will vote for major change, including a goods and services t ax.

Jrnlst:

Happy with the latest polls coming out showing your popularity rising.

Hewson:

Well, we don't worry too much about the polls as we've

consistently said. They come and go. I've been up and down in the polls and I'll go up and down again. The real issue is the final poll, the one on election day and that's the one we're about winning. It's nice to be in front, it's nice to see some support for the package, but we're not complacent, we're just going to continue working to convince people that we've got to make change in Australia. What's been done hasn't worked and we

need a new direction and a new vision and we will continue to sell that all around Australia.

Jrnlst:

The owner of this park, for instance, is rather concerned about what the 15 per cent straight impost would do for their admission price. They'd obviously have to raise it by 15 per cent. What sort of trade-offs would you offer to them.

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Hewsο η :

Well, they get a lot of trade-offs. Certainly the tax system is of benefit to them, particularly the capital gains tax changes, abolition of petrol excise, abolition of payroll tax, maybe, I'm not sure how many people they employ here, certainly the

abolition of sales tax, the fact that they won't pay goods and services tax on any of their inputs. To me they're important changes that means that their price won't go up 15 per cent. We think on average prices will go up about 4.4 per cent. Yet the number of tourists will increase dramatically. About 80 per cent of tourism is domestic, about 75 per cent of that involves use of the family car. The abolition of petrol excise will boost the tourism in Australia, boost the number of people coming to parks

like this, the demand will go up dramatically and despite the fact that they their price may go up a b i t . Really we're very convinced that overall it's beneficial to the tourist industry.

Jrnlst:

On what do you base you assumption that more people will spend their, if they have any extra money, that they will spend it on tourism. What sort of ...

Hewson:

Well, we're not saying that they'll spend all of it on tourism. But they'll spend some of it on tourism. Don't forget they get a lot of money back in their pocket from the tax cuts, we've

doubled family allowances for the average family - that's another $1,000 a year, then if they drive for their holidays, they're probably going to be several hundred dollars better off by driving for holidays somewhere, to Cairns and to visiting a tourist park like this. So as far as we're concerned they'll have the choice. They'll have the money in their pockets,

they'll have the choice and, given our tendency in the past for leisure and to enjoy holidays, I think a fair bit of that will go on holidays.

Jrnlst:

Are you ruling out increased road charges down the track, though.

Hewson:

For private motorists there won't be any increased road charges. We think the goods and services tax is an adequate user charge for the average Australian motorist. On the heavy trucks, yes, they'll pay a road user charge, but they'll pay it off a zero

base. They won't pay sales tax on their rig, or on the tyres or on the lubricants or on the parts, they won't pay petrol or

diesel excise, they won't pay payroll tax and the truckies and the trucking organisations I've spoken to are overwhelmingly positive towards the tax package.

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And I think what you'll see is as time goes on is that every

petrol bowser in Australia will say 'vote GST', every truck will say 'vote GST', and that's what we're about. It's overwhelmingly in favour of the trucking industry and tourism.

Jrnlst:

. . . means it will cost you more to fly, less to fly overseas than to fly to Cairns, once the GST comes into effect.

Hewson:

Well, that's not clear either because there are so many changes that are going to take place in the aviation industry under our policies. For example, we're going to allow Qantas and Air New Zealand to carry domestic passengers. We're going to allow

international airlines to inter-line on their own domestic legs, we're going to open up the aviation industry to more flights, more charter flights. We're going to privatise airports and runways, and build the third runway at Mascot as a matter of

urgency, the second airport in Sydney, and similarly around Australia.

There's overwhelming evidence to suggest that there'll be more tourists and significantly more revenue there for the tourist industry. Now to give you an aim, we presently take about

2.2 million tourists a year in Australia. We believe that the industry can double that by 1995 and they can double that again, that is to 10 million tourists, by the year 2000.

Jrnlst:

. . . (inaudible) . . .that Australia would lose about 125,000 tourists a year as a result of the GST.

Hewson:

I don't think that's right. We've had some discussions with ΑΤΙΑ and as far as I can see they haven't made a final determination. They certainly haven't factored in the benefits of goods and services tax, the abolition of payroll tax, the abolition of petrol excise, the abolition of sales tax and the other personal tax and capital gains tax changes.

Jrnlst:

...(inaudible). . . long time in the tourist industry. It will be a long time before hotel operators are able to pass on those savings to tourists.

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Hewson:

I'm not sure that's right. I mean, it will be done all in one

year, the tax reform package. We've foreshadowed the time of it's introduction and, you know, it's the way you think about it. There're a lot of other changes as well that will be going on. Abolition of penalty rates, abolition of leave loadings, major

cost disadvantages to the tourist industry, so you get better labour costs, you get many, many more tourists, international and domestic, with cheaper petrol, no goods and services tax on inputs into the tourist industry, be they hotel or a car hire

service, a tourist park, whatever it is.

Jrnlst:

... (inaudible)... aviation industry...

Jrnlst:

...that's always been a problem for Cairns, because of its

remoteness.

Hewson:

Well, that's only one issue. If you only look at one part of the package. Sure, the major airlines don't gain from the fact that there's not excise at present on AVTUR, there is excise on AVGAS, there's a tremendous amount of petrol costs that goes into running an airline. I mean, they don't just suddenly emerge, people arrive at the airport, they are taken to the airport by petrol driven or diesel driven vehicles, the bus companies, of course, are big users, McCafferys I think have estimated that they'll be $2 million a year better off, so the costs really do, the cost advantages really do flow through the system, be they

labour costs, or transportation costs, or the fact that the industry won't pay GST on it's inputs.

Jrnlst:

...(inaudible)... business, but how are tourists actually going to benefit from this.

Hewson:

Well, they'll get lower prices. If we open up the domestic

aviation industry to genuine competition and genuine

restructuring, you'll have cheaper airfares as well as having cheaper holidays by car or by bus or by caravan or by anything else.

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Jrnlst:

One of the great competitors, Brian Grey, has already said that the GST would cost him several million dollars more a year with no compensation.

Hewson:

Brian Grey has only done half the sums. Brian Grey has got a

long way to go to understand obviously the full dimensions of the package and, you know, I remain to be convinced that Brian Grey won't be better off.

Jrnlst:

Dr Hewson, the fact that you're here indicates that you must still be concerned, though, about the tourism industry.

David Jull has already been to the area and...

Hewson:

I foreshadowed that I'd come to Cairns many times. We came here during the pilot dispute, for example, David and I, to determine the impact of the pilots' dispute on Cairns. I've come here several times already and we're going all over Australia. Just because I go to the Pilbura, or down to Hobart, or up to Broome, or down the Albany or whatever, you shouldn't conclude that I'm concerned.

All I'm about is explaining ourselves and giving people a chance to meet us firsthand and to get to understand the package. We're going to have a mailout, or a letterbox drop to every household in Australia in January/February of next year, we've got 3-400 public meetings around Australia. I mean, I recognise that when you've got a package this big, that is this complex, that offers overwhelming benefits to the average Australian, we've got to get

out and explain ourselves.

My colleagues and myself are spending every day of however long we've got between now and the next election getting our message out to people, giving people a chance to ask questions, getting firsthand information on how the package will benefit particular

groups in Australia and we are very concerned, of course, about far north Queensland. People forget that a great bulk of the wealth in Australia is generated in the northern third of

Australia, that the mineral industry, the tourist industry are fundamentally important, the agricultural area as well, all fundamentally important. They're our major export earners and there has been a tendency in Canberra-based governments to forget

far north Queensland, and I'm not prepared to let that happen. That's why we've come, that's why we'll continue to come.

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And it's a delightful thing to do, anyway. We've met a lot of very interesting people, met some very interesting animals today, apart from the crocodile who didn't particularly turn me on, but the koala bear was fine.

Ends.