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Partial transcript of Howard Sattler program



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Leader of the Opposition .D

REF: TPT/BQ/PER.002

3 December 1991

DR JOHN HEWSON, MP

PARTIAL TRANSCRIPT OF HOWARD 8ATTLER PROGRAM RADIO 6PR PERTH, CO-HOSTED BY DR HEWSON 8:30am - 10:00am TUESDAY 3 DECEMBER, 1991

E & Ο E - Proof Copy Only

Hello, I'm John Hewson, welcome to the Sattler file, on today's program I'll talk with Howard Sattler about the Coalition's proposed Goods and Services Tax and the

Government's reaction since its release now about a week and a half ago and with some of its supporters and some of those concerned about how it will apply to them. We invite your calls throughout the program on 221 1233. Among my guests will be the head of the local Social Services Network and the

Lord Mayor of Perth, Reg Withers, who I am told is shaking your Council to its foundations, probably also cutting off a few bureaucratic toes, if he is true to form.

In a few moments we hope to speak with a man whose brother has just been released after five years in solitary confinement in the Middle East. Joseph Sicippio is the latest hostage to be given his freedom. Later Howard will give you the latest

location that could win you a telecom mobile phone, we'll also help you find your stolen cars in a special segment later.

Today's program is brought to you by John Hughes Skipper Diahatsu just over the causeway on Albany Highway, Victoria Park.

Hewson:

Sattler:

Welcome.

Hewson:

Thank you Howard, how are you?

Sattler:

You do that with aplomb, I will be replaced I fear.

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

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No chance of that.

Sattler:

Thanks for joining us on the program today.

Hewson:

Delighted to be here, delighted to be back in the West again.

Sattler:

And he's here on a selling job, how is it going?

Hewson:

It's going well, we are trying to get around Australia as much as we can and as 1 said in the intro, give people a chance to raise questions as well as give me the an opportunity to put our case. And, of course, this is the big week where the Government is intending to mount an attack.

Sattler:

They've started well, haven't they?

Hewson:

Started very well didn't they yesterday - got it completely wrong. in fact, I think they have conceded now that they can't find any mathematical problems or holes in it which is what we expected when we got the best people in Australia to

put the package together. What I hope we can do is get the Government to debate the issues really. I agree, I don't think we should get bogged down in the mathematical detail, it's accurate, let's talk about the big issues that are

confronting this country in the worst recession in 60 years.

Sattler:

Are you paying Brian Howe?

Hewson:

He did a pretty good job yesterday. There is a very important point I would make to you Howard, and that is, our approach is an honest attempt to deal with the problems and we call it the way we see it, there is some pluses and some minuses, some

good things, some bad thing from the point of view of

individuals, Brian is obviously trying to be dishonest.

Hewson:

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Ok, we'll talk about the pluses and minuses shortly.

.., continued ...

Sattler:

Yes, and I have with me as a co-host today John Hewson, Leader of the Opposition, but for how long? I notice, have you seen the cartoon in 'The Australian' newspaper today, you actually measuring up the Lodge for the new drapes and all that sort of

thing.

Hewson:

No I haven't seen the cartoon.

Sattler:

What sort of plans have you and Carolyn got for the Lodge?

Hewson:

Well we haven't even thought that far ahead, we've simply concentrated on getting the job done up until now, we've been a bit pre-occupied.

Sattler:

You are a lay down misere.

Hewson:

Well you are never a lay down misere in this business, you take nothing for granted, you leave no stone unturned and you continue . . .

Sattler:

Can I get some on now?

Hewson:

You can take what positions you like, but I will believe it the night the results are declared.

Sattler:

What price would you say you are at the moment if you were a bookmaker, you have got to put a price on it?

Sattler:

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No, I'm not really a betting man, that's the sort of question you better ask Dob Hawke.

Sattler:

I would have said 6 to 4 on, the Government drifting at 3 to 1 .

Hewson:

Well the Government is definitely drifting.

Sattler:

They need Paul Keating don't they? They need him back there to debate you. The last week has been a bonanza for you.

Hewson:

In terms of Parliamentary tactics I suppose Keating would be better at the theatre, but quite frankly we don't know what Keating would say about the package because if he was true to form he would to agree with most of it. Indeed, he has

advocated a lot of it over the years, so if he came back in an attacking mode he'd be trying to live down his past at the same time, now I don't think he would have an awful lot of credibility to do that.

Sattler:

But at least he would serve it up to you.

Hewson:

He would serve it up, but it is not just a question of serving it up, I actually think that if they judge the situation that way they have misjudged it because I think the electorate just wants the Government to get and do the job, to prepare an

alternative, to debate the issues and all the carping and whingelng and dishonesty and so on is not what the electorate is interested in.

Sattler:

Brian Howe has made two gaffs now, one of them was a very personal one and he used part of this program by the way, we are the ones who had the caller called Ann, which he distorted into Margaret. Now, you didn't seem to react at all to that,

others did, others on your particular side reacted but you didn't. What was going on inside?

Hewson;

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Well you always obviously feel these sort of taunts but my demeanour has always been one to just take it on the chin, I don't really worry too much about that. What I guess

disturbed me most is that it seemed to be pie-meditated, he seemed to read it and to repeat it and to say you are going to have get used to this sort of mud slinging and so on. I just thought well if that is the level that they are going to stoop to they obviously can't debate the issues of this package and

I thought it was just a very sad commentary on the fact that they'd lost their way and they'd resorted to that tactic as a conscious tactic. See I don't accept that it was the

passionate man swayed by the moment, I just think it was a tactic and it didn't work. They'd been around the gallery for a couple of days saying, Hewson has got a glass jaw, he is going to take all this criticism personally. Whereas, of course, in this business you live with the criticism, it is

the name of the game.

Sattler:

What do you think about it coming from a lay preacher?

Hewson:

That's a question you really ought to ask Brian Howe, it is not for me to judge as he would say, I'm sure, that we

shouldn't judge each other and in that sense he has got to live with his conscience on that. I set the standards in the Parliament, you might remember the occasion about a year ago when Wilson Tuckey got stuck into the other side using a

particular woman's name which is of sensitivity to Paul Keating and I refused to back Tuckey and wouldn't support him in the Parliament and showed that degree of leadership and set the standards and what I learned also last week was that Bob Hawke doesn't share the same standards and I think that is a

sad commentary.

Sattler:

Didn't he call Brian Howe aside later on?

Hewson:

Well I think they might have been trying to recover a bit of lost ground, it blew up in their face and I think they tried to put a brave face on it as far as the media were concerned. From the point of view of last week in Parliament, what did

the people of Australia really learn about an alternative view? The answer is nothing. The Government didn't look forward, their whole argument was looking back. Bob Hawke

reiterated what he thought were his great successes and when I asked him what his vision he talked about what he thought he'd done in 8 years in Government and he had no capacity to look forward.

Hewson:

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what people really want, the electorate knows that there Is a major problem, the policies that have been pursued by Government's of either persuasion over the last 20 years haven' t worked and they want a change and they want a debate about that change.

Sattler:

You worked for one of those governments, you worked for Malcolm Fraser. What did you do wrong?

Hewson:

I was an adviser in those days, I put my views as I saw them.

Sattler:

Are you telling us now that he didn't take notice of your views?

Hewson:

It is not fair to just blame any one individual, the

circumstances of the time changed dramatically too. I can remember, for example, in Malcolm's early days when they started going In hard on cutting government expenditure, the official view, the Treasury/Reserve Bank view at the time was that they're going too hard, two years later they weren't going hard enough. So ail 1 say is that all through that period there was a mixture of advice given to government and I

think the fact is that there were some very real opportunities lost and I will stay with one example that was dear to my heart was the introduction of a broad based goods and services tax, first went to the Cabinet in January of 1978 after he won

about a 55 or 57 seat majority.

Sattler:

Whose idea, was that your idea then?

Hewson:

we supported it, it was an idea that emanated I guess from the Treasurer and the Treasurer's office on the one hand and the Treasury on the other. But with that sort of majority the view was, look, there have got to be some major changes made

in Australia and this is one of them.

Sattler:

Well who knocked it on the head?

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The Cabinet knocked it on the head and the argument at the time, I guess, was principally associated with the tact that the retailers were not happy about the prospect of what was then going to be essentially a retail turnover tax. Again, it was looked at 1980/81 and knocked over. Now, I think they were two opportunities that were lost, if we put that sort of

tax shift in place in the middle to late 1970's the country would be substantially different, now that's all I'm saying.

Sattler:

was Malcolm Fraser in favour of it?

Hewson:

Well I can't speak for Malcolm, you'll have to ask Malcolm.

Sattler:

You must know?

Hewson:

You'll have to ask Malcolm. It is not for me to breach

Cabinet confidentiality.

Sattler:

But you weren't in the Cabinet then.

Hewson:

It is not for me to breach what I know about the processes that took place, it is dust simply for me to say the decision wasn't taken.

Sattler:

Were you in favour of it then?

Hewson:

Oh yes and I have been consistently all the way through. I, in a public sense supported the Government in 1985. When the Government was going to do it, I wasn't involved in politics, I was out trying to make a quid and they were going to do it

and in my weekly columns I supported tax reform.

Hewson:

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We've got a guest on the line, she mightn't be so enamoured with your goods and services tax, her name is Bindy Othergee and she's the Executive Director of the West Australian Council of Social Service. Are you there Bindy?

Othergee:

Good morning Howard.

Sattler:

Bindy you, of course, represent groups who are really working at the grass roots level trying to help people in trouble, you have got John Hewson on the line now, you have expressed some public concern already about his goods and services tax for

poor people, you might like to serve it up to him right now.

Othergee:

Well I guess I'd really like for Dr Hewson to ... (inaudible) ... is that this package is going to lead to further division in our society and certainly severe penalties for the unemployed.

Hewson:

Well it is not and we have spent a lot of time in the package actually targeting assistance to the low to middle income group. Now, I'll be honest with you and say that we have obviously tightened the eligibility for unemployment benefits

and for other benefits, but for those who continue to get the benefit and that is the vast majority of those that are presently on them, or likely to be on them, they can look to being more than compensated for the impact of the goods and

services tax. So much of what we have done in this package is targeted to the low to middle income groups and as you go up the income scale, as you get larger tax cuts, we claw back benefits like family allowances, we claw back the dependent

spouse rebate, we encourage people to take out private health insurance, we knock of all the tax advantages that high middle income to high income earners enjoy. And so, we believe that the package is really quite progressive. In designing the compensation package we have been very conscious of the fact that people on unemployment benefits, aged pensions, disability pensions and so on are really struggling in large

parts of Australia to make ends meet on the money they get, so, where possible we have taken those most disadvantaged groups and given them an 8% increase in the pension against a 4.4% CPI effect.

Sattler:

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You reckon you can hold that - 4.4?

Hewson:

Y©8, we do, we think it is a very conservative number. We have put a lot of time, obviously we knew that would be a central element of the debate, and enormous amount of work has been done on estimating that and to be fair that is the

consumer price index effect, the broader based inflation numbers are down around 2.2. So, we have significantly over­ compensated just on the pension alone, but then over and above that we have targeted other assistance in there - doubled

family allowances, we've provided tax rebates for people to go effectively into health insurance and pensioners will be able to basically get private health pover as a result of the package. Now those sort of changes are designed to really

target a lot of assistance into those groups.

The particular point that Bindy makes about the unemployed, well there was a perception around that we were just going to dump people after 9 months off the dole, now that isn't true.

Settler:

Well that is the perception.

Hewson:

Yes, it is unfortunate that that is the perception but the fact is that the only people that will lose the dole, totally, are those who are not prepared to satisfy a work test or who don't take a job that is offered, genuinely offered, or if

they don't take a training scheme that is recommended to them, now that is a small percentage. At the end of 9 months the great bulk of people go in one of three ways - they either go

to a work for the dole scheme; or they go to a new training scheme called Austrain; or they go onto special benefits. That is a very significant percentage of those on unemployment benefits at the end of 9 months end up on one of these

schemes, each one them, of course, being designed to basically get them back into the work force, particularly Austrain and work for the dole.

Sattler:

Any other worries Bindy?

Sattler:

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Othergee:

I have and perhaps we could come back to unemployment, but I'm still unconvinced that by introducing a goods and services tax at 15% and increasing pensions by 8% that the people on pensions and benefits who spend almost all of their income on goods and services are going to be advantaged.

Sattler:

Well you think they'll be 7% worse off do you?

Othergee:

I can't see how they can be anything but worse off.

Hewson:

The price effect isn't 15%, I guess the key point here is why isn't the 15% goods and services tax 15% inflation, why is it only 4.4? And the reason is that we abolish a lot of other taxes and three principle taxes are sales tax, payroll tax and petrol excise tax. Now those three taxes have a significant

impact on the cost of most things people buy, either directly or indirectly, and when you abolish them the cost base of all those products comes down.

Battler:

How do you know retailers will though?

Hewson:

Well we have seen one retailer, the Supermarket Institute for example, came out after our package and said that just on the basis of the abolition of sales tax alone they thought prices would only go up 3 to 5% in supermarkets.

Battler:

Across the board.

Hewson:

They've taken a basket of groceries and so on but they thought 3 to 5%. Now when you take away from that payroll tax and petrol and you just think about petrol, just take milk on the shelf and go all the way back to the cow and count the number

of times that petrol enters the cost of that final carton of milk, that's really the calculation that we have done. And nevertheless at 4.4 we have been conservative. Those taxes really do have a very big effect directly into the price of

goods and they cascade through the system - they start at the cow and they cascade several times before you get that milk to the shelf. That is really why the price base of the system

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comes down onto which you put the goods and services tax. The other thing is that business don't pay the goods and services tax, they get a refund on the goods and services tax and their inputs, so it doesn't built back into the price of goods and

in that sense it is only there at the end of the chain from the point of view of the consumer. All we are saying is that 15% GST is really going to have an average price effect of 4.4% and that is using the CPI which is an artificial measure of price, it isn't a broad based measure of ... (inaudible)

Sattler:

Does that make sense to you Bindy?

Othergee:

I think there is a couple of fairly untestable assumptions running through the whole package and I would like to say. Dr Hewson, I am not opposed to the entire package, there are some measures in it that we support and also to say that we are not entirely happy with the situation at the moment either. However, one of the assumptions that is being made is

that all of these advantages to business are going to result in 2 million jobs or at least a massive reduction in

unemployment. It is a fairly untestable assumption and I think a lot of the benefits of the package rest on that. Even if they do eventuate you have only talked about cutting unemployment by half, so we are still talking about 5% unemployed and I think that the measures taken to reduce the number on unemployment benefits are exceedingly harsh.

Hewson:

The two million jobs is an objective, it is what we think is achievable, we think it is a reasonable objective really for us to try and halve unemployment ...

Sattler:

You are going to create 2 million jobs are you? Well Bob Hawke created a million plus jobs but the trouble is all these other people are falling out the other end of the pipeline. How do we know that won't happen under your Government?

Hewson:

Well there is only one way to guarantee that job growth is sustainable, that the jobs are real jobs, is that you really rejuvenate the business sector, that is the sector that is going to create the employment, it is going to give the jobs

that people are looking for and what we have had over the last 8 years is really an anti business government. In saying that, of course, I'm not just paying out to the business community, we are going to make sure that the business

community pass on the tax abolitions and so on, the cost

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“ advantages they get In the form of lower prices or in jobs. We have got the Prices Surveillance Authority with a

particular task to make sure that the flow through there is into prices and when that happens, of course, the business community then becomes internationally competitive ...

Sattler:

Are you going to have price control?

Hewson:

No we are going to have the Prices Surveillance Authority monitoring to make sure that the cost advantages that are achieved are passed on.

Sattler:

And what can you do if they're not?

Hewson:

well the Prices Surveillance Authority will be a very high profile organisation, it already gets a fair bit of attention under this Government in relation to particular things like petrol, but we want to make it a very high profile

organisation.

Sattler:

Would you expose people who don't pass it on?

Hewson:

Yes, I mean the idea is to make the issue of the year, that it is introduced if you like, a fact that the price changes are going ...

Sattler:

So if a supermarket chain doesn't pass on or whatever they will be named publicly, will they?

Hewson:

That will be the idea, yes. I don't want to duck the

question, my answer ie yes.

Sattler:

Well it won’t work otherwise.

Hewson:

That's right, but I haven't talked to the Prices Surveillance Authority as to the detail of how it would be done, but in principle yes, you would draw significant public attention to those that were abusing the system or trying to exploit the

system.

Sattler:

Shop e1sewhere.

Hewson:

In a lot of areas where there is real competition it is not a problem. For example, take the trucking industry which is a major beneficiary of the package, now that is a super

competitive industry, they'll pass it on but nevertheless they will still be monitored.

Sattler:

Thank you Bindy, thanks for calling in.

****