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Transcript of Interview Dr Hewson, Leader of the Opposition AM, ABC Radio

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Leader of the Opposition

25 July 1991 REF: TRANSCR\0005.tmc



SUBJECTS: Goods and Services Tax, South Africa


Yesterday on of your colleagues, Senator Amanda Vanstone, released figures which showed that during the Labor years the richest 10% of Australians became 30% richer while the poorest 10% became 25% poorer. Why would you think to further increase that inequity by imposing a tax which will hurt the poor more than the rich?

Well there is absolutely no basis, Maxine, for concluding that our tax proposals will hurt the poor and benefit the rich. The Prime Minister has clearly argued that, but it is absolute nonsense. He's asserting that - it's absolute nonsense. And the reason is in the figures that you have just given - he's acutely

sensitive to the fact that the only people who have done well under Labor are the rich.

But if part of your plan is to lift the capital gains tax and

replace it with a weaker speculative gains tax the rich will get richer.

You need to wait to see that details of our package. As I have said we are reviewing all aspects of tax. We are very conscious of the fact that the focus of our attention should be on working Australians. And we're not in the business of favouring a

particular group like the rich, not at all.




Parliament House, Canberra, A.C.T. 2600 Phone 277 4022

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Well as long as you delay giving us the details, you give the Prime Minister the running on this issue, don't you? He can say what he likes about it and that will seep into the public



Well he runs off at the mouth but people will wait. The

electorate, I have every confidence in the electorate

sophistication, their maturity. We've got to be able to have rational debate in Australia about major issues like tax reform. Scare mongering by the Prime Minister will very shortly be seen as simply scare mongering by the Prime Minister.

Australians will not be fooled, they will sit back and

objectively assess what we have got to say. And in those

circumstances right now I am delighted he has elevated the debate, I am delighted to challenge him anywhere at anytime to debate the details of a tax reform package.

But we want to make sure that we do have a full blown rational debate in this country on something as important as tax.


Are we seeing a delay in the release of the details because you are having problems doing the sums on this? For instance, if you lift that capital gains tax you will lose billions and of course it is extremely expensive to get even a percentage point

reduction in income tax.


No, there is absolutely no problems with the sums, we have worked to an agenda since I announced the decision a year ago. We have always planned to release the details in the later part of this year. We obviously have to get it right but it is difficult from Opposition to do the detailed modelling that is available, obviously, to the Government. They set up their own little group, taxpayer funded scare mongering now out of the Treasury.

They are obviously going to tear us down but we have put a lot of time and effort and money into ensuring that our numbers are right and as far as the capital gains tax goes, assertions about billions of dollars are ridiculous. There is nothing to suggest

that there are billions of dollars at risk here. In the last several years a lot of people have lost a lot of money when the property markets have collapsed, the share markets have

collapsed. The assertion of billions is simply an assertion, lets wait and see the detail of the tax decision we bring down and then lets argue the case. The Prime Minister is simply scare

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Well, what about exemptions Dr Hewson, reports from Shadow Cabinet meeting the other day suggested that you would be

considering exemptions on perhaps health, education and financial services?


Well, internationally, I don't think anyone taxes financial services per se, it is almost impossible to do it directly, although they do tax the inputs to the financial industry, which has pretty much the same effect and we have reviewed

international practice on that. On health and education, I am listening debate on both sides.

My preference is for the broadest based tax possible. Uniformity and lower rates are preferable to trying to buy off particular interest groups by giving exemptions. The benefit of the tax is uniformity and across the board. We have got to be prepared to argue that as a principle, while at the same time of course,

looking at particular arguments where there maybe justifiable exemptions that need to be given.


What about food? Would you exempt food?


At this stage we have got food in as in terms of a broad base.

We haven't made a formal decision as to some of these exemption arguments that people have put to us but at this stage I think it should be as broadly based as possible.


Is it true that everything then is still on the table? I gather you are talking about wanting to release this just after the budget but you are still talking about all the details at the moment?


No, we haven't decided on just after the budget but certainly in the later part of this year. As far as the details go, we have a democratic decision making process in our Party, we debate the issues within the Shadow Ministry and within the Party room.

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We have a clear idea as to a very narrow range of options that we will be debating through that process, a lot of discussion has already taken place on some of those options and that is the best way in fact to design a package which then everybody has to go

out and sell, to get them to understand it is important, to get them to be involved in the decision making process all the way through.


Dr Hewson a critical area for you of course is the effect of the tax on savings. Superannuants are of course a key constituency for you, unless you compensate them, their savings are

immediately devalued, are they not?


Well, Mr Keating's response in 1985 is that savers will just have to lump it. We have taken the debate a bit further than that and tried to assess the precise nature of the change. It depends obviously on the size of the tax and the CPI impact of the tax and of course savers will be better off to the extent that the

income that they earn of savings will be subject to lower tax. . .


..that is true. With those savings they will then have to go out and have to put 15 per cent on all goods they buy.


Well you are assuming 15 per cent Maxine, that was the point I made, it depends what rate and what CPI effect and the Government is simply exaggerating a lot of those-effects and we will provide the details in as part of our package, informing people as to the

size of the CPI effect and the extent to which we have been able to compensate for that.


What about the concerns of retailers? I gather you are meeting with them at some stage, will you aim to distinguish the tax and the point of the sale from the retail prices as the industry is requesting?


Well, I haven't heard their argument on that. I think they are arguing for a retail turn-over tax and not a goods and services tax, that is an assumption on my part. If that is the case, we are not working towards to a retail turn-over tax.

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But they don't want to take the blame for being seen to be

putting an extra tax on.


Well, some retailers have come out to point out that in fact there is already a very large range of goods that people buy at the supermarket or in department stores that are subject to extensive taxes of 10, 20 and 30 per cent under the sales tax. And it is not clear that those retailers will be in some cases,

net tax collectors. Many of the prices of the goods that they sell in certain stores will go down and less tax will be



Dr Hewson, I know you are convinced this tax is in the best

interests of Australia but of course a lot of your colleagues are some what leery of that..


I am not sure that is fair. We have a pretty strong view across the Party that this is an essential change that has got to be made in this country.


But aren't a lot of them saying to you that they think you have found another way to lose an election?


No, not at all, not at all. People are not saying that to me,

I have read that in the press and there may be some people in the Party organisation that have expressed that view. But, we are not about losing elections, we are about governing in the best

interests of the people of Australia. Look, the lesson of the last election campaign was surely, that politicians ought to be open and honest and have the courage to call it the way it is, tell people what needs to be done to fix our country and we do need to re-build our economy from the bottom up.

In those circumstances it is preposterous to suggest that I shouldn't be courageous enough in those terms to announce that we are going to have a broad based goods and services tax as part of a central tax reform and be prepared to debate that all the way to the next election.

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To put in the bottom drawer and pull it out after the election, is a very sad commentary on the nature of our political process. If you have to lie to get into Government and you have to lie to stay there, it is a very sad situation and if you want that sort of approach, vote for Bob Hawke and his team because that is how they have got there in the past and obviously that is how they

intend to try and stay there in the future.


Alright, just a final point on another topic. Given the

revelations from South Africa about the Government's funding of Inkatha, is Senator Evans right do you think, in now wanting to stall the early easing of sanctions?


No, not at all, he is way behind the world in terms of the

adjustment to sanctions. The Europeans, the Japanese and so on have moved very quickly and decisively and appropriately. The situation has been such that the move away from apartheid, the

elimination of the main legislative pillars of apartheid has moved a lot faster than most people in the world were

anticipating and the De Klerk Government needs recognition for that. We have argued for quite some time that sanctions should have been lifted, they were ill-conceived in the first place, in the sense that really do discriminate against those that you most want to help, which is the poorer black South Africans and as far as we are concerned, there is overwhelming evidence now that

sanction ought to be lifted, with the exception of some of the arms limitations.

But basically, as far as we are concerned, most trade investment and economic sanctions and sporting sanctions can now be lifted.


Dr Hewson, thanks very much indeed for joining us.


For further information:

David McLachlan Ph: (02) 251 8915