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Opposition Leader discusses business tax, GST.

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RICHARDSON: There is a lot of news around coming out of Canberra and it’s hard sometimes to make head nor tail of it. But I suppose the staggering thing this week is that the Liberal Party got through a business tax package with the support of the Labor Party. That meant the capital gains tax rates, which obviously aren’t going to be of much benefit to bafflers, were halved. And, of course, the Democrats are saying that Labor has lost its way, it did too easy a deal with the Liberal Party. On the line is Kim Beazley, our Opposition Leader in Australia. Good morning, Kim.


BEAZLEY: Good morning, Graham. Actually, after hearing you reading the tea advertisement a moment ago, I would just rather have a cup of tea.


RICHARDSON: Well, actually, I am about to start mine, mate. I am just starting it right now.


BEAZLEY: Good on you.


RICHARDSON: Now, tell us, have you gone too easy on this?


BEAZLEY: I don’t take any notice of the Democrats. They gave us the GST along with the Government. And in the process punched a $6 billion hole in the Budget surplus, which is why we are even contemplating this levy associated with the Timorese commitment. So let’s leave the Democrats to one side. And let’s get to the issue of the business tax. Look, if we were doing business tax reform, we wouldn’t have done it this way. We would have concentrated, in particular, on research and development tax concessions because we think they are absolutely critical. They are getting people to invest in new product and employ people. But the Government wants to do it this way. Some of the ideas we had about an attractive capital gains tax regime for investors, they picked up. Other things that they have done, we would not have done if we had been in Government. But the point is, we are not in Government. So what is our job? Our job is to ensure that, whatever happens with this package, it doesn’t decrease our flexibility, the things that we can do when we are in Government. So what we were after the Governmentabout was this: we said OK, some of the ideas in the tax package we agree with, some of those we don’t agree with. We don’t think it is all fair, but we can fix the unfairness in Government. What we can’t fix is if you have not kept your promises that all the tax cuts here are going to have offsets to make sure they don’t become a heavy charge on the Budget, and stop us being able to spend on schools and hospitals etc. So we spent this week holding Peter Costello to his promises and, where he said he had a disposition to do something about some of the tax avoidance measures, we said ‘disposition is not enough, you have got to sign in blood’. And effectively, at least metaphorically, that is exactly what he has done.


RICHARDSON: OK. When you look at the announcements that he made yesterday how do you win an election next year with booming economic growth, with unemployment dropping below 7 per cent and the Budget surplus is still around.


BEAZLEY: Look, I think there are two things there. One thing that Victoria proves, and one thing that our defeat in 1996 proves - when we had even better growth rates than we have now, and we had even better employment growth than we have now - but I don’t expect people to remember back three years... that happens to be the truth, we lost then. You know, I think there are two things that are out there in the community and they are deeply held sentiment. The first is: yeah, the economy is doing alright, it is not doing brilliantly in comparison to achievements in the past, but it is doing alright. But what effect is it having on me and my family -don’t see any. That is a very common sentiment in the community and they are right to think that way. And the second element of it is: OK, well, it’s fine now, but we all know this is being driven by consumption. Not investment, not net exports. And that the countries which succeed in the next century are going to be the countries that know how to do things. And the various indices, if you like, to coin a cliche, of the knowledge nation that we are going to have to be, they are all going bad. Schools going bad, universities going bad, research and development in the private sector going bad. And most other countries, that are successful countries, are also experiencing pretty reasonable growth because most of Europe and the United States is experiencing pretty reasonable growth. They are also experiencing better and better achievement in those areas. They will leave us behind. Now, the Government has got no answers on these two fronts, no answers at all, and that is our challenge. To get the answers in, and people convinced that we know what to do.


RICHARDSON: And what about the GST? Obviously you have got to make sure that is the focus of most of your attention between now and the election.


BEAZLEY: Well, we oppose the GST. We think it is an unfair tax and a huge burden on those who have to administer it. You know, I stood up in Parliament the other day .. .and the Liberals are running into a bit of trouble on the GST, more than a bit of trouble. They have been out there mocking us saying, ‘you know, the old tax system was so bad, but you have got this bright spanking new tax system and you’re old fashioned’. The GST is a 1960s European tax, with all the 1960s European complexities. And now small businesses are realising it. You know, I stood up in Parliament the other day, after I had had one of these lectures on how efficient it was, and showed Peter Reith across the table the 100 plus page guide that everybody working 16 hours a day, seven days a week in small business is supposed to read, mark, understand and then submit the equivalent of an annual tax return every month or every quarter. Now, they are not going to be popular, this Government, not with the key elements of their constituency. And everybody else knows that this business that you are going to control the prices that rise, to an extent the Government says it is going to control them, is a load of nonsense. So there is going to be a huge number of people out there who are going to be suspicious that this Government intends to roll the GST forward, raise it, put it on more items. That they are going to roll it forward. And our view is going to be you are going to have to roll this GST back.


RICHARDSON: OK, Kim. I wish you well with it. It is going to be the main, I guess, centrepiece in an election campaign. You are only three points behind in the polls. It is still pretty close, isn’t it?


BEAZLEY: Yeah, the Government is ahead. We are the underdogs. And wouldn’t you expect to be the underdog in a climate in which there is a certain amount of growth around. But I don’t give up hope on that basis. I just don’t think this Government has the long-term directions that this country needs. I think it has put in place something that it did not need to do. And, you know, instead of spending on our crisis driven hospitals and schools, we are spending on the bribe package associated with the GST. It wouldn’t be necessary to put in the increases to family allowances and the other things that they have done. It wouldn’t be necessary if it weren’t for the GST. So, we are spending on that instead of spending on the crisis in our services. And that is not very good Government. It is not very sensible Government. But that is what we have got.


RICHARDSON: OK, Kim. We wish you well. Thanks for talking to us today, mate.

BEAZLEY: Thanks very much, Graham.