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Prime Minister discusses the effect of GST on charities, the possibility of lifting Stamp Duty, getting the package through the House of Representatives before Christmas and private health insurance; comments on the Dili massacre allegations, Australia's reputation in Indonesia and APEC.



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PRIME MINISTER

20 November 1998

 

 

TRANSCRIPT OF THE PRIME MINISTER

THE HON JOHN HOWARD MP

RADIO INTERVIEW WITH NEIL MITCHELL

RADIO 3AW

 

 

E&OE                                            

 

MITCHELL:

 

Mr Howard, good morning.

 

PRIME MINISTER:

 

Good morning, Neil, how are you?

 

MITCHELL:

 

I’m well. Gee, it’s a nice coincidence to be in Brisbane. I think there’s a little Test match starting up there today.

 

PRIME MINISTER:

 

Well, there is.

 

MITCHELL:

 

Can you get there?

 

PRIME MINISTER:

 

Well, I will later in the morning but my main reason for being in Brisbane is to address the Annual Conference of the Federation of Ethnic Community Organisations and that is a long-standing commitment but it does happen to fall on the same day.

 

MITCHELL:

 

Well, that’s good. I mean, I was thinking of Sir Robert Menzies who did manage to get to London for the odd Lords Test. Nothing wrong with it, Prime Minister.

 

PRIME MINISTER:

 

No, no, there isn’t. Well, I certainly will be going to the Test match but I’ll be attending to the meeting of the Ethnic Communities first. And I’ve got a number of things to say about issues of concern to them and that’s the principle reason for being in Brisbane, but I’m not disguising the fact that I’ll be going off to the cricket after I’ve delivered the speech. I mean, why not, it’s Mark Taylor’s 100th Test match.

 

MITCHELL:

 

I’d be very disappointed if you didn’t.

 

PRIME MINISTER:

 

Indeed, most Australians would too.

 

MITCHELL:

 

Mr Howard, if we may, domestic issues first. Is it correct the Government’s looking at a new compensation package for the charities because of the effect of the GST?

 

PRIME MINISTER:

 

To be perfectly frank, Neil, I haven’t seen the Vos Report on which this report is based. I’ve been out of the country for two or three days. We are meeting next Tuesday. I think that report is sort of a bit fanciful because the GST doesn’t apply to charities as such. The GST was only ever meant to apply if a not-for-profit organisation were carrying on a commercial activity in competition with another commercial activity. It was never the intention at any stage to apply the GST to the charitable activities of not-for-profit organisations, to donations or anything of that kind therefore I can’t quite see what the article in The Australian, which I imagine you’re referring to.

 

MITCHELL:

 

That’s correct, yes.

 

PRIME MINISTER:

 

I can’t quite see what that article’s getting at. But maybe there’s something in that report which I haven’t been briefed on yet but certainly it’s never been our intention that the GST would affect charitable activities, charitable donations and we’ll be keen to ensure that that objective is carried through.

 

MITCHELL:

 

Okay, well certainly the Council of Social Service says they believe it is going to have significant impact. Is there a possibility here that it’s having an unforeseen impact, do you think?

 

PRIME MINISTER:

 

Well, I’m not aware of that but if that were to be the case then we would do something to stop that happening. And let there be no doubt in anybody’s mind, we do not intend in any way to burden the charitable activities of Australians or in any way to discourage giving to charities through the introduction of the GST. That’s not our intention and we’ll see that that doesn’t happen.

 

MITCHELL:

 

Even if it costs money.

 

PRIME MINISTER:

 

Yes, but I don’t believe that will be necessary.

 

MITCHELL:

 

Will you release the Vos Report?

 

PRIME MINISTER:

 

Yes.

 

MITCHELL:

 

When?

 

PRIME MINISTER:

 

Well I would imagine after the Cabinet’s had a meeting next Tuesday.

 

MIT CHELL:

 

Can I ask you about another area that seems to me to be a miscalculation after the Premiers’ Conference, is it correct that stamp duty on business conveyancing will not be lifted now?

 

PRIME MINISTER:

 

No, that’s not correct. There is a possibility that the date of lifting the stamp duty on business conveyancing may be delayed by a year or two, that’s all. There’s a possibility of that and only in relation to the stamp duty on conveyances of buildings, commercial buildings, real property. The stamp duty on all other business conveyances, business transactions, will be lifted as announced from the 1st of July in the year 2000. But depending on how the calculations finally come out - and there’s still a lot of to-ing and fro-ing between the Commonwealth and the States as to the exact figures because the States have one set of figures and we have another and they’re being reconciled at the moment - and it may be necessary to delay — I underline the word, delay — by a small period of time, the elimination of the stamp duty on the conveyances of business real property. But there’s no suggestion that they won’t ultimately be abolished.

 

MITCHELL:

 

I guess the point I’m getting to, that that is, I suppose, an adjustment to calculations possibly, if we believe that social welfare groups, there may need to be an adjustment to calculations in the welfare area. I mean, how many adjustments are there likely to be of this nature around the GST?

 

PRIME MINISTER:

 

Well, at no stage did I say that there wouldn’t have to be some fine-tuning. And, indeed, we’re talking about the Vos Report. The Vos Report was designed to fine-tune aspects of the package and obviously a little bit of fine-tuning is always going to be necessary with something as vast as this. Now, on the question of compensation. We’ve had views put to, or the Vos Committee’s had views put to it. I haven’t seen them yet. And I’ll be having a briefing on the Vos Report over the weekend and we’ll be discussing it in full at Cabinet next week when we examine the legislation. But it’s always the case with something like this that you need fine-tuning. But on the issue of compensation, those documents that were released by the Treasurer last week showed very strongly that the alleged measure which was going to reveal that the compensation was inadequate - that is the Household Expenditure Survey measure - actually in some areas the impact was lower than what we’d said according to our measure.

 

MITCHELL:

 

Were you aware that ACOSS had, well, I suppose, got the backing of 40 of these key church welfare groups over the issue wanting change to the tax package?

 

PRIME MINISTER:

 

Well, I know that ACOSS has wanted change. They said that during the election campaign. Now, the question of...

 

MITCHELL:

 

It seems to have expanded a bit, though.

 

PRIME MINISTER:

 

Well, I don’t know about that. And it depends what sort of change you’re talking about, Neil. If you’re talking about a minor adjustment then you always make minor adjustments, you always fine-tune something like this. But if you’re talking about a big issue like taking food out of the GST, that’s an entirely different matter. I mean, our argument on that is, and it remains, that if you take food out you don’t help the poor but you immediately undermine the overall package. You create pressure for other things to be exempted, such as clothing, and where do you stop, do you have fresh food, do you have take-away foods, do you have restaurant meals. You have all the confusion that operates in other countries. Now, that is a major issue. That is quite distinct from whether you make a particular item sold over the counter at a chemist shop which is akin to a prescription drug, whether you make that GST-free or not. That is what I would call a minor fine-tuning.

 

MITCHELL:

 

Are you still confident you can get this package through before Christmas?

 

PRIME MINISTER:

 

Through the House of Representatives.

 

MITCHELL:

 

Yep.

 

PRIME MINISTER:

 

Yes. I believe we can get it through the House of Representatives and that is our aim because that’s what we were elected to do and we took it to the public. I do have to keep reminding people that we have had an election and we did lay all of this out. I mean, we did the unconventional thing. We told people we were going to change the tax system before the election and not after it as Labor Governments in the past have done. And we are entitled, therefore, to say to anybody, the public returned the Government and the Government’s got a mandate to introduce it.

 

MITCHELL:

 

Mr Howard, the Tax Commissioner, Mr Carmody, in an interview yesterday or last night on the 7.30 Report is suggesting, well, he really says there could be a lot more to be found if tax minimisation’s attacked. And he says if not, if you don’t jump on it, it sort of devalues the effect of the tax reform, that it erodes the effect. Do you think he’s right?

 

PRIME MINISTER:

 

Well, without having seen exactly what he said and just relying on reports of what he said, he’s right to this extent, Neil, that people who seek to exploit every last loophole in the tax system are not doing the country a service. And we are against that. One of the advantages of the new taxation system is that that will be harder to do because with the broad-based, indirect tax it’s harder to evade. And certainly we remain very committed to stamping out artificial tax avoidance practices. There’s always an argument between what people regard as legitimate business planning. In other words, nobody goes out to pay more tax than they have to.

 

MITCHELL:

 

And that’s legitimate, isn’t it?

 

PRIME MINISTER:

 

Well, that is legitimate. I mean, you can’t say to people, well, we want you to sort of deliberately arrange your affairs in such a way that you pay the maximum amount of tax. I don’t think anybody would agree with that. On the other hand, if I were to say that you shouldn’t spend your life trying to find every last loophole to avoid your taxation liabilities, most people would agree with that as well. Now, the fair balance is somewhere in the middle, isn’t it?

 

MITCHELL:

 

It is. Some of the estimates, though, they’re talking about a couple of billion dollars a year.

 

PRIME MINISTER:

 

Well, people fling those sort of estimates around.

 

MITCHELL:

 

Do you think that’s realistic?

 

PRIME MINISTER:

 

Well, it depends on what you regard as tax minimisation. Some people regard the benefits provided by the law, the use of them as tax minimisation, others don’t. I mean, some people say that it’s tax minimisation to take advantage of some of the deductions available under the superannuation law but most Australians would say, well, the whole idea of having a tax deduction in that area is to encourage people to provide for their retirement and all we are doing is taking advantage of that, and I agree with that. But then there are some people in the welfare sector who criticise that. I mean, many of the people who fling around these figures like billions of dollars are really talking about changes to the law that deliberately authorise the taking of a tax deduction for a certain activity. There are many people in ACOSS who regard the present taxation treatment of superannuation as akin to tax minimisation. Now, you wouldn’t regard it as so. I don’t think many of your listeners would. But that is the difficulty of a debate like this is to try and get an agreed definition of what amounts to tax minimisation.

 

MITCHELL:

 

I think he’s also touched on the GST. He says small business is going to need more help with the GST.

 

PRIME MINISTER:

 

Well, they are going to get our help. They are going to get $500 million of help.

 

MITCHELL:

 

He seems to be saying more is needed.

 

PRIME MINISTER:

 

Well, I, once again, I haven’t had a look at that but under the plan there’ll be $500 million available to help with the transitional impact of a GST.

 

MITCHELL:

 

Could I ask you about private health insurance?

 

PRIME MINISTER:

 

Yes.

 

MITCHELL:

 

The slide continues...

 

PRIME MINISTER:

 

Yes, it does and it will go on until there’s more help given to people to take out private health insurance. And we want to introduce and we announced before the election a 30 per cent tax rebate for everybody taking out private health insurance. And it’s urgent that that be passed.

 

MITCHELL:

 

Are you going to get that through?

 

PRIME MINISTER:

 

Well, it’ll get through the House of Representatives. But can I just say to those in the Senate who are now talking about delaying it. I mean, what are you going on about? The public voted for that and don’t imagine that by delaying or stopping a 30 per cent tax rebate for private health insurance that that’s going to help the public hospitals because if the slide in private health insurance continues more and more people will use public hospitals and there will be a greater strain on the public hospital system. And we have already increased massively the money going to the States for public hospitals. And I notice in Victoria that the Victorian Government is advertising about the huge increases in money that the Victorian Government is making available to public hospitals in that State, partly made possible by the extra money we have given Victoria. So, nobody can say governments around the country aren’t putting more and more resources into public hospitals. Now, if the Labor Party and the Democrats are going to in the Senate stop the introduction of this 30 per cent tax rebate they will be directly adding a further burden onto the public hospital system of this country. And I just say to the Australian public, if you want this 30 per cent private health insurance rebate you get onto your Democrat Senators, you get onto your Labor Party Senators and you tell them to pass that law when it comes into the Senate in a few weeks time. Because we took that to the public and the public voted for it and we are determined to introduce it but if it’s blocked in the Senate it will be on the heads of the Labor Party and the Democrats.

 

MITCHELL:

 

You’d also have to say that your previous attempts to haven’t worked. I think the figure that 500,000 have dropped out of private health insurance since your Government’s been in power.

 

PRIME MINISTER:

 

That is true.

 

MITCHELL:

 

And you have spent a fair bit trying to fix it.

 

PRIME MINISTER:

 

We have but we believe more is needed and that is why we’re increasing the rebate to 30 per cent. The problem in this area, Neil, is that years ago something should have been done to increase the incentives while there was a critical mass of people in private health insurance. Once it got below a certain figure, and it was identified by a former Labor Health Minister, Graham Richardson, as being about 40 per cent, once it got below that figure it was always going to need quite a big subsidy to turn it around. Now, we are at that very critical point and if this 30 per cent rebate does not come in as promised there will be a further drift of people, there’ll be more and more people using the public hospital system and there’ll be more and more strain on that system.

 

MITCHELL:

 

But, what will happen to private health insurance? The AMA say if you don’t get the rebate it’s doomed.

 

PRIME MINISTER:

 

Well, it will never be doomed for people who can afford to take it out without any kind of tax subsidy. There’ll always be some people in the higher income bracket that will be able to afford to take it out and you’ll have a more, you’ll have a sharper division between what you might say elite private health insurance coverage because only the very wealthy will be able to afford it. And it will become more and more elite and more and more exclusive. And everybody else using the public system now.. .we support both, we support a strong public system and I have great admiration for the Australian public hospital system and I have seen it at work and I know how professional and how good it is but we also need a private system. You need both and what we are saying is, have both and you can only have both if you have a reasonable percentage of people in private health insurance and that’s why we have got the rebate.

 

[Commercial break]

 

MITCHELL:

 

Mr Howard, Indonesia. Now the former Prime Minister, there’s probably not much you can do about this, but the former Prime Minister, Paul Keating, has visited President Soeharto... former President Soeharto overnight. In the current environment is that really a good thing to do?

 

PRIME MINISTER:

 

He’s got a perfect right to do that. He’s a private citizen as is the former President Soeharto. I don’t see any objection to that. I think it would be quite wrong of me to start telling Mr Keating who he should visit and who he shouldn’t visit. That’s his business.

 

MITCHELL:

 

I just wonder if Indonesia.. .he’ll be seen in Indonesia.. .still be seen as sought of an official of Australia even though he’s not.

 

PRIME MINISTER:

 

Well he will be seen by some but he’s a private citizen. He’s got a perfect right to see anybody he wants to and I don’t find anything strange at all in people who’ve served in, a Head of Government capacity in their own country retaining contact with others who’ve done the same thing. I know that Malcolm Fraser, often when he goes overseas, visits former French Presidents and Prime Ministers, and American Presidents. It’s a perfectly normal thing to do. I don’t, in the visit itself, I don’t see anything wrong at all.

 

MITCHELL:

 

He literally walked passed troops to get in there.

 

PRIME MINISTER:

 

Well once again I don’t know all of that but equally can I stand by what I say that he’s a private citizen and he doesn’t go there in any official capacity. He was Prime Minister of Australia. He’s no longer in politics. He has a perfect right in my view, as a private citizen to visit anybody he likes. I mean if he expresses views that I might disagree with well I would say so. But I think the fact that he’s gone to see President Soeharto is perfectly unexceptionable.

 

MITCHELL:

 

The reports of a second Dili massacre in 1991, and allegations have been made, have been in fact covered up by the then Labor Government. Do you.. .was there a second massacre? Do we know whether there was a second one?

 

PRIME MINISTER:

 

Well I guess you have to speak to the former government, Gareth Evans and to Paul Keating, about whether anything was covered up. I think it all revolves around what’s the definition of a ‘second massacre’. I think it appears to be the case that there were some different briefings provided to different people at the time about actually what happened. But whether that amounted to a second massacre or not is a matter of argument and debate. I’m not in a position to pass judgement in precise terms on that. All I can say is that obviously a very tragic incident did occur. It remains a source of concern to a lot of people which I fully understand and there were different reports and different indications given to people at the time. I’m not alleging that the former government covered up anything. I think it does, from the reports I’ve read, revolve very much around what constitutes the meaning of a ‘second massacre’.

 

MITCHELL:

 

What, how many deaths?

 

PRIME MINISTER:

 

Well, and I suppose the distance between when the first part of the incident had occurred and whether the second part of it is a continuation of the first or whether there was a sufficient lapse of time for people to say: well this was one massacre and then there was another one. I mean I think it all... it becomes a rather semantic debate. I mean, there was a tragic event that involved a completely unacceptable loss of life and continues to be an extremely, you know, an unsavory incident and where obviously a lot of people were guilty of appalling behavior. Now whether it technically comprise one or two massacres is something that I can’t really answer.

 

MITCHELL:

 

The Bishop of East Timor says a new inquiry is needed. Do you think there’s any point in a new inquiry?

 

PRIME MINISTER:

 

Well, I mean once again it’s very easy to call for new inquiries and I understand why the Bishop of East Timor would do that, but we can’t control the holding of an inquiry in another country.

 

MITCHELL:

 

Malaysia, APEC looked a little bit shaky, particularly the performance of Al Gore. Did the Americans overplay their hand? Did they go too hard?

 

PRIME MINISTER:

 

Well I’m not going to criticise the Americans. I’m simply going to endorse what we did. I think we handled the thing correctly. We made our position clear.

 

MITCHELL:

 

What did you say to Dr Mahathir?

 

PRIME MINISTER:

 

Well I said to Dr Mahathir that Australia was very concerned about what had happened to his former deputy and that Malaysia’s reputation abroad had been damaged by the incident, and that it was imperative that Anwar receive a completely fair and open trial.

 

MITCHELL:

 

Did he react to that?

 

PRIME MINISTER:

 

Well he said that people didn’t understand the full story. He then gave me a very long explanation of what had happened.

 

MITCHELL:

 

Did that change your mind?

 

PRIME MINISTER:

 

No it didn’t change my mind. I listened to his explanation and I thanked him for that but I didn’t say that that altered my mind because it didn’t. I still remain concerned and the Australian Government remains concerned. I also told him something that was then not publicly known and that is that Mr Downer had seen Anwar’s wife the day before and he’d spent about an hour-and-a-half with her at the residence of the Australian High Commissioner in Kuala Lumpur. And we thought once again that the right thing to do in that was not to make a media circus out of the meeting between Anwar’s wife and the Foreign Minister, but rather to have a calm discussion so that she could put her point of view. And frankly that kind of event is more likely to enable the man’s wife to get his concern across and her concern across than some kind of media circus.

 

MITCHELL:

 

Is APEC going to survive all this?

 

PRIME MINISTER:

 

Oh yes. I have no doubt about that. It was inevitable Neil that because of what’s happened to so many of the APEC economies over the last year that there would be a bit of a slow down in the rate of trade liberalisation. That was inevitable. But given what’s happened I think the slow down has been remarkably small. Remarkably small. I’m not pessimistic at all. People have got to be realistic about what APEC can achieve. There is no one single international grouping that is going to solve all the domestic economic problems of countries. Their domestic economic problems essentially have got to be solved by them with some outside help from friendly countries. I’m not pessimistic.

 

MITCHELL:

 

Thank you very much for speaking to us. Welcome back to Australia. I just have to ask you this, what will you do with that shirt they gave you up there?

 

PRIME MINISTER:

 

Well I can tell you this that when I arrived back from Canada with a bomber jacket that was eagerly sought by the younger male members of the Howard household. They’re distinctly underwhelmed by this shirt.

 

MITCHELL:

 

Thank you very much for your time.

 

PRIME MINISTER:

 

Okay.

 

[Ends]