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Budget 2005: Opposition Leader discusses the budget; his Sydney accommodation; and Liberal Party leadership.

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Subjects: 2005 Budget; Sydney accommodation; Liberal leadership

HADLEY: Mr Beazley, good morning.

BEAZLEY: Good to talk to you, Ray.

HADLEY: Good to talk to you. I saw your interview this morning on Sky News and you made a couple of points that need to be repeated again, I guess, and that's in relation to the tax cuts to the middle and high income earners, as opposed to more generous tax cuts to low income earners and (inaudible) unemployed and you're concerned about the lack of money being spent in infrastructure.

BEAZLEY: That's right. I think the Budget is a missed opportunity at one level, irresponsible at another, and unfair at a third level. The real tax problem, the tax reform problem in this country, is around the middle income earning levels and particularly when you're talking about families because the taper rates in relation to the family tax benefit and the income tax system is such that ordinary people on middle incomes can face, when they work a bit of overtime or go and do extra work, more days, they can face effective marginal tax rates of 60 or 70 cents in the dollar. It doesn't do anything about that. They've got it out of whack. They've got politicians taken, for the first time in my memory anyway, out of the top tax bracket but the bulk of taxpayers who - around 80 per cent of them who are around the $50,000 mark or a bit below or a bit above - they get $6.00 a week. It's not good enough.

HADLEY: Now, you said the Prime Minister pointed to this in my discussions with him back on the 3rd February, ordinary trades people were affected by the top tax rates cutting in too soon, which would even be a cause for the shortage of skilled trades people, and at present, and this is going back in February, taxpayers earning $58,001 to $70,000 are subject to the 42 per cent tax rate while those earning more than $70,000 are in the 47 per cent bracket. I mean, is that perhaps having a crack at your own suggestion maybe that people in that bracket needed some sort of relief?

BEAZLEY: We some are but it's proportional here I mean, all the relief has gone up into that area and I don't think I'd have ever argued that but I don't think you could have got me in a month of Sundays getting up and arguing that politicians where we are should be taken out of the top tax bracket. John Howard uses all these arguments to cover what steel?? At the upper end and sure, come back with a comprehensive tax package that looks at things like that 42 cent rate at $58,000 but focuses on families at around about $50,00 where most people are. We're fine with that. We're not saying do nothing. But what this tax package is all out of whack, all the benefits at the top end and there's nothing in the middle and the middle are the ones who got nothing last time.

HADLEY: Now, you've already said this morning that your Party won't support this in the Upper House. I just don't know to what end because as you know, half way through this year they will have a majority in the House so what's the point in stalling it if, in fact, they've got a mandate to govern and a mandate to go with this Budget?

BEAZLEY: The Labor Party's got to make a stand. It's got to make a stand for nation building, national development and fairness in the tax system. We don't have the numbers to block it in the Senate, no matter what Mr Howard might say. We've got 28 votes in the Senate out of 76. So, it's possible that if all the Independents, all the Democrats and all the Greens voted with us, the Government would have to go back and rethink this package. I would love the Government to rethink this package so ordinary middle income Australians got a better deal out of it. I'd like them to rethink a few other things in the Budget, I might say, too. But you've got the Reserve Bank out there saying, 'pressure on interest rates comes from a lack of focus on skills and a lack of focus on infrastructure by the Government'. And then to produce a budget which does nothing about that is producing a (inaudible) that very might well reflect tears by bedtime as the Reserve Bank decides they'll raise interest rates on it.

HADLEY: But you say that you want the Government to rethink. When they get the numbers in the Senate they won't have to rethink it. It's an exercise in futility, surely?

BEAZLEY: Well, what you say is quite right but they'll get the numbers and they can, in the end, do anything they want to do. But I want to, for the Labor Party, I've got to do two things: I've got to hold the Government accountable and I've got to make a stand on what we think is good policy. We'll lose the votes, that's what happens when you're in Opposition, but at least we'll make the point.

HADLEY: Just one other point I make to you, and I don't mean it to be a personal criticism because we have discussed in this studio, about the need for you to be based on the east coast, and I applaud you in making that decision even though it will, to a certain extent, separate you from your family, and that's most difficult. But of course, I think, to have any hope in the next election you've got to win the hearts and minds of the east coast. You're moving into an apartment in Pyrmont - so you can pop in and say g'day to us at Pyrmont - and you'll be

renting because you said quite simply you can't afford, even if you sell your Perth residence, to get into the Sydney property market. There's been plenty made of your rather humble digs down at that University Motel and the amount of money that you're able to take home - not your fault, that's just the way life is -but do you see that as a problem - while you're preaching about giving battlers a break and politicians shouldn't be getting tax cuts when you can get your hands on that sort of money on a weekly basis because of the way the system's set up?

BEAZLEY: Anything you read in the papers ain't necessarily true or ain't necessarily true in detail. Can I say, I started using that motel, which I love, when I was travelling on Parliamentary business but got absolutely no living allowance at all -

HADLEY: So, you had to pay for it yourself.

BEAZLEY: So, when I was in there I was paying the full tote odds myself so that's why I did it then. Now, of course, I sacrifice that amount of money by renting this place in Pyrmont. I go down from I think it's about - I could be corrected on this - I think it's about $340 a day to about $120 a day.

HADLEY: Because you have permanent accommodation?

BEAZLEY: Yes. John Howard gets his accommodation in Sydney, which is fully supported by the taxpayer and his Ministers, when they visit him for Cabinet meetings in Sydney, get $340 day but when I'm in Sydney I get $120.

HADLEY: As I said, it's not a personal criticism -


HADLEY: I just think that because you're talking about tax cuts for politicians, we should have raised the issue and I appreciate you putting that particular point. Now, one of the other things I couldn't get out of the Prime Minister, you've said the Budget reflects the leadership battle between Mr Costello and the Prime Minister. Now, I would think, as smart a man as you are, you'd be rubbing your hands with glee hoping that when you do contest the next election that it's against Peter Costello and not John Howard.

BEAZLEY: There are strengths and weaknesses in both of them and I've got to be able to handle either -

HADLEY: But not according to the opinion polls in the electorate. Now, you know that. I don't expect you to say, 'I'll beat Costello but I can't beat Howard'. But, by gee, your job's got to be a whole lot easier if Howard's out of the way.

BEAZLEY: I've got to beat either of them, mate, and you know, what I'd say about this is you should have seen the Liberal Party backbench last night. They

were shockers. They were rubbing their hands with glee because they understood immediately they're taken out of the top tax bracket and those of them who are pensionable or superannuate under the old arrangements; get a huge poultice of dough there as well. I think Costello, in that fight with Howard, did himself a lot of good last night.

HADLEY: And in relation to positives, I know that you've said a couple of positive things, including the abolishing the three per cent tariff. What are the other positives out of the Budget, because, you know, people are looking to the Opposition not to be critical all the time.

BEAZLEY: Yeah, look, there are positives. What they've done with carers is good. We'd support that.

HADLEY: What about the Future Fund? Do you like that idea?

BEAZLEY: I don't like what they're doing with it. You know, they're talking about it as though it's dealing with the ageing population. It's not. It's dealing with public servant superannuation.

HADLEY: Which is unfunded so I guess they've got to try and provide for it somewhere.

BEAZLEY: Well, not really. That is being easily dealt with now. You see, all the public servants have gone over to a fully funded scheme. So, this is a problem which disappears, right, over time and currently it's been more than adequately met from the budget and will continue to be. So, this is a bit of a sleight of hand. This is a government saying, 'right, all the ordinary taxpayers out there will never benefit a red cent from any of this’, you can produce a nice symmetry between the old super funds for public servants and the new schemes. Now, we say no. Have a Future Fund, that's fine, but allow the earnings of that Fund to be used for some critical infrastructure projects. If you want to do the right thing by future generations, build the right infrastructure now.

HADLEY: By the way, when you move to Pyrmont you'll have some level of understanding of the problems we encounter in NSW with trains and with buses and with all sorts of other things.

BEAZLEY: I think I'm going to get a lesson in reality which will do me no harm at all - (tape ends).