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Liberal Party may set its proposed consumption tax level at 15 per cent

PAUL MURPHY: The Shadow Treasurer, Peter Reith, today refused to rule out a consumption tax being levied by a Coalition Government at a rate of 15 per cent. And while attacking yesterday's assault on the banks by the new Treasurer, John Kerin, Peter Reith said the banks are not beyond criticism. As Peter Rapp reports from Adelaide, the Shadow Treasurer was in town to sell the Opposition's radical tax reform proposals.

PETER RAPP: Last week, in Adelaide, the Prime Minister stepped up his campaign against the Opposition's consumption tax proposal by describing it as a wicked inequity which would see the necessities of life taxed at 15 per cent. Today, Mr Reith personalised the debate, bringing it right into the Lodge when he attacked what he called the Government's hidden consumption tax.

PETER REITH: Is it fair and reasonable for Bob Hawke to say, as he did at the ALP Conference, he said: `The wholesale sales tax, that's a tax on luxuries not on necessities.' Well, I ask you Bob: is Omo, cuddly soft, napisan, soap, Johnson's baby powder, disinfectants, tissues, clingwrap, foil, brownpaper bags, toothpaste, deodorant, shampoo and conditioner, razors and blades and pet food and toilet paper; are they really luxuries in your household?

PETER RAPP: Mr Reith summed up the Coalition's tax policy for the 300-odd business people, at lunch, in two words. ` Less tax', he said. And from the questions after his speech, it seems the business community is eager for the goods and services taxes introduction. But again, there was no detail in a speech about exemptions or the rate - a point Mr Reith was tackled on by reporters.

PETER REITH: Well, there were a lot of details and it was a very positive reaction from the crowd, and I think it just shows people that we've, in the decision we made last year, announced a lot of the details of the policy package. Sure, there are going to be more details, and when I'm satisfied that they all add up and that the package is complete we will release it.

REPORTER: Are you having trouble getting them all to add up?

PETER REITH: No, absolutely no problem with tax, whatsoever. But the point is that, as I showed today, we have already a lot of details out there and there's certainly plenty there for people to support and that's why you'll see the support for a tax package reform proposal, that we have built up, in the months ahead.

REPORTER: Can you give us an indication of the rate, because Bob Hawke said, here in Adelaide, last week, that it was going to be 15 per cent? Is that out; do you rule that out?

PETER REITH: I wouldn't have the Prime Minister deciding our tax package .....

REPORTER: Would you rule out that?

PETER REITH: I'm not ruling anything, anything in or anything out.

REPORTER: ... give us a ball park figure on the consumption tax?

PETER REITH: Because I don't announce my tax package at lunches in Adelaide, that's why.

PETER RAPP: But what the Shadow Treasurer, and Deputy Leader of the Opposition, was prepared to expand on, albeit only after a little nudging, was the new Treasurer John Kerin's criticism of banks, saying they had treated Australians like mugs and the institutions had a lot to answer for.

PETER REITH: Well, I was very surprised at Mr Kerin, that he should run a bank bashing exercise. He's been fairly moderate in his remarks so far, but that just showed how out of touch he was and it just also shows that, you know, he's just another Labor Treasurer.

REPORTER: You don't agree with him then?

PETER REITH: Well, I think the bank bashing exercise from the Labor Party has been done for one reason, and that is to distract attention from the fact that they put up high interest rates and brought on a recession. And the banks are not beyond criticism, but a bank bashing exercise of the sort we had from Mr Kerin, yesterday, was evidence of a loose tongue, somebody who hadn't thought through the issues, and somebody who was playing .. more interested in politics than they were in good economic management.

REPORTER: What are your criticisms then, of the the banks?

PETER REITH: Well, I'm not here to talk about banks. I'm here to give you a quick response to what I said at lunch time and then move on.

REPORTER: We're not asking you that. You say they're not beyond criticism; what are your criticisms?

PETER REITH: Oh, well, I mean we had, we did have some problems following deregulation in 1983 and we had banks looking for market share, and we also had an inflationary environment for which the Government is responsible. We have a tax system that encourages boom and bust mentality in the Australian economy and banks get caught up in that as everybody else does.

PETER RAPP: And from the new Treasurer to the old. Mr Reith was obviously delighted with today's return to the public arena by his erstwhile sparring partner, Paul Keating.

PETER REITH: Well, we're looking forward to Mr Keating's, you know, re-entry onto the public scene, and apparently that's happening today. And that's stage one of his re-election campaign and we wish him luck and I know he's got 44 votes there and some of the boys are very keen to see him get back. And I'm sure we'll be talking a lot about leadership within the Labor Party in the next few months.

PAUL MURPHY: Peter Reith in Adelaide with Peter Rapp.