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Treasurer criticises proposed ALP spending plans; discusses ethanol excise and ALP paid maternity leave scheme.

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Monday 20 October 2003

Treasurer criticises proposed ALP spending plans; discusses ethanol excise and ALP paid maternity leave scheme


PETER CAVE: Well, the Government has wasted no time in attacking Labor's plans. 


Treasurer Peter Costello has been speaking to Alexandra Kirk. 


PETER COSTELLO: When it says, "savings", what it means is it's going to get money with tax rises. 


ALEXANDRA KIRK: It says it won't increase taxes, though. 


PETER COSTELLO: Hang on. By taking away the baby bonus, you're putting up the tax on mothers. Because the baby bonus allows mothers that come out of the workforce to average their tax and get a tax reduction. If you take that away, you're increasing tax on mothers. 


Now, ethanol: what the Government did is when it said that there would be 38 cents a litre excise on ethanol, it paid a production subsidy to the Australian producers. So, effectively there would be a continuation of a zero tax rate. If you keep the excise on but take away the production subsidy, it's a 38-cent-litre tax rise on ethanol. 


Third area: if you take away the fuel sales grants at one cents and two cents, which is to equalise out the current taxation regime on petrol, it's a tax rise for people in rural and regional Australia.  


So, let's not dress this up as so-called "savings". Labor is proposing three tax rises. Now, anyone can propose tax rises but they ought to be honest about it and come out and say they want higher taxes. 


The first step that they make: three in one day. 


ALEXANDRA KIRK: But they say they're not going to increase the tax burden across the board. That they will, for example in the case of the baby bonus, they'll replace that with a paid maternity leave scheme. Isn't it up to them really to say what programs they'll put in their place and offer an alternative to the Government? 


PETER COSTELLO: What Labor is proposing to do is to increase taxes. At the moment, under the baby bonus scheme that if you're a working mother and you go out of the workforce you can average your income over five years and get a tax reduction. They're taking that away. 


ALEXANDRA KIRK: But if they're offering paid maternity leave to women who want to back into the workforce or those who want to stay at home, that's another alternative and it might in the end have the same financial effect, mightn't it? 


PETER COSTELLO: No. What you would be doing then is you would be saying, we want to increase taxes and at the same time we will be increasing spending. But you are increasing taxes. Let's not call these "savings": it's an increased tax on working mothers, an increased tax on ethanol and an increase tax on petrol.  


Now, Labor ought to be honest and instead of coming out and saying it has savings proposals, it ought to be honest enough to say it has tax-rise proposals. So, we're not even within sight of the election, Labor comes out with three policies, three tax rises, and people ought to know that this is the Labor's agenda. 


It may well have an agenda to spend more as well, but let's be totally open about this - this is a tax-rise agenda. 


ALEXANDRA KIRK: But if you take away the subsidy, for example, on ethanol, you're not increasing taxes because currently the ethanol industry is in fact paying an excise, isn't it, it's just that that's being off-set by a subsidy. 


PETER COSTELLO: Well, at the moment, there's an excise of 38 cents and a production subsidy of 38 cents, so that a product is not taxed. If you take away the subsidy, the production subsidy, and leave the excise in, the tax rate rises to 38 cents a litre. 


ALEXANDRA KIRK: It's not on an across-the-board tax rise, though, is it? 


PETER COSTELLO: Well, it's across-the-board tax rise on ethanol. Now, anybody can raise money by increasing tax from zero cents a litre to 38 cents a litre. Let's not call this a saving; it's a tax rise. 


PETER CAVE: The Treasurer, Peter Costello.