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Adelaide Convention Centre, Tuesday, 20 May 1997, 2.00pm: transcript of doorstop [Budget; Tax reform]


JOURNALIST: Well an election is still some time away Mr Costello, can you afford to go to a poll with a broad policy of taxation reform or do you have to specifically outline details of the GST?

TREASURER: Well of course we'll put our election policy before the Australian people at the time of the next election. But we think that it's important that we keep focussing on reforming the Australian taxation system, we've done a lot to date for families, capital gains tax, small business and we've now put in place really all of the measures that we promised before the last election, culminating in the savings rebate which I announced in last week's Budget. So obviously we'll now be looking at future challenges and when we have anything more to say on that we'll let you know.

JOURNALIST: Do you support a GST - John Howard raised the issue on Sunday, he's put it in the spotlight. What's your position?

TREASURER: Well, as I said before, having now put in place all of the measures that we outlined before the election, I think we can now engage in wider discussion about other features of the Australian taxation system that can be improved. But it's important when we do that that we bear in mind that the Government, our Government's position is not to increase taxes, but to create the situation where they can be reduced and that's always going to be our guiding principle.

JOURNALIST: While you may not be keen to focus unduly on a GST, when you're talking about real structural long term reform of the tax system doesn't that necessarily mean that a component of that would have to be some sort of broad-based consumption tax?

TREASURER: Well look you've got to look at the taxation system as a whole, it's got many facets. There's the incidence of taxation on families, we've dealt with that. There's the incidence of taxation on small business, we've dealt with that. And now people are saying well look do you think you can improve the indirect tax system. I think it can be improved in Australia and it's a question of having a look at how we improve it. But I don't want anyone to say this means a particular outcome. We've just got to sit down and we've got to see the way in which it can be improved and that will involve quite a deal of discussion.

JOURNALIST: Your comments on the possibility of an election next year, are you in some way linking an early election with the need to accelerate tax reform?

TREASURER: Well, the point about an election next year is that the Parliaments go for three years and three years would be up by 1998, that's my main point. And that means we're about mid-term now. Now we've come a long way in one and a half years but I think we should use the fact that we're now mid-term as an opportunity to gird up our loins, work harder over the next year and a half. You can never let a year go by in politics is my view. Every year is a year to be worked at, hard. In the last year we've done two Budgets. That's a great outcome. We've turned a $10.3 billion deficit into a $1.6 billion surplus. But we're not going to sit back, the next year has got to be another year of achievement.

JOURNALIST: But the election is not due until the first half of 1999 and you're saying next year. How would it happen next year!

TREASURER: Well I think that the three years will be coming to an end by the end of l998, I think that would be the natural timing and of course we don't know how the Senate is going to play out of course. I hope that the Senate does cooperate over the course of this year and next.

JOURNALIST: When you say next year the message that you seem to be putting out is that it could be as early as the start of next year.

TREASURER: Oh, I'm not talking about that. I'm talking about the natural three year period would run through 1996-97-98.

JOURNALIST: Treasurer do you think bipartisan support is necessary for fundamental tax reform?

TREASURER: Well I think that the Labor Party should keep an open mind on the question of tax. You know the funny thing is that although he's had a shocking entry into the House of Representatives, Mr Evans might have just got it right. He might have just got it right for the first time in 18 months. Now of course he's been sat on by Mr Beazley but I think Mr Beazley should listen a bit more to Mr Evans on this question Mr Evans made the obvious point. And the obvious point is this. That if you can reform things, fairly, you should have an open mind about it. Now of course Gareth as per usual read from the wrong script but he just might have made a contribution.

JOURNALIST: Now that you're in Government do you think that you would be in a better position like with the help of Treasury to demonstrate some of the you know severe regressive impact on low income earners through the wholesale sales tax system, that sort of thing?

TREASURER: Well I welcome open debate and I'm quite happy to engage in it. The point I want to make is this: that we're now in the position, once we implement our savings rebate, where we will have delivered on the tax commitments that we made before the election and so we can now stan looking for new challenges. And we want to look for new challenges frankly. I think it's a healthy thing for Australia and it will be a healthy thing for our Government. I wouldn't put it higher than that.

JOURNALIST: Is it possible to take about tax reform without actually mouthing the letters GST?

TREASURER: Oh, I find those letters quite easy to mouth. The important thing of course is ...

JOURNALIST: You seem to have skirted around them today.

TREASURER: ... the import thing is the overall improvement. No tax in itself is any better than any other. Taxes are things that are put in place in order to run social services. And when you look at tax you've got to look at the overall mix. If your overall mix meets the conditions of giving incentive, being fair, being administratively less complex, these are good things. But it's the overall mix that you've got to have a look at and that's why it's far too early to start speculating about specific outcomes.

JOURNALIST: How ready is the economy for another interest rate cut, is it ripe?

TREASURER: Well I don't speculate on interest rates.

JOURNALIST: The Alice-Springs to Darwin rail link. I mean it's been said that the Federation Fund, the criteria, are almost tailor-made for a boost to the Adelaide-Darwin rail-link. What's your opinion?

TREASURER: Well, look I can't get into naming specific projects because obviously there will have to be a prioritisation, they'll have to be fairly distributed. But the criteria that we're putting on them is major works; one, major works; two, something that will last and bring lasting, either economic benefit or lasting cultural/historical benefit; and thirdly they're going to have to be shared around. Now, a project that fits into that criteria will be one that goes ahead. The important thing if I can just say about the Alice Springs-Darwin rail link is to make sure that things are commercial. We wouldn't want to do anything that was not commercial. We're not going to build something that's not commercial and so it's important that it be looked at very carefully from the economic point of view.

JOURNALIST: Should the State Government be concerned about tariff cuts for imported vehicles? Should they be nervous at this stage or would you reassure them.

TREASURER: No I think, as we've made it clear, that we'll be getting the report ofthe Industry Commission later on this month. We'll be having a look at that. We'll be guided by the importance of our industries. We'll be guided by the importance of the employment consequences. We'll be guided by the timetable that we have in relation to APEC and the region. And we'll give it totally careful consideration and I think that when you understand that this will be carefully considered and discussed that there's every reason to believe the Government will get the right outcome. Thanks.