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Liberal Party Campaign Headquarters, Melbourne, Tuesday 15 September 1998, 1.00pm: transcript of press conference [Tax reform]



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PRESS RELEASE

 

TREASURER

 

EMBARGO

TRANSCRIPT

THE HON PETER COSTELLO MP

Treasurer

Press Conference

Liberal Party Campaign Headquarters, Melbourne

Tuesday 15 September 1998

1.00 pm

 

E & OE

 

SUBJECTS: Tax reform

 

TREASURER:

 

Well, in August of last year the Evatt Foundation, Labor’s think tank, announced that it was setting up a Commission on government revenue to be chaired by Mr Bernie Fraser, former head of the Treasury. When it actually set up that inquiry, it released question and answers and terms of reference which began by making this statement: “everyone accepts that the existing taxation system is broke and needs fixing”. That was what the Labor Party research and think tank said when it set up this Commission in relation to government revenue.

 

In preparing its report the Commission was asked to develop proposals for a taxation system to, inter alia, provide a more adequate revenue base, to be more efficient, and to be more simple and transparent. The Commissioners were asked to have regard to, inter alia, the ongoing erosion of existing tax bases, vertical fiscal imbalance in the Federal system. And press reports around about March of 1998 indicated that the Commission could well have been supporting a GST and could well have been supporting a GST between 5 and 7½ per cent.

 

Now when this Commission was set up by the Evatt Foundation, it was said that its report would be made public and that it would be released at the National Press Club and a timeline was given for the release of the report in April or May of this year. That report has never been released and Mr Fraser today says that that report will not be released until after the election.

 

I call on Kim Beazley and the Labor Party to direct the Evatt Foundation to release that report, to let the public know what is in the report, which is commissioned by Labor’s think tank. To know what Labor’s advisers are telling them in relation to the tax system so that we can know whether or not this research report indicates, as the Government believes, that you can’t reform the taxation system without reforming the indirect tax base.

 

Now if Labor won’t release that report, two conclusions follow. One is that this report undermines Labor’s tax policy. This is a Labor think tank which was going to do some hard and serious work on tax something that the Labor Party hasn’t done and now its report is being buried. The second thing that you can draw from that is that Labor is not being honest and will not come clean in relation to its tax plans. The Labor Party has form in relation to this. Before the 1993 election the Labor Party said that they were campaigning against tax reform and a GST. When they were elected, they increased wholesale sales tax rates on every item and took away income tax cuts which they said they had put into L.A.W. They didn’t come clean with the Australian people in 1993 and they must come clean with the Australian people if they are to assure the Australian people that they are not attempting another giant con or another giant scam in relation to tax in this election.

 

JOURNALIST:

 

Surely it’s a bit unfair though to think that Labor should be dictated to by a think tank?

 

TREASURER:

 

Well, why won’t the Labor Party release the report. The Labor Party’s think tank said it was setting up this research to contribute to the tax debate and said it would be released publicly in April/May. Now the Chairman of that Commission says in the paper today something like “there wasn’t much point putting something out in the middle of an election campaign because no-one is interested in serious tax reform”. Everybody is interested in serious tax reform. This is an election about serious tax reform. There’s no point in putting this report out after the election unless you are trying to hide what’s in it. The time to put this report out is now, before the election, so that the public knows what Labor’s think tank advises the Labor Party in relation to taxation matters.

 

JOURNALIST:

 

But it is only advice, it’s not necessarily policy.

 

TREASURER:

 

Well why has it been covered up? The Labor Party made a big thing about the fact that they would have their think tank look at the tax system. Now what’s wrong with releasing it? The Labor Party said to its think tank we wanted them to look at the inadequacy of the indirect tax base. We in the Government have sat down and looked at the inadequacy of the indirect tax base. The only way you can fix it is with a broad based goods and services tax. Indeed Mr Bernie Fraser today says, he’s the Chairman of Labor’s advisory think tank, he says, he thinks that “we need to explore the possibility of imposing, on a national basis, a limited and selective tax on services”. Now here you have a campaign, the Labor Party is going all the way through a campaign saying that there is no need for a broadening of the indirect tax base, when the Chairman of its think tank says there is and when the report which it commissioned is being hidden. Now the reason why the Labor Party, obviously, won’t release this report is that this report, going from the indications from Mr Fraser today, dramatically undermines its credibility in relation to tax policy.

 

JOURNALIST:

 

Mr Costello just on another matter, the meeting this morning with the Democrats, what sort of compromises are you willing to make to get their support for the GST if you get re-elected?

 

TREASURER:

 

We’re not making any compromises. We put our package out to the Australian people and we are asking the Australian people to endorse a whole new tax system. And it’s the whole new tax system which we intend to introduce. Now the Democrats sought a briefing on the package today and I met with the Leader of the Democrats, Senator Lees, to answer her questions, the questions that she raised with me. And obviously she will make her own decision. But, you know, let’s be frank about this, the Democrats are a political party that no doubt are going to publish their own policy during the course of the election campaign. But I will welcome the fact that they’re at least open minded enough to want to know how the Australian taxation system could be improved. As opposed to the Labor Party which is not open minded about tax reform. Which has opposed any significant tax reform, and which is now trying to bury up and cover material produced by its own think tank lest it prove embarrassing to it.

 

JOURNALIST:

 

So there’ll be no deals with the Democrats fullstop?

 

TREASURER:

 

No, our package is a complete designed package and that’s the package that’s being put to the Australian public and that’s the package that we seek the approval of and that’s the package which we seek to introduce and it’s the package which will give Australia a better economy, more jobs, and give middle income families incentive to work and save.

 

JOURNALIST:

 

Do you have a gut feel that you can win the Democrats over?

 

TREASURER:

 

Well as I said, we’re trying to win over the Australian public. We are going to the Australian public with a proposal for tax reform The Democrats sought a meeting with me so that they could get some education on the issues that are involved, and I was happy to give it.

 

JOURNALIST:

 

Would you like to have their support?

 

TREASURER:

 

I would like to have the support of everybody in relation to tax reform. I would like to have the support of the Labor Party. Let’s be honest about this, when the Labor Party was being honest back in the 1980’s about tax reform, what did they support? A broad based consumption tax. To crack down on the black economy, as they said, and to reduce marginal income tax rates. That was the Labor Party position. The Labor Party commissions a report and says you’d better have a look at the following problems. The indirect tax base is not broad enough. The current system is not transparent. We’ve got to make sure that our tax system responds to different changes in consumption. And that Commission’s report is buried. Now why? Because there is no doubt that that Commission would have been aware, as the Labor Party is today aware, as all serious tax commentators are aware) that our tax system needs dramatic change. See even the, I come back to what the Evatt Foundation itself said. This undermines Labor’s position on tax in this campaign. It said this: “everyone accepts that the existing taxation system is broke and needs fixing”. Mr Beazley is trying to pretend in this campaign that it’s not broken. Mr Evans is trying to pretend in this campaign that the only fix you need in the taxation system is to put wholesale sales tax on caviar and take it off orange juice.

 

JOURNALIST:

 

You don’t see winning Democrat support as a critical litmus test of whether you can win the Australian ....?

 

TREASURER:

 

No, but no, they are a political party who are, they are a political party running against the Liberal Party in this election. So they won’t come out and say we support the Liberal Party policy because if they did people would vote Liberal rather than Democrat in their minds. They will come out with their own policy, of course they will. We know that. The only thing I say about it is at least they’re honest enough to look at the issues. Will they support our policy? They will have their own policy. I think Senator Lees has made that entirely clear. But I was happy to explain to them the need for taxation reform and how our package meets it. That was the purpose of the meeting.

 

JOURNALIST:

 

Senator Lees said this morning that, after meeting with you, that she believed you might have left yourself at a disadvantage by releasing the package so soon before an election and that the public will not feel that they’ve had enough time to look at it and decide if that’s what they do want to endorse.

 

TREASURER:

 

I don’t think so. Look, the public has been discussing the issues of tax reform now for quite some time. The package was released as I recall on about the13th of August. There was intensive discussion. We’re going through a five week election campaign where there will be intensive discussion and the public will make a judgement on that issue. This is the biggest political issue that’s being discussed in the campaign and it will be throughout the course of the campaign. There’ll be plenty of time to discuss it.

 

JOURNALIST:

 

Does today’s Newspoll suggest that the GST scare by Labor is working?

 

TREASURER:

 

Well I’m not going to comment on the polls. I never have and I won’t break that now. But it’s boiled down to this hasn’t it? Labor, with a totally negative position in the election campaign. No positive ideas. No policy. You never hear Mr Beazley talking about his own tax policy do you. Isn’t that interesting. Whenever he calls a doorstop he doesn’t tell you about his income tax credit policy. He doesn’t tell you about his capital gains tax policy to bring pre-1985 capital gain assets into the capital gains tax net. He’s not trying to tell you about his rebate policy. He is now a totally negative politician) bereft of ideas with no leadership, trying to pretend that the tax system works when it doesn’t. And being exposed on the issue by his own think tank which begins its media statement back in August 1997, when there was a little more honesty around, by saying this: “everyone accepts that the existing taxation system is broke and needs fixing”. Everyone, apparently, except Beazley, Evans, the Labor Party frontbench, the Labor Party backbench, who can rise to nothing more than the smear and the scare. True sons of Paul Keating, both of them.

 

JOURNALIST:

 

Is there some risk for you though in, both the Prime Minister in the debate focusing so much on tax, you putting tax so much at the centre of the election when it clearly is a risky issue?

 

TREASURER:

 

Well if you’re going to lead you’ve got to be prepared to get out in front and that’s what the Prime Minister and the Government’s doing. Make no mistake about it, we are prepared to lead on this issue. We are prepared to lead on this issue because it’s necessary for Australia. Because it’s necessary for Australia. This is a tax plan that can take $4.5 billion off the cost base of our exporters, which can boost our trade, which can create jobs, which can give tax relief to middle income earners, which can reform the indirect tax base. And it takes leadership to have a position like that and Mr Beazley, as I said, is reduced now to being a totally negative politician.

 

JOURNALIST:

 

If the Democrats hold the balance of power, they would obviously therefore be in some position to have some leverage and call for changes in your package. So, how does the electorate really know what they’re actually voting for?

 

TREASURER:

 

Well, we’re asking the electorate to vote for our new tax system and if, and Labor’s asking the electorate to vote for the current tax system, plus new capital gains taxes on pre-1985 assets. If that’s what you want, if you want to bring grandmother’s assets into the capital gains tax you’ve got the chance to vote for Labor’s package. But that’s why we have elections. We put our policy out and we’re asking for people to endorse it.

 

Thanks.

 

 

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