Peter Costello

Media Transcripts

Labor's Tax Policy - Press Conference, Prime Minister's Office, Sydney

TRANSCRIPT

THE HON PETER COSTELLO MP
TREASURER

Press Conference
Prime Minister's Office
70 Phillip Street, Sydney

Tuesday, 7 September 2004
4.30 pm

SUBJECTS: Labor's Tax Policy

TREASURER:

Well, 16 weeks late and 32 days before the election campaign we now know why Mr Latham has been hiding. He's cobbled together a policy with the intent of trying to pull the wool over the eyes of the Australian public. And I do not think I have seen anything as deceptive as his attempt to put together weekly tables to show that people will be better off under his policy and leaving out of those weekly tables benefits which they are entitled to under this Government.

Mr Latham produces weekly comparisons for families between his policy and where they stand under this Government and leaves out the $600 per annum benefit, which all families who receive the Family Tax Benefit (A) are entitled to – he just leaves it out. He takes it out of his weekly tables. Not only that but if you read carefully – I've only had this for about an hour and I always go to the footnotes first – the footnotes on page two of his family tables, he also leaves out of the weekly difference the value of the low income tax offset which the Labor Party is proposing to abolish.

Ladies and gentlemen, Mr Latham's weekly tables are not worth the paper they are written on. They were designed to hoax you. They are designed to deceive the Australian public. The one thing you can take out of it is Labor intends to abolish the $600 per annum payment and they have left it out of the tables because the moment you put it into the tables, all of these tables, which are designed to show that 9 out of 10 Australians are better off, all of those tables have to be redone. Mr Latham has attempted to deceive you with the statement that 9 out of 10 families are better off. The deception is built on leaving out the $600 family tax payment and also, in relation to the tax changes, failing to take into account the value of the low income tax offset, which is currently available and which he proposes to abolish.

Now, a few other points. A lot of Australians will lose under this package. And over forthcoming days we will be recasting the tables on an honest basis but you can see even from these tables themselves that single income families are attacked by Mr Latham. Even on his figures, single income families – you go to page 14 of these cameos – single income families with children are worse off. If you have three children, up to $30,000, up to $35,000, you're worse off again, from $80,000 on, Labor has attacked the single income families. How have they done that? They've done that by abolishing Family Tax Benefit Part B.

I'm just going to ask another rhetorical question here too – it is very hard to find out, by the way, from these tables, what Labor's actual payments are, family payments. They say they are introducing a thing called, is it the basic family payment, the better family payment…it is very hard to find out what the levels are, it is very hard to find that out. I have only had this for an hour but you normally actually name what the levels are so that you can do these proper comparisons. You may have had more time, you may be actually able to find out what it is but I think the reason why they have not nominated the amounts and compared them is, one, they're trying to airbrush the $600 payment out of existence, two, they are trying to cover up the fact that the abolition of the Family Tax Benefit Part B is an attack on the single income families.

I'm going to make one other point, which I think is absolutely crucial as this package begins to unravel and it is this. In an ageing society where Labor says it is in favour of improving savings, Labor is proposing over three years to rip $3.47 billion out of people's savings. That is the combination of the increase in the superannuation surcharge and the abolition of the co-contribution scheme. Over those three years Labor's so-called contributions tax cut will reduce tax by $1.3 billion.

So this is a policy to increase taxes and take away superannuation savings. There is no doubt about it. When you net it out, this is a policy which will take away superannuation savings. Now, I thought Mr Latham had been complaining that he thought savings were not great enough in Australia and yet he has a policy to rip away people's savings with the increased superannuation surcharge and the abolition of the co-contribution scheme for lower income earners. That is where the money is coming from – bigger imposts on your superannuation – Mr Latham's hand reaching out and grabbing people's superannuation. Why? He does not care about the future, he does not care about the future. He is trying to rob from the future for his own naked, political advantage. One of the most anti-future announcements that could ever have been made.

This is a deceptive document. This is a document which has started unravelling already. This is a document which is bad economic policy and I look forward over the days which lie ahead to outlining to the many, many Australians who are going to be worse off, the way in which a vote for Mr Latham will make them worse off and it will make the Australian economy worse off.

JOURNALIST:

Treasurer, they have railed, both parties have railed long and hard about the tax, family payment tax debt and they say that this will do away with that debt. Do you, will this…

TREASURER:

This does nothing about family tax benefit debt. It does absolutely nothing. What they say – and you have got to read it yourself – what they say is, we pay it fortnightly and if you tell Centrelink of all your fortnightly changes, you won't get a family tax benefit debt. Just as under the current system, if you were to fortnightly tell Centrelink your payments, you would not get a family tax benefit debt. There is no change, there is no change at all. All they say is, if you give accurate information to Centrelink you won't get a debt. Just as at the moment, if you give accurate information to Centrelink you won't get a debt. It is absolutely true.

JOURNALIST:

But that is not really true, is it Treasurer?

TREASURER:

It is absolutely true.

JOURNALIST:

At the moment, there are one in four families that (inaudible) have a problem where even though they may notify Centrelink almost straight away of an income change but still end up with an end of year tax debt.

TREASURER:

No that is not the case. If you keep Centrelink informed of your income you do not get a debt. It is because people do not keep Centrelink up to date on a fortnightly basis with their income that they can get an overpayment or an underpayment which we say, can be made up at the end of the year. Under the Labor policy, if they do not keep Centrelink informed on a fortnightly basis, they can get an overpayment or an underpayment. There is no change, it is just a requirement that it be a fortnightly notification to Centrelink. If we had people notifying fortnightly and they were doing it accurately, nobody would ever get the wrong amount. This does nothing….

JOURNALIST:

Treasurer are you saying…

TREASURER:

…about that problem. I have got to say, this is a Wayne Swan Special, this. This is a man who has been out breathing fire against the Family Tax Benefit System for so long, that when he gets to announce his policy he makes no changes.

JOURNALIST:

Are you saying Treasurer that nobody on the under $52,000 income, will be better off under the scheme?

TREASURER:

No, I did not say nobody would be better off, I said that there will be many, many Australians who are worse off.

JOURNALIST:

Who exactly? Which, which…

TREASURER:

Centrelink covered families will be worse off

JOURNALIST:

On what types of income?

TREASURER:

Well I have told you, everybody (inaudible) you can see, even on Mr Latham's, this is before I do my figures and put the benefits back in. You can see on page 14 of his cameo: 'Single income couple, three children, one aged under five, two aged 5-12 years, worse off on $10,000, worse off on $20,000, worse off on $25,000, worse off on $30,000, worse off on $35,000, worse off on $80,000, worse off on $85,000, worse off on $90,000, worse off on $95,000, worse off on $100,000. Single income couple with two children, one under five: worse off on $25,000, worse off on $30,000, worse off on $75,000, worse off on $80,000.' That is even on his table.

JOURNALIST:

(inaudible) single income people?

TREASURER:

Single income, that is on page 14, I am just reading you his tables. His tables, the annual tables. Okay, dual income, let's go to his tables: 'Dual income couple with three children with one aged under five, 80/20 income split, worse off at $25,000, worse off at $30,000, worse off at $35,000. Dual income couple with two children, one aged under five, worse off at $30,000.' I mean, these are his tables. There are thousands of Australians that are going to be worse off under that, and of course, you see what he doesn't put in his tables is, and you will recall, that when we did the tables of the Budget, not only did we have tax changes, family changes, but superannuation co-contribution. When you add in another column, for the abolition of the superannuation co-contribution, some of these tables are going to go all completely negative. You see he doesn't, this is how the Budget was done, tax cut, family assistance, co-contribution. His tables don't have that co-contribution. That is what has been abolished for people earning up to $58,000. Add in the abolition of those benefits.

JOURNALIST:

Why does the super co-contribution on an average (inaudible)?

TREASURER:

It depends, I mean what you want to take as an average case. It is all here, I mean, dual income couple with two children, one aged under five. The Government's superannuation co-contribution $500.

JOURNALIST:

A year?

TREASURER:

Yes.

JOURNALIST:

So you are spending $3.5 billion, who is getting better off? It sounds like nobody, where has all money gone?

TREASURER:

Well that is, I mean is he spending, who knows what he is spending. I will tell you something, he doesn't.

JOURNALIST:

But the bottom line is that…

TREASURER:

We can, I will do my own assessment over the next day or two. I got this at about 3.15 this afternoon so I had about an hour to read it, but we can solve all of the questions about what it costs, can't we? It can be submitted to Treasury tonight. We can solve all of these arguments. Now, why can't he submit it to Treasury tonight? Submit it to Treasury tonight and have a costing in a day or two and then we will really know. But he has got a complicated reason, hasn't he, why it can't actually be costed by the Treasury It is a very complicated reason, he can't actually tell you what that reason is but it is complicated. Somebody has got to speak to somebody and something has got to be ironed out. Why can't it be at Treasury today? Look, this Charter of Budget Honesty it is no great recent invention, it has been in place for years, he has known about it whilst he has been in the Parliament, it has been there for the last 7 ½ years or whatever, he does not need anything clarified, he can submit it tonight.

JOURNALIST:

Treasurer, will the Government be offering tax cuts to income earners under $52,000?

TREASURER:

Let's not worry about the Government, we have just seen the most blatant attempt to hoodwink the Press Gallery that we have seen in a very long period in Australia. The production of weekly tables which oh, just happen to leave out the $600 increase which was handed down in the Budget. Oh, just happened to leave out the net difference on the low income tax offset which he is taking away. And then, just happen to leave out the superannuation co-contribution and then said, have a look at those weekly tables, nine out of ten are better off…

JOURNALIST:

What about the $8 tax cut?

TREASURER:

…this is, well…

JOURNALIST:

It is better than zip.

TREASURER:

Well does everybody, let me ask you this question, let me ask Mr Latham this question. Does everybody up to his limit get an $8 tax cut? Did he tell you they did? I think he might have. But that is not true either. Because that credit has to be netted off the low income tax offset, this is what I keep telling you about. There is a low income tax offset which the Government currently pays $235 between the incomes of $21,600 and $27,475. By my calculations, hard to find in his table, he is introducing 416 as his offset, he does not actually tell you the amount. The difference is 181, it's only 181 on an annual basis if you were previously entitled to the low income tax offset. You only get near your $8 if you are somebody who was previously entitled to none of the low income tax offset and are fully entitled to his 416. Now, does he know it? I don't know if he knows it, but he sure tried to misrepresent it.

JOURNALIST:

What will your Government be offering people who earn less than $53,000 (inaudible) tax cuts?

TREASURER:

Well let me tell you, and I think this is very important, there's a big difference, there is a huge difference at this election between what our Government is offering people below $52,000 and what Mr Latham is. We are offering them $1.50 for every dollar they put into their superannuation under our co-contributions scheme. He is saying if you put a dollar into your superannuation, zip, nothing, zero. This is…

JOURNALIST:

(inaudible) Labor….

TREASURER:

This was the most generous superannuation initiative that we've ever seen in Australia. It wasn't a tax cut, it was a 150 per cent payment to you for each dollar your made your contribution. Today Mr Latham just said it is getting abolished. So those people, just think about those poor people who have the opportunity to have $1.50 for each dollar they contributed to set up their savings for their retirement. That disappeared today.

JOURNALIST:

With respect Treasurer that does not account for the question of whether you would offer people earning less than $52,000 a tax cut of your own.

TREASURER:

I've answered it by saying I am offering them a superannuation co-contribution scheme which is better than any tax cut. Can I tell you this? A tax cut can never actually give you money, it only reduces the amount the Government takes away. Where you actually have a co-contribution you actually give them and in this case it is 150 per cent for each dollar of contribution.

JOURNALIST:

But Treasurer surely families that are struggling to meet basic weekly payments, a few dollars in their pockets now instead of $1.50 from 30, 40, 50 years in future?

TREASURER:

Well if that were your view you would abolish the Superannuation Guarantee wouldn't you?

JOURNALIST:

Treasurer (inaudible)

TREASURER:

I mean that is the argument against the Super Guarantee, give them the nine per cent now in their wages rather than put it into superannuation. You see, people deserve good wages and they deserve strong savings for their retirement. But to net take away from them on their superannuation savings, in an ageing population. We have produced this Intergenerational Report, on the back of the Intergenerational Report we showed that our population was ageing, we had to start saving for the future. We introduced a co-contributions scheme and Mr Latham walks into an election campaign, 16 weeks late, 32 days before, and says he's going to abolish it. Just extraordinary.

JOURNALIST:

… cost the Government at the moment?

TREASURER:

The co-contribution? Well it's all in Labor's costings.

JOURNALIST:

Why doesn't the (inaudible).

TREASURER:

Well I'm quite happy to accept his figure on it because I assume he's taken it off my Budget papers, I don't have my Budget papers. But here it is, I'll show it to you. It's on page four of Labor's savings measures. He says abolishing this co-contributions scheme will save $632 million in 05/06, $1 billion in 06/07, $1.045 billion in 07/08. His increase superannuation surcharge will cost

$69 million in 05/06, $340 million in 06/07, $385 million in 07/08. And in return, jeez he is generous this bloke isn't he, he cuts the superannuation contributions tax, after taking all that, by $199, $423 and $676.

JOURNALIST:

… because a single means tested family payments (inaudible) in the Government's (inaudible).

TREASURER:

No. Because it takes away a benefit which is currently available for single income families. He is abolishing a benefit for single income families.

JOURNALIST:

… means tested and…

TREASURER:

Part B, he is abolishing it.

JOURNALIST:

Mr Costello, is the Government committed to the $600 in the next term?

TREASURER:

Absolutely.

JOURNALIST:

That's an iron clad guarantee?

TREASURER:

Absolutely. We introduced the $600 increase in the Family Tax Benefit. We introduced it, we paid it before 30 June. Families are now getting their second annual payment commencing from September, if we are re-elected they will get it next year and the year after and if Mark Latham is elected it will be abolished.

Thank you very much.

7 Sep 2004

View more media transcripts …

Latest News

Paris Diary

Peter Costello Paris Diary

Read more …

To the Brink 1997-2001 Black Holes to Surplus Budgets

Peter Costello To the Brink 1997-2001 Black Holes to Surplus Budgets

Read more …

The Hole Truth

Peter Costello in the Daily Telegraph

Read more …

Videos

Video Screenshot

Watch videos …