Peter Costello

Media Transcripts

30 March, World at Noon

Transcript No. 1
Hon Peter Costello MP

World at Noon

Monday, 30 March 1998
12.00 pm

E&OE

SUBJECTS: Small businesses, Westpac, tax reform


JOURNALIST:

 

Mr Costello this is just the sort of news you want going into an election campaign?

 

TREASURER:

Well look we welcome the moves that have been done today. This is going to be a great new product obviously for small business, it has the capacity to give your average overdraft rate a cut of about of $1,500 in terms of interest. And what were now seeing in the business lending market is what weve seen in the home loan market, that Government moves to fix the economy, to heighten competition is going to lead to direct benefits for small business. And small business direct benefits, increased profitability is good for jobs and is for the economy.

JOURNALIST:

Would you like to see the other banks follow Westpacs suit with this low interest rate?

TREASURER:

Well its our policy to increase competition in the financial services market and that paid handsome dividends for mortgage owners, people who are buying homes, theyre now about $3,000 a year better off as a consequence of Government moves. And Id say that in relation to business if you had one of the big competitors offering new products obviously in a competitive market others will have to watch. And I just hope that small business can take advantage of these reductions in interest rates. These are now some of the lowest overdraft interest rates since the beginning of the 1970s, nearly 30 year lows and that is just a wonderful climate for small business.

JOURNALIST:

With that sort of endorsement coming from the Federal Treasurer the other banks will have to follow suit, wont they?

TREASURER:

Well look, in a competitive market people have to price their products to get business and weve always said keep the market competitive and get benefits to consumers. The benefit to consumer here is for small business, weve got the benefits to the home buyers who are now nearly $3,000 a year better off and thats good for the economy.

JOURNALIST:

Just on the matter of small business. Theyre worried about Government intentions on the tax regimes on trusts, do you see that having to change the tax that is currently, the tax evasion that goes on amongst small business at the moment?

TREASURER:

I dont think that it is fair to say that small business is engaging in tax evasion. We have recently put through the Parliament some legislation which prohibited people using trust losses outside their families, that is retailing them to other people. That was a move to stop trust promoters, or clever promoters coming in and taking advantage. It was a good measure and its tightened up the area considerably. Well continue to move in relation to any unfair practices and well ensure that business is paying their fair share of tax just as we expect wage and salary earners to do so.

JOURNALIST:

You dont think that they should be taxed at company rates?

TREASURER:

Well look, were looking at all sorts of areas in relation to tax, thats one of the propositions that have been put forward. Were looking at not only the tax system but how the various business structures operate. And the message I say, as the Government moves towards tax reform is this, that the broader the base the lower the rate. If you have a tax system which is based across a broad base you can bring rates down and thats good for everybody.

JOURNALIST:

Just on tax reform, is a GST any more popular today than what it was in 1993?

TREASURER:

I dont think any taxes are popular, to be frank. I dont think you get people marching in the street for any kind of tax. But what I would say is this, I think since 1993 the Australian public has come to understand that we need a tax system on a broad base with a low rate and that one of the advantages is that you bring so many people that are currently in the black economy into the tax system you can deliver benefits to the massive wage and salary earners. And I think people understand that I think people understand there has got to be a fair amount of revenue to pay for the hospitals and the schools and the roads and the age pensions. But we should be raising it in a better way, our current tax system is broken.

JOURNALIST:

Alright but in order to provide a trade-off for income tax payers and theres talk of a 12 per cent GST, can you afford to charge 12 for a GST and still trade-off for those people?

TREASURER:

Look, lots of people talk about different rates and Im certainly not announcing any particular rates of tax measures here. But I make this point, our tax system is broken and it has got to be fixed. The Government intends to do that and I think that people of good will in the Australian community will join us in that very important crusade.

JOURNALIST:

Can you sell a 12 per cent GST?

TREASURER:

Well you keep coming back to that particular mark because you want me to say something about rates, which I wont. But what I can assure the Australian people of is this, we can have a better tax system, this is not the optimal tax system for Australia and we ought to have the vision and the courage to do it and people of goodwill will join us in that effort.

JOURNALIST:

Federal Treasurer, Peter Costello, thanks for your time.

TREASURER:

Thank you.

30 Mar 1998

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