THE HON. JOHN HEWSON
LEADER OF THE OPPOSITION

Dr Hewson, thank you for finding the studio.

Thank you. It’s a great pleasure to arrive, and thank you for inviting me.

You’re working towards some proposal for a consumption tax.

What I actually said was, we are looking for a scenario where, under certain circumstances, it may not be completely inappropriate to introduce some sort of very broadly based consumption tax at some future time.

How does a consumption tax work?

No, look…(conspiratorially) What you do is…I pretend that we’re not going to introduce a consumption tax and you try to trick me into denying that we’re actually going to do it. That’s the way it works.

Dr Hewson, could you describe a consumption tax?

Why don’t you do that? I say, ‘We’re not going to introduce one,’ and then…I’ll help you, I’ll give you a few clues. I’ll leak some John Elliott stuff. Then I’ll say, ‘Yes, of course, there is some support in some quarters for some sort of tax at some future time.’ That’s the way the consumption tax argument works. Read it out.

What is a consumption tax, Dr Hewson? Is it a tax on consumption?

Yes, of course it is.

There are three things you can do with money, aren’t there? You can save it, spend it or invest it.

That’s right.

The poor don’t save much.

They don’t save a whole lot, no.

Do they make a lot of investments?

I don’t think they’re a very big player in the market currently. No.

So, a consumption tax is applied to money that is spent.

Correct.

Let me put this to you: if a family has an income, after paying income tax, of five hundred dollars a week, and it costs them five hundred dollars a week for rent, food and running the car; they have no investments, no savings; what percentage of their income attracts a consumption tax?

Roughly?

Roughly.

Roughly one hundred per cent.

What are you going to do with all this money?

We’re going to give tax relief.

To whom?

To people who save and invest…Why don’t you trick me into a denial? That’s the way the consumption tax argument works. Trick me into a denial that we’re actually planning to introduce it. That’s the way it works.

You want to play a game?

Yes. Why don’t you play the game properly?

I don’t want to play a game.

You big sook.

I beg your pardon?

You’re a big baby.