Time 18:30 Participants John Hewson | First reporter Mike Willesee | |
Date 3 March 1993 (1993-03-03) Location Sydney, New South Wales, Australia Cause Hewson was unable to explain one of his Fightback! key tax policies on live television | ||
The birthday cake interview was a famous interview in Australia between reporter Mike Willesee and Liberal Party Opposition Leader John Hewson shortly before the 1993 federal election. Hewson was unable to easily answer whether a birthday cake would cost more or less under his proposed tax reforms, causing voters to reject the plan as overly complex. It is remembered as the interview which contributed to Hewson's failure to win the election because he was unable to explain one of his key tax policies on live television.
Contents
Background
After winning leadership of the ailing Liberal Party, Hewson launched a comprehensive package of proposed reforms called Fightback! in November 1991, after years of Australian Labor Party dominance in Federal politics. The package included new social structures, industrial reforms and radical economic policies. One of the key elements of the package was the introduction of a consumption tax called the Goods and Services Tax (GST), the compensatory abolition of a range of other taxes such as sales tax, deep cuts in income tax for the middle and upper-middle classes, and increases in pensions and benefits to compensate the poor for the rise in prices flowing from the GST.
Bob Hawke and his Treasurer John Kerin were unable to mount an effective response, and in December 1991, Paul Keating successfully challenged Hawke and became Prime Minister.
Through 1992, Keating mounted a campaign against the Fightback! package and, particularly, against the GST, which he described as an attack on the working class in that it shifted the tax burden from direct taxation of the wealthy to indirect taxation of the mass of consumers. Keating famously described Hewson as a "feral abacus".
The interview
This assault forced Hewson into a partial backdown, agreeing not to levy the GST on food. However, this concession opened Hewson to charges of weakness and inconsistency, and it also complicated the arithmetic of the whole package. Essentially, the weakening of the GST reduced the scope for the tax cuts, which were the most attractive elements of the package for middle-class voters. A particular problem was coming up with a precise legal definition for 'food'. The complications of the new package were demonstrated in the interview ten days before the election, in which Hewson was unable to answer a question posed by journalist Mike Willessee about whether or not a birthday cake would cost more or less under a Coalition government. Hewson stonewalled and was unable to answer a seemingly straightforward question. Hewson was instead forced into a series of circumlocutions about whether the cake would be decorated, have candles on it, and so on.
Mike Willesee: "If I buy a birthday cake from a cake shop and GST is in place do I pay more or less for that birthday cake?"
John Hewson: "Well, it will depend whether cakes today in that shop are subject to sales tax, or they're not - firstly. And they may have a sales tax on them. Let's assume that they don't have a sales tax on them... then that birthday cake is going to be sales tax free. Then of course you wouldn't pay - it would be exempt, would, sorry - there would be no GST on it under our system. If it was one with a sales tax today it would attract the GST, and then the difference would be the difference between the two taxes whatever the sales tax rate is on birthday cakes, how it's decorated, because there will be sales tax perhaps on some of the decorations as well, and then of course the price - the price will reflect that accordingly. But the key point is that there, the average Australian will have more money in their pocket - "
Willesee: "No, but just on the, just on the birthday cake, because I'm trying to pick up a simple example. You tell us in what you've published that the cost of cake goes down, the cost of confectionery goes up, there's icing and maybe ice-cream, and then there's candles on top of it."
Hewson: "That's right, now that's the difficulty - that's what I'm addressing in the question. To give you an accurate answer, I need to know exactly what type of cake to give a detailed answer. I mean if it's just a cake from a cake shop that is not presently subject to sales tax, it will not attract the GST."
Willesee: "But isn't that - "
Hewson: "If it is a cake shop, a cake from a cake shop that has sales tax, and it's decorated and candles as you say, that attracts sales tax, then of course we scrap the sales tax, before the GST is - "
Willesee: "Okay - it's just an example. If the answer to a birthday cake is so complex - you do have an overall problem with the GST, don't you?"
"Well, people don't know how much tax they currently pay..."Aftermath
Hewson subsequently lost the 1993 election, which, until that point, had been billed by many of his supporters as the "unloseable election". However, the contribution of the birthday cake interview to Hewson's loss is disputed. According to Channel 9's 20 to 1 episode "Unscripted and Unplanned", it was the moment Hewson lost the election; the interview was held 10 days before the election, and polls right up to election day predicted a Coalition victory.
After the election Fightback! was declared dead and buried, in May 1994 Hewson lost the Liberal leadership to Alexander Downer, and the issue of the GST was dropped from the Liberal Party's agenda until the 1998 election campaign.
In August 2006, Andrew Denton conducted an in-depth interview with Hewson on the ABC TV program Enough Rope. Upon being shown footage of the birthday cake interview, Hewson commented, "Well I answered the question honestly. The answer's actually right. That doesn't count... I should have told him [Mike Willesee] to get stuffed!"