Tax cuts high on Australia's agenda

The federal Government and the Reserve Bank have exactly the same opinion about potential tax cuts, says Prime Minister John Howard.

Reserve Bank Governor Ian Macfarlane cleared the way for the Government to undertake major tax reform over the weekend when he said the economy could afford tax cuts. Howard said yesterday the Government agreed with MacFarlane.

"What Mr McFarlane said at the weekend was identical to what [Treasurer] Peter Costello and I have been saying for weeks," Howard said.

"We have said before that if we have the capacity to give relief in the next Budget then we will but it has got to be consistent with our determination to retain a strong Budget surplus."