…a pre-election grab bag of give aways, prompting speculation that the Government is saving the razzmatazz for the up-coming tax package. Well, as we go to air, the Treasurer is attending the traditional Post-Budget Press Club Luncheon, but I recorded this interview with him earlier.

Mr Costello, welcome to Midday.

TREASURER:

Thanks very much, KerriAnne.

Well, it’s back in black, right back on track with a $2.7 billion surplus. How will you use it?

Well, we’ll use that to start paying off some of Labor’s debt. We’re back in the black. That means in this year we’ll pay our way. But we’ve got the accumulated debts of the Labor years, they haven’t gone away, they’re still there. At the moment we have to pay interest on those debts, with the $2.7 billion we’ll start paying down those debts. And as we pay down the debts, as the mortgage gets less the interest payments will reduce, and the benefits then will be lower taxes and better services.

So you will be using that surplus to cut further debt?

Yes. When we talk about Labor having us in the red by $10.3 billion, ten thousand million dollars, that was only for one year. And what they’d done by doing that for five or six years is built up this huge debt which was hanging over the Government. Now we’re back in the black for this year, and with the money that we’ve got we are going to start paying down the debts. And as you pay down the debts, it’s like a mortgage, if you take $40,000 off your mortgage, what that means is your interest payments aren’t as great. And if we don’t have to pay as great interest payments, that means that our taxes can go on new schools, and new hospitals, and new roads, and we can have lower taxes, which is the great news.

So there will be tax relief coming from this surplus this year?

Well, there has been some tax relief which was announced last night, in relation to provisional tax, for example. Provisional tax is a tax where they say you earned so much last year, we’ll assume you’re going to earn it this year and add ten per cent, and make you pay tax on it. Now we’ve reduced that provisional tax uplift factor to five per cent, which is about half what it was earlier on in the 1990’s, so there’s some tax relief flowing already, and as you get the nation’s finances back in the black, and back on track, you can have further relief down the track.

Now in this Budget last night, there were no real carrots for the family or the everyday working Australian. Are you saving those sweeteners for the tax package?

Well, the main benefit that we want to deliver to families is low interest rates. Low interest rates just don’t happen by accident. You have to work hard with good economic policy, and we did that by getting inflation down and getting the Budget back on track. Now that means in the last two years, since we were elected, home mortgage rates have come down from about ten-and-a-half to about six-and-half per cent. For the average Australian mortgage, that means a family is now saving $4,000 a year on their own home mortgages. And $4,000 a year, that’s an awful lot for families.

Oh, it certainly is. But can the average Australian family, or working Australian, expect any more tax relief in terms of their pay packet?

Well, as we improve the state of the economy and keep the Budget in the black, and back on track, we can look, I think, at giving better tax deals. But that’s the big question of tax reform, that’s something that we’re going to address in the coming months.

What you didn’t address last night was child care. How do you explain, Mr Costello, to women who have had to give up their jobs because they cannot afford child care? How do you explain that this surplus is good for them?

Well, we’ve actually been redirecting child care funding, and what we’ve been doing is getting it out on a needs basis. And we’ve actually been increasing the number of places in ‘before and after school’ child care opportunities. So for people who have school-age children, the facilities are improving, and for people who have lower incomes, the child care subsidies are of more benefit. So they’ve actually been re-directed towards the areas of greatest need, and child care, child care expenditure over all is increasing.

Well, what about health? Health hasn’t been addressed as well. What do you say to people about that surplus who are on hospital waiting lists?

Well, we’ve made available $4 million a week to reduce hospital waiting lists. It’s available now. Any state government can come along and can claim $4 million, their share of $4 million, a week, just to reduce hospital waiting lists. The Queensland Government’s claiming it, the ACT Government is claiming it, the New South Wales Government could claim it if it wanted to, and I hope they do, because $4 million a week would be good for patients to reduce waiting lists.

How do you respond to people who haven’t got a job, and they say: who cares about a surplus, I need a job?

Well, there are more Australians in work now than ever before, and unemployment now is the lowest it’s been in eight years. But how do you create jobs? You create jobs by getting better business conditions and low interest rates is a big part of that. Small business is now paying interest rates of 7.7 per cent. In 1990 they were paying 20.5 per cent, three times higher. So if you get interest rates low, if you get better conditions for business, people want real jobs, they want real jobs in the real economy, with real firms. And that’s all about making business conditions better, it’s all about good economic management. Low inflation, low interest rates, a Budget coming back into the black, the chance to reduce Labor’s debt, and to set Australia up for better opportunities.

Well, while I understand you are creating the environment to make these things happen automatically, there are still a lot of people out there, they’re hurting. You have looked after the elderly though, to the tune of one-and-a-half million dollars. Was that as a result, response to the backlash over the nursing home debacle?

No, it’s a different area really, because what we wanted to say to the self-funded retiree, the person that had saved, is that it’s actually a good thing. We want more people to save for their retirement, that’s one of the ways of keeping government bills down. So, at the moment if you are a pensioner, you got this Health Card which entitled you to subsidised pharmaceuticals. What we did last night is we said to the self-funded retiree, another 220,000 people that are living on their savings, that they could get that Health Card as well. And what that means for them is that for pharmaceuticals they pay $3.20, no more than $3.20, and after 52 scripts, that’s if you had one a week, every script thereafter is free. Now that’s a great benefit for a self-funded retired person who’s worried about health care, and it’s also sending an important message. It’s sending the important message that if you save for your retirement you’re not going to be penalised, in fact you’ll be recognised.

The ABC seems to think it only got half of what it wants. Do you worry about that in terms of jeopardising election coverage when you’re not keeping people at the ABC happy?

Oh, well, I’ve given up trying to keep people at the ABC happy. The ABC , look the ABC’s funded $500 million a year, 500 million dollars. I reckon it would probably be a lot more than Channel 9 spends in a year.

But potentially they could give you a big whacking because there is a looming election.

Well, far be it from me to say whether the ABC would give us a big whacking. But do you think it would be right if we ran scared of the ABC? Do you think it would be right if we said we should take taxpayers’ money and pay it to the ABC to try and get good coverage for ourselves? Look, somebody’s got to pay these taxes in the end, and you know, it might be nice if the Government said, well look, we’ll try and sweet-talk the ABC with some more money, but somebody’s got to pay it. We don’t pay money to Channel 9.

Darned right!

Perhaps we should, Kerry-Anne?

Well, listen, can we start negotiating?

I think your contract’s way out of my league.

Well, thank you very much. Now, listen, you must be delighted looking, you’ve made the front page of every newspaper in the country. The Daily Telegraph has got to have the best caricature Did you see this one this morning?

Yes I did, yes. It doesn’t look a thing like me, don’t you think?

There you are as Dorothy, with pigtails, on the yellow brick road. That’s pretty impressive. What did you think of it?

Well, I didn’t like the pigtails actually. I thought that they looked a bit, what do you say, follicly challenged? A bit like me.

Oh I don’t know. But you know it led us to think about if you’re Dorothy, and the wicked witch was in fact the Labor Party, and we did a bit of casting here, who would be the lion without courage? I mean it couldn’t be Peter Reith because he’s been out there fighting, so he’s had the courage. What about the tin man without a heart? Who would you cast as the tin man without a heart, Mr Costello?

Oh, that’s a tough one. The tin man without a heart. I think I’d probably have to put Simon Crean in that role.

Okay. And we move on, our final bit of casting would have to be the scarecrow without a brain.

Gareth Evans is a must! Hands down!

So that’s your casting, Dorothy?

In that role he could be an Oscar nomination.

Well, the Budget, as I say, front page of every paper. Most people are hailing it as a great success, it’s every responsible. I guess it would be enough to make you feel like dancing?

Well, I’ve actually got the tune of Elton John’s “Goodbye Yellow Brick Road” more in my mind. Great song, same idea, and a great performer, but you won’t get me humming any of the bars on this programme.

Well I thought if you wanted to t dance, we’ve rehearsed, we’ve done it before.

Kerri-Anne, we’ll never reach those heights again. Quit while you’re in front.

So I couldn’t ask you to sing a little of “Yellow Brick Road”?

Sorry, but the old tonsils are…That kind of pain I wouldn’t inflict on anybody.

So auditioning for Elton John is out of the question?

Right out of the question.

Well, Mr Costello, we do appreciate your time with us, I know how busy you are. And thank you for joining us on Midday.

Thanks very much Kerri-Anne.