PRESENTER:

The Federal Treasurer, Peter Costello says the Senate’s decision to block the full privatisation of Telstra has weakened the Government’s ability to isolate Australia from the Asian economic crisis and he’s confirmed the Government’s resolve to re-introduce the legislation to complete the sale. Matt Peacock asked Mr Costello if he believed the Senate’s action would shake business confidence.

There is no room for let up in Australia at all. If we continue to run good Budget policy, good monetary policy, if we make sure that we reform areas like our taxation system this can be a time of great opportunity for Australia.

But the reform isn’t keeping up because the vote on Telstra certainly seems to have affected confidence among some investors.

Well of course that is a backwards step because amongst other things it is going to make the historic opportunity we had to deliver a one-off knock out blow to Labor’s debt, to wipe out Labor’s debt much more difficult.

But have you abandoned hope on this yet?

No, no, no I haven’t abandoned hope on this at all but there is no reason why Governments should be investing their money in phone companies. It’s not in the US, it’s not in England, it’s not in Europe, it’s not in Asia. What we ought to be…

All those countries haven’t sold off all Telstra.

Oh yes they have, yes they have.

France for example.

France is engaged in privatisation at the moment, so is Germany. The UK has engaged in full privatisation, New Zealand has engaged in full privatisation. Right throughout Asia, even Cuba is talking about privatisation of its phone company. Now there is no reason why Governments should be spending hard pressed taxpayers dollars investing in phones when there are so many better things to do, particularly in relation to health and education and other services. We could better deploy that money by delivering better services out to the bush and by reducing Labor’s debt. And if we got that we would be setting Australia in a much stronger position to face the Asian economic crisis.

Is it a blow to your election strategy or to your tax package?

Oh no. It is a blow to good economic policy and so that is why we will revisit the issue. But we….. the important thing is that we continue to go on with other areas of economic reform, particularly in relation to tax, which we will.

And how long will you be advertising your new policy on tax?

Oh well as long as is needed to try and explain to people the benefits of delivering income tax relief and better deals for families.

Treasurer, Peter Costello.