Peter Costello you leave for Washington on Monday for an IMF convened meeting of international finance ministers. There’s been suggestions that in the wake of the Asian crisis the role of the IMF should be changed to be more of an early warning signal kind of thing, do you agree with that?

I think that that’s always been part of its role. The IMF produces reports on countries economies and has done for a very long period of time. Some people say that it should have been giving stronger warnings about what was going on in Asia but it was actually making some warnings at the time. The IMF then has the role, of course, to try and stabilise the financial system, a role that it’s doing at the moment. But my view is that in the modern world with interconnectedness and the way in which funds move so quickly, probably the role of the IMF is going to be greater than ever before rather than scaled down.

So in that since, when you say greater, should it be greater in terms of its surveillance of global economies?

I think surveillance is the most important thing. Surveillance in relation to financial systems in particular. What we know about the Asian crisis is that as much as anything it was a financial crisis, that is that the financial institutions were not as well regulated as they should have been, that they were making some unwise lending and that when companies got into trouble they took financial institutions with them and that shook confidence. This is a big point that this is as much a financial crisis as an economic crisis that is going on in Asia at the moment.

Well Australia played a role in persuading the IMF to restructure its demands of Indonesia in relation to the rescue package there. A new agreement has just been announced, are you happy with the terms of the revised restructure package?

Look we’ve been motivated by two points here all along. The first is that an IMF program properly implemented will give international confidence to Indonesia which is desperately required if the exchange rate is going to recover. The second point, though, is that the IMF package has got to be well targeted and well delivered. And we thought it was important to disentangle the basic food needs and the requirements of living standards from the financial restructure that was part of the original IMF package. Now I think that this package bears a greater chance of being implemented and implemented in a way which can give confidence to international markets whilst at the same time protecting the poor from privation and hardship that could otherwise occur.

So in terms of Australia’s particular concerns though is this package able to deliver some of the economic certainty or shoring up that Indonesia needs and restore some of the social calm?

I think so. I think it’s a better package but again I make this point: the agreement to the package is not the end. It’s the implementation that counts. Now we’ve got a better package on the table and provided the package is implemented and the international community can see that it is being implemented then you’ll get that confidence back which is required to rescue the exchange rate.

In the economic outlook from the OECD there is a warning for Australia about its exposure to the Asian financial crisis. It’s urged the Australian Government to continue its fiscal consolidation program. Will you deliver another tough budget this May in the light of that advice?

Well we are aiming to get the Australian Budget back into the black. That is, we want the Commonwealth Government to pay its way in the next financial year which is something it’s not done for a decade. That is our great aim. Now this is not in the bag but we are well along towards that great goal, and that’s what we are working on right at this moment. Now the importance of that is as the OECD says, at a time when you’ve got instability and turbulence in the region, you’ve got to fire proof and protect your own economy and fire proofing our economy means getting back into the black. It means getting our debt under control and it means showing that we’ve got the strength to put in place the right policies. Now is not the time to depart from good economic policy. In fact now is the time to heighten good economic policy, now is the time to engage in tax reform and financial sector reform and industrial relations reform and waterfront reform. Now is the time…

And more tough budgets?

And a proper fiscal policy. Look, if we achieve our goal in the next year we will have taken the Australian Budget, which was $10 billion in the red, and put it in the black. This is a huge turnaround in the finances of the nation.

If we can turn to the waterfront now. 1,400 wharf workers have just lost their jobs, two days before Easter, the Government likes to paint these people as mad rorters but they can’t be all bad can they? What message do you have for them?

Well they will be paid in full their entitlements in relation to redundancy and superannuation. But the message is this: in the modern world we’ve got to ensure that each sector of the economy is efficient and adds value. The wharves, they were like an arthritic vein, they were constricting the bloodlines in and out of the country. They were holding back the exporters, they were holding back people all over the rest of the Australian economy and to clear out the blockages will be so good for the economy generally that it will provide great new job opportunities and there had been so many attempts to reform the waterfront, none of which had come to anything. This is the big structural reform and it had to be done in a big and a bold way and it’s been done that way.

It was done fairly promptly, it was done without warning, can any worker around Australia now fear that if the Government thinks that they are blocking up the arteries if you like, their jobs might go like that overnight too?

Well I don’t think that you could say it was done without warning. Look you’d have to be deaf and blind in Australia to think that there was no warning to ….

Sacking the whole workforce?

..to waterside workers. There had been attempts year after year. There had been warnings from the Government. Some of the unions had even said that this was going to happen themselves, I don’t think anybody was particularly surprised. You’d have to have been deaf and blind not to know that something was going to happen on the Australian waterfront and the Government had promised that it was going to do something to clean up the Australian waterfront. So I don’t think that this was unexpected, the only thing that I would say is that the warning should have been heeded much earlier.

Why is the Government prepared to expend loans to Patrick Stevedoring to fund redundancy for these 400 workers who did have jobs until Patrick sacked them. But it’s done anything for the 260 Cobar workers who lost their jobs. I mean the Cobar workers are asking this, they are saying it is not fair?

Well the waterfront has always been a special case. When the Labor Party tried to clean up the waterfront, which they failed in doing under their proposals back in the early 90s, they always had a Government commitment in relation to redundancy packages. Now let me make this point the Government is not going to pay a dollar to redundancy packages, it is a very important point. What is going to happen is that a company is going to be set up, money is going to be borrowed, they are going to be paid out now and then the money is going to be recovered from the companies.

From the whole of industry though, it is essentially a tax on that industry?

Well when you say the whole of the industry, there are only two real players in the industry, one of whom is Patricks. Patricks is going to pay at least 50 per cent of all of these entitlements as it gets recovered from Patricks.

And there’s nothing similar that could have been done for the Cobar workers?

Well Patricks is paying out in full the entitlements as to 50 per cent and P&O has agreed to make a contribution as well. Now if there were another mining company in Australia that would like to pay out the Cobar workers we would encourage them to do it. That’s the analogy.

Can the Government do anything for Cobar workers?

Well we are, yes we can. We have the Australian Securities Commission now investigating whether or not the directors of that company breached the law and if they did and if it is a criminal breach of the law, proceedings will be brought against them. That’s the way to help the Cobar employees.

Treasurer thank you.

Thank you.