Transcript 

of

 

THE HON PETER COSTELLO MP

 

FEDERAL MEMBER FOR HIGGINS

 

Interview with Neil Mitchell

3AW

Friday, 6 February 2009

9.10 am

E & OE

SUBJECTS:  Economic stimulus package

NEIL MITCHELL:

It has been the week for the economy.  We have debated it often.  I have spoken to the Opposition Leader about it.  I have spoken to the Prime Minister about it.  It has also been a week, which I think has been a positive thing, we have heard more from the former Treasurer, Peter Costello.  There’s probably no man with more experience in the Federal Parliament.  Arguably he knows far more about the economy and how to run it than anybody else sitting in that building.  He is on the line now, the Member for Higgins, Peter Costello, good morning.

MR COSTELLO:

Good morning Neil.

NEIL MITCHELL:

Have you decided yet whether you will seek pre-selection and do another term?

MR COSTELLO:

Oh well that is the 2010 Election.  The nominations aren’t open.  They will probably be open later in the year.  Obviously I will talk to people about it.  When it arises I will make an announcement then.

 

NEIL MITCHELL:

So is the decision made yet or not?

MR COSTELLO:

No.  I will make an announcement then Neil.

NEIL MITCHELL:

I understand the announcement.  Is the decision made yet?

MR COSTELLO:

I won’t be saying any more about that until it arises.

NEIL MITCHELL:

Okay.  And when is the pre-selection decision made on Higgins?

MR COSTELLO:

Some time in the middle of the year I think.

NEIL MITCHELL:

Oh okay.  So you have got a bit of time?

MR COSTELLO:

Oh yes.  This is not the important thing at the moment.  The important thing at the moment is the economic debate and of course how this is going to affect Australians and their jobs.

NEIL MITCHELL:

This is very important I agree but there is some importance being put on the things you have had to say this week.

MR COSTELLO:

Yes.

NEIL MITCHELL:

Because of the experience you have got, because some people will turn to you and say: well we want to know what he thinks and because some people are saying: Peter Costello is back.  He is going to stay.  He now wants to be Leader.

MR COSTELLO:

I think you are right in saying somebody who has had experience should offer that experience and offer their views.  Of course that is what Parliament is for.  That is why I made a major speech on this package during the week.  And you can imagine there has been enormous media interest and that is why I have done a round of interviews because what’s going on now is pretty important Neil.  Australia is about to allocate $42 billion of spending.  Now these figures roll off the tongue – $42 billion.

NEIL MITCHELL:

Yes.

MR COSTELLO:

It is a large sum of money forty two thousands of millions of dollars and the money that is going to be spent the Government doesn’t have.  So what it is going to do is it is going to borrow money and spend it.  And you know if you are one of the people that will get one of those cheques, it will borrow the money and it will then send the cheques to people and then ask you to spend it.  If you are one of the people who gets the cheques of course it is nice to get a cheque but you have got to remember this is borrowed money and the Government will eventually have to pay it back.

NEIL MITCHELL:

Given this is such an important issue wouldn’t you be better involved sitting on the front bench?

MR COSTELLO:

Well I am involved in it as a Member of Parliament.  I am completed involved in it as a Member of Parliament.

NEIL MITCHELL:

I understand that but would you be open to the suggestion of returning to the front bench?

MR COSTELLO:

No.  I am very happy to contribute on behalf of my constituents and as a Member of Parliament and that is what I am doing.  I am very active on this.  And I am not doing it as an Opposition front bencher I am doing it as somebody who has brought down more Budgets than anybody else in Australian history.  That’s a fact.  And I have been a Governor of the World Bank and I have been a Member of the IMF Committee probably longer than anybody in Australian history so…

NEIL MITCHELL:

And you’re saying this plan is wrong?

MR COSTELLO:

What I am saying is this is a huge expenditure for very low value.  That you could get lots better for $42 billion.  This $42 billion is not going to build a road or a railway or a bridge or a dam.  This is $42 billion and at the end of it Neil as far as I can see you will have some better facilities in schools which by the way should have been done anyway and you will have houses that weren’t previously insulated now insulated.  And that will be good if you have got one of those houses but you know what else you will have?  You will have $100 billion of debt.

NEIL MITCHELL:

Well are you saying it should be $42 billion spent differently or are you saying as Malcolm Turnbull is that it shouldn’t be that much?

MR COSTELLO:

I am saying to spend $42 billion like this and to put Australia back into debt is a misuse of resources.

NEIL MITCHELL:

So how much would you be spending?

MR COSTELLO:

Well I wouldn’t be spending $42 billion.  Of the money I would be spending I would be spending on things that will last.  That is the point Neil things that would last.

NEIL MITCHELL:

Malcolm Turnbull’s $20 billion.  Is that enough?

MR COSTELLO:

Look I support Malcolm and it is not my purpose to get into arguments on specific amounts but I will tell you this.  $42 billion, you have got to think about this, this is a very, very large sum of money.  This is, our Defence Budget is a bit over $10 billion.  This, and at the end of it, ask yourself this, at the end of it not a new road, not a new bridge, not a new dam.  You won’t have any more water, your Connex trains won’t be running any better, the track won’t be fixed, there won’t be another bridge.  Now if you’re going to get one of the cheques of course you will be happy with that it is a $950 cheque and the government says spend it right.  So the cheque is made out, the money is spent.  And that will be over and at the end of it there will be $100 billion of Government debt there which someone will have to pay back sometime.

NEIL MITCHELL:

The Treasury Secretary Ken Henry yesterday to the Senate Inquiry said that if Malcolm Turnbull’s package was used instead of the Federal Governments that it just wasn’t enough, that we would go backwards, we would possibly go into recession.  Is he just wrong?  Ken Henry?

MR COSTELLO:

Well Ken Henry is the Head of the Treasury.  He has to defend the Government’s position which is what he did.

NEIL MITCHELL:

I thought he was supposed to be independent?

MR COSTELLO:

Oh no, no.  Ken Henry is the Departmental Secretary.  He is called to give evidence on the Government’s package.  You will never get Ken Henry to turn up in an Estimates Committee and say the Government is wrong.

NEIL MITCHELL:

So does he believe it or is he just going along with the Government?

MR COSTELLO:

Well look it is his duty to defend the Government and Ken did as well as you could expect but Neil let’s make this point if all you’ve got to do to avoid a recession is to spend some money why just spend $42 billion.  Why don’t we really make sure we avoid a recession and spend $400 billion?

NEIL MITCHELL:

But is it going to avoid a recession?  If the rest of the world goes into recession how do we spend our way out of it?

MR COSTELLO:

This is exactly the point.  If the economy is going to go into recession, a real recession, spending $42 billion won’t save it.

NEIL MITCHELL:

Well do you think we will go into a recession?

MR COSTELLO:

And if the economy is going to avoid the recession the $42 billion will be wasted.

NEIL MITCHELL:

Do you think we will go into a recession?

MR COSTELLO:

I am just going to make this point here Neil, if I could just finish this point, there is no great science here, you can’t sit down and say well $42 billion that would save a recession but $40 billion wouldn’t, $50 billion would really save it but $35 billion wouldn’t.  I mean, there is no great science.  At the end of the day you have got to make judgements about stimulus.  But here is the important point:- that when you are spending money like this, and this is $42 billion, you ought to spend it on things that will last.  This is the whole point about public expenditures.  Rather than pump it out there and I think the Government’s idea is to pump it out there, pump these cheques out there in March/April and get them spent immediately.  So let me tell you where we will be in May – in May the money will have been spent, it will be gone, the debt will be there, the debt will be there, in my opinion it could be there for a generation, and we will have nothing to show for it.

NEIL MITCHELL:

Would you have been willing to go into deficit at this time?

MR COSTELLO:

Well you see I left the Budget with a $20 billion surplus.

NEIL MITCHELL:

Oh yeah but different times.  I mean even if you’d be facing this you couldn’t stop this.

 

MR COSTELLO:

No, no, I left the Budget with a $20 billion surplus and Labor has decided to have new spending of $29 billion.  And the point I make is that they had ample room for spending and still could have kept the Budget this year 2008-09 in surplus.

NEIL MITCHELL:

Would you look at cutting the GST?

MR COSTELLO:

Look the problem with cutting the GST Neil is, it wouldn’t worry the Federal Government, the Federal Government can halve the GST and it wouldn’t have a dollar less.  If you cut the GST then the State Government would lose income and I can’t imagine the State, if you ask me if I were the Federal Treasurer it wouldn’t worry me in the slightest.

NEIL MITCHELL:

Yeah but would you want to do it to stimulate it?

MR COSTELLO:

I can’t imagine the State Governments agreeing to it.

NEIL MITCHELL:

Would you want to do it to stimulate things?

MR COSTELLO:

Well the State Governments won’t agree with it.  Well I will tell you what will happen the State Governments would say all right if you cut the GST you have got to find some other tax and raise the money to put us back in the same position.  That is why I don’t think it would make a big difference.

NEIL MITCHELL:

Can you tell me, can you explain to me Julie Bishop said if you cut the tax base and taxes will increase tax revenue.  How does that work?

MR COSTELLO:

Oh look these are long sort of academic arguments.

NEIL MITCHELL:

I would be fascinated because you reduce the amount you are taking but it somehow increases the amount you bring in?

MR COSTELLO:

Well look you…

 

NEIL MITCHELL:

She was wrong wasn’t she?

MR COSTELLO:

You have got to look…

NEIL MITCHELL:

She was just wrong.

MR COSTELLO:

Oh no, no, Neil.

NEIL MITCHELL:

She was.

MR COSTELLO:

You have got to look at all sorts of things and there is an argument that a more competitive economy with lower taxes grows better.  I don’t think people would dispute that.

NEIL MITCHELL:

Is she up to it?

MR COSTELLO:

Julie?  Yes. Yes.

NEIL MITCHELL:

You would be better?

MR COSTELLO:

No she is up to it and she in my view is doing a very good job.

NEIL MITCHELL:

Could you be tempted back to Shadow Treasurer?

MR COSTELLO:

No.  I was the Shadow Treasurer in 1994.

NEIL MITCHELL:

Could you be tempted back as Opposition Leader?

MR COSTELLO

No.

NEIL MITCHELL:

Never?  Never ever?

MR COSTELLO:

Neil I have been the Treasurer of Australia for nearly 12 years, I know a little bit about the Australian economy, I am a Member of Parliament, I am contributing my knowledge and my experience and I am very happy to do it.

NEIL MITCHELL:

You have enjoyed being back in the front line this week haven’t you?

MR COSTELLO:

Well I tell you not enjoyed but…

NEIL MITCHELL:

Well it is a crisis true but you’ve…

MR COSTELLO:

I have, I think I have made a positive contribution because of this Neil.  I was the Treasurer that repaid $100 billion of debt.  It took me 10 years to get rid of $100 billion worth of debt.  I have watched this Government in its first year go back and announce a program to re-borrow that $100 billion.   And that’s what’s happened.  It took me 10 years to get rid of Labor’s last $100 billion of debt and within a year they have announced a plan to borrow it again.  Now I know because I had to pay back that $100 billion debt I know how hard it is going to be first to service and then eventually to repay it.  It is very easy, very, very easy to clock it up Neil.

NEIL MITCHELL:

Okay just finally your thought on something else.  I have asked a lot of people about this – the proposition from the family of little Darcey Freeman who died on the Westgate Bridge – a national children’s day.  Good idea?

MR COSTELLO:

Yes.

NEIL MITCHELL:

If it happened who would make it work?

MR COSTELLO:

Look there are two ways you can make it work.  The first is you could ask the Government to proclaim it that could be done.  Personally I think a better way is to get a committee of prominent Australians, people who have knowledge of child abuse, the health system, of families, you know really you know big people.  People like Dame Elisabeth Murdoch and so on.  Get them together, get them to declare it.  Get the people to say this is something that they want to do and the Government will fall in.  And frankly if it comes from the people in my view rather than from the Government it will mean more to Australians.

NEIL MITCHELL:

Thank you for speaking to us.

MR COSTELLO:

Great pleasure to be with you Neil.  Thanks.