TRANSCRIPT 

of

THE HON PETER COSTELLO MP

FEDERAL MEMBER FOR HIGGINS

Interview with Karl Stefanovic

Today Show, Channel 9

7.10am

E & OE

SUBJECTS:      Economy

STEFANOVIC:

Peter Costello joins us now.  Peter good morning to you.

MR COSTELLO:

Good morning Karl.  Good to be with you.

STEFANOVIC:

Good to be with you too.  Good to talk to you.  There are going to be so many more people like Richard who we have just heard from then?

MR COSTELLO:

Oh yes.  I think we should brace ourselves that unemployment is going to rise.  We are coming off an historic low of course, we did get it down as low as 4 per cent.  It has risen not quite to 5 per cent but it will go significantly higher than that and judging by yesterday’s figures we will probably see hundreds of thousands of Australians thrown out of work over the next couple of years and this is going to break up families, it will affect jobs, obviously it will affect people’s homes, there is going to be a great human tragedy arising out of this economic downturn which is why the object of economic policy should always be to have a continuously growing economy, that was always the policy that I followed of course.  And I think unfortunately we are now going to see the consequences of that interruption to growth.

STEFANOVIC:

Okay.  How would you fix it?  You tell Australia right now.

MR COSTELLO:

Well I think that what the Government should say is it should say that this human tragedy, this increase in joblessness is going to force it to rethink on numbers of fronts.  The first is it has got to rethink in relation to energy policy.  Its emissions trading scheme is going to put up the price of energy, it is going to affect manufacturing.  It will make manufacturing in this country more difficult and I think the Government has now got to reconsider that.  It has to reconsider its proposals in relation to industrial relations which might have been okay in times of good growth, it will affect jobs in a downturn.  It has got to make sure that when it engages in spending packages as it did in shovelling out $10 billion before Christmas that we get something for it.  I think the thing that worries me and it will worry the Australian public is we shovelled $10 billion out before Christmas, it obviously hasn’t made any effect at all in relation to these National Accounts and what have we got to show for it?  For $10 billion not a road, not a bridge, not a dam, not a power plant, not a railway.

STEFANOVIC:

The Government argues that if they hadn’t done that then we would be in a much worse situation.

MR COSTELLO:

Well the Government says that by putting that out they were encouraging people to spend.  Now what we know is they didn’t spend.  And why would you spend Karl?  If you were worried about losing your job and the economy is turning down, why would you go out and spend everything you have got?  The rational thing to do is to save and that is what people did.  The only institution in our society at the moment which is borrowing is the Government.  Business is repaying debt, individuals are repaying debt.  It is quite rational.  So if you are really going to spend $10 billion and you wanted to create some jobs you would build a few things.  You would build a road or a railway or a dam or a power plant or you would build something and after $10 billion, and you know these figures roll off the tongue don’t they, that is ten thousand million dollars that was shovelled out before Christmas.  Have a look around what did we get for it?

STEFANOVIC:

That still doesn’t really answer my question in terms of how you are going to fix this economy right now.  If you were in charge of the purse strings, if this country was under your stewardship, how would you fix it from here?  The Government is working hard.  They are trying to do something, isn’t it better to try and do something than nothing at all?

MR COSTELLO:

Well it is better to do something that works.

STEFANOVIC:

Well what does work and would you have stopped this recession if you were in power?

MR COSTELLO:

Well I have just told you three things and I will go through them again.

STEFANOVIC:

Would you have stopped the recession if you were in power?

MR COSTELLO:

Let me tell you this Karl, when I left the Australian economy to Mr Rudd it was in the best condition it’s been in probably for 30, 40 or more years.  We had a balanced Budget which was in surplus, he had no debt, he had full employment and we had created 2.2 million new jobs.  Now that was an incredibly strong starting base.  Out of that $20 billion surplus which I left him he went and spent $10 billion before Christmas and this is the criticism I make – we have nothing to show for it.  What they should have done is they should have engaged in job creation either by bringing forward public works or by subsidising businesses which were creating jobs.  What they did is they sent cheques to everybody and those cheques were saved – quite a rational thing to do – but those cheques, $10 billion Karl, you imagine what you could do with $10 billion.  It didn’t make one iota of difference before Christmas.

STEFANOVIC:

You wouldn’t have stopped it though would you?

MR COSTELLO:

Oh look I have always said that there was a huge downturn coming as a result of the sub-prime crisis.  Remember I was the person before the election that said the financial tsunami was coming.  But we should have started working much earlier on this and one of the things I am extremely critical of, of this Government is all the way through 2008 when interest rates should have been held or cut the Government was urging the Reserve Bank to put up interest rates.  Now this is a very important point Karl because interest rate policy, monetary policy works on a lag of a year to 18 months.  Do you know that 18 months ago this Government was trying to cool the Australian economy right at the time when we should have been easing monetary policy the Government was working in the wrong direction.  So we are playing catch up now a long time after the damage was done.

STEFANOVIC:

We do have to go but you sound like a man who has the fire in the belly again Mr Costello.  Are you going to jump back in the ring?  Australia needs to hear from you now?

MR COSTELLO:

I want to offer my views of course I do.  But the most important thing Karl is that this is going to affect a lot of people’s lives.  And it is people and their lives that we have got to worry about here and that is why we don’t need any more policy mistakes.

STEFANOVIC:

You have got to get out there though.  You have got to get up on that front bench and do something don’t you?

MR COSTELLO:

Well I do get out there Karl.  And I get out there on the media and I get out there in writing and I only hope…

STEFANOVIC:

Do you feel like you already lead?

MR COSTELLO:

…I was going to say Karl I only hope that Mr Rudd is listening and he is reading.

STEFANOVIC:

You feel like you already lead?

MR COSTELLO:

Look Karl I have told you what I think should happen.  We ought to get value for money, we ought to do better on energy policy, we ought to do better on industrial relations and we shouldn’t have got monetary policy wrong.  And I think if those prescriptions are followed Karl then many Australians will have better opportunities.

STEFANOVIC:

Peter Costello thank you very much for your time today.  We appreciate it as always.

MR COSTELLO:

Thank you.