O’BRIEN:

The blocking of Telstra is just one of the problems confronting Treasurer Peter Costello at present and he joins me now from Parliament House. Peter Costello the Government seems to have pinned so much on the sale of Telstra, where does this now leave your promises to the bush on their communications infrastructure for one thing, where does it leave your Budget surpluses in future years, where does it leave your capacity to pay for income tax cuts?

Well it leaves the bush worse off as at the moment, because one of the things that selling further shares in Telstra would have enabled was untimed calls in the bush. And you have got to hand it to Mr Beazley he’s dealt the bush a big blow by preventing that occurring. Your introduction blamed Mal Colston but Kim Beazley can take a lion’s share of the blame. In relation to the dividend from Telstra we were going to, with the money raised by the full privatisation of Telstra, deal a one-off knock off blow to Australia’s debt. We could have practically erased the $80 billion debt that Mr Keating and Mr Beazley ran up in the last five years between 1991 and 1996 of their Government. We could have practically wiped that out. Now as a result we won’t be able to do that, people will be living with the Labor debt for much longer. But it doesn’t effect our surplus. Our Budget is now in the black. That is we are now living within our means and by doing that we have stabilised Australian debt and we are starting to run it down. But we won’t get that knock out blow. Kim Beazley’s great victory in blocking the Telstra privatisation is that he has made Australia live with his debt for longer.

Where was your mandate to sell the rest of Telstra?

Well we were going to put through this legislation which would have enabled the Government if returned, with a mandate at the election, to offer the remaining shares in Telstra. Now let me make this point, if you look around the world Kerry, there aren’t many governments around the world that still invest in phone companies. Not in the United States, not in New Zealand, not in Europe, not in Britain, not in Asia, not in Eastern Europe. And governments only have limited amounts of money. You can invest that money if you like in a phone company or you can invest that money much better in health, and education and other things and we believe that they are priorities. Labor wants to invest in the phone company, which alone Australia in the western world would be doing. We say that there are much better things to do with taxpayers monies.

But governments presumably are supposed to do things with the endorsement of the people. At the last election you went with a clear policy that said we want to sell one third of Telstra and when Mr Howard was asked the inevitable question what about the other two thirds, he said, very clearly, unequivocally, we will not move to sell the other two thirds of Telstra without going to another election and seeking another mandate.

Sure.

Now you have not done that, you have broken that promise.

No, no, no the legislation would have said, if our Government had been returned, we could have sold the remaining two thirds of Telstra.

And you don’t see arrogance…..

Hang on.

…in going into the Parliament and drawing up legislation and taking a decision in Cabinet, getting the vote through the Parliament, and then after you have done all that going to the people and saying by the way, do you support belief that we should sell the rest of Telstra.

No because the legislation wouldn’t have been activated unless we had been re-elected on that platform. Let me turn the question around and ask you this. We will go to the Australian electorate with a policy to privatise the remaining part of Telstra. If we are elected do we have a right to do that? The answer must be yes Kerry, it must be yes. But the way in which the Senate numbers are now configuring, Labor is saying the outcome of the election is meaningless, they won’t accept the verdict. This is a mechanism…..

Surely ….(inaudible)

….a mechanism that would have enabled the result at the last election to determine the outcome in relation to privatisation. That mechanism is not put in place because Labor now reserves the right, notwithstanding the verdict of the Australian people, to defeat the outcome of the next election.

Surely you can’t claim that the verdict of the last election that people went to the polls at the last election voting not only to for you to sell the first third of Telstra but to allow you to go ahead to this extent on selling the rest of Telstra and then after the event going back to the people and saying, by the way do you know approve this.

No, no, no Kerry I don’t think you’re hearing me here. What the legislation provided was that if the Coalition were returned at the next election on a policy of selling the remaining two thirds of Telstra that would be achieved. That’s what it provided. It would not have been activated until we had won another election with the mandate of the Australian people. This is a mechanism basically to ensure that the result of the election was the result in the legislation.

Of course regardless of Telstra your biggest task, toughest task, at the next election I would suggest is going to be to sell the GST. You’d agree?

Well to explain to the Australian people the need for tax reform. Tax reform is not just GST GST is part of indirect tax reform but tax reform, is lower income taxes, a better deal for families…

But I’m talking about the tough end?

Well I know, Kerry, the Labor Party and the opponents of tax reform would like to boil it down to just one issue but tax reform is much bigger than one issue. Tax reform is about changing the whole nature of the Australian taxation system. It’s about giving ordinary wage earners the opportunity to keep more of what they earn. It’s about giving families additional benefits to look after children and that is why we are engaging in tax reform because we believe ordinary wage and salary earners need a better go and families need better benefits as well.

And I assume that the Prime Minister will have the number one job in selling the tax reform package?

Well of course. The Prime Minister is the number one person in the Government and he’s the number one on all issues.

So how embarrassed is he and are you going to be over his promise before the last election never, never, never to introduce a GST?

Well he was elected at the last election saying that he would not introduce a GST. He has not.

Never, ever.

He is now going to the Australian public to say, will you give me a mandate to introduce tax reform and if they give him a mandate he is entitled to do it. Let me ask you the other question, let me turn it around again, what policy has Labor came out with in this term of Government on tax reform?

When a politician says never, ever…

Hang on.

When a political leader goes to the people in an election campaign and uses the terms never, ever are you saying that never, ever means for the next three years or it means never, ever?

You didn’t answer my question. The only policy that the Labor Party has come up with …

This is a format where I ask them and you answer.

Let me tell you what the answer was. The only policy that the Labor Party has come up with yet, is that if they are re-elected they have a policy for the next term of Opposition which is to oppose tax reform.

Well those questions I’ll reserve for interviews with the Opposition.

The only way you can get tax reform through in this country is by going to the Australian public and getting a mandate. And what we say is this. If you get that mandate, if you get a mandate in an election for tax reform, shouldn’t you be able to introduce it, isn’t that important, wouldn’t that be a basis for getting a new tax reform. The Prime Minister is going to the Australian public with a proposal for tax reform. The Australia public, if they vote for it, are entitled to get it.

But one of the big issues and one of the big messages that the electorate seems to be handing out quite frequently in this day and age is on the issue of trust and the basis of mistrust of the political process and of politicians. If in the fairly recent past you, Peter Costello, had said to the Australian people there would never, ever be a GST, how much credibility would you have with those people in this climate in going to them now, and saying I now want you to support a GST?

Judge the Government on its tax record. Before the next election what did we say. We said we would give $1 billion in reductions to families we did it on time, on budget , in full. We said we would give small business capital gains tax rollover, we did it on time, in full. We said we’d reduce provisional tax uplift factor to 6 per cent. We reduced it to 5 per cent from Labor’s 8 per cent. And now we go to another election. We say that tax reform is not yet finished and we say to the Australian people if you want tax reform cast a vote for it in the election. That’s the fair way to do things and that is the way it should work out.

And you are also going to promise them substantial income tax about two years down the track, why should they believe that promise two years down the track on income tax cuts when the Prime Minister is on record saying there would never, ever be a GST?

Judge us on our record Kerry.

Not on your promises?

Family tax initiative, on time, on budget, in full.

And where do election promises sit?

Capital gains tax rollover on time, on budget, in full.

And where do election…

And provisional uplift factor, we said we’d take it down from Labor’s 8 per cent to 6 and we brought it down to 5 per cent. This is a Government which delivered all of it’s tax record, everything that we said before the last election and more so. Judge the record, the record is there in relation to tax.

The Prime Minister has also promised in the last 24 hours a reasonable time to consider and debate your tax reform package before the election, what is your definition of a reasonable time in this regard?

Time for people to get as much information as they want by advertising and we plan to advertise as best we can to get follow up material, to get material through the post, time for people to actually try and understand the big issues that are involved.

How much time is that?

Well it depends on how intensive the advertising can be, but I would have thought people probably read things in newspapers, they will probably reserve judgment until they have seen analysis pieces there is no great rush in relation to any of this Kerry.

You mean there is no great rush in getting it out?

There is no great rush in making sure that people have ample time I mean we are quite prepared to make sure that people have ample time.

But you are not saying what that is, Michael Raper for instance of the welfare lobby says that he believes that there must be a minimum of three months to properly discuss, absorb, consider and decide on your package. Do you think that’s reasonable, three months?

Oh well you can, some people might take three months, some people might take three minutes for all I know. But the important thing is just to make sure that there is adequate time for discussion. But having said all of that Kerry, can I just make this point. This is not coming in a vacuum. You wouldn’t open a newspaper any day of the week without seeing a discussion of tax reform.

Except we don’t know the number, we don’t know the final form of your package….

Hang on.

There are different stories in different weeks on what you may or may not have decided but they are all on the basis of leaks, which may or may not be accurate.

I was going to say leaks or inventions, Kerry.

Which may or may not be accurate.

Well invention is not accurate but you can turn on your television, you can see advertising about the nature of tax reform. The only thing, I think people know this, we think we have got to have a better indirect tax system, we have got to help exporters, we’ve got to get business going to create jobs. We need to reduce income tax for average earners who have faced the prospect of paying $1 in 2 in tax. Our party stands for families and our party wants to help employment generation. That is pretty well known. Our party stands for tax reform. The only thing that is not known really is the sums on how all of this adds up. Now how long do you need to study sums on how it all adds up. How many people in fact do study them. You and I study them Kerry but who else studies them.

The entire welfare lobby for one and I would think you wouldn’t mind their support. But if we can move on, Victorian Premier Jeff Kennett said from Washington overnight that after the Telstra vote the country has come to a standstill, and I assume he means a policy standstill, that we’ve got to re-insert not just good policy but passion and leadership. Your response?

Well I don’t think you need Jeff Kennett to tell you that the fact that Labor and Mal Colston have voted against Telstra is a blow to economic reform. But the important thing of course in a hostile Senate with an opportunistic Labor Party which won’t put forward a policy and opposes all reform is to continue going on. And let me assure you of this, if this is your question. Do we intend to go on with passion? Yes. Because we believe in this country and let’s put this in context. We are living in an Asian region which is now in serious recession, as serious as we have ever seen in our lifetimes. We as a country can’t afford to sit back and say that we will give the game away on economic reform. If we do the opportunities for jobs, the opportunities for living standards, the opportunities for lower interest rates will be lost to us.

Do you still say that you have fireproofed the Australian economy from whatever happens in Asia?

Well look at the story in Asia today. Asia in now in recession. The strong economy in Asia is Australia. That is the strong economy in Asia.

And yet most Australian economists are predicting right now that this current quarter that we’re in, the June quarter, is going to record negative growth.

Well I don’t know that they are predicting that. But where are we at the moment, what high 4’s, high 4’s in growth. Where’s Japan? Minus 5. Where’s Hong Kong? In recession. Where’s Singapore? Facing recession. The point I make is this. Two years ago when we said Australian couldn’t continue to run at a loss of $10 billion a year, we didn’t know about the Asian crisis, but let me ask you this question.

Very briefly Mr Costello because we are out of time.

Let me ask you this question, if we hadn’t decided to put Australia’s books back in order where would we be now, in terms of this external crisis, where would we be now? And wasn’t it a good decision in retrospect.

On the basis of that rhetorical question, I’ll leave you. Mr Costello thank you for talking with us.

Thanks Kerry.