Well tonight I asked Peter Costello about the latest developments in Japan and as you’ll see he went on to make some extraordinary allegations about who was driving Pauline Hanson’s One Nation.

Peter Costello welcome to the program.

Thanks very much Barrie.

Did the United States do the right thing by intervening to drive up the value of the Yen overnight?

Look I think it was a welcome statement from the US monetary authorities and indeed from the Japanese Government. Clearly the Yen had been subject to significant movement, clearly Japan has to have a domestic policy response. But the intervention of both authorities, I think, was welcome for Japan and welcome for much of Asia, in particular particularly those countries that have suffered debilitating depressions themselves.

Does it suggest though that the situation in Japan is more critical than perhaps you might have thought?

The situation in Japan is quite serious, you’ve got an economy which is unquestionably in recession and it hasn’t grown for years but it is now unquestionably in recession, quite severe.

Does all of this though suggest that the recovery in Asia is further away than we thought because it is a change of strategy on the United States part?

Well in Asia some countries, I think, have improved over recent months, I think that there have been some encouraging signs in Thailand, I think there were some encouraging signs in Korea. But a severe depreciation by Japan would threaten the fragile position in even of those countries and could lead to a second wave and that was the consideration that all of the policy makers in the region have been taking into account and would have been moving the US and Japanese Governments.

Why is business confidence and consumer confidence so low in Australia at the moment?

Oh I think principally because of the position in Asia and because there has been a diet, a steady diet, of news reports in relation to it. But let’s look at it from this angle, last week the dollar fell, that dominated all the headlines. You won’t see a headline tomorrow that dollar bounces back or dollar roars, that won’t sell newspapers. So the newspapers, of course, have been focussing on the negatives and the truth is if you have negative news and the news has not been positive, but if you have negative news dominating your newspapers for a long time it will effect sentiment.

Well from your point of view, though, I suppose, domestic politics is not so bright, the vote in the Queensland election, what are the lessons for the Federal Government?

I think the important thing for the Federal Government is to keep concentrating on the policy and to keep focussing on the alternatives that have been put forward. The one thing that you didn’t hear in the Queensland election Barrie was a policy from One Nation that could make Australia better. In fact their economic policy, which was to create a state bank to lend out at 2 per cent, we had their director come out I think two days ago when he was asked about this he says well this is a policy to print money.

Yes but that has been reversed today, in fact Pauline Hanson does point out that that was an official speaking, Pauline Hanson’s policy is that this is money that will be prioritised from other areas, taken away from areas like arts and aborigines. What’s wrong with that as a concept?

Well the interesting thing about it is when I heard this proposal for a state bank with 2 per cent interest I knew I’d heard it before and I actually went back through some of the literature. I found it, of course, in a document by, headed up, Enterprise talking about 2 per cent state bank loans, a document printed and published by the Australian League of Rights. I found the idea about state banks with subsidised loans to home buyers, farmers and small business, again in the series of documents called Enterprise, printed and published by the Australian League of Rights. And I heard one of the One Nation people who I don’t think has been sacked as a spokesman today, Mr Oldfield, on your program a couple of nights ago talking about The Lima Declaration. I’d heard that before, of course, and I went back and I found the leaflet the New World Order, A Threat to Australia, The Lima Declaration in another brochure printed and issued by the Australian League of Rights.

So you are saying that this is all a direct steal from the League of Rights?

Why do I say that? The Australian League of Rights is Australia’s premier anti-semitic organisation which for years has been trying to infiltrate rural institutions, had a very big push to infiltrate the National Party as you know, and it was courageous action by Senator Ron Boswell and others that defeated it. There’s nothing new about these policies. The Australian League of Rights has been promoting them for decades. The success the League of Rights has had, is in gaining policy control over the One Nation party and One Nation is being manipulated now by forces that possibly even it doesn’t understand, notorious forces that have been around in Australian politics for years, peddling these kinds of theories which would do nothing for this country and which are unashamedly and unabashedly anti-semitic.

So you’re suggesting that they’re totally under the control of the League of Rights, that Pauline Hanson is not driving any of the agenda?

Well I’ve said before there are obviously people that are now driving the policy agenda of One Nation. The League of Rights is driving its policy in relation to banking and money and here it is documented decades ago. I think Mr Etteridge, who is the director, we hear today he is not a spokesman, he’s the director of the party, he was a spokesman until he come up with the policy of printing money a few days ago, his brother has talked about the infiltration of para-military groups in One Nation. And the point I make is this, I don’t think it’s contested, that this is a political party which has now been infiltrated by some very old forces of Australian politics and those very old forces of Australian politics have been around for a long time.

Well how can any major political party in this country contemplate giving One Nation preferences ahead of the other political party?

Well the important thing that we’re doing and just in the last two days I think the most cursory look at their economic policy has made it clear at a glance how far fetched it is, the important thing to do now is to start exposing the policies which we intend to do….

And perhaps putting them last on the ballot paper?

Well in the Victorian Division of the Liberal Party, they are last. It’s up to each state division to consider this and I think that there are strong reasons to expose One Nation for what it is ……

But the Prime Minister of this country still hasn’t said whether One Nation will be last in the seat of Bennelong, in his own seat.

Well I think if you ask the Prime Minister that question you’d probably find a very interesting answer, have you asked him?

He’s been asked many times and you’re now suggesting we’ll get a different answer if we ask the question?

No I’m not, I’m saying to you this, that in the Liberal Party the position has been that state divisions decide the position. As far as I know two state divisions have for the federal election and each of them intends to put One Nation last.

In trying to explain the emergence of One Nation, to what extent are the major parties to blame?

Well look the point is if you’re making this point it’s always true that it’s important that political parties listen to the electorate, there’s no doubt about that and I wouldn’t for a moment say that each of the major parties are 100 per cent tip top political organisations but I will say this there have always been League of Rights types pushing far fetched agendas in Australia. They’ve tried it through various political parties, they’ve had success with One Nation but let me ask you this Barrie, would any problem in Australia be fixed by running printing presses of money?

Well they backed away from that as I said before.

Have they, let me ask you this question, have they? How do you set up a state bank making loans a 2 per cent without printing money?

They’re saying that what….

Would you lend to a state bank, would you lend your money to a state bank that’s lending it out a 2 per cent Barrie?

What they say is that it’s no different from what governments have done in the past, that they’ve given low interest loans to farmers when they’ve been in trouble, at a time of crisis during droughts, you’ve given industry assistance and the other point that Pauline Hanson makes is an emotive one, that you also loan to Korea and Indonesia, so why not to Australian battlers?

On what terms do we loan to Korea and Indonesia?

Well the….

What does One Nation say?

I think they said that it was a matter of confidence between the two countries but of course they do pay interest on those loans but the point I make about assistance to farmers in a time of need, what’s the difference between that and a peoples bank?

I don’t know what One Nation says about those loans, but let me tell you the fact because you very often get an allegation from One Nation which is withdrawn the next day because the spokesman been sacked or the statement has been exposed. Now let’s look at loans to Indonesia or Korea, loans which we haven’t made incidentally, as I’ve said in the Parliament any loan to Indonesia or Korea will be cost of funds plus margin plus interest, it will be on commercial terms. That’s the basis on which it’s being done, that is the cost of funds to Government plus the margin and those loans will be carrying interest. Now why do we make those loans, we make those loans because it’s in Australia’s interest. Do we make those loans cheaper than banks are making to Australian householders, no. You can get an Australian household loan at the moment in 6, 6 , 7 per cent, the lowest rate in 20 or 30 years. But you can’t get that from the Australian Government in a Government to Government loan in Indonesia or Korea.

How’s the tax package going, is it still several months away as you said the other day?

Well I think I said probably, I said that a week ago and what I can tell you is that it is a week closer.

Is it well enough advanced to meet perhaps an August election deadline if you had to?

Well I can’t comment on election deadlines, I don’t call them, the Prime Minister does but…

But you could meet the deadline if you had to, an August deadline?

I’ll meet any deadline that the Prime Minister asks me to Barrie.

And can you say that this tax package will be released outside of a formal election campaign?

Oh yes.

In other words it won’t herald the campaign?

Oh no this is a tax package to change Australia’s tax system.

And we’ll be given plenty of time to absorb it?

I think that’s right, I think that there’s a very constructive debate going on now, I think a lot of the issues are known and I’m quite happy for the debate to run and we’ll say within more specific parameters who we’ll fix it but I think most people know what has to be done with the Australian taxation system. We have to reduce income tax, that’s what we’re interested in, we have to improve the situation for families and we have to rationalise and make fair indirect taxes.

Peter Costello thanks for your time.

Thanks very much Barrie.