Transcript No. 2000/51

TRANSCRIPT

of

Hon. Peter Costello MP

Radio 2SM with Howard Sattler

Wednesday, 10 May 1999

10.15 am

SUBJECTS: Budget

SATTLER:

Now the man who has allegedly got a supercilious smile joins me on the programme. Now

I’ve got to say this before we introduce the Treasurer. You get the impression when

you’re a bit hard bitten like me and you’ve been listening and watching people

deliver budgets for I don’t know how long now, it must be thirty years, that

you’ve almost heard the whole thing before, because what happens is that so much of

the information in it gets leaked. The Treasury it seems, or his office, the

Treasurer’s office leaks like a sieve and I always wonder when they’re

interviewed on the day of the budget and people ask the questions and, sought of try to

probe what’s in it, they I can’t tell you. But I wonder why they bother because

we sought of know most of it, when he gets up there to speak. Have you thought about that

Peter Costello? Not the supercilious smile.

Look there’s a lot of speculation that goes on before budgets and I think

journalists sought of speculate everything on the principle that if you speculate

everything fifty per cent will be right and fifty per cent will be wrong and you hope

people remember what was right about it.

Yeah but they’re pretty spot on.

You only remember the ones that were right incidentally. If I took you back through the

press of the last week I could show you that at least one in two of all that speculation

was wrong.

But does it worry you that so much of the information does get out? Like the Timor tax.

How could we have known about that if someone didn’t leak it?

Sure. Does it worry me, sure. I mean I’d prefer that there weren’t any leaks

in Canberra. Canberra is a small town. You’ve got public servants and advisers

working all over these documents. But the essential parts of the budget the market

sensitive stuff in a budget is always kept incredibly tight. In relation to Timor I think

there was just, sort of, some pretty informed speculation.

Why?

Well, we said to pay for Timor which is about $1 billion a year we had to keep the

budget in surplus, that we would need a levy in this year, because you couldn’t fund

Timor and keep the budget in surplus without it. As the year wore on from when we

announced that in November and the economy strengthened, it became apparent that you could

fund Timor and keep the budget in surplus.

So everybody knew that. Is that what your saying?

Well you could see that the economy was strengthening through the course of the year.

Now what was the Government going to do? Normally in the past of course the Government

would have said oh well we said an East Timor levy was necessary, we now no longer need it

for East Timor lets spend it on something else. But this Government thought we ought to

keep faith. We told the people that we only did it to keep the budget in surplus and pay

for East Timor. The budget was in surplus without such a levy and we though it was a

matter of keeping faith and so we announced that since the one-off emergency measure was

no longer necessary we wouldn’t proceed with it, not for a day.

But you could still be in surplus but a lot of people are saying today, they are saying

you’ve cooked the books because almost all of that surplus revolves around the sale

of this spectrum mobile phone network. Now you said and they played a grab the other

night, when you were in opposition that assets sales should not be listed in the budget as

part of the surplus. What’s changed?

Nothing because they’re not.

Isn’t this that?

No asset sale is listed. There are asset sales going on by the way that’s the

second part of Telstra. Every single last dollar of that goes to retire Labor’s debt.

No asset sale.

What’s the spectrum sale if it’s not an asset sale?

Spectrum licence fees, fee for a licence to use the spectrum have been in the budget in

relation to radio from the day radio began, been in the budget from television from the

day television began because television pays a licence fee to use the spectrum. And in the

last three or four years as we have allowed competition in telecommunications and people

pay for a licence to be able to run mobile phone networks. You know you’ve heard of

them. What are they called, Onetel and AAPT and all those sorts of people just like

television stations which pay a licence fee, these people pay for a licence to use a

public asset that is treated in the budget as it always has been as always should be.

It’s a revenue to the Government from licensing a public asset.

You forecast unemployment is going to go down to 6.25 per cent in this year. Isn’t

that a bit ambitious post the Olympics?

Well unemployment now has gone under seven per cent, its at the lowest in ten years. If

we can keep the Australian economy growing for another year it would go down to, by June

of next year, it would go down to about six and a quarter.

Well I don’t think you can.

The question is can we keep the Australian economy growing for another year?

That’s the great task before us because if we can accomplish that then you get to

those historically low unemployment rates. People would know and I am sure you find this

in Sydney that in Sydney we’re getting pretty close to full employment. It’s

very hard to get a tradesman in Sydney.

The Olympics have got something to do with that.

I think most of the Olympic construction is actually finished. The Olympics will help I

expect in service type areas you know limousine travel and restaurants and accommodation

and all that kind of thing. But in relation to the construction most of the construction

is now over. So there is some parts of Australia and Sydney is one of them which are

basically near full employment now but if we can keep the economy growing other parts of

Australia can join that.

Have you factored in the prospect of more interest rate rises? I mean you keep saying

you’ve got no control over that because (inaudible) small government but you

can’t control them and you don’t know what they’ll do.

Well we…..

Is it good to control them by the way?

We made the bank independent that was our decision. The idea was that an independent

bank which would be free of all political considerations would make these decisions. A bit

like, I guess, a bit like a court you know which is free of political considerations,

makes decisions. I think that gives us a lot more credibility in international financial

markets but…..

Doesn’t help the poor buggers trying to pay off their mortgages.

Yeah sure. Look and you know I think if you’re a mortgage payer over the,

you’ve seen interest rates rise by about one and a quarter per cent. But they’re

still in the sevens. Home mortgage rates are still in the sevens.

But Treasurer a lot of those people took out their loans and they had a small margin.

They took them out in the last couple of years. So forget what happened under Labor. They

did and all their budgeting is done around having a certain income at a certain time.

Well I was just going to go on and make the point that outside our administration in

the last year, a mortgage interest rate of seven would be lowest rate in the sevens, would

be the lowest rate since 1973. At seven and a half, 7.8 home mortgage interest rates by

Australian standards are still at really thirty-year lows.

I know but what if it goes up another per cent in the next year? That’s going to

throw a lot of your figuring out isn’t it?

Well look I’m in this difficult situation Howard. I can’t actually speculate

on interest rate rises.

I know you keep saying that.

Whatever I say ….

Do you factor that into your budgeting?

Let me say this. We factor into our budgeting all reasonable economic parameters. But

the reason I can’t speculate on interest rates is as you know what I say gets

reported, it get flashed around foreign exchange markets around the world. People buy and

sell dollars on the basis of them and I’ve just got to be very careful.

But if they did go up would you consider a mini-budget to try to push in the blow?

I don’t think there’ll be a need for a mini-budget. This is a budget which

will take us to next year’s budget which is May of next year. This budget will take

us through the biggest tax changes in Australian history. This budget will take us into

the largest personal income tax cuts we have ever seen and they are going to come into

effect in fifty-two days. Let me make this point. When was the last income tax cut in this

country?

Oh I know that. I mean I’ve heard you say that last night.

It was supposed to be in 1993.

It was what Paul Keating promised us and we didn’t get one. Don’t get me

started on him. Don’t get me started on him. You know ….

No I won’t start you on him. Don’t you start me on him either. On 1 July

they’re really going to materialise. I think there are a lot of people in Australia

would say, a lot of young income earners. Suppose you’ve only been in the workforce

for ten years. You’ve never had an income, they wouldn’t know, they have no

personal experience of an income tax cut.

Or a GST by the way.

And this is going to be the first time they’ve ever had such an experience and its

going to happen. It’s going to happen in fifty-two days time.

I know you’re upbeat about this but the Taxpayers Association is saying you are,

you haven’t quite let us know how much revenue you’re going to get out of that.

They reckon you are going to get $24 billion.

What out of GST?

Yeah.

No it’s in this budget.

You’re only going to give us $12 billion in tax cuts.

It’s in the budget papers. Hang on, hang on, hang on. The GST raises revenue and

in return we abolish wholesale sales tax.

Which I think is a great idea. But anyway…

And I think they should put that. We reduce diesel excise. We drop petrol excise.

Financial institutions duty is going to be abolished. And we paid for income tax cuts. I

think you have got to have all of the tax changes in the equation. At the end of that the

Government is going to be taking less in taxation.

Unbelievable.

It is. Actually Howard I think there’s a lot of people in Australia who just

haven’t had experience in this. They haven’t had any experience of a Government

actually cutting income taxes. I’m just trying to think in my own working life if I

have ever had an experience of an income tax cut. I think if you went back to the eighties

there were some changes back then. But if you happen to have been in the workforce over

the last decade or so, you wouldn’t have an experience of this.

Just finally because I do have some knowledge of this. I’m talking about these

detention centres for these illegal immigrants, I notice you’re going to spend money

on building new ones at Darwin and Brisbane but I’m aware that the Port Hedland

Council actually offered the Government a free site alongside the airport to lease. Why

wouldn’t you have taken that up?

Well we’ve got a detention facility at Port Hedland.

I know. They were going to give you another one.

But one of the reasons why we’re building a new one at Darwin is for people that

are intercepted closer to Darwin than Port Hedland. It means that the transport

costs…. It costs a lot of money to pick these people up and fly them to Port Hedland.

Tell me about it.

And the second thing of course is that there’s a workforce in Darwin that can man

it. So we’ll have one in Port Hedland and we’ll have one in Darwin as well

and…. The most important thing I’d say in all of this though is we’ve got

to attack people smuggling at its source. You’ve heard of smuggling drugs into this

country.

It’s a shocker.

Some of these people are in the business of smuggling people into Australia.

That’s right. And internet and governments have been allowing them to do it for

light years.

We’re now putting, we’re now getting co-operation up there. We’re now

putting mobile strike force teams overseas and we are going to attack people smuggling at

its source by attacking the people smugglers. And they’re doing this for money. You

go and find a people smuggler and you pay them money and they say they will smuggle you

into the country. Well we’re going to attack that at its source.

Alright. Now will this be the second last budget before the next election?

Well an election has to be held by the end of next year at the latest so if the

Government runs its full term and….

But you would be expecting to be delivering another budget before the next election?

I would expect the Government, well I always work on the principle that the Government

will run its full term, yes.

John Howard hasn’t told you anything different?

No.

See ya.

Okay, thanks bye.

Ends.