Transcript No. 2001/072

TRANSCRIPT
of
HON. PETER COSTELLO MP
Treasurer

Radio 2SM – Interview with Howard Sattler
Wednesday, 23 May 2001
10.15am

E&OE

SUBJECTS: Budget

SATTLER:

All right, the morning after the night before. The Budget night. I’ve got Peter Costello the Federal Treasurer on the line. Hello Treasurer how are you?

TREASURER:

I am very well indeed thanks Howard.

SATTLER:

Did you hear what my caller Alan just said then?

TREASURER:

I only heard the end of it.

SATTLER:

He says that that’s wrong, that not every pensioner will enjoy the tax-free threshold. He said you’d need $40 grand in the bank. What do you say to that?

TREASURER:

What we’ve done is we’ve introduced changes last night which means that no pensioner needs to pay any income tax or any Medicare levy until $20,000. They have a tax-free threshold of $20,000.

SATTLER:

So you’re saying back to Alan that he’s wrong?

TREASURER:

Well I don’t know what he’s saying. But the law is, and it’s going to apply from 1 July of last year, that if you’re of aged pension age, you’re a self-funded retiree or a pensioner with additional income, you will pay no income tax and no Medicare levy on $20,000. That is the tax-free threshold for the qualifying people.

SATTLER:

We’ll get to more of the substance of the Budget in just a moment.

TREASURER:

There’s no doubt about that Howard.

SATTLER:

Well I’m hoping, I hope you’re right.

TREASURER:

Well I am right. That’s the law. And there is no doubt about it whatsoever. When this Government came into office, Howard, the self-funded retiree had a tax-free threshold of $5,400. They started paying tax after that.

SATTLER:

Yes.

TREASURER:

As a result of the measures we announced last night, the self-funded retiree from 1 July of last year, remember this is backdated.

SATTLER:

Yes.

TREASURER:

Yes.

SATTLER:

A world event.

TREASURER:

A tax-free threshold of $20,000. I know what your caller said, but that’s the law.

SATTLER:

Okay, well he was listening, so he may get back to me if he thinks you’re wrong. But that’s a democracy. Now just before we get to the substance of the Budget, what are you going to do about all the leaks.

TREASURER:

Which ones are they?

SATTLER:

Most of, most of it was leaked before the Budget. And Alan Kohler of the Fin Review told me today. He said that my mobile went off. And he said they swooped on me, and said `You’re not talking to people outside are you?’ And we agreed that what difference would it make if he did because most of it had been released before last night?

TREASURER:

Well a lot of journalists like to try and foreshadow what they think we’ll be doing.

SATTLER:

Well they’re pretty spot on with a lot of it.

TREASURER:

Well, sometimes they’re spot on and sometimes they’re not. When you’re designing tax measures, social security measures, you’ve got a lot of public servants are involved, sometimes information gets out, sometimes it’s right, sometimes it’s not.

SATTLER:

Well the $300 one-off payment was certainly was spot on.

TREASURER:

Yeah it was, as it turned out.

SATTLER:

I mean how would we know if someone hadn’t leaked it?

TREASURER:

Well it would have been announced in the Budget.

SATTLER:

You know what I mean, you know what I mean, there’s this big deal made about `Oh we can’t let stuff leak out’ and all that sort of thing and yet it does.

TREASURER:

Leaving that aside, I mean I think the $300 bonus to pensioners and part-pensioners is a good thing. Whether or not it leaked out last week or whether or not it be held to last night, the good thing is unless the Labor Party stops it.

SATTLER:

Well, they won’t stop it.

TREASURER:

Well you never know. Because they’ve been running this policy of obstructionism in the Senate.

SATTLER:

They won’t stop it.

TREASURER:

Unless they stop it, it will be paid to pensioners and to part-pensioners next month.

SATTLER:

Yeah okay. Now the other thing is too, and you’ve probably expected this, you’ve made an announcement which is, which most people who were prisoners of war, their widows still surviving, $25,000 for prisoners of war of the Japanese and we just had the big re-enactment in Crete, 60 years since then, and the people who were prisoners of war of the Germans and now ringing up and saying well what about us? Well what about them?

TREASURER:

Well the payment in relation to prisoners of war of the Japanese has been made in recognition of the very unusual suffering that the prisoners of war of the Japanese had on the Burma-Thai railroad and in Changi and the Government’s taken the view that it should pay compensation. Not that our Government incidentally was responsible.

SATTLER:

No the Japanese should pay.

TREASURER:

Well. And that’s also the view that’s been taken by the Canadian Government, the New Zealand Government and the British Government. The British Government hasn’t paid compensation to prisoners of war of the Germans. The British Government paid compensation to prisoners of war of the Japanese.

SATTLER:

I know, we don’t have to follow them. But, I mean, you can see…

TREASURER:

Well, look in all fairness Howard, I mean it was very cruel.

SATTLER:

So more cruel than it was in the German prisoner of war camps? That’s what you’re saying?

TREASURER:

Well the prisoners of war of the Japanese, and I don’t think anyone would begrudge this, suffered more…

SATTLER:

Than the ones that were in Germany?

TREASURER:

…than anybody else during the war. It was very, very cruel and I don’t think you know we should understate that.

SATTLER:

All right, now you’ve gone to extremes to get on side with small business with a reduction of 4 per cent in company tax, abolition…thank you for that by the way, abolition of the FID and (inaudible) no I don’t mind saying thank you, and substantial reductions…

TREASURER:

You pay company tax?

SATTLER:

Yeah, well I’ve got a company.

TREASURER:

Oh, very good.

SATTLER:

Is that all right?

TREASURER:

You’re a (inaudible). That’s great. That’s great for you. Because you got a big tax cut last night.

SATTLER:

I’m a small business person right.

TREASURER:

Yeah.

SATTLER:

And also reductions in stamp duty to help us buy motor vehicles, are you trying to get back on side over the BAS compliance problem?

TREASURER:

I think that we’ve…

SATTLER:

Well I am paying more for that let me tell you.

TREASURER:

Yeah, you know we’re trying to cut tax for business and we’re cutting tax to 30 per cent. That’s the lowest it’s been, I think it’s probably the lowest it’s been, I can’t remember back in the old days, but certainly in the last, my memory, and it’s a 30 per cent company tax rate. If you happen to buy a car, I don’t know if you use a car in your business Howard, but if you happen to buy a car in your business, you’d be able to get all tax back on that, so that’ll be a saving of $3,500 if you buy a new car for the business. Abolition of Financial Institutions Duty, a business won’t be paying tax when it pays money into a bank account. I think that’ll be good. I think it’ll be good for building small businesses and that’ll be good for the economy.

SATTLER:

By the way, I am also paying income tax. I should have thrown that in. I’m paying both, right.

TREASURER:

Well, you’re the kind of person that keeps Australia going Howard.

SATTLER:

Oh it makes me feel so much better. Now unemployment, so you are reckoning it’s going to plateau at about 7 per cent for the next year are you?

TREASURER:

Yes. I think it is.

SATTLER:

It won’t come any lower than that now?

TREASURER:

We’ve come through in the latter part of the 1990s some of the strongest growth we’ve ever had in Australia. The unemployment rate fell quite substantially. 820,000 new jobs were created in Australia. We think unemployment will plateau over the next year because the economy is not growing at 4 per cent as it was back in the late 90s.

SATTLER:

No, we’ve had people like 200 Impulse employees sacked yesterday, we’ve had the Arnotts problems in Victoria, so, I mean, in that regard things aren’t getting better are they?

TREASURER:

Well, when you look at Impulse, you know, I feel very sorry for those employees, I really do. But what happened in relation to Impulse is that somebody decided to take on the majors and the majors are in a very strong competitive position, and you are going to find that in business. And I feel very sorry for them.

SATTLER:

You aren’t predicting the same for Virgin I hope.

TREASURER:

Well, I’m not predicting anything. I hope the discounters, what I hope is this Howard, I hope that we can keep discounters in the market because I know this, while you’ve got discounters in the market you’ve got competitive pressure to bring airfares down.

SATTLER:

How do you feel about Ansett proposing that maybe they and Air New Zealand get together and bring in a cut-price airline into Australia?

TREASURER:

Well, Ansett is Air New Zealand, isn’t it?

SATTLER:

Well, it is. But how do you feel about another, sort of, cut price one? Maybe?

TREASURER:

I think cut-price airlines are good. They keep airfares down, it proves that competition can work and that’s why I’d like to see cut price airlines continue. Now,…

SATTLER:

You would welcome them?

TREASURER:

It is very hard for these cut-price airlines, you are taking on companies with huge resources, it is very hard to stay in the market we know that, but I think it is good. Yes, more power to their arm.

SATTLER:

Now, defence spending is up, and I hope I’ve got this right, is it $27.6 billion over the next ten years? Are you expecting World War III?

TREASURER:

That’s not all we are spending on defence, by the way. That is the increase.

SATTLER:

That is what I’m saying, are you expecting World War III?

TREASURER:

Well, Howard, you know, people have got short memories, it was what only a bit over a year ago that we had Australian troops on our northern border in East Timor.

SATTLER:

That’s right. Still there.

TREASURER:

And we’ve still got peacekeepers there. We are raising two extra battalions because we know that Australian troops can be called into an area which is pretty unstable at any time. We are investing in Airborne Early Warning & Control Aircraft (AEW&C) which have the capacity to…

SATTLER:

Let us know when they are coming.

TREASURER:

…well, and control the battlefield. That they can give you intelligence on whether you are going to have an air strike in the battlefield and the risk to your troops and that’s because we don’t want to send Australian troops into hot spots without battlefield command.

SATTLER:

Are you also pressed a bit because New Zealand is cutting back, thank you very much?

TREASURER:

Well, New Zealand is cutting back, but we’re not cutting back. Look, Howard, if you look around what we call the immediate arc of Australia you’ve got….

SATTLER:

Trouble.

TREASURER:

….Indonesia, East Timor, Papua New Guinea, Solomon Islands, Fiji, there has been a lot of trouble in that area over the last couple of years. And we think it is a prudent investment in Australian defence.

SATTLER:

Well, it says to me that New Zealand should become the seventh state. What do you reckon?

TREASURER:

Well, you know, there was some talk in New Zealand sometime ago about them adopting the Australian currency, and I think I said at that time if they wanted to adopt the Australian currency we couldn’t stop them.

SATTLER:

I’ve just participated in a television documentary which they’ll see later this year, which talks about them being incorporated into Australia in the year 2050, so there you go.

TREASURER:

Well, you know, they’ve got free trade, free movement of people, their economy is very closely aligned to ours and at the time of Federation back in 1901 there was some suggestion that they might come into Australia. But that is a matter for the New Zealand people, it is not for us.

SATTLER:

We’d have a great rugby team. Now, is this an election Budget? Well, it is the last Budget before the election, so I suppose it is.

TREASURER:

Well, in that sense. But this is a Budget where we try to lay down good responsible economic management to give a dividend for people in the community who deserve it, like pensioners, self-funded retirees, small business, but we are making sure that we keep that consistent with overall good economic management.

SATTLER:

I know that, I know that. But you’re a pragmatist, I mean, you’d be mad to put out a bad news Budget before an election, wouldn’t you?

TREASURER:

Well, we always try and put out good Budgets, so that’s fair enough. And people will decide whether or not this is a good Budget, but I think it has got a lot of good measures in it to reward Australians who deserve a bit of help.

SATTLER:

It’s your last Budget isn’t it? You, Peter Costello?

TREASURER:

It is the last Budget in this term of the Government.

SATTLER:

You don’t want to be Treasurer any longer do you? I mean, you said two or three years ago you’d just about had enough of it.

TREASURER:

Oh well, let’s concentrate on the Budget at hand before we start thinking about any other ones, Howard.

SATTLER:

Is it also the last Budget for the worst reason possible, you might get voted out. Or do you think you can win with this one?

TREASURER:

Look, it is up to the electors.

SATTLER:

That’s stating the bleeding obvious.

TREASURER:

That’s the obvious. But I would say to the electors, look, this Government has a good record of economic management, we’ve got the books in the black, we’ve paid down $60 billion of the Labor Party’s debt, we’re saving our interest payments, we’ve cut income taxes, we’ve cut capital gains tax, we abolished Financial Institutions Duty, we cut company tax and we’ve done some good things for pensioners and self-funded retirees.

SATTLER:

Vote for us, he’s saying. Vote for us, he’s saying. What is the better chance, this Government to be re-elected, or Essendon to win the premiership back to back?

TREASURER:

Well, I don’t think you can get odds on the Bombers at the moment. I’m sure you could still get odds on us for the Federal election.

SATTLER:

You’re darn tootin’ right. All right, thank you for your time. I appreciate that.

TREASURER:

Thanks very much, Howard.