Transcript No. 2001/067

TRANSCRIPT
of
HON. PETER COSTELLO MP
Treasurer

Interview with Philip Clark – Radio 2GB
Wednesday, 23 May 2001
7.20am

E&OE

SUBJECTS: Budget

CLARK:

On the line from Canberra, Mr Costello, good morning.

TREASURER:

How are you?

CLARK:

I’m well. You are a busy man this morning.

TREASURER:

I know.

CLARK:

And a busy last night as well. Mr Costello, could I put this to you, with the grant of the $300 and the raising of the tax-free threshold for self-funded retirees, isn’t this really an explicit acknowledgement that pensioners and self-funded retirees were hit hard by the GST and were not properly compensated in the first place?

TREASURER:

No. It is additional benefits particularly for self-funded retirees. We’ve been working on this for some time, Philip. When the Government first came to office self-funded retirees paid tax after $5,400 and we increased it in 1996 to $11,000, we increased it again and last night we increased it again to $20,000. So we’ve been increasing that tax-free threshold now for really the last five years, and we’ve been doing it because we thought that regardless of any other tax changes self-funded retirees deserved it. And that is why we introduced it, they deserved it, and the Budget could afford it, so last night we did it.

CLARK:

I mean there is no doubt, there is no doubt that many would argue that the move is entirely in the right direction, that they do indeed deserve it and have a difficult time of it and don’t get enough support. With the impact of the GST has hit people like that, self-fund retirees and others who are looking at essentially fixed incomes pretty hard hasn’t it? I mean, isn’t the Budget really acknowledging that yes they have been hit hard and they should have been helped earlier?

TREASURER:

Well, we did other things in relation to 1 July last year for self-funded retirees, for example, we cut their tax bill, we cut the actual rates last year. And you will also be aware that we introduced a 30 per cent private health insurance rebate, because before our Government came to office if you took out private health insurance you got no help. And a self-funded retiree and the older Australian takes out private health insurance much more than a younger Australian. So we had already factored those things in. This is something that is over and above and in addition and it is something that I think is thoroughly deserved, for a single $20,000 tax-free threshold, no Medicare levy, and for a couple $32,000 and they pay no Medicare levy, and this will put the self-funded retiree in a much better position substantially in front to where they’ve really been over the last five or six years.

CLARK:

I’m getting a number of calls this morning, Mr Costello, saying this to me, they are saying, look the $300 is entirely welcome, there is no doubt about that, of course it is welcome, but it is $300 now, the GST rolls on. What about next year and the year after that? Is there going to be another $300 next year? I don’t think so. In other words people are saying, it is all very well but it doesn’t really give you much security against the future with this tax rolling on.

TREASURER:

What we’ve done there Philip, is we’ve put in place changes to the pension so that it is always 2 per cent higher than the CPI, than the cost of living. So that that’s already built into the base formula of the pension, the base formula of the pension always is in advance of the cost of living, which includes all tax measures. So, that is the protection in relation to living rises. This is a statement really that it will be good for the economy, to stimulate the economy, the Budget could afford it, and this is a payment for pensioners because they deserve it, which is quite separate from that. I don’t know if it has been done before, I’m trying to find out. It’s really a sort of a new thing, it’s a situation where your Budget is stronger than it was and so the people that you decide to try and help in this case are the pensioners.

CLARK:

The money will go straight into the shops, and that is what my callers tell me this morning, and I’m sure that’s what the Government has factored in as well.

TREASURER:

Well, that wouldn’t be a bad thing, that is why I say that it would be good for the economy if a pensioner feels that they can go out and buy a new item of clothing or something, or maybe buy a present for one of the grandchildren, that wouldn’t be bad for the economy either.

CLARK:

Twenty-six past seven, Mr Peter Costello, Federal Treasurer, is my guest. What about the jobless and the jobless future Mr Costello? The Budget seems to predict an increase in jobless. It doesn’t hold out much hope for them does it?

TREASURER:

Well, the economy is not, last year to the 1990’s we were growing at above 4 per cent, we were one of the fastest economies in the world. Growth will be a little slower this year before picking up in 2001-02, so we will have a pause in reducing unemployment through the course of this year. But as growth picks up next year we will continue to reduce it. A rate of about 7 per cent means that there are 820,000 people more in work, more in work, than when the Government was elected. 820,000 new jobs, and we will have a pause in the rate of reducing unemployment, but it will pick up again in the year ahead.

CLARK:

I’ve had calls this morning saying this, look the $300 payment is fine for those who are eligible for the age pension, what about those on disability pensions and so on?

TREASURER:

It is eligible for people who are of age pension age, which for men is 65 and for women, I think, 61 ½.

CLARK:

I mean, a number of my callers this morning said, look I’m under that age but I’m on a pension, I’m on a disability pension. I’m in a similar situation. Why discriminate against us?

TREASURER:

Well, this is something that is, because as I said, the Budget was stronger than expected, we thought that it was able to make a payment to older Australians. In relation to those that are below pension age and on some kind of income support, they’ve had the increases, as I said, from 1 July last year, but we’ve also….

CLARK:

But they’re not going to get this payment are they?

TREASURER:

No, they’re not. We have raised the Medicare threshold for them so that they get relief in relation to the Medicare threshold.

CLARK:

But one class of pensioners is going to get the money and another class is not?

TREASURER:

This is a payment, yes, they should be very clear about this, this is a payment for people who are above age pension age.

CLARK:

So, it is a payment for older pensioners and not for those….

TREASURER:

That is those that are over 65 for men, they can be on something else, they can be on veterans’ pension or a service pension….

CLARK:

But they must be….

TREASURER:

…over age pension, and for women I think it is 61 ½. In relation to other income supports, as I said, they were increased from 1 July last year.

CLARK:

Mr Costello, on the Liberal side of politics, you are, you are the next leader of the country after Mr Howard. Is it the sort of Budget that you see laying the framework for a Costello Prime Ministership?

TREASURER:

Well, I see it laying the framework for a Costello Treasurership. Look, it’s the fifth consecutive surplus, it cuts tax, it abolishes Financial Institutions Duty, you know that tax you pay every time you put money into your bank account or pay off a credit card or pay your mortgage, it cuts company tax, it cuts self-funded retirees tax, it is responsible and by the end of the year we’ll have paid back $60 billion of Labor’s debts so that’s, I think, economically responsible.

CLARK:

Someone remarked in the office here, Mr Costello, this morning that the only people who didn’t seem to get anything out of the Budget were the Essendon Football Club. And they probably don’t need it anyway.

TREASURER:

Oh well, we did make an announcement that we would make a contribution to the Commonwealth Games which is being held in Melbourne in 2006. As you know, we made a contribution to the Sydney Olympics, so we are obliged to make one to the Commonwealth Games. That will help sport in Melbourne and the Essendon Football Club too I’m sure.

CLARK:

Mr Costello, I appreciate your time this morning.

TREASURER:

Thanks very much Philip.