TRANSCRIPT

of

THE HON PETER COSTELLO MP

Treasurer

Interview with David Speers

Sky TV

Pre-record

Wednesday May 2002

7:20 am

 

SUBJECTS: Budget

SPEERS:

(inaudible) during the election campaign the Budget was in surplus, the War

on Terror had been factored in, now we learn we are in deficit, were voters

misled?

TREASURER:

After the election we came back into the Parliament and we sought additional

funds for the war. That’s all been on the record, that was all done earlier

this year. We thought it was important because the duration and the intensity

stepped up with land, sea and air support and in addition to that we decided

to secure Australia’s domestic security. And I think they are perfectly proper

expenditures, we were not going to let the troops go without in Afghanistan.

The good news is that we have come through a global recession. The American

economy has been in recession, Japan has been in recession the economic growth

of the world slowed down and Australia powered on.

SPEERS:

And you didn’t know that before the election?

TREASURER:

Well, I think that to have got Australia through a US recession and a Japanese

recession and a German recession and a European slowdown and a Singaporean recession

and to have grown at a bit over 3% we are saying three and three quarter per

cent is probably one of the best years of the Australian economy and to keep

the fiscal policy accommodative during that time, I think was a good decision.

SPEERS:

Nevertheless, is this deficit a blemish on your record as Treasurer. You’ve

made a lot a about the fact that you have brought the budget into surplus. Does

this blemish your record and also does it effect the confidence of people in

believing the forecast, the fairly healthy forecasts you’ve got for the next

financial year.

TREASURER:

Well, the healthy forecasts show that we are expecting a surplus of about $2.1

billion dollars in our Budget year.

SPEERS:

And we can believe that?

TREASURER:

That’s the Budget that we brought down last night. Well, if the world was suddenly

to go into recession and a new war were to erupt you would have to reconsider

it. But the world is going to recover and we think that military commitments

in Afghanistan are winding down, rather than winding up and in those circumstances

Australia will be posting very healthy surpluses. Unlike the United States which

will be in significant deficit unlike the United Kingdom which will be in significant

deficit, unlike the European Union which will be in significant recession and

unlike the OECD. You wouldn’t find an advanced industrial economy in Europe

or Japan or Australia which would be within a bull’s roar of Australia’s fiscal

strength. This by world standards is is one of the strongest positions and as

I said none of the G7 countries could match it in any sense. Now, I don’t say

that to say well, look at all the wonderful things we have done. I say that

to say that having repaid $62 billion dollars of Labor debt, having put Australia

into a strong position, having had growth through a global downturn we’ve now

got a lot of strength behind our economic policy.

SPEERS:

This Budget has been described this morning as the `Big Brother’ Budget, the

`Fortress Australia’ Budget, do you think taxpayers are going to support this

huge extra expenditure on defence and counter-terrorism at a time when as you

said the world is facing enormous economic pressures?

TREASURER:

Well of course we are not the only country that is facing these security pressures.

The United States has had a very large build up and Britain has had a large

build up too. My view is this David, that we are making a contribution to the

War against Terrorism and we hope that terror networks can be wiped out. But

to the extent that the terror networks still operate we know that they target

western countries and we have to prepare against that. It is going to be no

consolation to anybody if an incident happens here in Australia and we haven’t

prepared. So I hope none of these things are ever necessary and let me make

it clear I hope that our response unit to deal with chemical and biological

and nuclear incidents is never needed. I hope that our stockpile of antidotes

for biological outbreaks is never needed. But suppose we had a biological outbreak

and we didn’t have any antidotes in the country. What would you think of a Government

that hadn’t prepared against that eventuality. Now we had to sit down in the

aftermath of the 11^th of September and we had to say that was an

unexpected event but it was against the world’s most powerful economy and if

it can happen there, it can happen elsewhere and we had to make provision.

SPEERS:

And is it fair to make the sick and the disabled pay for this extra precaution?

TREASURER:

Well, of course their not. It is a complete nonsense.

SPEERS:

Well they are, the Government is not going to fund as much in terms of subsidised

pharmaceuticals. The Government has already spent in relation to Afghanistan

and in relation to domestic security measures. Changes to the Pharmaceutical

Benefit Scheme are in the future. They are not related to this, they are in

the future. They are in the future because we are bringing new drugs onto the

PBS system, some of them worth $200 some of them $1000. You bring a drug onto

the system and the Government pays $1000 to get it. What we are proposing is

that the pensioner will pay $4.60 for a $1000 prescription or if the case be

$200 prescription or a $100 prescription e-$4.60. If they have more than fifty

two prescriptions in the year they pay nothing. Now, you have got to ask yourself,

what is a fair thing? Is it a fair thing to ask people to make a $4.60 contribution

regardless of whether the drug cost $100, $200, $500, $1000, I think it is.

Now if you want to say that you don’t have to pay anything it is completely

free, I don’t know how you are going to bring new medicines onto this scheme.

SPEERS:

But for a family with a couple of sick kids, I mean this is going to be a bit

of a whack for them in the annual budget. For a household budget it’s going

to be a bit whack isn’t it?

TREASURER:

Well, let’s get this in perspective. You know this is a Budget which introduces

Baby Bonuses for families, more medical services in the outer suburbs for families

and the cost rise for a family is $6.20 whether the medicine is $200,

SPEERS:

Per script though isn’t it?

TREASURER:

Yes, $500 or $1000, they still have it completely subsidised and if they buy

thirty scripts in a year thereafter they go onto a concessional rate. So what

we are saying here is if you want to maintain this system and if you want to

bring new medicines onto it and I, you know I would get a letter every week

from someone asking for a new prescription to go on it and the cost of that

new prescription might be $1000, now we don’t charge $1000 but what we want

to do is we want to charge $4.60.

SPEERS:

Just finally, you’ve forecast in the outer years down the track a fairly healthy

surplus, $7 or $8 billion dollars. Is this building a war chest for the

next election. An election that you might be fighting as Prime Minister?

TREASURER:

Well, that is saying that as our economy continues to grow, as our unemployment

rate comes down, as we get over the commitments, the big build up commitments

we have made in Defence. And that’s assuming that we don’t have another war-like

situation and that is assuming that there is no second global economic downturn,

that the Australian Budget will be in a very healthy position. I hope it is.

SPEERS:

And there is enough room there for a tax-cut surely isn’t there for the next

election?

TREASURER:

Well, don’t you start on next budgets until we finish this one.

SPEERS:

Treasurer, thanks very much for your time.

TREASURER:

Thank you.