TRANSCRIPT

THE HON PETER COSTELLO MP
Treasurer

Doorstop Interview

Northbourne Avenue, Canberra

Tuesday, 1 April 2003

8.20 am

SUBJECTS: Ansett levy; Budget; bond market; Medibank Private

JOURNALIST:

…the decision today about the Ansett levy?

TREASURER:

Well, obviously I cannot go into what will be discussed in Cabinet. But the

Government’s position has been clear in relation to that levy. The levy was

put in place to guarantee entitlements to Ansett workers and once those entitlements

have been paid then the levy will come off. There is some doubt at the moment

because there are still some court cases as to what the entitlements are. But

I can assure you of this, once the entitlements are covered the Ansett levy

will be abolished.

JOURNALIST:

Have the entitlements been covered or do we still have a way to go?

TREASURER:

It is a difficult question because there is a court case, which is still on

foot, to try and determine whether or not superannuation funds can claim some

of the money. But without going into the technical details, the levy was introduced

to pay entitlements to Ansett employees. Once those employees have their entitlements

covered the levy will come off.

JOURNALIST:

Treasurer, you have hinted very strongly in recent days that the Budget for

2002-03 will be in surplus as forecast in November. A lot of economists are

questioning whether you need to keep a budget in surplus. Why do you think that

is important?

TREASURER:

Well, the Government’s fiscal policy is that during periods of growth it is

important to have surpluses because in periods of down-turn or recession you

will most probably have deficits. And if, over the course of the cycle, you

run surpluses during the growth periods then you can cope with deficits during

the recessionary or down-turn periods. That has been our policy since we were

elected and it has been very crucial for the performance of the Australian economy.

When we were elected, of course, although the economy was growing strongly the

Budget was in deep deficit and we had to turn that around.

JOURNALIST:

Does that mean in 2003-04, having forecast a surplus of $4.9 billion, that

in the Budget you will be keep in another surplus forecast on that year?

TREASURER:

Well, I am not going into what may, we might be doing in 2003-04. But we have

set our fiscal policy, we have set our course back in 1996. We have kept to

it, and it has been an important reason why the Australian economy has been

one of the best performing economies in the world.

JOURNALIST:

Has this been the most difficult Budget for you to shape considering the pressures,

the external pressures?

TREASURER:

Look, it is difficult in the sense that we are engaged in a war. The Australian

troops, the men and women who are in the services are our first priority. And

funding those obligations will be very expensive, very expensive indeed. And

it is difficult to actually make assumptions as to the duration of the war at

the moment. So that does add an element of uncertainty.

JOURNALIST:

Is adequately funding the military operation in Iraq a bigger priority than

keeping the Budget in the black?

TREASURER:

Look, the first priority, I have always said this, when you have your servicemen

and women engaged in a theatre of war is to ensure that they are adequately

supported. And that is our first priority at the current time. We will ensure

that those men and women are adequately supported. That is the obligation of

our Government.

JOURNALIST:

Just on the Government bond market, Treasurer. We have had a few, I guess,

dealers in the market contacting us in terms of, where is this issue at now

given your recent comments that the debate is largely academic. Do you still

intend to come out with some sort of recommendation or finding by the time of

the Budget?

TREASURER:

Well, I have given an indication as to what I think the current situation is,

and that is what you are referring to. We will probably say something in addition

to that at the time of the Budget, but that will give you a pretty fair idea

of where we are going and what I have said already.

JOURNALIST:

(inaudible)…

TREASURER:

Last one.

JOURNALIST:

…the Medibank scoping study has now been received. Will you be making

any decision at all about the possible sale of Medibank in the Budget, Medibank

Private?

TREASURER:

Well, I won’t be commenting on that at this stage. Thanks, thank you.