TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with Neil Mitchell

3AW

Thursday, 2 December 2004
8.35 am

SUBJECTS: Economy, Telstra, Eureka

MITCHELL:

Treasurer good morning.

TREASURER:

Good morning Neil.

MITCHELL:

Who buys the Christmas presents in your house?

TREASURER:

A bit of both.

MITCHELL:

Oh you don’t.

TREASURER:

Well, my wife buys them the most and I buy them for my wife.

MITCHELL:

Are you going to put a spending limit on her?

TREASURER:

No, no, Neil, I made the point yesterday, as I have on occasions before that

obviously people want to give their kids presents at Christmas but people should

always be careful with consumer debt and credit bills come after Christmas and

bear that in mind and I also said the best thing we can do for kids at Christmas

is show them love.

MITCHELL:

True, so you will have a restriction will you?

TREASURER:

Well, we will try and show them some love.

MITCHELL:

What do you want for Christmas?

TREASURER:

A rest.

MITCHELL:

It seems, on a serious point, there seems to be warning signs coming through

about the economy. There is not the enthusiasm there was perhaps probably pre-election,

why?

TREASURER:

I have made the point probably over 12, 18 months now Neil, that the kind of

price rises that we saw in the housing market couldn’t and shouldn’t

go on indefinitely and it would actually be in the interests of the economy

if the house market slowed a bit. We have now seen that slowing coming through.

You can see it in auction rates, you can see it in prices, you can see it in

building approvals, you can see it in credit. And that is not unwelcome actually.

We had some hot spots in the economy and if they are cooling that will put economic

growth on a slower, but a more sustainable base.

MITCHELL:

But the American economy is not exactly a basket case, but it is headed that

way, is it not?

TREASURER:

Well the Americans had a recession and they now have very large budget deficits

and they are going to have a lot of trouble reigning them in and one of the

things that is happening is that the American dollar is sinking against currencies

around the world and that has the effect of pushing our dollar higher, as you

have seen, and that also is making life harder for our exporters. With a high

Australian dollar it is harder for our exporters to compete on international

markets.

MITCHELL:

Do you still believe our economy is fireproof? That the American economy, the

rest of the world economy is not going to damage us?

TREASURER:

Look we are always influenced by overseas events, there is no doubt about that,

but the Australian economy is one of the stronger economies of the world. We

have done a lot of work over recent years, but we don’t want to get complacent,

we can’t stop and rest on our laurels. There are challenges coming at

us from every direction, we have got to keep on working at it.

MITCHELL:

When you say all this, and particularly the housing market, everybody has been

predicting interest rates will go up next year. It would seem unlikely?

TREASURER:

Well one of the things that has worried people was that the housing market

might be rising in an unsustainable way and if it rises too high you can get

a big correction. What you would prefer to see in the housing market is that

a bit of the steam comes out of it so that it is more sustainable. And that

I think is what is happening, that is why I say it is not an unwelcome thing.

MITCHELL:

Then it must have that influence on interest rates.

TREASURER:

Well of course all of these factors are taken into account when decisions are

made on interest rates.

MITCHELL:

Okay. Can I ask you about Telstra? Will the disappearance of Dr Switkowski

improve the service from Telstra?

TREASURER:

Well we don’t know who actually is going to become the Chief Executive,

Neil. If Telstra gets a good Chief Executive, the company will be well run,

but as of today the Board doesn’t actually know who it is going to appoint,

it is engaged in a search. I hope they get the best person. I hope they seriously

consider Australian candidates because I think there are some good people in

Australia but it is just to early to say what is going to happen to the company

until you know who is going to be running it.

MITCHELL:

Would you rather see an Australian run it?

TREASURER:

Yes, I would rather see an Australian run a large Australian company, yes I

would, because I think we have got talented people in this country, I don’t

think this idea that they are all better than us overseas is right. I think

we have got some of the most talented people in this country. Some Australians

who have gone overseas to run some of biggest corporations in the world. Having

said that, the Board has got to get the best person and it may be that the best

person at this time is out of the country but I think they should very seriously

consider Australian candidates.

MITCHELL:

Is the Government required to approve an appointment?

TREASURER:

No, it is a matter for the Board.

MITCHELL:

Why not?

TREASURER:

Well, the Board runs a corporation and you have got these directors, they are

appointed by the shareholders – not just the Government by the way – there are

millions of private shareholders and the Board makes the decision.

MITCHELL:

Dr Switkowski, well, does the Board wear the mistake of re-appointing Dr Switkowski?

It is only 14 months ago that he is given four years and now he is gone. Somebody

mucked it up.

TREASURER:

Well the Board re-appointed him and the Board entered into the contract, it

wasn’t a government contract.

MITCHELL:

It was a mistake, do you agree?

TREASURER:

Well that is a matter for the Board. The point I am making is that Telstra

is a corporation, the Government happens to own a lot of shares but so do millions

of Australians. But like any corporation, like BHP or anybody, it is the Board

that appoints the CEO, it is not the shareholders.

MITCHELL:

Yes, but you are the major shareholder. Was Dr Switkowski’s re-appointment

a mistake?

TREASURER:

Well that is a matter for the Board, you will have to ask the Chairman that.

MITCHELL:

What does the major shareholder think?

TREASURER:

The major shareholder wasn’t consulted and didn’t make the decision.

MITCHELL:

I am sure that you have an opinion though.

TREASURER:

Look, I think that Ziggy did some good things for Telstra, it is true that

some of the investments particularly in Asia didn’t come off, but I don’t

think you can say they were just Dr Switkowski’s decisions. They were

(inaudible) by all of the executives and in fact endorsed by the Board itself

so I think there is a collective responsibility there.

MITCHELL:

And is a couple of million golden handshake fair enough?

TREASURER:

Well Neil, they entered into a contract, they have either got to observe the

contract or they have got to pay it out, that is the law.

MITCHELL:

It is reported today that you are talking to the Democrats about the sale of

Telstra, why? You are going to have the numbers.

TREASURER:

Well if the Democrats want to talk about passing Government legislation we

are open to talks with them, yes sure we are. We would be very happy to see

what the Democrats have to say and we would be very happy if they were to vote

for Government legislation, we have been doing that for about eight years.

MITCHELL:

Can I ask you about a couple of other things just quickly? David Hicks leading

the lantern walk for Eureka, is that appropriate do you think?

TREASURER:

No I don’t think so, no. It is his father isn’t it?

MITCHELL:

Yes, that is David, Terry is the other one, the father.

TREASURER:

Yes…

MITCHELL:

David is in jail, it is his father leading it.

TREASURER:

…yes, I don’t think it is appropriate for his father to lead it,

no, I don’t know what his qualifications are to lead it. If his qualification

is that he is the father of David, I don’t see what that has got to do

with Eureka. Whatever you take the view about in relation to these charges,

the fact of the matter is that he was picked up in Afghanistan and I don’t

think he was a sightseer there.

MITCHELL:

Yes. Just a couple of other things, Chris Pyne says he has never seen another

politician intoxicated, it is a myth that you all drink too much. Have you ever

seen another politician intoxicated?

TREASURER:

Not in Parliament.

MITCHELL:

What about outside of Parliament?

TREASURER:

Well I am sure at Christmas parties people may have been enjoying the cheer

but I don’t think I have seen it in Parliament, no.

MITCHELL:

And I saw a photograph of you sitting in the Prime Ministers chair today, was

it comfortable?

TREASURER:

As far as chairs go it is quite a comfy one, Neil, yes.

MITCHELL:

Would you replace it?

TREASURER:

I will be going back to my old chair today.

MITCHELL:

Thank you for your time.

TREASURER:

It is a great pleasure, thanks Neil.