TRANSCRIPT

THE HON PETER COSTELLO MP

TREASURER

Interview with Jon Faine

3LO ABC

Thursday, 7 October 2004

8.30 am

FAINE:

Good morning to you Peter Costello.

TREASURER:

Great to be with you Jon.

FAINE:

On the 23^rd of September on the AM Programme, Catherine

McGrath, our Federal Political reporter, asked you about your criticisms

of what you said was a $700 million black hole in the Labor Party’s Budget

costings and tax package and the like. Here is a little bit of what you

said to Catherine McGrath that morning:

MCGRATH:

Do you stand by your criticisms made yesterday about the black hole?

TREASURER:

Yes, if you fund the low income tax offset and Labor’s working tax

bonus in 2005-06, the amount which has been allowed is $700 million short.

MCGRATH:

Will you stack your economic credibility on the claim that you have

made?

TREASURER:

Yes.

FAINE:

That was you on AM on the 23^rd of September. Is your

economic credibility now in tatters?

TREASURER:

The hole is bigger than $700 million…

FAINE:

Where is it?

TREASURER:

…well it is in the costing.

FAINE:

Where?

TREASURER:

Well, $1.2 billion of participation dividend which doesn’t exist, the GST

allocation to the wrong year which doesn’t exist, and the under funding

of the working tax bonus and the low income tax offset. It is not $700 million…

FAINE:

Not a single economist who has analysed the figures agrees with you Mr

Costello.

TREASURER:

…well hang on, it is not $700 million, it is well over $2 billion.

FAINE:

Why haven’t you been running hard on that if you believe that, you haven’t

mentioned it?

TREASURER:

Well I had a press conference yesterday.

FAINE:

No one has taken any notice…

TREASURER:

Well I…

FAINE:

…it has been dismissed out of hand.

TREASURER:

…well Jon, you said, why haven’t I been running hard on it –

I had a press conference on it yesterday.

FAINE:

No one agrees with you…

TREASURER:

Now, now…

FAINE:

…it has got no legs this claim.

TREASURER:

…well Jon, I am sorry, the participation dividend doesn’t exist.

When the Labor Party put in its policy for costing, it didn’t even claim

it. I have got the policy here, I will show it to you. They put in their

policy, and they were asked, ‘do you expect any behavioural affects?’

‘No.’ They just gave up on it. And in relation to the GST changes,

they got the wrong year, they didn’t put that in for costing. And then when

they put the remainder of their policy in they said there is one fact we

omitted to mention in our original policy – over one million people

are not going to get any weekly benefit from the working tax bonus. So…

FAINE:

So you persist with your claim of a black hole that nobody agrees with?

TREASURER:

…when you exclude one million people, as they now do, you can reduce

the cost but if you give it to everybody, Jon, it doesn’t add up.

FAINE:

Eight years of fiscal prudency from Peter Costello the Treasurer at the

expense of your public profile everyone sees you as Peter McScrooge, and

the Prime Minister has blown it all in six weeks of campaigning. How do

you feel about that?

TREASURER:

Well Jon, I have been Treasurer now for eight years. We have produced seven

surplus Budgets, we have reduced Labor’s $96 billion debt by $73 billion.

We were fought every step of the way when we balanced the Budget. Labor

opposed paying down their debt. We come into this election campaign, I think

almost on the first day of the election campaign, Mr Latham went out and

he signed a big piece of cardboard. And his piece of cardboard said this;

‘that he was going to run surplus Budgets and pay down debt.’ I have

got to say I thought it was the most massive endorsement of our policy after

opposing it for eight years. Mr Latham’s position in this campaign is he

can now be like me. Well I don’t believe he can be like me, but it was an

endorsement of the economic strategy that we put in place and Labor fought

every step of the way in the last eight years.

FAINE:

The Prime Minister has totally blown eight years of financial discipline

in this campaign, has he not? And you have had to sit by and watch him do

it, undo all of your work.

TREASURER:

Jon, in this campaign we have made carefully targeted and costed promises

which are consistent with a growing economy and will keep the Budget in

surplus for the next four years. And may I say, we have promised less in

net terms than the Labor Party.

FAINE:

You didn’t answer my question there about the Prime Minister’s spending

(inaudible)…

TREASURER:

Let me go on, so after we implement all of these policies Jon, what happens?

We get four more Budget surpluses. Now, I ask you this question very seriously,

name a country, a developed country in the western world, that is in a stronger

financial position than Australia? It is not the United States, it is not

Japan, it is not Britain, it is not France, it is not Germany – name

one. We are in a stronger position than nearly every other western developed

country.

FAINE:

Name another country that is a trading partner, major trading partner of

ours with higher interest rates, worse housing affordability, higher levels

of personal bankruptcies, as bad a problem endemic in the economy as negative

gearing, higher household debt with the same tax burden that we now pay

that has given you that money to spend?

TREASURER:

Well I could name several. I would start off with the United States and

I would move onto Britain. Look…

FAINE:

Interest rates in the United States are a third of ours.

TREASURER:

…well you are asking me about personal debt and housing prices. Let

me talk, let me come to interest rates, okay? The standard variable mortgage

interest rate in Australia is 7.05 per cent. And what was it when we were

elected? 10 ½. What did it average under the Labor Party? 12 ¾.

What did it peak at under the Labor Party? 17 per cent. I mean, these are

extraordinarily low interest rates.

FAINE:

They are around the world.

TREASURER:

No, you then say to me, oh, what about America? Oh, America has low official

interest rates, you are right about that…

FAINE:

1 ¼ per cent.

TREASURER:

…you are right about that. Do you know why? America is a recession

economy. The US Federal Reserve cut interest rates to try and pull an economy

out of recession and when America went into recession in 2001, a very large

proportion of the world followed it, but not Australia. Now you are going

to have Mr Crean on your programme in a moment…

FAINE:

He is listening to you and he will get the same time…

TREASURER:

 …Mr Crean said in 2001, Australia would go into recession. He said

if we reformed Australia’s taxation system we would go into recession. Now,

he was right about one thing – there was a recession, it is just that

the reform of Australia’s tax system apparently led to a US recession –

but it certainly didn’t lead to an Australia recession. So here we are,

we are a growth economy, we, unlike America, have kept out of recession,

we have low interest rates, we have had 1.3 million new jobs created in

Australia over the last eight years, we are in one of the strongest Budget

positions of the western world. Why would you risk all of that on the failed

Mayor of the Liverpool Council.

FAINE:

Why wouldn’t you debate Simon Crean if you are so confident about the Australian

economy?

TREASURER:

Well I have. I have debated him at the National Press Club…

FAINE:

We have been chasing you for four weeks…

TREASURER:

…on 3AW, I debated him of Channel 7 and I was going to debate him

on Channel 9 this morning but it was cancelled. So…

FAINE:

…we have been chasing you for four weeks to do it here…

TREASURER:

…I am happy to debate him in the Parliament and everywhere.

FAINE:

…but why not here?

TREASURER:

Well Jon, because I think it is actually more important to get information

out rather than have people shouting across each other.

FAINE:

Well the shouting happened when you did a radio debate earlier in the week

because…

TREASURER:

Well that is what always happens in radio debates…

FAINE:

…well you were doing most of the shouting.

TREASURER:

…well I will go to the tape Jon.

FAINE:

The weapons of mass destruction…

TREASURER:

I was actually there, I doubt that you were listening to 3AW that morning.

FAINE:

…not that morning, no. The weapons of mass destruction report that

has come out proves for once and for all that your Government, the Government

that you are a senior member of and the Treasurer of, was wrong to commit

Australian troops to the campaign in Iraq. Surely now you have to acknowledge

that?

TREASURER:

No, I don’t believe that the commitment to Iraq was wrong at all. I think

that the commitment in Iraq and the removal of Saddam Hussein has made the

world a safer place. I think it means that hundreds of thousands of people

won’t lose their lives at the hands of a tyrant, it means that Kurds won’t

be subject to chemical weapons attacks as they were under him. It means

that although Iraq will never be an entirely peaceful place whilst the terrorist

attacks are going on, it is a much better place than it ever was under Saddam

Hussein. And I think that Australia’s contribution to the removal of Saddam

Hussein has been overwhelmingly a positive thing.

FAINE:

I want to ask you about logging. For some reason logging has come up as

the issue for the last few days of the campaign. If you have now struck

a deal with the CFMEU, does this mean that you are in the pockets of the

unions Peter Costello?

TREASURER:

We haven’t struck deals with anybody, what we have announced is that the

regional forest agreement which has been in place for some time can be improved

in a way which preserves jobs. This is not a question of striking a deal

Jon, you know that.

FAINE:

Do you support clear felling in old growth forests?

TREASURER:

I support the RFA’s and I think the RFA can be improved in the way that

was announced yesterday and I believe that the timber workers can continue

their jobs and there can be a more sensible preservation of those old growth

forests.

FAINE:

Who went to see the CFMEU on behalf of the Liberal Party? Tony Abbott went

to see George Pell, who went to see the CFMEU on your behalf?

TREASURER:

I doubt that anyone…

FAINE:

It much have been a strange mission.

TREASURER:

…well, I don’t know Jon. We have to deal with all people in Government

and we try to.

FAINE:

After you have been hounding them through the Royal Commission and all,

it is an astonishing deal, but…

TREASURER:

Hang on Jon, I mean if you are serious about these points, let me answer

it in a serious way. Are forestry workers entitled to keep their jobs? Yes.

Are building workers entitled to hold builders to ransom, to make building

costs double the expense in Victoria that they are interstate? Were they

entitled to hold the State Government to ransom on the MCG site? No, no

they weren’t…

FAINE:

…but if forestry workers are…

TREASURER:

…but if you are asking me a serious question what I think about the

CFMEU and building stoppages in Victoria, it is a bad thing.

FAINE:

…but here you are cuddling up to them in Tasmania…

TREASURER:

…now if you are asking me about…

FAINE:

…for the sake of a couple of votes.

TREASURER:

…no, no, if you are asking me about the jobs of forestry workers…

FAINE:

Who are clear felling old growth forests.

TREASURER:

…in Launceston, I believe that consistent and sensible management

of our forests. If we can keep people in Launceston in work, it is a good

thing. Can I…

FAINE:

Will it cost you mainland seats?

TREASURER:

…can I tell you Jon, there are not that many alternative industries

in Launceston.

FAINE:

That is why the Labor Party is committing, I think it is $800 million compared

to Mr Howard’s fraction of that to try and re-structure the Tasmanian economy,

isn’t it?

TREASURER:

Well who knows. Honestly who knows what Mr Latham is doing in this election,

I don’t think he does. $800 million to do what?

FAINE:

To re-structure the economy and provide sustainable jobs for people displaced

when they are not cutting down old growth forests.

TREASURER:

Well what jobs are they going to be given?

FAINE:

Well that is why he is spending $800 million, tourism, look at the example

Bob Brown gave on TV last night of the tourism from the Franklin being saved.

TREASURER:

Well Jon, $800 million is a very large sum of money for thousands of workers,

it is a very large sum per head.

FAINE:

Sixteen minutes to nine, we have got one more minute with you Peter Costello,

John Howard is now saying that if he is asked he will serve a full term.

You said you would review with your family your political future at Christmas.

Are you still going to do that?

TREASURER:

Well I said what I would do is I would spend time with my family at Christmas.

FAINE:

And you would look at the future.

TREASURER:

No. I have also said in the course of this election campaign that I am

running for Treasurer. What I said, and I will say it again, to my family,

having been away for 30 weeks of the year, I would like to spend some time

with them over Christmas. I think you would appreciate that a family, a

father with young children should spend some time with them over Christmas.

If you want to read any career implications into that you are wrong Jon.

We do actually get some days off at Christmas and I said it would be nice

to spend some time with my family.

FAINE:

Good luck, thank you for your time this morning, it is a pity that you

wouldn’t agree to a debate with Simon Crean but he is waiting in our Sydney

studios…

TREASURER:

It is a great pleasure to be with you, I must say, you are a very formidable

debater yourself Jon.

FAINE:

…well it is not my job to debate, it is my job to ask questions and

find the stickiest points that I can.

TREASURER:

But you are a very formidable debater and I enjoy very much crossing swords

with you.

FAINE:

Eighteen degrees in Melbourne, heading to a top today of twenty-three,

Peter Costello, thank you.