TRANSCRIPT

THE HON PETER COSTELLO MP

TREASURER

Interview with Matthew Abraham and David

Bevan

5AN

Thursday, 9 September 2004

8.30 am (Adelaide time)

JOURNALIST:

Yesterday we heard on this programme from Simon Crean, the Labor Treasurer,

and today it’s our pleasure to turn to Peter Costello, who is joining us

from Melbourne. Good morning Peter Costello.

TREASURER:

Good morning Matt and good morning David. Good to be with you.

JOURNALIST:

Peter Costello, there is much speculation about the state of the Budget.

New figures will be released today from some economic forecasters, are saying

well it could be twice the original forecast. It could be about $5 billion,

apparently Access Economics is saying more than $9 billion. Peter Costello,

what are you going to do with all that money?

TREASURER:

Well, let’s wait and see the figures. You get people like Access Economics

regularly forecast things that don’t come about, so let us wait and see

the figures. Most of that is just pure speculation. We will have the figures

tomorrow, and hopefully they will show that the Budget continues to be in

surplus, which would be the seventh surplus delivered by this Government.

As you know when Labor was running the economy, the Budget was in deep deficit

and we pulled it back into surplus, and hopefully we can continue to keep

it there.

JOURNALIST:

Do you have any inside running on these figures?

TREASURER:

No. The figures are prepared independently of me. They are prepared by

the Finance and Treasury Departments. Of course I brought down the Budget

so, I have brought down a Budget which would keep a surplus continuing and

the figures bounce around here and there, but I would expect there to be

a surplus and I would expect that to be independently confirmed by the Finance

and Treasury Departments tomorrow.

JOURNALIST:

Would you be surprised if it was anywhere near $9 billion?

TREASURER:

What the surplus for the current financial year? Well that would be a most

surprising result.

JOURNALIST:

Peter Costello, what are you going to do to match Mark Latham’s tax cuts

for people under $52,000 in particular, the forgotten people?

TREASURER:

Well it has now become clear of course that probably most families are

going to be worse off under Mark Latham’s policy. He rigged the tables,

and he got caught out rigging the tables, and once you reconstruct the tables,

it is clear that most families are going to go backwards. That is they will

pay more tax, or have less benefits, and there is one category of family

that he has singled out for special punishment, that is the single earner

family, where Mum’s at home looking after the kids. If you are a single

earning family with Mum staying at home looking after children you will

be worse off, Mark Latham is actually taking money back out of those families.

JOURNALIST:

That is one category though, do you concede that most people, even if it

is seven out of ten are going to be better off under $52,000 than they are

under your tax cuts?

TREASURER:

No. There is no basis for that at all. Mr Latham originally …

JOURNALIST:

Are they going to be worse off?

TREASURER:

Oh yes, yes. It now appears there could well be a majority of families

are going to be worse off, yes.

JOURNALIST:

Well, how can we believe that?

TREASURER:

Well because the figures that showed to the reverse were rigged, and he

has been caught out. He left out benefits that the families are currently

getting which is $600 per child, $1,200 for two and $1,800 for three. And

for the single income family, the benefit which is available when Mum stays

at home to look after the kids is being abolished. That is why he has targeted

the single income family out for special treatment, so …

JOURNALIST:

This isn’t tax overboard, is it? I mean he would have his own figures saying

that you are wrong?

TREASURER:

No, he doesn’t. He has not provided any worked examples. The press of Australia

has not yet asked him to provide a worked example of those people that he

says are better off. That is, to start, to do a worked example, you have

got to name the family payment that a person is eligible for, how much it

is, how much it is per child, and how much it is for the single income earning

family. He has not provided any of those worked examples …

JOURNALIST:

(inaudible) … ok, but let’s look …

TREASURER:

… when we work through those, it is clear that the tables that he

has produced were rigged. And you know, it is now a question I think of

Mr Latham being asked to take these examples, don’t write on the back of

your hand, actually take these examples and work them out for the press

of Australia, because it is quite clear these tables are inaccurate.

JOURNALIST:

But what we do know is that you do not offer tax cuts for those people

earning under $52,000, and will you with a Budget surplus?

TREASURER:

No what we are doing is we are offering superannuation savings. Now let

me explain how that works. If you were to put some money into superannuation

under $58,000, the Government will match you and pay an additional fifty

cents, it will pay $1.50 for each dollar and that is to give those people

a chance to gather together some superannuation. That is a much more generous

programme than a $4.30 tax cut, or a $6.10 tax cut depending on which way

you look at Mr Latham’s figures. So they will be much better off, and they

will have the chance to actually retire with some superannuation. Now he

wants to abolish that. Mr Latham wants to abolish the superannuation co-contribution

savings scheme, so when you take that into account, people under $58,000

will be far worse off under his proposals.

JOURNALIST:

You are listening to Matthew Abraham and David Bevan broadcasting from

the Wayville Showgrounds, talking to Peter Costello from Melbourne, Andrew

from Aldinga Beach has joined us. Good morning Andrew.

CALLER:

Yes, good morning. A question for you. Is there anything in his policies

for dual income people with no children and buying a house, and we both

earn a combined income of less $50,000?

JOURNALIST:

Peter Costello?

TREASURER:

We have, well let me say first of all, yes, low interest rates. The most

important thing you can do for people who are buying a house is keep their

interest rates low. And let me just give you a figure. If interest rates

were to return to the average of the Labor party, the average Australian

mortgage payer would be paying $960 a month more. Now think about that very

carefully.

JOURNALIST:

Can you guarantee that there won’t be a rise in interest rates immediately

after the election?

TREASURER:

I can guarantee that interest rates will be lower under the Coalition …

JOURNALIST:

You can’t rule out that there will not be a rise because all the indications

are now that there will be a rise after the election?

TREASURER:

Well I am the Treasurer and I can not actually say what future movements

are going to be in interest rates because I would move the markets, it is

a policy that I have followed for the last eight and a half years …

JOURNALIST:

So is that a no?

TREASURER:

Well as I said, it is that I have for the last eight and half years adopted

the policy, as Finance Ministers around the world do, that we do not comment

on future movements of interest rates, and that we do not try and move the

markets, but, having said that …

JOURNALIST:

But, but you are quite free to say what they will do under your opposition?

TREASURER:

Well you only need to look at the record. You see, what I say is look at

the record. The record of interest rates …

JOURNALIST:

… well, well putting aside the question of interest rates …

TREASURER:

… no, no, no, I think this is a very important point …

JOURNALIST:

… but I think you’ve made that point Peter Costello, can you help

Andrew of Aldinga who has got a two income family with no kids, he is paying

a mortgage and both incomes are under $52,000?

TREASURER:

Yes, and the first thing I said is, the most important thing you can do

for him is keep his interest rates low.

JOURNALIST:

But you can’t give a guarantee on that. You have just said that.

TREASURER:

Well, yes, I can give this guarantee, that I have been Treasurer for eight

and a half years, and under me interest rates have averaged 7 per cent,

under my predecessors as Treasurer, they averaged 12 ¾ per cent.

JOURNALIST:

So you are giving a guarantee on interest rates?

TREASURER:

Well, no, I am saying look at the record. The record is just there, and

it is so strong.

JOURNALIST:

I’m confused. I’m confused. You either are or aren’t. You either can deliver

or you can’t.

TREASURER:

Well look at my record. Words are very easy, but look at my record. My

record is an interest rate average of 7 per cent. Before I became Treasurer,

the record was an interest rate average of 12 ¾ per cent.

JOURNALIST:

Your record is also of home prices going through the roof, so people are

having to borrow enormous amounts of money.

TREASURER:

Well hang on. If you have low interest rates it is true people can afford

better homes. Now …

JOURNALIST:

… but now they are paying more for the same old homes?

TREASURER:

Well can I also say this, that I have never met many home buyers that are

upset that the value of their homes has appreciated, …

JOURNALIST:

Well I’ve met many people who are trying to buy homes who are upset because

they can not get into the market. Peter Costello, we regularly get calls

to this programme, people who have no intention of selling their home, and

in fact are grieved that their home has gone up in value because their Council

rates, their water rates, all of these things are linked to their, to their

value of their homes. They’re not happy about home prices going up at all.

TREASURER:

Well, I think it is a bit rich to blame the Federal Government for Council

rates going up.

JOURNALIST:

No, no, but you just said everybody’s happy when the price of their home

goes up, and that is just not true.

TREASURER:

No, I think I said that I have not met many home buyers who are upset that

the value of their home has gone up.

JOURNALIST:

Well you should listen to 891.

TREASURER:

Well, well, let me put it the other way. Try and find a home buyer that

wants the value of their house to go down.

JOURNALIST:

I don’t think they are happy with it going up or down. They’re not going

to thank you for house prices going up, if that means that, if they have

no intention of selling the home, but if all that means is that all of the

on-costs have gone up.

TREASURER:

Well I think we can cut through all of this. I think we could do a poll

and we could say to home buyers, would you prefer the price of your home

to appreciate and your investment to increase, or would you prefer the price

of your home to depreciate and for your investment to lose its value?

JOURNALIST:

I think if you put a question in there saying, and would you like your

children to be able to afford a home like yours?

TREASURER:

Well, how are their children going to be able to afford homes? You keep

interest rates low, and this is the Government which introduced the First

Home Owners Scheme. Before this Government there was no First Home Owners

Scheme, there was no $7,000 for first home buyers to get into the market.

It just didn’t exist. This was the Government that one, brought interest

rates down, and two, introduced the First Home Owners Scheme.

JOURNALIST:

We are talking to Peter Costello. Before you leave us, because I know you

have to go soon, is it economically responsible to give tax cuts, or perhaps

tax cuts in the form of childcare tax cuts, making that tax deductible,

is it responsible to put tax cuts in on the back of a one-off surplus? Do

you think you’re going to get this extra money tomorrow, how sustainable

is it for you to say, well, well we can offer some tax cuts in any form,

because you might not get that surplus next year. Is this good economics?

TREASURER:

Oh, I think you have got to have responsible economic policies, and you

have to have policies which are there for the medium and long term, and

that is what we are doing. We are making sure; it has never been my objective

just to have a one-off surplus Budget, it is to try and get the Budget into

surplus and keep it there, and if this were a surplus in the next year,

which we are budgeting for, that would be our seventh surplus out of eight

and half years of Government, that is a good track record. But, can I just

pick up one thing, you talk there about deductible childcare, and I know

you had Simon Crean on your programme yesterday, he claimed that Labor was

making childcare tax deductible. That is false. That is entirely false.

There is no Labor policy to make childcare tax deductible, and I was very

surprised that he said that on your programme, and I noticed that some of

the newspapers have picked that up today.

JOURNALIST:

Ok, Peter Costello just finally, how big is your mortgage?

TREASURER:

My mortgage. It’s bigger than I would like.

JOURNALIST:

So what is it, $50,000, $100,000, $200,000, or is it …?

TREASURER:

It is bigger than I would like.

JOURNALIST:

Oh, don’t be coy.

TREASURER:

Well …

JOURNALIST:

… (inaudible)… snakes and things…. (inaudible) …

really interested, I’m just interested.

TREASURER:

I’ve got a mortgage and it’s bigger than I would like.

JOURNALIST:

… because … interest rates are … (inaudible) …

academic when you’ve got no mortgage.

TREASURER:

Oh no, I’ve got a mortgage and it is bigger than I would like.

JOURNALIST:

Peter Costello, thank you.

TREASURER:

Thank you very much for your time.