TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with Alan Jones

2GB

Wednesday, 7 July 2004

7.15 am

SUBJECTS: Values, Mark Latham, politics, interest rates, Budget, financial

management, Family Tax Benefit, GST, State taxes, water policy, election

JONES:

In the context of all of this I came upon a quote last night when I returned

home by the man that would be Prime Minister, Treasurer Peter Costello. He addressed

what is described as Sydney’s largest Christian conference, it is called

Passion ‘04. An estimated crowd of more than 30,000 listened to

Peter Costello’s speech at the Sydney Superdome and he was wildly acclaimed.

In part Mr Costello said, ‘we need a return to faith and the values which

have made our country strong’. Many would feel that that is most probably

relevant today. He is with me in the studio, good morning.

TREASURER:

Good morning Alan.

JONES:

Faith and values, what did you mean by that?

TREASURER:

I think a lot of parents in particular are worried about the kind of values

that their children are growing up with, some of this gangster rap that you

hear repeated mindlessly over and over on television and radio, worried about

some of the values that have been pushed through television programs, and I

think that a return to faith and the values on which our society were found,

the values of the ten commandments, respect for other people, respect for their

property, would actually strengthen our society.

JONES:

What about the values system inherent in what has been going on relation to

Mark Latham and the alleged argument that there is a dirt unit within the Coalition,

is there a dirt unit?

TREASURER:

Absolutely not. That is a completely false allegation.

JONES:

Is the argument by Mark Latham that there is a dirt unit the pushing in itself

of dirt?

TREASURER:

Well, a lot of these things he seems to raise himself. He is the person that

keeps talking about all of these things. Can I tell you, nobody in the Government,

nobody, has talked about videos or his sister or anybody else. And…

JONES:

Should these things be off limit?

TREASURER:

…the proof is in the pudding Alan. You have got, I think I heard journalists

on the radio last night, one after the other, saying none of this had come from

the Government. Now, he himself said, his ex-wife has said certain things, Liverpool

Labor Councillors have said certain things, obviously, that has been in the

media, but this allegation that his problems are somehow the fault of the Government

is absolutely false.

JONES:

What does this all do though, for the public’s perception of politics?

I mean he for example himself gave Alexander a pretty tough time when Alexander

Downer was Opposition Leader.

TREASURER:

Sure, well Mr Latham was somebody who over the years built his career on what

he called muscling up, he called politics a cage, and he was probably the person

who brought abuse to the highest standard, or I would say the lowest standard,

in the Federal Parliament. He said at one point that he didn’t want the

Parliament to be namby pamby, it was a cage, and you recall that is when he

described Tony Staley as deformed, you know Tony is crippled, so I think the

Parliament did go through a very bad period, led mostly by Mr Latham actually.

JONES:

Given that an election is in the offing, what would you as, you know, virtually

one of the senior leaders of the Government, want to see in the public place

for debate to determine who should govern this country?

TREASURER:

Well…

JONES:

(inaudible) one of the issues?

TREASURER:

…I don’t care about videos and I think it is complete nonsense

to say that his sister has got something to do with his political career and

anybody who publishes that, and by the way I haven’t seen anyone publish

that, should be condemned if they do it. But having said that, what is absolutely

relevant is his capacity for financial management. Now, Mr Latham wants to be

the Prime Minister of Australia, let me tell you, the Budget is a $200 billion

Budget and his capacity for financial management is very relevant to his job

application for Prime Minister. And that is why his record as the Mayor of the

Liverpool Council is absolutely relevant to his qualification for the highest

office in the land and that is why what the Mayor’s of Liverpool say about

his financial management, and I am not talking about his bucks night, I am not

talking about his sister or anybody else, but when he was in the public office

of Liverpool Mayor, his spending decisions and his record is part of the public

record and part of his job qualifications for the Prime Ministership. And his

record was a bad one, a very bad one. He spent a lot of money and he said well,

the savings will appear, the trouble is the money got spent and the savings

never appeared and the Liverpool Council under his mayoralty was not a success.

If he can’t run a council, he can’t run a country.

JONES:

Just talking about running the country, you met yesterday with the Board of

the Reserve Bank, there will be an announcement at half past nine this morning,

is there a case for interest rates in this environment to be going up?

TREASURER:

Well, I am not going to pre-empt any announcement at nine thirty, let me make

that point. But the way in which we have put interest rate policy in Australia

is that we focus on inflation. If inflation is a threat to the economy, then

interest rates are adjusted accordingly, but inflation is low in our economy,

it is down around 2 per cent, we don’t have inflationary pressures and

that is consistent with a low interest rate regime.

JONES:

Access Economics said yesterday that you are $52 billion in new policies has

left the Treasury cupboard, quote, ‘distressingly bare.’

TREASURER:

Well, I have never even heard of the person who wrote that for Access Economics,

was it a Mr Rumble?

JONES:

I think so, yes.

TREASURER:

Well…

JONES:

He said the Government has displayed all the restraint of Meatloaf, who is

the popular singer, at McDonalds.

TREASURER:

…yes, well, I thought to myself, Mr Rumble has written a piece to try

and get publicity for him and his organisation, but it doesn’t make him

qualified. Reputable economists don’t talk about Meatloaf, do they?

JONES:

So you are happy are you, about the capacity for the Government to be able

to stay in surpluses into the future?

TREASURER:

Well, Alan, when I first became Treasurer the Commonwealth Budget was $10 billion

in deficit, and I have done nine Budget’s, we have brought the Budget

back into surplus, we have had seven surpluses. So I think I am qualified to

speak on the Budgetary position.

JONES:

Mark Latham says a vote for John Howard is a vote for Peter Costello as if

that ought to be something that should frighten the national electorate. How

do you react to that?

TREASURER:

Well, over the years John Howard and I have worked very closely, he has had

the most senior position in the Government, I have had the second most senior

position in the Government, we have worked very well, I am happy for people

to look over my record of financial management. When I say look at Mr Latham’s

record of financial management, I don’t say, hands off my own. People

poor over my financial record on a daily basis and I think the record in terms

of low unemployment, low inflation, low interest rates, seven surplus Budgets,

reducing Labor’s debt by $70 billion has put Australia in a much stronger

position than we were in in 1996.

JONES:

One of the key issues of the May Budget to people listening to you this morning

was this $600 per child one-off family payment. There has been all sorts of

talk about some families being over-paid, I think Kay Patterson said 0.1 per

cent of families, have there been overpayments and if people have been overpaid,

must they pay it back?

TREASURER:

Look, you hear these anecdotal cases, but we laid down a rule which was this,

anybody who had an entitlement to the Family Tax Benefit in the 2003-04 year,

that is the financial year which has just finished, would be entitled to an

additional $600 per annum, per child. That is the instruction that we have given,

as far as we know, every such person has been paid their $600 entitlement.

JONES:

In New South Wales, just on this GST business, we have had a State budget brought

down recently where taxes will increase by $558 million, land tax revenue has

gone through the roof with a $326 million windfall, there will be a record $5.3

billion collected from property tax, which is up 230 per cent in nine years.

The public here think, well what the hell, I thought the GST was to relieve

us of all of these taxes, it just seems to be an addition to the tax burden.

TREASURER:

Well, all of the GST goes to the States, you know that.

JONES:

But it doesn’t seem to relieve the poor taxpayer in the states of other

taxes.

TREASURER:

Well, I like reminding people of that because there are some people that don’t

know that. Every dollar of GST is received by Mr Carr and Mr Bracks and Mr Beattie

and Mr Gallop and all of the State Premiers.

JONES:

Why doesn’t the Government say, well listen you are not going to get

this money unless you retire certain taxes?

TREASURER:

Well, we have done an agreement with them and the money is just appropriated

to them. Now, we said to them, this money should be used to abolish other taxes.

The taxes that we have forced the States to abolish are, were the Bed Tax, the

Financial Institutions Duty, which was when you put money into your bank account,

the Bank Account Debits Tax, when you took money out of your bank account, stamp

duties on shares. But the thing that really does concern me, is as the GST revenue

grows and New South Wales is now getting more money under the GST than they

were under the old system, they are getting a financial bonus, the States are

increasing their spending and that is why they are increasing their taxes.

JONES:

Would you say that there is a bigger issue facing the country than the water

issue, we see nothing from either party about how we are going to prevent the

recurrence of debt that we have had to endure and now possibly the worst of

all time, you have said you will provide several hundred million dollars to

return sustainable water flows to rivers, but just leaving the rivers alone,

what are we doing to make sure that the drought cycle doesn’t continue?

What are the programs for example, for grey water? What is the desalination

program? What is the program to stop us flushing our toilet with the same water

we make our tea with?

TREASURER:

Well, there are a lot of programs that have been put in place by State Governments

to encourage water tanks, this is in residential areas…

JONES:

Shouldn’t you take a lead on this?

TREASURER:

…well…

JONES:

National prices, this is costing you the earth.

TREASURER:

…well, we are taking the lead on the river system because it crosses

state borders…

JONES:

That doesn’t affect farmers though, does it?

TREASURER:

…the Commonwealth Government, well, I will come back to that in a moment.

The Commonwealth Government has never run metropolitan water systems…

JONES:

But the Snowy Mountains scheme is a Commonwealth initiative.

TREASURER:

Absolutely. Why? Because it has affected rivers and rivers that crossed State

borders. Now, we are going to take a major engagement in the way in which water

is allocated through our river system and to our farmers. We had this big initiative

which was agreed to by the States, we are going to have a proper water market,

we are going to make…

JONES:

Forget the rivers though, forget the rivers for a moment, isn’t the water

crisis a national crisis requiring say, the issuing of infrastructure bonds,

so that people can build weirs and dams, or a national development bank where

they can get cheaper money if they are going to build infrastructure to create

something which will reduce the water crisis in the future?

TREASURER:

…well, I think that there is a case for building further dams, absolutely,

and I think the biggest problem here Alan, is not the financing of them, the

biggest problem here is locating them. I think one of the reasons why the State

Governments have not built enough dams, I am not singling out any particular

government here, is that every time they put on the drawing block, a place where

a dam ought to go, there are local objections, or conservation objections, and

I think that the infrastructure for water reservoirs, particularly for our major

metropolitan cities has run down.

JONES:

So how much longer are we going to endure this kind of set-up with water restrictions

in every State and farmers facing drought with no solution?

TREASURER:

Well, you will have to speak to those that are responsible for building the

dams, but I agree with you, I agree with you, and I think the problem is going

to be environmental, it is not going to be financial.

JONES:

And an election, has the Prime Minister discussed an election with you?

TREASURER:

Sure, we discuss timing, but…

JONES:

Will this be an appropriate time now to indicate what you are thinking?

TREASURER:

…but I think, but he makes the final decision obviously, and he has to

my knowledge not made any such decision.

JONES:

Good to talk to you.

TREASURER:

Good to be with you.