TRANSCRIPT of
THE HON PETER COSTELLO MP
Treasurer

Interview with John Laws

2UE

Tuesday, 6 July 2004
9.15 am

SUBJECTS: Church, Mark Latham, Liverpool Council, Economy, Election

LAWS:

Well last night the Treasurer of this country was a very special guest at Sydney’s

Hillsong Church, so I presume he is sung up, I hope he is not spoken out, or

I hope he speaks out now, he is in the studio, Treasurer good morning.

TREASURER:

Great to be with you, thank you John.

LAWS:

Did you sing last night?

TREASURER:

I sure did.

LAWS:

What did you sing?

TREASURER:

Well, I don’t quite know the songs, but as I said to the audience, after

I have sung a few bars of those songs, anything coming out of my mouth sounds

a bit like the Greek national anthem.

LAWS:

There was a lot of that yesterday.

TREASURER:

Did you hear the Greek national anthem being sung by raucus supporters about

3 am yesterday morning?

LAWS:

Yes, but I couldn’t understand it.

TREASURER:

That is a bit like my singing last night.

LAWS:

You actually sound as though you might have sung a bit last night.

TREASURER:

I did, at a great musical event.

LAWS:

(inaudible) by our Treasurer.

TREASURER:

I don’t think I was part of the musical event, I was part of the non-musical

entertainment John.

LAWS:

OK, my friend and colleague Mike Carlton said that you won’t talk to

him and I said it doesn’t matter, tell me what you want to ask him and

I will ask him. Are you ready?

TREASURER:

I am ready.

LAWS:

Have you punched anybody?

TREASURER:

No.

LAWS:

Never?

TREASURER:

Not in a fight, no.

LAWS:

Well, how else do you punch them?

TREASURER:

Well, I don’t get into fights.

LAWS:

Slap, sort of thing?

TREASURER:

No, no, obviously I played sports but no, I don’t go around punching…

LAWS:

Well the rest of his questions become instantly redundant, if so, whom and

when and why and did they hit back and who won. Mike, I did my best mate.

TREASURER:

Well, that gets me off the hook from going on a Mike Carlton interview for

the next couple of months does it?

LAWS:

Don’t you like Mike?

TREASURER:

I do actually, well, I didn’t realise that he felt like that, so I will

come on.

LAWS:

OK, well that is good, well he is listening I am sure he will be happy to hear

that. Is Mark Latham getting all he deserves?

TREASURER:

The one thing I would say about Mr Latham, John is that over the years he has

dished out a lot of abuse…

LAWS:

In Parliament?

TREASURER:

…in Parliament. I have been in the Parliament nearly 15 years, I have

never heard anyone as abusive as Mark Latham.

LAWS:

Not even Paul Keating?

TREASURER:

Oh no, no, no, Paul Keating had a good turn of phrase but he wasn’t personally

abusive in the way that Mark Latham has been. Mark Latham set out deliberately

to abuse people and he did a pretty good job of it.

LAWS:

Yes, but the difference is, I mean, I think calling you a really big C wasn’t

intelligent nor would I say accurate…

TREASURER:

No.

LAWS:

..but nonetheless that kind of thing was in Parliament and it was in relation

to you and others directly and not in relation to families and personal issues.

TREASURER:

Of course, but you know what it means don’t you when somebody says that,

you know what it means…

LAWS:

Of course I know what it means.

TREASURER:

…it hardly adds to a debate, does it, about Australia’s foreign

policy or our Budget or our tax system?

LAWS:

No.

TREASURER:

That is not designed to be a policy debate, is it?

LAWS:

No, but I would suggest with respect that even you and more so Tony Abbott

have made comments in Parliament that haven’t been really closely associated

with tax issues or other issues of importance in the Parliament at that time.

TREASURER:

To be frank, he said that about me you know, I actually thought it reflected

badly on him, it didn’t particularly worry me to be frank.

LAWS:

What do you think is going to be the wash-up of all of, I know it doesn’t

worry you, what do you think is going to be the wash-up of all of this?

TREASURER:

Look, I think there is one important political issue in all of this and, which

is a matter for legitimate inquiry and that is Mark Latham’s capability

for financial management. I think it is highly relevant what his record was

as the Mayor of Liverpool. I tell you why, he wants to be the Prime Minister

of a country that has a $800 billion economy. We bring down a budget every year,

I have brought, I have just brought down the most recent Budget, a Budget is

$200 billion, $200 thousands of millions every year. Now, if you make a mistake

in relation to the Budget or in relation to the running of the economy, interest

rates go up and people lose their jobs. And it takes a bit of discipline and

it takes a bit of skill. Now, Mr Latham wants the responsibility of a $200 billion

budget and a $800 billion economy, it is very relevant to know what his financial

qualifications are.

LAWS:

What about Simon Crean? Wouldn’t he be doing that side of it?

TREASURER:

Well, people will form their own views about Simon Crean and their team will

be Mark Latham and Simon Crean. Now, it is very relevant to know what his record

is and I think if you look carefully at the Liverpool Council record of Mayor

Mark Latham, it is a cause for great concern.

LAWS:

Yes, but is seems that at least the Sunday program didn’t look

all that much at his council record when it came to book keeping as his council

record when it came to hitting people.

TREASURER:

Well OK, well leave that aside, I mean that is a matter for him and Mr Nelson

as far as I am concerned, but you have got to ask yourself what actually happened

down the Liverpool Council. Now, we had six mayors that came out and made a

statement and Mark Latham said, well I will spend a whole lot of money and then

the council will get savings which will pay for it. Well, the first part of

the equation – he spent a lot of money that is for sure. The second part of

the equation never came through, the Council was left in debt and eventually

got into property developments that forced the Council to be suspended. Now,

you wouldn’t want to have somebody running a country that spent a whole

lot of money and said somebody else will find the savings, find out that those

savings don’t appear. You can’t suspend a country by the way, if

a country gets into financial difficulty you can’t bring in a receiver.

LAWS:

No, so what you are saying here is Mark Latham is not up to the job.

TREASURER:

I am saying Mark Latham doesn’t have the, in my view, Mark Latham does

not have the financial management record or skills to properly run the Australian

economy.

LAWS:

Well, that would mean that he is not up to the job.

TREASURER:

Sure.

LAWS:

So, you believe that Mark Latham is not up to the job?

TREASURER:

I believe that the Australian economy would be run badly and mismanaged and

that interest rates would go up and people would lose their jobs under a Mark

Latham government, yes I do.

LAWS:

That is a very long answer to a yes or no question. Is Mark Latham up to the

job, yes or no?

TREASURER:

He is not up to good economic management.

LAWS:

OK. Is there a political dirt unit within the Liberal Party?

TREASURER:

No.

LAWS:

And if not, why not?

TREASURER:

There is no need for one, that is why not. There is none. Mr Latham mentioned

Ian Hanke as running some unit. Ian Hanke works for Kevin Andrews, the Minister

for Industrial Relations, he is a press secretary, that is it. Can I say John,

this stuff that is coming out about Mr Latham…

LAWS:

Yes.

TREASURER:

…he said yesterday, his ex-wife, well she is not connected with the Liberal

Party. The former mayors of the Liverpool Council, most of whom are Labor Party,

they are not connected with the Liverpool Council. Then a whole lot of other

allegations which he talked about yesterday which I don’t even want to

repeat, you know, about videos and so on, it doesn’t come from the Liberal

Party. Nobody in the Liberal Party would know anything about that and every

senior journalist in the country today has said, well I never heard about any

of this from the Liberal Party.

LAWS:

OK, well if, but if you did hear about it, let’s say if the Liberal Party

did hear about it, you wouldn’t be too concerned about saying it was released

to the general public, would you?

TREASURER:

I am not interested in videos, I am not interested in people’s marriages

because I don’t think they bear on politics. What I am very interested

in is people’s track record for economic management, I am very, very interested

in that.

LAWS:

OK, but could we just go back to this. If not you singularly, if the Liberal

Party collectively heard some rumblings about Mark Latham had biffed yet another

taxi driver or something, are you telling me that the Liberal Party wouldn’t

see that that was released into the area as it might well be damaging to your

opponent and things could be worse than having him damaged in a run-up to an

election?

TREASURER:

No, we wouldn’t because you know, I have read about the taxi driver by

the way, the papers didn’t hear about the taxi driver from the Liberal

Party. The Liberal Party heard about the taxi driver from the papers. That is

how the Liberal Party hears about these things. I have read the story about

the taxi driver, but how do you think the Liberal Party would find out that

Mark Latham had bashed a taxi driver? By reading the paper just like everybody

else, it is not as if…

LAWS:

Unless the taxi driver rang somebody in the Liberal Party and said, I mean,

that is not impossible.

TREASURER:

…I think the taxi driver is much more likely to ring the papers these

days, if I may say so John, your news gathering information is much better than

the Liberal Party’s. The media of Australia hears these things before

the Liberal Party.

LAWS:

But you would have and I am sure you do have a special group of people who

monitor all Labor Party mutterings in the run-up to an election. You would have

to.

TREASURER:

We listen carefully to what people say on radio obviously, and we read the

newspapers, and where there are policy disputes between Labor figures or where

they announce bad policies, of course we argue against them, but as you say,

what that is, is actually listening to media, it is not giving to media, it

is taking from media.

LAWS:

OK, but then there is no point taking something from somebody unless you are

going to do something with it.

TREASURER:

Look, if I, let me give you an example. Mr Latham announced a superannuation

policy which I think was billions of dollars out. When I heard that of course,

I exposed the fact that policy wouldn’t work and he made a monumental

financial error. Of course I would do that and I do do it. But if heard that

Mr Latham had a video, which apparently he doesn’t, what interest to me

would that be?

LAWS:

Well, only that it might be damaging to either he or the Labor Party.

TREASURER:

I don’t think it would be, I don’t think the press would regard

it as interesting and I don’t think it would be damaging…

LAWS:

Did you watch the Sunday program?

TREASURER:

I watched part of it.

LAWS:

So, do you think that the Sunday program has done Mr Latham no harm

at all?

TREASURER:

I don’t know that, well, there was this question that what did the Sunday

program tell us about Mr Nelson, what he said about the fight, but of interest

to me, much more interest to me, is the record of Mark Latham at the Liverpool

Council.

LAWS:

(inaudible) relevant.

TREASURER:

Very relevant issue, John. Let me tell you, (inaudible), if you can’t

run a Council how are you going to run a country?

LAWS:

I agree with all of that, but Peter you have missed the question, I don’t

know, after all of that singing last night, maybe, were you wearing headphones,

maybe the hearing was jacked up. Did that program…

TREASURER:

(inaudible) wearing earplugs.

LAWS:

…you should be wearing them now. Did Mark Latham, was he damaged by that

program or not?

TREASURER:

No, I don’t think the program was the issue, I think his response is

the issue actually. What has given all this coverage in today’s newspapers,

it is not the Sunday program…

LAWS:

No, it was…

TREASURER:

…it was his press conference, that, (inaudible) response that is the

critical thing here.

LAWS:

…do you think the response was weak?

TREASURER:

Well, I will make this point, the response has put this all over the front

pages of every newspaper in Australia.

LAWS:

Do you think the response has harmed him more than the program?

TREASURER:

Well, as I say, the response has given this a lot more coverage than it would

have had otherwise.

LAWS:

As I said, has it harmed him more than the program?

TREASURER:

It has publicised things.

LAWS:

(inaudible).

TREASURER:

I am with the master.

LAWS:

Yes, tell me about that. But you do have a, you do have a, seriously now, you

do have a bunch of people who listen to what is going on in Labor Party circles

and what is being said by Labor Party people.

TREASURER:

We have people, and I am one of them myself, that read the newspapers everyday

to see what the Labor Party is saying…

LAWS:

Yes, yes.

TREASURER:

…and when you have the opportunity, listen to the radio airwaves because

that is where they are announcing policies and that is how you have got to engage

in the policy debate….

TREASURER:

…and when you have the opportunity, listen to the radio airways because

that is where they are announcing policies and that is how you have got to engage

in the policy debate. Of course we have people do that.

JOURNALIST:

Are they Liberal Party people or are they outside people?

TREASURER:

They are mostly staffers, press secretaries, that is what press secretaries

do John.

JOURNALIST:

Okay but some are outside people?

TREASURER:

Not that I know of, they are mostly press secretaries.

JOURNALIST:

Okay. I see the retail figures for June have soared, any idea what might be

behind that?

TREASURER:

Retail has been strong in Australia for a while and the long term fact is we

have low interest rates and we have high employment more people in work in Australia

than ever before in Australian history, and when you’re in a job, you

have got some money to spend.

JOURNALIST:

Okay. Do you think that the handouts had anything to do with the retail things?

TREASURER:

I would not think so in June..

JOURNALIST:

…people suddenly found that they had more money..

TREASURER:

…well there was a Family Tax payment of $600 per child which was made

at the very end of the month. Tax cuts come in to force on 1 July. I would not

think they would have a big impact in June. There may be some impact in subsequent

months. But retail has been strong as I said because employment is high, unemployment

is low and interest rates are low. People can get good deals at the moment.

JOURNALIST:

It’s very interesting to note that for several months the increase in

this retail market was about 0.3 of a per cent per month and all of a sudden

it was three full percentage points. Now if that has got nothing to do with

the handouts, what do you anticipate it might be in July?

TREASURER:

I think retail will continue strongly but probably over the course of the year

will soften. Because over the course of the year we think that consumption,

generally, will come off over the course of the financial year July to June

2004-05.

JOURNALIST:

Okay but if this economic growth continues at this rate of the three per cent

are the voters going to thank you when the interest rates do go up?

TREASURER:

Well I will be happy if growth could continue at three percent. That is a little

slower than it has been in previous years but it will keep people in work. As

to interest rates, interest rates are at historic lows and interest rates are

set according to inflation.

JOURNALIST:

Well inflation is going to be affected by that three per cent rise.

TREASURER:

I do not think inflation, our forecast for inflation to stay low right through

the year and into next year actually. We think that inflationary pressures are

not building up in the Australian economy.

JOURNALIST:

Okay what are you going to do about these super funds? Any closer to a performance

based structure (inaudible)?

TREASURER:

…I think that we are getting there. Yes I think we are.

JOURNALIST:

…you will approve of that…

TREASURER:

…yes, yes, yes absolutely and we are getting there. We were able to pass

some legislation at the end of June to give people choice in superannuation

so they will be now able in the future to take their money out of poorly performing

funds and put it into stronger performing funds.

JOURNALIST:

And when funds lose your money, and they do, will they continue to be paid

at the same level as when they making money?

TREASURER:

…well

JOURNALIST:

..shouldn’t that be geared?

TREASURER:

Well I think it should, I think that funds should have a commission arrangement

which means that if they make a profit they can have a little bit of commission

and if they make a loss they should not get anything. I do not think you will

ever get any money back out of the fund, (inaudiable).

JOURNALIST:

Well they don’t so why should they be paid?

TREASURER:

But I think a management fee based on results is the best way of ensuring that.

JOURNALIST:

The Reserve Bank is meeting today. Will they go up or down do you reckon?

TREASURER:

Well I am actually going down to have lunch with the Reserve Bank Board today

so it will be, it will be an opportunity to sit back and discuss with them the

state of the Australian economy.

JOURNALIST:

Okay. Do you…

TREASURER:

But I do not and I never do foreshadow movements in interest rates.

JOURNALIST:

Alright, do they like having lunch with you Pete?

TREASURER:

Once a year the Treasurer meets the Reserve Bank Board and we discuss the year

and we look at the Bank’s performance. The bank is actually a bank and

it actually pays a dividend and once a year after the end of the financial year

we have a meeting, we discuss the dividends. I should say you do not expect

a huge dividend this year because interest rates are low so…

JOURNALIST:

So does that mean the (inaudible) will be perhaps a little thinner?

TREASURER:

Well a dividend is substantially lower then it has been in previous years because

the funny thing is it is a bank and it invests its money in interest bearing

deposits because interest rates are low that the banks dividend will be low.

But this is not new news it has all been in the Budget papers.

JOURNALIST:

And you do realise that somebody is going to find out exactly what is going

to be eaten at that lunch and how much it costs?

TREASURER:

The Telegraph always goes through what is eaten and what is on the wine list

so…

JOURNALIST:

…I think the editor of the Telegraph does a bit of moonlighting and acts

as a waiter.

TREASURER:

And let me tell the Telegraph that I only meet with Board once a year so you

can’t blame me for the other 11 luncheons.

JOURNALIST:

I imagine the Prime Minister talks about election dates with you, does he?

TREASURER:

We just talk about general political issues. I know what your next question

is going to be and no he has not told me what the date is going to be and, but

if I may say so, I do not think he has decided himself because the day you decide,

in my experience, the date the Prime Minister decides the election date is the

day that he motors out to Yarralumla and has a talk.

JOURNALIST:

Yes well he certainly hasn’t decided because I saw him about 20 minutes

ago, no that is a fib, about an hour ago, and we were comparing driver’s

licences so he is not too worried about the next election I can tell you that.

TREASURER:

Why were you comparing driver’s licences?

JOURNALIST:

Because I asked him if the photograph on his driver’s licence was as

crook as the photo on my driver’s licence, and do the people who print

driver’s licences deliberately want to make us look crook.

TREASURER:

And what did he say? Did he (inaudible) your licence is better?

JOURNALIST:

He then got his driver’s licence out and showed me and we probably looked

both equally as crook on our driver’s licence and we agreed on that. So

he is certainly not thinking about the election, but you escaped one question,

but I am…

TREASURER:

How do crook driver’s licence photos bear on election timing?

JOURNALIST:

Because he is not going to be talking to me down at my office, getting his

wallet out, pulling his driver’s licence out if he is on his way to Yarralumla

for God’s sake.

TREASURER:

Was there any money in the wallet?

JOURNALIST:

Lots. I don’t look in the Prime Minister’s wallet. How much have

you got in yours?

TREASURER:

Actually I have not got a wallet on me.

JOURNALIST:

Have you ever been drunk?

TREASURER:

Probably there have been occasions when I have drunk more than I should have.

JOURNALIST:

You can never say yes or no. Have you ever been drunk?

TREASURER:

Well that is my answer.

JOURNALIST:

You have been, I mean you must have been, not in my presence, I’m not

(inaudible).

TREASURER:

That is a relief.

JOURNALIST:

Everybody gets a bit tiddly, but back to that other question. Does the Prime

Minster discuss election dates with you?

TREASURER:

Yes he discusses general strategy.

JOURNALIST:

An election date?

TREASURER:

And what issues are coming up and you know that it is designed around what

possible dates there could be for an election.

JOURNALIST:

Does he ever say things like ‘have you got a date in mind?’

TREASURER:

He would say ‘what is your view?’ and I would express a view.

JOURNALIST:

What is your view?

TREASURER:

To him, I would express a view to him.

JOURNALIST:

Terrible wouldn’t it if I was accused of throwing the Treasurer…

TREASURER:

What is your view John?

JOURNALIST:

I would reckon the way the climate is now, sooner rather than later. It would

be this year.

TREASURER:

Got any advice?

JOURNALIST:

That is the sort of thing I only discuss privately when I am talking about

driver’s licences and other major issues. I am very, yes I do have some

advice, actually, but I will give that to you in private.

TREASURER:

Appreciated, I would not ask you to do it on air.

JOURNALIST:

But it would have to be this year.

TREASURER:

I think so. It is conceivable to have an election next year but I would think

it will be this year.

JOURNALIST:

And if you take any notice of those Newspoll things that shows that Mark Latham

has now dropped to a six month low in ratings, I don’t think that you

can take much notice of those or not.

TREASURER:

You read the polls but you do not place any reliance on one poll because they

go up and down, but you do read them, of course you read them.

JOURNALIST:

Okay. Treasurer I appreciate your time very much. I hope you have a wonderful

lunch and that the Caviar is Beluga and nothing less.

TREASURER:

I do not think it will be at that proportion, it is more likely to be pea soup

today.

JOURNALIST:

You’d like pea soup anyway.

TREASURER:

I prefer pea soup.

JOURNALIST:

I love pea soup with croutons.

TREASURER:

Pea soup with pepper.

JOURNALIST:

Yeah good.

TREASURER:

Very good.

JOURNALIST:

Okay whatever it is enjoy it and I hope that you give us a feast for a number

of years to come, the way things are looking at the moment, I have very little

doubt, that you’ll be re-elected. You do have a bit of doubt though?

TREASURER:

I think this will be a tough election and I think that it is very close and

at the moment Labor’s in front, that is what the polls tell you so we

do not take anything for granted, you can not take anything for granted in this

business.

JOURNALIST:

Apart from that it is rather fun being the underdog.

TREASURER:

Well in my view it is better to win elections than lose them, I will be honest

with you, but at the moment it is very, very tight and I just think that it

is important that people think carefully about the direction of our country.

If I may say one last thing. A lot of people say the economy is running well,

you have got people in work and inflation is low and interest rates are low.

It does not happen by chance, and it does not happen by accident, it takes a

lot management.

JOURNALIST:

I think the public…

TREASURER:

…it is not a fluke…

JOURNALIST:

They’re aware of that…

TREASURER:

And you do not want to risk it. There are a lot of countries around the world

that do not have a record like this and they are all trying, they’re all

trying believe me. But it takes a bit of management and when you’re making

a big decision which is going to affect your mortgage rate and the chances of

your kids getting a job or you staying in a job, financial management is a big

issue.

JOURNALIST:

You’re quite right. It is a major issue and I think the general public

understand it is no fluke, it has taken a bit of doing and it has been done

well. I doubt that too many people would argue with that. Good to talk to you

Peter Costello I appreciate your time very much.

TREASURER:

Thanks very much for your time John.