THE HON PETER COSTELLO MP

Treasurer

Doorstop Interview

Ministerial Entrance

Parliament House

Thursday, 13 May 2004

12 noon

SUBJECTS: April Labour Force figures, interest rates, Senate obstructionism,

tax cuts, Budget

TREASURER:

Today’s unemployment figures for the month of April show that Australia

has kept its unemployment rate below 6 per cent for the eighth month in a row,

and job creation has been very strong with 56,000 new jobs for the month of

April and 43,000 of those were full-time jobs and in fact, if you look at the

last two months the rate of job creation has been over 100,000. Now, these figures

bounce around from month to month, but the good thing is for the eighth month

in a row, unemployment has been below 6 per cent, and we haven’t been

in this kind of territory since 1981. So, these are unemployment outcomes which

are as good as they have been since the last 23 years. Now, if we can continue

to keep our economy growing, particularly if we could get some of our industrial

relations reforms though the Senate, we could even look at doing better than

that, but the important thing is to keep the Australian economy growing, it

is a strong growing economy which creates jobs and since this Government was

elected there have been 1.3 million new jobs created in Australia, 1.3 million

more people in work in those jobs and from a government perspective, strong

economic management, job opportunities, good outcomes for families gives you

the capacity to do the kinds of things we are trying to do in this Budget.

JOURNALIST:

Moving right on to the custard tart Treasurer, do you think we could have an

unemployment rate with a four in front of it at some stage?

TREASURER:

Look, the important thing is to keep unemployment below 6 per cent which we

have done now for eight months in a row. I think that is probably what we call

a cyclical low, where it gets to after strong continued growth in the economy,

I think if you want to go further than that, you have got to change the structure,

this is what we call structural change. What we need to do if we want to change

the structure to get unemployment lower in this country is we need to change

the unfair dismissal laws which the Senate continues to block, we need to improve

the flexibility and the reason why that helps creates jobs is if employers can

be confident that by putting people on they won’t be subject to legal

suits if there is a downturn, then they will go out and they will create more

opportunities, we will get the structural change in our labour market.

JOURNALIST:

What does this mean for interest rates, this number today?

TREASURER:

I think, there are some people that get afraid of employment growth, they say,

Australia has never had unemployment below 6 per cent for this period of time

since, in the last 23 years, this must be a worry, there must be too many jobs.

We should not be frightened of low unemployment, we should not be frightened

of employment growth, this is the whole object of economic policy, is to so

manage your economy that people can find work. And let’s not get frightened

of it, let’s lock it in and let’s try and go further.

JOURNALIST:

You don’t see this employment growth and this fiscal stimulus from the

Budget as putting renewed pressure on rates?

TREASURER:

The fiscal stimulus in the Budget is about half a per cent of GDP, that is

not a large fiscal stimulus. There are some countries, the United States is

one, that has got a fiscal stimulus of 5 per cent deficit, so let’s get

things in perspective here, 5 per cent deficit on the US Budget, we have a change

of half a per cent of GDP, so let’s hold these things in perspective.

JOURNALIST:

You are often talking about the obstructionism of the Senate, would you like

to see the Government take the chance even without by-partisan support on a

(inaudible) to blunt the teeth of the Senate?

TREASURER:

To blunt the teeth of the Senate?

JOURNALIST:

Well, the proposal was floated earlier…

TREASURER:

By, in the discussion paper?

JOURNALIST:

…yes.

TREASURER:

Well, I did say at the time that I supported the proposal that if a law were

blocked twice and there was a subsequent election, then you should be able to

secure passage through the Senate, and I am on the record as saying that and

that is my view. Do I think that it would go through in a referendum? Well,

it is very hard to change the Australian constitution as experience has told

us, I don’t feel any massive groundswell out there.

JOURNALIST:

So where is the proposal now and do you think it is worth (inaudible) regardless?

TREASURER:

Well, I don’t know where the proposal is, I thought that the Committee

had reported that they didn’t feel there was sufficient consensus to go

ahead, that is my recollection.

JOURNALIST:

(inaudible) announced their decision, has it?

TREASURER:

Well, my recollection is that that is what the Committee said.

JOURNALIST:

There is an expectation tonight that Mark Latham will promise tax cuts to lower

income earners, is he going to be able to do that, to pay for that?

TREASURER:

Well, tonight he will have to outline the rates, the thresholds and the amount

that that will involve and where the money will come from. And he promised that

he would do that in Budget week, he is on the record promising that, it is not

enough to go around and say I will give you all everything you want, he has

got to name the rates and the thresholds and the amount and the source of funding.

So, we will see what his rates are tonight, but if he wants to have larger tax

cuts, he will have to also detail how he will pay for them.

JOURNALIST:

Are you prepared to get into a tax cut auction in the run up to the election?

TREASURER:

Well, we have laid out our tax plan. Today I introduced the legislation, that

legislation is now in the Parliament and after the Parliamentary recess, we

will come back and hopefully we will legislate it, that is our plan.

JOURNALIST:

Treasurer, why was there no extra money in the Budget for new pneumococcal

vaccines?

TREASURER:

Well, the Prime Minister said yesterday that the Government was considering

this issue and there are two points to be born in mind. One is the supply and

the other is the price. So, it is very important I think, that when you are

negotiating these things you make sure that you negotiate a proper price.

JOURNALIST:

Treasurer, has the FIRB made its recommendations to the Government yet on News

Corps proposed move to New York?

TREASURER:

Not that I can recall.

JOURNALIST:

How is the procreation going? Are you getting any more feedback on that?

TREASURER:

Well, I was hoping you would help us out there Jason, perhaps you can tells

us how it is going.

JOURNALIST:

Treasurer, the Labour Force figures have showed that female participation is

still well below male participation in the workforce, do you think that your

Budget measures will change that?

TREASURER:

Well, female participation in the workforce is below male participation in

the workforce because women tend to come out of the workforce when they have

children. Mostly when they go back into the workforce after a few years, they

go back on a part-time basis. Now, we are trying to address that, we are trying

to address it by giving a maternity payment for women who have children and

are coming out of the workforce, but then by changing the structure of the Family

Tax Benefits, so that if they go back into the workforce, particularly part-time,

they don’t suffer any loss of their entitlements. Now, I think you could

make a fair argument that they way things have been structured up to date, there

would be some women who would say, I will not go back into the workforce part-time

because I would lose my Family Tax Benefit Part B, and to adjust to that situation

we had two very major structural initiatives in the Budget. The first was, we

changed the income and taper tests so that more women could keep that benefit

as they work part-time and the second is, we said there would be a disregard

if you like, that when you started earning income you could keep your FTB B

entitlement up until that point, and that was a very big major structural change

in relation to that benefit. And the idea of that is to enhance women’s

participation in the workforce.

JOURNALIST:

Treasurer, what do you think of this idea to reduce HECS debts if university

students undertake voluntary or charity work?

TREASURER:

Well, I think it was put forward by Senator Fifield in his maiden speech and

I thought it was a very interesting contribution to debate, and I predict a

great career for the Senator. Thank you very much.