TRANSCRIPT
THE HON PETER COSTELLO MP
TREASURER

Doorstop Interview

Senate Alcove Courtyard, Parliament House

Wednesday, 31 March 2004

4.15 pm

SUBJECTS: Retail trade figures; credit figures; Labor’s Baby

Care Payment; costing errors; Labor’s payroll tax increase

TREASURER:

Let me just say something about retail trade figures which were released today.

Retail trade figures for the month of February, increased by 0.1 of a percentage

point, and that shows a slowing in relation to retail trade. Over the last 3

months, retail trade has essentially been flat. We also had released today RBA

credit figures, which showed an increase of 1.6 per cent in housing credit in

the month of February, that is the lowest growth rate in nine months. So, the

data which we have got both on retail trade and in relation to credit, confirms

some slowing in both the retail market and in the housing market. And put that

together with the figures that I was commenting on yesterday in relation to

international trade in goods and services, I think that we are seeing a little

slowing in the Australian economy, and it means that there is a delicate poise

at the moment, not a major turnaround, but a slowing and in many respects the

slowing will actually be welcomed, particularly in relation to the housing market.

Let me now say something in relation to Labor’s proposal which was announced

today – panic makes for poor policy. Labor was panicked into releasing

a statement today in relation to baby care, and it is poorly done, it is poorly

researched, and it is poorly thought out. The reason it was released today of

course, was to try and take the focus off Mr Latham over national security and

the way in which he misled the House. The Baby Care Payment of course had its

origins in the document which the Labor Party had last year from the Government’s

Work and Family Taskforce. In fact that document actually talked about the same

sort of thing, Baby Care Payment. But the one thing that the Labor Party had

to do was actually put numbers and pay for it. Labor’s policy is $350

million short. It has misfired again, in relation to the calculations and it

doesn’t add up. Now, Labor has put some savings against this policy, for

example abolishing the Governments scheme to guarantee employees where companies

fail, and Labor is also proposing to abolish the Building Industry Commission

and Task Force which is a proposal to let the CFMEU run riot on building sites

throughout Australia. But why a Baby Care Payment should be partially funded

by a green light to the CFMEU to run riot on Australian building sites, is a

bit of a puzzle. But even allowing for those matters, there is a $350 million

costing error in relation to this policy, and if it were implemented, they would

have to find another $350 million from somewhere.

JOURNALIST:

Can you explain where the hole is please, Treasurer?

TREASURER:

Yes, it is in relation to the sums allegedly raised from the abolition of

the Baby Bonus, Labor has allowed a total of $1.157 billion in relation to that,

the abolition of the Baby Bonus would not raise $1.157, it would raise $347

million short of that on current estimates.

JOURNALIST:

Treasurer, you say that they have pinched an idea from the Government, something

the Government was talking about, isn’t that the difference? The Government

has been talking about it, and the Labor Party has done it?

TREASURER:

No, there was a Work and Family Taskforce discussion paper which talked about

a Baby Care Payment, and that is obviously where they got the name from, but

to actually implement a policy, you need to cost it and fund it. That was the

part the Labor Party had to do, and that is the part they couldn’t do.

They couldn’t fund it and they couldn’t cost it.

JOURNALIST:

Are those estimates on the savings from scrapping the Baby Bonus, are they

available in budget papers, or are they just…

TREASURER:

They are the material that we have in the forward estimates. They are the

forward estimates as they currently stand.

JOURNALIST:

So is the Government going to fund and cost a Baby Care Payment?

TREASURER:

Well, when the Government announces its policies, I can assure you they will

be properly funded and they will be properly paid for. The other thing I want

to say to you is this, that when Labor says it is going to abolish our employee

and redundancy scheme, it is not actually proposing to leave employees short

if a company fails, it is actually proposing an alternate scheme funded with

a 0.1 per cent increase in payroll tax. So, in this policy, there is a tax rise,

a payroll tax rise, there is a saving, by letting the CFMEU run riot on building

sites, but there is no complete funding, because they have got the estimates

wrong in relation to the baby bonus.

JOURNALIST:

Are you concerned that Labor is stealing a march on the Government in terms

of work and family…

TREASURER:

No…

JOURNALIST:

…I mean, this is quite a sizeable announcement…

TREASURER:

…no, I am concerned that again, the Labor Party has not properly costed

or funded its policies.

JOURNALIST:

Is Senator Patterson right when she says that $324 million will be ripped

out of the Medicare safety net to help pay for this plan?

TREASURER:

Yes, well that is another thing that the Labor Party says. It says here, it

has got its table, it says that it would pay for it through the abolition of

the baby bonus, where it has got the figures wrong, it would abolish the maternity

allowance, it would abolish GEERS, right, and introduce an increased payroll

tax. So this is a proposal for an increased payroll tax. Let’s get this

clear, this is, you know, when I said to you that Labor would increased taxes,

if it was elected, I wasn’t making it up. There is an increased payroll

tax, we then let the CFMEU run riot on building sites by abolishing a Building

Industry Commission and Task Force, and then, there is also a proposal, as they

say, to reverse the Government’s Senate deal on Medicare, they are. So,

take away what we have announced, in relation to people being able to claim

medical expenses over certain amounts, let the CFMEU run riot, introduce a new

payroll tax, but you still have not funded it.

JOURNALIST:

Mr Costello, the shortfall in the savings from abolishing the baby bonus,

does that reflect the low take up of the baby bonus, and is it so that Labor

claims that 90 per cent of recipients of the baby bonus only get the $500 minimum?

TREASURER:

Well, there is a guaranteed amount of the baby bonus which is $500, $500 per

annum which everybody gets.

But if you are able to average your tax, you can get more than that, but not

everybody gets it, that is true, that is quite true. Can I also point out to

you, and I think people who do get the baby bonus ought to know this, the baby

bonus goes for five years, Labor’s proposal is to retrospectively cut

some people that are on it. You should know that. If Labor is elected, you will

not get your five year entitlement because they are going to cut it out mid

stream.

JOURNALIST:

Can you guarantee the Government will keep the baby bonus?

TREASURER:

Well, the Government introduced it, but if you have a look at what Labor is

saying, there are people, that are on the baby bonus, who are entitled to five

years, who will be cut out mid stream. At the end of the day…

JOURNALIST:

…Treasurer, isn’t the Government going to rebadge the baby bonus?

TREASURER:

…when the Government announces its policies, I will assure you of this,

they will be properly funded, they won’t involve a new tax, they won’t

involve allowing the CFMEU to run riot on building sites, and they won’t

involved taking away Medicare entitlements from people.

JOURNALIST:

When are you going to…

TREASURER:

Let me say this, panic makes for poor policy. This policy was announced today,

it is not thought through by the Labor Party, it was announced today to try

and take the scrutiny off Mr Latham over national security. And when you panic,

you make poor policy, and that is what Labor has done. Thanks.