TRANSCRIPT

of

THE HON PETER COSTELLO MP
Treasurer

Interview with Alexandra Kirk

ABC AM

Wednesday, 11 February 2004

8.00 am

 

SUBJECTS: Free Trade Agreement, Sugar, MPs Superannuation

KIRK:

Good morning Mr Costello.

TREASURER:

Good morning Alex.

KIRK:

There is now some debate about the figures. Your fellow Ministers Robert Hill

and Ian MacDonald were in the Senate just yesterday, saying that it was still

worth $4 billion a year to Australia, is it?

TREASURER:

Well, Alex, I have said it is overwhelmingly in the national interest and

will be positive for Australia. Now, I listened to the introduction, and I think

the main point that was being made there, is, that a benefit of $2 billion US

on an exchange rate of 50 cents, is different to a benefit of $2 billion US

on an exchange rate of 78 cents…

KIRK:

Is that correct?

TREASURER:

…and of course these things move, these exchange rates move every day

and to think that you can adjust economic benefits over a 10 or 20 year period

on exchange rate assumptions, is looking for a false precision. Alex, what do

you think the exchange rate will be in five years time?

KIRK:

So, how much do you think the deal is worth now?

TREASURER:

Nobody can tell you what the exchange rate will be in 5 years time, you can’t

even tell what it will be in five months time, let alone five years time. But

I would make this point. We are gaining access, enhanced access to a market

of 300 million people. That market is gaining enhanced access to our market

of 20 million people. The bigger benefits are going to go to the people who

are getting the access to the larger market. This is why it is in Australia’s

interests. We take a country of 20 million people, and suddenly we get enhanced

access for our goods and services into a market of 300…

KIRK:

But how much is that…

TREASURER:

…that is where the benefit comes.

KIRK:

…but how much is that enhanced access worth, I mean…

TREASURER:

Well, as I said to you before, it is a false precision to make exchange rate

assumptions for five months or five years, and I am putting…

KIRK:

But you had the Ministers in the Senate.

TREASURER:

…I am not putting specific, A dollar or US dollar benefits on it. What

I am telling you…

KIRK:

But your Ministers are, aren’t they…

TREASURER:

…well, what I am telling you is, this is in Australia’s national

interest, because we get access to a market of 300 million people and that will

enhance our trade and our economy.

KIRK:

So, will you pull your Ministers into line? Will they no longer say that this

deal is worth $4 billion a year?

TREASURER:

Well, Alex a valiant try. But as I said to you, this is overwhelmingly in

Australia’s interests, and the question is, will…

KIRK:

But shouldn’t we know how much it is worth?

TREASURER:

…no the question is, will we take it? What, do you think that Labor is

right to reject a dealt which is in Australia’s interests because on various

exchange rate assumptions the benefit only might be $2 or $3 or $5 or $6 billion?

If there is a benefit, we should take it, shouldn’t we? Why would we sit

back as one of the few developed countries in the world that has got a free

trade agreement with the United States, maybe Canada, but other than Canada,

us. And having negotiated that, why would we walk away? Let me tell you, countries

around the world are lining up to get access to the largest, richest market

in the world, and if we can get it, we ought to take it.

KIRK:

If we could look to our sugar, specifically the Prime Minister is pledging

another package of assistance to sugar farmers, how much are you planning to

help out sugar farmers?

TREASURER:

Well, can I go back a step and say that the problems in the sugar industry are not caused by this Free Trade Agreement. I think we have got to be very clear about that. The problems in the sugar industry existed before Monday, and they existed after Monday. And the Free Trade Agreement did not make the sugar industry worse. Now, people will say it did not make it better, but it did not make it worse.

KIRK:

Nevertheless, you are still planning to help them out?

TREASURER:

Nevertheless, there is in the sugar industry this difficulty, that farmers that are producing sugar, are not able at current prices to operate on a long term profitable basis. Now, we think that re-structuring is necessary in the sugar industry, to help people get economies of scale, maybe help people get into alternative crops, maybe help people look at alternative occupations.

And we put in place a $120 million package, and we will look again at re-structuring assistance for the sugar industry.

KIRK:

Now, the National Party, National Party sources are telling me that it has to be big money to help the sugar industry. How much?

TREASURER:

Well, I think that there are about 6,600 farmers, something of that order that are affected, and the package which we have already announced, $120 million, for 6,600, so you have got to take into account all of the packages, I am not putting figures on this, but what I am saying is that it is important to get re-structuring. I don’t think, if the price is no good, and there is no prospect in the short term, or even the medium term of the price becoming better, there is no point just continuing something which you can’t get a good price for, without re-structuring, looking at alternatives and helping people with assistance in other areas.

KIRK:

And when will you start spending the money, before the election?

TREASURER:

Well, I don’t know when the election will be, but I can tell you this, we are looking at this re-structuring already.

KIRK:

So, it is coming soon?

TREASURER:

Well, you look at it, you talk to the industry, you have got to sit down, you have got to work out what is affordable, you have got to bear in mind that this is taxpayers’ money, so it has to be spent in an efficient way. All of that takes a bit of time.

KIRK:

Now, Mark Latham yesterday pledged to take a much smaller superannuation payout when he leaves politics. Will you do the same?

TREASURER:

Well, Mark Latham said what he would do as Prime Minister. But it was a curious announcement. He didn’t say what he would do as Leader of the Opposition. I point that out. He was going to knock the Prime Minister’s superannuation entitlement to that of a Cabinet Minister but he, today, as Leader of the Opposition, gets more than a Cabinet Minister. So it wasn’t quite…

KIRK:

Are you…

TREASURER:

…sure what pledge he was making yesterday. With Mr Latham it always pays to read the fine print, I have discovered.

KIRK:

How can you defend a super scheme that is seven times more generous than the average Australian’s? Do you agree that it is out of whack?

TREASURER:

I think for people that are running the country, overall the package compared to the private sector is quite restrained actually, compared to the private sector.

KIRK:

But what about comparing it to the average Australian?

TREASURER:

Well, let me give an example. In my portfolio, my Secretary, who works for me, Treasury Secretary, gets paid double what I get paid. The Deputy Secretaries get the same or more, and they, by the standards of their private sector colleagues. You take a Treasury Secretary who would be paid, getting paid say about a twentieth of a bank chief executive. In the public sector compared to the private sector of course they are not paid nearly as much, and I think in many respects they do a more important job.

KIRK:

So you wouldn’t, you would say that the current super scheme shouldn’t be changed?

TREASURER:

No, I would ask this question. By changing the super scheme do you think you will get better MPs? I am not sure that it will give you better MPs. I think we ought to do things that will get us better MPs in Australia. But I don’t think this is one of the things that will do it. Now, can I move on to judges? Because this is a very important point. Mr Latham says he is going to cut superannuation for Federal Judges but not State Judges. What this means is that the good people will not take Federal Court appointments. They will take State Court appointments. I will make another point. Is there one Labor Premier that came out yesterday and said he would forgo Premiers superannuation? Because under the Latham plan, you know what this means, your State MPs are going to be on much more generous superannuation than your Federal MPs. Will that get the best people into Federal politics? I don’t think so. And there was an ominous silence from the State capitals yesterday.

KIRK:

Peter Costello, thank you.

TREASURER:

Thank you.