TRANSCRIPT

THE HON PETER COSTELLO MP
Treasurer

Interview with John Miller and Ross Davies

4BC Radio

Friday, 23 January 2004

7.40 am (Queensland Time)

 

SUBJECTS: Queensland Election, National Australia Bank, Political Donation,

Australian Dollar, Schools, David Hookes, Interest Rates, First Home Buyers,

Defence Force Golf Courses

JOURNALIST:

Good morning and joining us here in the station is Mr Peter Costello.

TREASURER:

It’s great to be with you.

JOURNALIST:

Good to have you here.

TREASURER:

Good Morning Ross.

JOURNALIST:

You have obviously one purpose of the visit is too lend your support to the

Coalition in the lead-up to the up-coming snap State election, as they say.

You say Labor will lack accountability if it wins a third term?

TREASURER:

Well I have been focusing on economic management and one of the points that

we’ve been making is that the Queensland Government has got a $334 million

bonus from the GST this year.

JOURNALIST:

So it hasn’t been their sound economic management it’s coming from

Federal level?

TREASURER:

Well, $334 million over and above what they would have got under the old financial

arrangement and this has been the basis on which they’ve managed to balance

their budget. It comprises the whole of their cash surplus and my complaint

is this, having received this enormous bonus, $334 million, instead of cutting

taxes which you might have expected they’ve been raising them as well

and that’s not good management.

JOURNALIST:

All right, you must be though however, somewhat a little, shall we say disconcerted

by the apparent state of disarray within the Liberal Party in Queensland. I

mean I have been told that the Liberal Party headquarters is looking a lot like

the bridge of the Titanic, just before it hit the ice berg.

TREASURER:

Well I was down there yesterday and they looked, they didn’t look nearly

as luxurious as the bridge of the Titanic and I was out campaigning yesterday

with Bob Quinn and Sally Hannah who is the Liberal candidate in Clayfield. She

impressed me very much and so I think on the grounds…..

JOURNALIST:

She’s a very good local candidate…..

TREASURER:

She’s a good candidate and I went through shopping centres with her and

talked to some voters and I thought on the ground the campaign was going pretty

well but we’ll see on election day won’t we. They’re facing

a State Government which is entrenched and miles ahead in the polls and they’re

coming off a low base and that’s why I think their right to say it’s

important to restore a bit of the balance.

JOURNALIST:

Just about ten or fifteen minutes ago we were talking about the worsening problems

with the NAB. You have been outspoken about that in the past, it just seems

to get worse and worse doesn’t it?

TREASURER:

Well …

JOURNALIST:

…thirty somethings wondering around with buckets and buckets and buckets

of …

TREASURER:

Well we’ve got the prudential regulator APRA the Australian Prudential

Regulatory Authority which is looking at this from a prudential point of view,

that is how does it effect the bank’s asset base and capitalisation and

prudential. We have now heard over night that the securities in ASIC will be

looking at it from a disclosure point of view. That is were they disclosing

properly to the market and in addition to that of course you’ve the bank

looking at it from a point of view of “were these guys acting within their

responsibilities and were they being probably supervised” and I think

that’s going to be the critical question here. Because a trader normally

has limits and those limits are there so that people who are removed from it

can decide whether or not they’re getting to exposed and the question

is whether those limits were being observed.

JOURNALIST:

Mark Latham, back to politics for a moment, will announce next week that Labour

will not accept donations from tobacco company’s. Are you doing the same

thing?

TREASURER:

Well both parties have traditionally taken donations from business, including

companies like Phillip Morris that are partly tobacco companies partly do other

things as well…..

JOURNALIST:

…Vegemite for example…

TREASURER:

Vegemite, yes I think they do, do Vegemite. They’re diversifying into

food and we’re not influenced by the fact of course, that we take those

donations. But we have traditionally received them, we declare them, everybody

knows about them.

JOURNALIST:

$40,000 or so over the last couple of years…

TREASURER:

…absolutely, its on a public register if anybody thinks that this has

got them unfair treatment its all above board and its all out there. I will

make the point that the current government and presumably any government that

Mr Latham will be part of, if he were part of a government, isn’t too

proud to take the taxes from the tobacco companies. They do pay a lot of tax

on their product so, we’re not to proud to take taxes from them.

JOURNALIST:

Back to the question though, you would make it a policy that you would no longer

take donations from tobacco…

TREASURER:

…No, no we, we, we have taken them in the past and we have disclosed

it and as far as I am aware we not proposing to change that.

JOURNALIST:

Right, onto another subject again the Australian dollar, now if your going

overseas, great, but a major article in the Bulletin this week by Max Walsh

saying that the business community is getting very, very concerned about the,

the Aussie dollar which, I don’t know what it’s pushing today, but

heading up around the 80c mark.

TREASURER:

Well, the Australian dollar appreciated 40 per cent since the beginning of

2003, that’s in the last twelve months or so. It was the largest appreciation

of any currency in the world and you can remember the days when we were back

in the late 50’s at point we were even below 50c and as you now say we

up …

JOURNALIST:

…I know I went overseas at that time, its just great the Pacific peso

they were calling it.

TREASURER:

Well that’s the point you see. When tourists went overseas everything

was expensive. One of the consequences of that is fewer people went overseas,

you see and that was actually good for the economy. With the dollar stronger

now you’re going to get cheaper prices overseas, your dollar will go further

as it were, and more people might go overseas. So as it turns out in affecting

things like tourism or things we send overseas it does actually make it harder.

So it makes it harder for our exporters, our farmers, and I think this has been

a bit of a difficulty for them in the last couple of months and I acknowledge

that, but until you see a change of sentiment in relation to the United States

then the Greenback is weak and conversely the Australian dollar will be strong

again.

JOURNALIST:

…And there’s really…

TREASURER:

…consumers…

JOURNALIST:

…not much we can do about it is there?

TREASURER:

…no because a large part of it. Look part of it is the fact that people

have confidence in the Australian economy, that is one factor but an even bigger

factor in the movement of our currency over the last couple of years has been

the fact that the US dollar is weak. And when you see the Australian dollar

going up against the US dollar, part of the explanation is the US dollar is

going down. If your with me…

JOURNALIST:

Yes

TREASURER:

….there are two things that can move and if the US dollar moves down we move

up.

JOURNALIST:

The consumer benefits though, you can pick up a plasma screen TV at the moment

and electrical goods, for the consumer are way, way down in price.

TREASURER:

…Yes well imports are down see because our dollar buys cheaper, it makes

imported prices cheaper it buys more foreign currency so the consumer does benefits

from cheaper imports but from an economic point of view …

JOURNALIST:

…not good for Australia…

TREASURER:

…from an economic …more imports and less exports is not what we

want.

JOURNALIST:

…No, no

TREASURER:

…If you know what I mean and we prefer to have more exports and less imports

so the dollar does have that effect it does, it does, deliver some great benefits

to the consumer but from an economic point of view we would rather it be going

the other way.

JOURNALIST:

All right, in the interest of more dollars for our proprietors we might take

a short break, have a breather for a second and then be back with the Treasurer.

JOURNALIST:

Talking with Peter Costello of course. Mr Costello we had Jenny Macklin in

here last week and of course she has been hugely critical of the large amounts

of money going to elite schools and this week we have had both John Howard and

John Anderson attacking public schools. Is this a stance you share and why is

it that the elite schools do get so much money and there seems to be a lack

for public and independent schools?

TREASURER:

Well let me start off by saying obviously the Government schools are funded

by the tax payer a great deal more than independent schools. We got to start

off my making that point very, very clear. Those independent schools that do

receive Government funding receive them in categories with the richest or the

most elite receiving the least, they don’t all get the same amount. They

are put into categories and you know, the, the schools that have parents that

are from, this is the way its done, suburbs that have the highest incomes receive

the least. So even within the independent school formula, the elites are getting

a much smaller proportion than other independent schools. Now from a Government

point of view, can I make this point it actually pays to have both systems because

it is much cheaper for the Government, for the tax payer, to educate somebody

in an independent school. Government subsidy is much less and the parents pick

up a larger proportion. If all of those kids in independent schools went back

into the Government system tomorrow tax payers would be paying a lot more than

they are today. Its like if, if you can give say 20% of what it cost for a government

school and a kid goes to an independent school and the parents pay the remaining

80% their actually, the taxpayer is much better off. Having said that I think

that there are good Government schools, I think there are good independent schools.

My point is parents should have choice, parents should be able to decide where

they want to send their kids. If they can get a good Government school that

saves them a lot of money, if they believe that an independent school would

be better for their child and their able to pay for the money, then that should

be their choice as well.

JOURNALIST:

Fair enough. Now lets move onto your statements in relation to the tragic death

of David Hookes and the huge public outcry that has been occurring on this and

other radio stations in our network over the last, last week or so about a need

for a shake up in the security industry and these so called crowd controllers.

TREASURER:

Well look this is an absolute tragedy. David Hookes is somebody who has captured

the imagination of Australians, cricket lovers. He was very well known, as you

know as a radio commentator. I have met him on numbers of occasions and dealt

with him, he was a terrific guy and he was coaching Victoria and you just don’t

expect somebody to die in a senseless act of violence like that. The tragedy

probably is that there are other people who weren’t well known who had

died in similar accidents.

JOURNALIST:

…it happens everyday of the week, not people necessarily dying but being

bashed…

TREASURER:

…Every weekend, bashed outside pubs or bashed outside night clubs. And

maybe it just took somebody as famous as David Hookes to focus our attention

on this problem and makes you think of all those mothers and fathers and brothers

and sisters who’ve had somebody bashed in this situation. Their loss would

be no less. And one of the things that really worries parents and members of

the public is your bouncers are supposed to be there to stop fights and what

happens if a bouncer far from stopping it adds to it, what happens then? And

who is responsible, well of course I think the venues that employ the security

have got to be taking some responsibility in all of this and I said on radio

recently that if a venue has too many incidents maybe they should take a holiday

on their license for a while. And you have one bashing and it might be an accident

you have two bashings and it might be a bad crowd or three bashings within a

particular time maybe its time for a holiday on your license. Until such time

as the licensee and their security can get on top of the situation.

JOURNALIST:

I think it’s high time that the licensing was looked at in general.

My father used to say that if you can’t have all the fun you need by midnight

its time to go home. …

TREASURER:

Yes…

JOURNALIST:

You’ve too many venues open till 5 am. All of these violent bashings

occur somewhere between, or most of them occur between midnight and 4 or 5 in

the morning. I just really think Australia-wide that pubs and clubs have got

to really look at closing their doors at midnight.

TREASURER:

Well I don’t know about time limits but you do pick up when you watch

the news that there seems to be some clubs where there is regular violence right,

and I think one of the reasons for that is that some people know that if you

want a bit of action this is the place to go. I think there are some gangs that

regularly meet each other outside these clubs and if a club is so unfortunate

that its had numbers of bashings maybe we ought to just remove that venue for

a while. You know, bear this in mind, the clubs and the pubs are in the business

of providing entertainment and selling liquor and that’s fair enough and

they try to make a business out of it. But if in the course of that their product

fuels people or their venue fuels people to assault then it might be time to

have a bit of a holiday. Now, I put that forward. I hope, I see the Victorian

Government where the Hookes incident happened is now going to look at its security

industry in a much tighter way and I hope some good comes out of this because

you wouldn’t want another situation like this to occur would you…

JOURNALIST:

…Absolutely, no you wouldn’t although we had a very, very violent

situations occurring in Ipswich in the last couple of days as well. Similar,

similar sort of things no one dead fortunately.

You were actually bashed while you were at Uni weren’t you?

TREASURER:

Yes, yes but that wasn’t serious like this…

JOURNALIST:

All right, lets looks at interest rates. As we are getting out of time now.

Where do you see the future of interest rates?

TREASURER:

Well the Australian economy is growing pretty strongly, it’s growing

3 to 4% we think. The dollar is a bit of a dampener as I said earlier that’s

a bit of a dampener on our economic growth out there but our interest rates,

John are still pretty low. Home mortgage interest rate is 7% or a touch over

7% that’s low you and I can remember when it was 17%.

JOURNALIST:

Too right, who could forget it.

TREASURER:

Who could forget it. That’s when I started getting interested in economic

policy when I was paying 17 % under Keating. You can remember those days under

Keating. So its still pretty low, it is important I think that we try and keep

our interest rates as low as possible by running good disciplined budget policy

and we’ll have another surplus budget this year. So I think that it’s

important that we get the economic fundamentals right cause it’s important

for job creation in the future

JOURNALIST:

Certainly, I mean it is in the lap of the gods in the Reserve Bank, but do

you not see any exponential increases in the interest rates in the foreseeable

future?

TREASURER:

I think the bank has made the point that the Australian economy has grown and

maybe the world economy is picking up you know John. The Americans have been

through a recession and that has made the whole world economy weak, but if it

picks up that has given us a bit more strength. The bank responded to that last

year but I think the important thing for the future is if we keep our eye on

inflation, we keep inflation under control and consistent with our monetary

policy target then that will be a key indicator in relation to …

JOURNALIST:

…its getter harder and harder to own a home for young people particularly

in NSW with prices going sky high. Any plans to tamper with the first home buyers

grant or leave it as it is or perhaps supply a little more for the first home

buyers?

TREASURER:

Well, its in interesting one because we introduced that $7000 first home buyers

grant to help your first own buyer into the market and it has helped thousands,

tens of thousands probably hundreds of thousands of people. It is an interesting

question though Ross, what effect it has on price. There is some evidence that

by giving people a grant it may actually put up prices. We have asked the Productivity

Commission to look at this. You could get into a situation if you made it larger,

prices just went up because people have got more money to spend, prices could

go up. We have asked the Productivity Commission to have a look at that. But

I do think actually, that the housing market is coming off a bit. We had some

figures out during the week on lending finance we had some figures out previously

on finance approvals and my suspicion is that a bit of the heat is coming out

of the market. Auction clearance rates are in most capital cities going below

50%. There are always two perspective on this, if you own a home you want prices

to be high, if you don’t you want them to be low. But I think it might

be swinging a bit back towards the buyer in the next year or so.

JOURNALIST:

Mr Costello we have got about 30 seconds left but speaking of coming out of

left field, coming out of 22 left fields, apparently the defence forces own

22 golf courses, is that necessary?

TREASURER:

I am not sure that it’s 22 but it’s certainly a lot and I’ve

been looking and talking to the defence force about this for a very long period

of time. Some of the military land you can’t do any thing else.

JOURNALIST:

…Canungra, there is one there…

TREASURER:

Canungra, there is one in Canberra and they open it up to the public. There

is one out at Duntroon. But I wouldn’t call it core business, no I wouldn’t.

JOURNALIST:

Alright Mr Costello thanks for coming in this morning, enjoy your stay in Queensland

we look forward to seeing you when you get on your own campaign trail in the

not too far distance future.

TREASURER:

It will be a great pleasure to be back with you fellows…

JOURNALIST:

Thanks Mr Costello

TREASURER:

Thanks.