Interview with Tracey Grimshaw

Today Show

Wednesday, 11 May 2005
7.07 am

SUBJECTS: Budget

GRIMSHAW:

Well the man in the hot seat, the Treasurer, joins us as he does this time

every year now live from Canberra. Good morning Mr Costello.

TREASURER:

Good morning Tracey, good to be with you.

GRIMSHAW:

Good to have you. Your tax cuts have had a fairly positive reception understandably,

but what is fair about a big surplus Budget that takes up to $40 a week away

from the disabled and single mums and gives it to people earning $95,000 a year

and more?

TREASURER:

Well of course nothing is taken away from single mums. No single mother who

is currently on Parenting Pension will lose it. So, nothing is taken away from

people in relation to their existing entitlements. What we have said is commencing

in July of 2006 when people apply for benefits they will do so on a new understanding

which is this, that you can be on the Parenting Payment or the Parenting Pension

until your youngest child turns six, and when your youngest child turns six

and goes off to school you have the opportunity to look for part-time work and

you will have an obligation to look for part-time work. There is a lot of single

mums that work full time. What we are saying is we would like to encourage single

mums, and other mums incidentally, to work part-time.

GRIMSHAW:

Childcare is expensive and it gobbles up most of working parents’ salaries.

What if those single mums can’t get work during school hours. Surely the

cost of childcare will gobble up whatever money they earn plus they are $40

per week worse off.

TREASURER:

Well Tracey that is why we have introduced 84,000 new outside school hours

childcare places, more long day childcare and that is why we have also introduced…

GRIMSHAW:

But that doesn’t address the cost of it.

TREASURER:

…oh yes, well it is also why we introduced a 30 per cent rebate, a tax

rebate, in relation to childcare. That has never existed before. So you can

now get a childcare benefit and if that doesn’t cover the full cost of

childcare you can get a 30 per cent rebate on your tax. So there is this huge

array of services now which are available for people that want to get back into

the workforce and Tracey, getting into the workforce is not a bad thing, that

is a good thing. It actually helps people. They get higher income, they participate

in the mainstream and of course, from other taxpayers’ point of view,

the more people that we get into the workforce the lower taxes are going to

be overall. This is actually something which I think will be welcomed by parents

that want to return to work. Our unemployment rate is the lowest in 28 years

so now there is an opportunity to get more people into the workforce.

GRIMSHAW:

Do you believe that a significant number of welfare recipients in this country

are rorting the system or, at the very least, exploiting it when they could

be working?

TREASURER:

Well, the number of people on Disability Pension in Australia today is 6.5

per cent of the workforce. Do you think 6.5 per cent of the Australian workforce

is disabled and incapable of work? Obviously there are people that are disabled

and incapable of work but do you think there is 6.5 per cent? Nobody believes

that 6.5 per cent of Australians are disabled and it looks as if some people

have gone on Disability Pension rather than re-enter the workforce and we want

to encourage those people back into the workforce too.

GRIMSHAW:

Alright, well given that many of these new changes won’t affect existing

recipients, what you’re saying is those who are currently exploiting the

system if you like will be allowed to continue aren’t you?

TREASURER:

Well we are saying that everybody who has got a current payment is guaranteed

and that is to counter of the argument which you put to me in the opening question.

We knew the media would say well you are throwing people off benefits so we

said alright those that are on benefits are quarantined. This won’t affect

them, but we will tighten the rules in the future so, that we can get more people

into work.

GRIMSHAW:

You are creating two tiers then of those who are on benefits aren’t you?

TREASURER:

Well you are saying that everybody that has got a benefit is entitled to keep

it and everyboday who is genuinely disabled in the future will be entitled to

get that benefit too. But if you are able bodied, if you are able to work, in

the future you will be encouraged to work.

GRIMSHAW:

If, as economists predict, these wide tax cuts will lead to higher interest

rates, those workers who are on $50,000 a year are not really going to be thanking

you for their $6 a week tax cut, will they?

TREASURER:

Well, we have managed to cut tax and strengthen the Budget bottom line and

the important thing is strengthening the Budget bottom line so there is nothing

in this Budget that puts pressure in relation to interest rates. Australia has

practically the strongest bottom line in the world. You know, we are not America

or Britain which have big Budget deficits. We have a Budget surplus. The Government

is saving money overall. The Government is not in financial markets borrowing

and driving up interest rates. The Government is depositing into financial markets

and, with the Future Fund that we will be building up over the years, we will

be funding the future of Australia for 20 and 30 and 40 years time.

GRIMSHAW:

This is your tenth Budget and many people are wondering whether it will be

your last. Can you now address that question this morning? You have presented

the Budget, you can turn your mind to other matters.

TREASURER:

Well when I presented the Budget the work has just begun. Today we have to

explain the Budget and then we have to enact the Budget. We have got the Labour

Party opposing tax cuts, can you believe it? Opposing the tax cuts so that we

have to go back into the Parliament and we have to try and argue our case and

we have to legislate it. So, this Budget will not be over for several months,

Tracey.

GRIMSHAW:

If the Prime Minister doesn’t relinquish the Lodge to you next year will

you stay on as Treasurer?

TREASURER:

I am not going into any speculation at all because I think what the people

of Australia are interested in today Tracey, is they are interested in what

their prospects are of getting a job, what their new tax arrangements are going

to be, how we are going to fund the future, what we are going to do with the

health system. That is my job, and we haven’t had the chance yet to talk

about the tax cuts but, can I say to you, we are getting an internationally

competitive tax system in Australia as well out of this Budget. It means for

over 80 per cent of Australians the highest rate of income tax which they will

be facing will be 30 cents or less. Now that will be a great incentive for middle

income earners in Australia.

GRIMSHAW:

I understand that you are selling the Budget this morning, but you would also

understand that there is a sub-plot and that is that the current leadership

‘tussle’, if you like, over the Prime Ministership. Cabinet seems

to be closing ranks behind the Prime Minister’s right to stay and fed

by some opinion polls that must give you some cause for dismay. Is this the

sort of Budget that might turn around your popularity as preferred Prime Minister?

TREASURER:

There is no sub-plot here, I have just brought down a $200 billion Budget Tracey.

It does not do itself. It is $200 billion, it takes an enormous amount of work,

it will take months to enact. It will give Australia a new taxation system,

it will revolutionise the way people work and it will fund the future. That

is what we have got to make sure that we get in place in this country, if we

don’t our opportunities in 10 and 20 and 30 and 40 years will not be what

they should be.

GRIMSHAW:

So you’re not going to answer that question?

TREASURER:

I have answered the question that what we are doing in this Budget is what

is right for Australia. That is the absolute answer, that is what we are focussing

on here and if we get an internationally competitive taxation system and if

we get more people in work and keep unemployment at the lowest level in 28 years

then Australia will have much better opportunities.

GRIMSHAW:

Treasurer thank you for your time this morning.

TREASURER:

Thank you very much Tracey.