Interview with Neil Mitchell

3AW

Monday, 19 November 2007

8. 35 am

SUBJECTS: Unions, election, petrol prices, US sub-prime fallout, economic management, risk of wall-to-wall Labor, climate change, AFL drugs policy, generational change

MITCHELL:

Peter Costello good morning.

TREASURER:

Good morning Neil, good to be with you.

MITCHELL:

Well only a couple of days to go, this is one of your latest ads, in fact 3AW management refused to play this because they thought it was too offensive, takes after the unions.

[plays ad]

MITCHELL:

Pretty negative stuff, isn’t it? Do you stand by it?

TREASURER:

Oh yes. The voice is Joe McDonald, the CFMEU official in Western Australia who said quite openly that once Howard goes they are coming back.

MITCHELL:

Does he represent the teachers union?

TREASURER:

Well, I will get to the teachers in a moment because you do know of course that the teachers unions are threatening strikes during the VCE exams. . .

MITCHELL:

Yes but you are in power, not Labor.

TREASURER:

Yes but, I am just saying that there is a lot of militancy that is starting to gather.

MITCHELL:

So where’s the petrol strike coming from?

TREASURER:

Well we used to have petrol strikes…

MITCHELL:

Of course we did, where’s the new one coming from (inaudible).

TREASURER:

…and the point that it is making…

MITCHELL:

What about the airline industry, where’s that one?

TREASURER:

Well, we used to have airline strikes too, you will recall.

MITCHELL:

Yes but…

TREASURER:

But let me…

MITCHELL:

The biggest airline strike was under a Labor Government, because Hawke pulled on the unions.

TREASURER:

Well I think what you will find is that you always have more industrial disputation under a Labor Government and I think that that can be objectively shown by the fact that we now have the lowest level of disputation ever in Australian history under this Government. We have had the lowest number of days lost in strikes and stoppages since they started recording in 1913.

MITCHELL:

How will a Federal Labor Government affect a train strike?

TREASURER:

Well let me say that what we have found is that because the unions have such control in relation to the Labor Party – they are members of the Labor Party, they fund the Labor Party – the unions generally decide that under a Labor Government they can go for their real agenda. And that is why you get more industrial disputation under a Labor Government. You are seeing it in Victoria, we are seeing industrial disputes rise as against the State Labor Government. We saw it with the nurses, we are seeing it with the teachers under a State Labor Government. Now, remember these are state employees, they are not striking against the Howard…

MITCHELL:

Well, not the airline industry, not in the petrol industry. They are not state employees, that is your system.

TREASURER:

Well let me say, if you go back to the previous Labor Government, the Hawke Labor Government, we did have airline strikes.

MITCHELL:

Okay. So why are we going to have a strike in the petrol industry? Where has that come from?

TREASURER:

Well let me say Neil, industrial disputation is the lowest that it has been since 1913. We have managed a system of industrial relations which have quietened the building sites, everybody in Australia knows that. And under a Labor Government the risk of disputation increasing is very great and if you go back and you compare the record of previous Labor governments, it is much higher than it is under this Government.

MITCHELL:

But you are specifically saying the petrol industry and the airline industry.

TREASURER:

Well what it is saying is remember the strikes that we used to have under Labor. Remember them.

MITCHELL:

Okay, and you are saying there will be strikes (inaudible).

TREASURER:

Remember what it was like. It wasn’t always like this.

MITCHELL:

Isn’t this the whole problem with the campaign, that it has been too negative for the Government?

TREASURER:

Well let me say, every time I turn on the radio I hear ‘Whinging Wendy’ out on behalf of Mr Rudd…

MITCHELL:

Yes but, answer what you’re responsible for.

TREASURER:

Let’s get real about this. In politics there are positive policies, and I think we have had all of the positive policies in this campaign. There is also advertising that goes on. But let me talk about the policy that we are putting before the Australian people…

MITCHELL:

Not just yet, because I want to stay with this point, that the negativity of the campaign…

TREASURER:

As long as you let me get on to the positives…

MITCHELL:

But even your own people are starting to bicker about the sort of campaign that is being run, that they are starting to bicker amongst themselves. They look defeated. Do you seriously believe you can still win?

TREASURER:

I think this is very much an open election. I think either party can win this election on Saturday. It depends very much on this last week. The polls say at the moment that Rudd is in front but I think as a consequence of that there is going to be a lot of scrutiny on him this week. And I find when you put Mr Rudd under scrutiny he is very shallow. He is good on the clichés but he doesn’t have a strong grip of the economy and I think as the week goes on, if he gets put under scrutiny people will start to worry about his economic capacity and his team.

MITCHELL:

Is it right Malcolm Turnbull has written off the Government?

TREASURER:

I don’t think so, no.

MITCHELL:

Have you talked to him about that?

TREASURER:

No, I haven’t.

MITCHELL:

Will you?

TREASURER:

Not really, because to me, this is not the main issue. The main issue is the choice that the Australian people are going to make on Saturday. Let’s remember, we have got what, five, six days until an election. The election will determine the country and I want to do everything I can to inform people of the choice so that they make an informed choice. I want to tell them about our plans.

MITCHELL:

Has he performed well, Malcolm Turnbull?

TREASURER:

I think Malcolm has been a very good Environment Minister, yes.

MITCHELL:

What would he be in your Government?

TREASURER:

I think that is getting a bit ahead of ourselves. We have got an election on Saturday Neil, and the important thing is the choice that people make. I want to see this economy strong. I don’t think Mr Rudd can do that. I think the economy will go backwards if Rudd and Swan and Gillard are running it. And I just want to explain to the Australian people the policy that we have to take Australia forward, create more jobs, make businesses stronger. And if we get through this election, then I will think about the 2010 election.

MITCHELL:

How soon?

TREASURER:

I have got plenty of time to think about that.

MITCHELL:

How soon would you be Prime Minister?

TREASURER:

Look, John Howard has said that well into the next term, before the 2010 election, which is the one after this one, there would be a transition.

MITCHELL:

It would be pretty urgent though, wouldn’t it? Because, I mean, the election campaign has indicated with the ‘me too-ism’, has indicated that there is probably a need for new leadership?

TREASURER:

Well I don’t think there is a need for Gillard and Swan and Rudd.

MITCHELL:

Okay, what does it mean for Costello?

TREASURER:

Well look, I think,Neil, can I say this? There are a lot of risks out there in the international economy at the moment. Can I tell you, oil is now $100 a barrel. In the late 1990s, do you know what it was? It was $11 a barrel. When I was first Treasurer, it was $11 a barrel.

MITCHELL:

Will you cut petrol tax?

TREASURER:

It is now ten times that. We have got the fallout from the US sub-prime going on and analyst reports coming out all of the time about what that is going to do to the US economy. The US economy is heading down, everybody knows that. And you have got these huge management risks going on. Now, who is going to manage these risks on Saturday night? Mr Rudd says he is going to go off on the international stage so what, we are going to have Gillard and Swan managing the Australian economy? I don’t think so. I don’t think that is going to be good for people’s jobs and their businesses and their mortgages.

MITCHELL:

You talk about petrol prices, will you definitely not offer anything on petrol prices? You will not cut tax on petrol before this election?

TREASURER:

Well, we will maintain the position which is this: 38 cents a litre, no indexation. So in real terms, that is after allowing for inflation, it does actually decline.

MITCHELL:

So would you maintain…

TREASURER:

Fourth lowest in the developed world, by the way.

MITCHELL:

Will you maintain the tax on a tax? Is there a chance still, at the last minute you could remove that?

TREASURER:

Our policy, which is well known, will stand.

MITCHELL:

Okay. So no change on petrol?

TREASURER:

No.

MITCHELL:

Okay. The new report on sub-prime released overnight, says it is, impact is far greater than first thought. What will the impact be on Australia?

TREASURER:

Well this is the Goldman Sachs report saying that, in Goldman Sachs’ view, this is going to lead to US banks withdrawing finance. Huge sums of money. This is turn will lead to pressure on interest rates because if you withdraw lending, the amount of lending that still goes on is at higher prices as people compete for it. And they are saying that this could lead to a downturn in the world’s largest economy, the United States. Now how will that affect Australia? In a couple of ways. First, some of the our own financial institutions will lose money, that will affect them. Secondly, some of our financial institutions that borrow money in the United States will have to pay more to get it and that will affect what they on-lend it at. And thirdly of course, as the US economy turns down, exchange rates all around the world will start moving and it will affect competitive positions of countries, including Australia. Now this is a very, very big risk out in the international economy at the moment. And believe me, Australia will not be immune. It will take a lot of management to get us through this.

MITCHELL:

Are you saying it will force interest rates up?

TREASURER:

Well you see the banks in Australia are already saying they are paying more to borrow in the United States. And they would like to pass on those higher interest rates to Australian borrowers. Now I have made this point: the banks have no grounds whatsoever to increase home mortgage interest rates because they can fund their home mortgage interest rates out of their Australian deposit book. But what the banks will do, is they will start increasing rates to business borrowers, they will not offer discounts as they have previously been doing. And this will take quite a deal of management, believe me. This will have effects in the Australian market, it will have effects on the Australian economy. Kevin Rudd just says, ‘oh well, you know, the economy runs itself, don’t worry about that, it doesn’t really matter who is in government, the economy’s strong. ’It will take a lot of management.

MITCHELL:

In your view, if Labor wins, are we headed for recession or not?

TREASURER:

In my view, if Labor wins, without the policy and without the economic experience, you will see inflation take off and if you see inflation take off, interest rates will rise as they always have under previous Labor governments.

MITCHELL:

You have used the word recession in the past, do you stand by that?

TREASURER:

I have used the word in relation to the United States and I will use it again now as I have in the past:- periods of strong growth in Australia in the past have always ended in inflation, high interest rates which bring on a downturn.

MITCHELL:

So is Australia under Labor headed for recession?

TREASURER:

That is what Keating did when he put the country into recession in 1990. Remember he said we had to have a recession: ‘this is the recession we had to have’, said Keating. If inflation takes off and interest rates take off our economy will turn down, as night follows day.

MITCHELL:

Recession or not?

TREASURER:

Well Neil, I am not going to say how far it will turn down but that is the risk.

MITCHELL:

We will take a break, come back with callers and more questions for Treasurer, Peter Costello.

[ad break]

MITCHELL:

The Treasurer is with me. I will take quick calls, Steven go ahead please.

CALLER:

Yes, good morning boys. Mr Costello, you are telling us now that we have to worry about what happens overseas as far as the economy goes, but you told us two years ago that you had fire-proofed the economy.

TREASURER:

Well the Australian economy has grown continuously for the period that I have been Treasurer, which is the longest continuous period of economic growth. But of course, we have had challenges during that period. We had the Asian financial crisis, we have had a one in 100 year drought, we had the risk of SARS and terrorism, but the economy managed to continue to grow. And I think under experienced economic management and good policy, we can continue to grow. But I was making the point, if the government changes on Saturday, you won’t have experienced management and I don’t think you will have good policy.

MITCHELL:

So is it fire-proof under you still?

TREASURER:

Well I think by the reason of the record and policy, you can judge me and I think by reason of the experience and the policy, we will continue to grow the Australian economy. But I can’t speak for Rudd and Gillard and Swan.

MITCHELL:

So all of those awful things you have said will happen because of the sub-prime crisis…

TREASURER:

Yes, they are challenges.

MITCHELL:

Will they happen under you? Will they still flow through to Australia under your (inaudible)?

TREASURER:

Well yes, they will have effects, of course they will. But you will have an experienced team with the right policy to manage them, and that is the difference.

MITCHELL:

All right, Chris, go ahead.

CALLER:

G’day, how you going, Neil?

MITCHELL:

Okay.

CALLER:

Hello Neil.

MITCHELL:

Yep, go ahead, Chris.

CALLER:

Sorry, Neil, whilst you have got Peter, Peter you (inaudible) I have come from a conservative family. You give the unions a belting, you forget a lot of us of who are conservative are members of trade unions and you say under your stewardship, you have done a good job. What about the AWB, what about the big waste with all the helicopters that you bought mistakenly, and you let people like Dick Pratt get off free?

TREASURER:

Well I support the right of people to freely join unions if they want to. I don’t think anyone should be compelled to join them. I am against compulsory unionism. But people who freely join them should be entitled to do so. Well in relation, and I don’t want to go through court cases but in relation to the court case you mentioned, I think it was a $36 million fine, I wouldn’t call that free.

MITCHELL:

Do you think Dick Pratt should give back his AC?

TREASURER:

Look, this is a matter for the Council in itself and the Council looks at those things, they have got guidelines, I am not entirely sure what they are, it is not a matter for me. Can I say the…

MITCHELL:

Rodney Alder sent his back.

TREASURER:

Did he?

MITCHELL:

It wasn’t an AC, it was a AO.

TREASURER:

People ought to understand this, the Government doesn’t give honours. There is an independent council presided over by the Governor General and they have guidelines on how they are awarded and whether certain circumstances require them to be returned. It is not political, it is not a government decision. You can tell why Neil, you wouldn’t want the government of the day giving these things out or taking them back.

MITCHELL:

You’d have a view on it, you have been one of the few people to be critical of Dick Pratt.

TREASURER:

Well look, I made this point that cartels are against the law and if you engage in a cartel we have got a well financed ACCC which is out there to take proceedings against you and this is the biggest cartel that they have ever taken proceedings against. I think it was a $36 million fine…

MITCHELL:

It was. Should he be president of Carlton?

TREASURER:

Look, that is a matter for Carlton. I don’t think Carlton are going to take the advice of the Number One ticket holder of the Essendon Football Club on their President.

MITCHELL:

If you lose the election will you stand as Opposition Leader?

TREASURER:

Neil, I am not focussing on losing the election.

MITCHELL:

Will you serve three years as a member of Parliament?

TREASURER:

Yes, I am running for election for the next three years…

MITCHELL:

Will you stay on the front bench?

TREASURER:

…and I am going to serve them and I am doing everything I can to win the election.

MITCHELL:

Do you want to work on the front bench in Opposition?

TREASURER:

I would rather work on a front bench in Government.

MITCHELL:

True, but would you stay on the front bench if you were in Opposition?

TREASURER:

I am running to win.

MITCHELL:

You must have thought about it.

TREASURER:

No, I am trying to explain to the Australian people the choice that they are making and what I am saying to them is when you vote on Saturday, that is it for three years. You can’t take it back on Sunday. Think about it carefully. The other thing I would say, is if Labor gets elected on Saturday, you will have Labor in government in every State, every Territory and Federally for the first time in Australian history. One political party will control every government in the land and that is a big risk.

MITCHELL:

Do you stand by the claim that Australian families have never been better off?

TREASURER:

Look Neil, there are more Australians in work before, wages are higher than they have been before and that is helping Australian families. Are there some families doing it tough? Yes.

MITCHELL:

But they have never been better off?

TREASURER:

I don’t say every Australian family, by the way, is better off, or every Australian is better off. But I say the indicators in relation to employment and wages are stronger than they have been for a very long period of time.

MITCHELL:

What unemployment figure can you offer us?

TREASURER:

Well when I first became Treasurer the unemployment rate was 8 and a bit and now it is 4 and a bit…

MITCHELL:

What would Kevin Rudd take it to?

TREASURER:

…so we have halved it.

MITCHELL:

What would Kevin Rudd take it to?

TREASURER:

Well it would be higher than it is now.

MITCHELL:

Is a policy on climate change more urgent than first thought? This UN report is pretty devastating by the look of it. Is it perhaps more urgent to have a climate change decision than first thought?

TREASURER:

Look, I think we have got to all work. Australia has got to play its part Neil, and we are doing that with our emissions trading system and our regional forestation plans. But you have got to bear this in mind: if you don’t have countries like China or India or the United States, our contribution will not change, will not change the global situation. We should play our part. But you know, Australia is 0. 3 of 1 per cent of the globe’s population.

MITCHELL:

But do you accept it is now more urgent than we thought?

TREASURER:

I accept that we have to be ambitious, I accept that we have to work harder, I accept that we have to begin now. But it is do-able, that’s the point. It’s do-able.

MITCHELL:

So when do we set targets?

TREASURER:

Well we have the Treasury which is looking at this work right at the moment. We have put the emissions trading system out there, and targets will be set up when the Treasury work is finished.

MITCHELL:

Ben Cousins appears before the AFL today, now you have been outspoken on the AFL policy on drugs, do you think that they have been too lenient with Ben Cousins?

TREASURER:

Well leave aside Ben Cousins because I think that is a pretty sad case and let me talk generally. The AFL deserves marks for having an extensive testing programme. They test outside of match day which they call out of competition. But where I think the AFL has fallen down is when they get a positive drug test, they don’t do enough about it. The first time, they don’t even tell the club by the way, they tell the doctor. The second time they will tell the club doctor and the third time they will look at an offence. Now, what I think that says is you know, it is not that serious if you get picked up with amphetamines – which by the way, would be an offence in the general public – the AFL won’t do anything about it, not on the first occasions, not on the second occasion. And I think that has sent a bad message. I think the AFL will have to tighten its drug code. It is looking at doing that, it will at least have to get as tight as the rugby league has. At least.

MITCHELL:

What would you do with Ben Cousins?

TREASURER:

Well, you know, it is all a very sad case and you just wonder whether or not there should have been some more intervention at an earlier stage.

MITCHELL:

By the AFL?

TREASURER:

Well the AFL can’t solve everybody’s personal problems, they make that point, that is fair. But I think what the AFL can do is it can send a loud and unequivocal message that taking cocaine or ice or anything else is not good for you, it is contrary to the law and it won’t be tolerated.

MITCHELL:

On the email site, youdecide@3aw. com. au Graham’s question: you started the debate about generational change in Australia four or five years ago, what generational change as Prime Minister Costello would you institute?

TREASURER:

Well I started this debate because it is going to change our society in 10, 20, 30 and 40 years. It is going to change, healthcare, it is going to change education, it is going to change aged care, it is going to change our economy, it is going to change our tax system…

MITCHELL:

But would you have generational change in your Government? Would you change the Cabinet?

TREASURER:

Well I think as life moves on we are always adapting to change, but this big intergenerational issue, this is the biggest issue that is going to change the nature of our society over the next 30 or 40 years. I have put it on the map. All of our policies have to go through the filter to make sure we are building for that future.

MITCHELL:

The Opposition Leader seems to be addressing this question and I think it is only fair to ask you. Who would you turn gay for?

TREASURER:

The man is not for turning, Neil…

MITCHELL:

What would make you vote Labor?

TREASURER:

… too late in the day for me.

MITCHELL:

You used to have very long hair. What would make you vote Labor?

TREASURER:

Well, I mean, suppose there is a two-horse race between the Communist Party and Labor, I would think about it.

MITCHELL:

Thank you very much for coming in. I am glad to see you have your shirt tucked in today.

TREASURER:

There are two kinds of men in the world, those that have their shirts out and those that have their shirts in. Modern and fashionable men these days have them out, Neil and there are three other men in this studio, you are all outers and I am an inner.

MITCHELL:

Feel free, the cameras are running, pull it out.

TREASURER:

I will let my hair down and pull my shirt out.

MITCHELL:

Thank you very much for coming in.

TREASURER:

Thanks.

MITCHELL:

You’re moving around Australia, you know there’s a fly plague?

TREASURER:

Yes, it is awful.

MITCHELL:

Is it getting you?

TREASURER:

Yes it is. It has hit Malvern and Camberwell.

MITCHELL:

(inaudible).

TREASURER:

Well look, you know, you remember Mao Tse Tung said every Chinese person had to go out and kill a fly to get rid of the plague? That is my policy.

MITCHELL:

The Treasurer.