Interview with Virginia Trioli

702 ABC

Tuesday, 2 October 2007

8.35 am

 

SUBJECTS: Interest rates, economic management, hospitals, Election ‘07, industrial relations, Bali bombers, AFL drugs policy

TRIOLI:

Good morning Mr Costello. 

TREASURER:

Good morning Virginia.  Good to be with you. 

TRIOLI:

The Reserve Bank Board meets today to discuss interest rates.  But as we of course just heard then the consensus seems to be there will no rate rise this time.  But it is quite possible according to some data that I have looked at that could lift rates in early November after inflation data is released.  Do you agree this could be the case and what would this do to your election chances if so?

TREASURER:

Well of course the agreement that I have entered into with the Reserve Bank is that it will target inflation to 2 to 3 per cent over the cycle.  And that is to lock in low inflation and keep our period of growth going.  The good news is that inflation is within that band even though we are probably at a peak in the cycle, certainly in the terms of trade, but we can’t afford to be complacent and it will continue to monitor these things to make sure we keep inflation low in this country. 

TRIOLI:

Do you believe that it is quite possible that at the next meeting the Bank could consider another rate rise?

TREASURER:

Well Virginia, as I said, I think we are doing well on the inflation front given the fact that we have strong terms of trade, given the fact that oil prices are so high.  The other factor that is probably going to impact in the quarters ahead of course is drought.  Drought will affect food prices, there is not much we can do about that either.  But we do have to keep the economy growing strongly and one of the side effects of growing the economy strongly is we can afford to assist farmers at this time of terrible hardship that they are going through. 

TRIOLI:

Politically it would be most damaging of course, I think that would make it the sixth rate rise since the election in 2004.  Clearly something you’d not need just as we are looking down the barrel of an election in November. 

TREASURER:

Well if you look at the longer term perspective, interest rates today are certainly lower than they were when Labor was thrown out of office.  And notwithstanding the fact that we have had 2.2 million new jobs created in our country.  And normally what you would expect at a time of economic strength and job creation, you would expect interest rates to be high.  Yet at a period of job creation and low unemployment, interest rates are still lower than they were when we had unemployment much higher than it is today – about double what it is today.  So that shows you really how far the economy has come in recent years.  Now, we don’t want to be complacent about that but we have made enormous strides. 

TRIOLI:

Would we be having this debate about a federal takeover of hospitals if there were Liberal governments in place in the states, do you think, Peter Costello?

TREASURER:

Well, I am sure…

TRIOLI:

There is a political dimension to this, isn’t there, we need to sort of call a spade a spade?

TREASURER:

Well I am sure if the hospitals had been run better, it wouldn’t be such an issue in a federal campaign.  You see, the Federal Government doesn’t run any of these hospitals, they are all run by state governments.  If they were running well then it wouldn’t be an issue for the Federal Government.  But plainly they are running badly and running nowhere worse then they are in New South Wales.  You have got a Health Minister in New South Wales who obviously isn’t coping with the job.  And that is why it becomes a bit of an issue.  If there were governments of any persuasion – whether they were Labor or Liberal – that were competently managing the health system, I don’t think it would be such a big issue.  

TRIOLI:

But that’s the issue, isn’t it?  Whether the Government is Labor or Liberal, running public hospitals is expensive now.  The cost of the very well developed medicine that we now offer in hospitals is expensive and possibly just not possible to run at a profit no matter who is in charge.  And that of course is according to senior doctors at public hospitals right across Australia.  So the problem then becomes the same one, doesn’t it? 

TREASURER:

Well, I think you make the point that with the increase in technology we are now able to treat a lot of conditions that we couldn’t in the past.  And as our Intergenerational Report has shown with the ageing of the population, this means that health spending is going to increase.  That is going to continue to increase over the next four years.  There is no doubt about that, this is what the Intergenerational Report I brought down showed…

TRIOLI:

So (inaudible) any government is going to struggle with funding, that if it goes to the Commonwealth it would just be a bigger problem then, would it?

TREASURER:

Health is going to consume a larger and larger amount of budget and a larger and larger amount of the economy.  That is for two reasons:  one is the population is ageing and as you get older you need more treatment.  The other is technology is improving and it now gives us the capacity to treat more conditions.  For example, 40 or 50 years ago, public hospitals wouldn’t have been doing heart transplants.  Now they can do a heart transplant.  A heart transplant is a very expensive operation.  So this is where technological advance – which is giving us better standards of health incidentally – is actually creating more cost.  Now, given those two facts, yes funding will have to increase and we have been increasing, at the Commonwealth level, funding for health more than any other area.  But the other side of it is you are going to have to get more value for your funding.  You can’t just keep pouring money into it because this is a growing demand, you have got to make sure that that money is being well spent. 

TRIOLI:

And a Commonwealth Government could do that?  Could keep its eye across all of the public hospitals in all of the States when the cost of healthcare is increasing as we are getting older and require more and more expensive intervention.  You are saying a Commonwealth Government could do that, keep the hospitals well-run and in the black?  That is setting the bar very high, Treasurer.

TREASURER:

Well we are actually not saying that they should all be run from Canberra, for the reasons that you have just outlined.  What we think should happen is that there should be local boards accountable to the community that can keep an eye on these hospitals.  The idea – I agree with you – the idea that some person sitting in Canberra can keep an eye on every hospital right around Australia I think is madness.  What I think you need for these hospitals is you need local boards which bring together people with clinical skills, medical skills, financial skills who know their community and can get executives that are accountable to them to manage these hospitals.  I think that is the way to go ahead, in relation to public hospital care. 

TRIOLI:

There has been no bounce Treasurer, from the new leadership team on your side of politics.  According to the Newspoll, the Government is still looking at a massive defeat.  If the Government has been such a success, why doesn’t the public like the idea of your double act?  Are you personally offended by this, Mr Costello? 

TREASURER:

Well look, I think if you probe the public on who they trust to manage their mortgage, their jobs, their businesses…

TRIOLI:

I will move to that in a moment, that is a slightly separate issue and I do want to talk about the Wayne Swan versus Peter Costello issue because that is fascinating.  But just looking at the value that you would like to offer as a new leadership team – you and the Prime Minister, John Howard – the public is not buying it, according to Newspoll. 

TREASURER:

Well Virginia, there is a bit of time to go and I think that as people begin to focus on these issues, they will think about things in a serious light.  We will be explaining our case over and over and over again and at the end of the day the Australian public will make their judgement, but it is not going to stop me talking about the things I think are important for their future.

TRIOLI:

Commentary yesterday in The Australian that what the Government most need is time, the more time you can get, the longer you can leave this poll, the better your chances.  Now you seemed to make a bit of a slip on Grand Final day, Peter Costello, and suggest that the election was going to be somewhere towards the end of November.  Does that give you enough time?

TREASURER:

Well it has to be before Christmas and if it were called today the earliest it could be would be the beginning of November.  So you have got a pretty narrow window, haven’t you?  And what we know is that sometime towards the end of this year there will be an election and the people of Australia will decide where they want their country to go over the next three years.  Who they are going to trust with their mortgage, their job and their business.  This is democracy at work.  And I will be putting before them a vision for the future, a vision for a strong prosperous economy with good services and a clean environment and a state of world class education; a Government which is dealing with climate change and improving our water resources and doing that off the back of strong employment and low tax.  That is the vision that I am going to be putting to the people of Australia and we will ask them sometime between now and Christmas to make their decision accordingly. 

TRIOLI:

If you’re just joining us, it’s 17 minutes to nine on 702 ABC Sydney, the Federal Treasurer, Peter Costello is with us, the Member for Higgins.  David has called in this morning Mr Costello, and says: ‘although you have 11 years experience as Treasurer now, a decade ago you were just like Wayne Swan.  What qualified you then, as Treasurer?’ 

TREASURER:

I thank David for his call but I don’t think it is quite fair to compare me to Wayne Swan.

TRIOLI:

Why not?

TREASURER:

Well Wayne is…

TRIOLI:

I mean, you may not like the comparison, but why is it not fair?

TREASURER:

No I don’t.  No I don’t.  I don’t think many people would like to be compared to Wayne Swan…

TRIOLI:

Well we will leave that to them.

TREASURER:

Well look, the people of Australia can judge the economic record that I have put in place over the last ten years in terms of jobs, inflation, interest rates, balanced budgets, re-paying all of Labor’s debt…

TRIOLI:

Yes but that wasn’t quite the question.  The question is about experience coming into the job when you are coming from Opposition…

TREASURER:

Sure. 

TRIOLI:

…and of course you came from Opposition.  Wayne Swan is in exactly that position now, isn’t he, that you were in before you took Government?

TREASURER:

Yes but you see, whilst all of this economic reform has been going on, Wayne Swan and Kevin Rudd have been opposing it.  It would have been quite different…

TRIOLI:

Yes but they are entitled to their point of view, aren’t they?  I mean, they are offering an alternative government. 

TREASURER:

They are entitled, Virginia, they are entitled to have their point of view.  Their point of view was we shouldn’t balance the budget.  Their point of view was we shouldn’t re-pay debt.  Their point of view was we should keep wholesale sales tax.  Their point of view was we should have higher income tax rates.  They are entitled to their point of view.  The point I am making here is their point of view was wrong.  Was wrong.  And it is all very well for them to say, now that I have put these building blocks in place, yes they’re right and they will keep them.  But having confronted the decisions and made the wrong choices over and over and over again, why would you put them in the position where they will have to make the choices in the future. 

TRIOLI:

Peter Costello, it was interesting to me this morning the Minister for Workplace Relations, Joe Hockey, dismissed the Australian Research Council’s report into WorkChoices that showed that some low skilled employees are earning less on Australian Workplace Agreements.  The Australian Research Council is a statutory authority within the Australian Government Education, Science and Training portfolio.  On what basis do you dismiss the ARC’s work as somehow politically motivated?

TREASURER:

Well I don’t think that was Joe’s point.  I think Joe’s point was, sure the ARC was part-funding this and Unions New South Wales was funding it, I think he said 50 per cent for the remainder. 

TRIOLI:

But on what basis does that therefore sour their research?

TREASURER:

Well I think we can dismiss the impartiality of Unions New South Wales, can’t we, which is 50 per cent of the funding?  This is a trade union body which is unashamedly and unabashedly campaigning for a change of government.  Now, the ARC may have put up some of the money but Unions New South Wales put up the remainder.  I think he is well within his rights to point to the fact that Unions New South Wales is not an impartial body. 

TRIOLI:

Are you saying then that when it comes to the ARC who pays the piper, calls the tune?  Is that then not call for you as Treasurer and for the Government to look at what the ARC is doing and whether it is independent or not or is it independent?

TREASURER:

What I am saying is when it comes to the New South Wales union movement, who pays the piper call the tune.

TRIOLI:

So, so, it has actually corrupted the Australian Research Council?

TREASURER:

Unions New South Wales, an affiliated body to the ALP – which has 60 per cent of the control of an ALP council, has formed a fighting fund in order to campaign against the Federal Government – puts money into a research project.  Who in their right mind would believe that that was independent?  Now…

TRIOLI:

So hang on, but that is what the ARC does.  I mean, do you say the same thing for any organisation that gets involved in funding research out of the ARC?  If a multinational pharmaceutical company comes along, do you say, we should never ever believe the research that comes out because it comes from a pharmaceutical company?

TREASURER:

I am not complaining about the ARC.  It would be different if the ARC had funded this project.  The ARC gives some money to this project and Unions New South Wales makes up the balance.  I am not talking about the ARC.  I am saying once you see Unions New South Wales putting up money for a project, you know it is contaminated.  You know it is.  The Unions New South Wales is not some independent objective observer.  It is a player in this election campaign. 

TRIOLI:

But Treasurer, the organisation doesn’t do the research.  The ARC does. 

TREASURER:

Well, no, no, no.  The ARC is a funding body.  No, the ARC is the Australian Research Council which makes some money available, Unions New South Wales makes some money available, and then an academic, being jointly funded by the two of them, does the research.  The ARC doesn’t do the research.  The ARC is just a part funder, it is like a 50 per cent partner.  And the other 50 per cent partner is Unions New South Wales.  The work is actually done by the academics and that is my point. 

TRIOLI:

And they’ve been corrupted. 

TREASURER:

Well, the Unions, I heard the academic saying earlier you know, who would ever have an interest in getting statistics to prove a point, I think she asked rhetorically.  Let me answer her question: Unions New South Wales. 

TRIOLI:

Moving on to other subjects because we do have time against us, 11 minutes to nine on 702 ABC Sydney.  In Indonesia men convicted of involvement in the 2002 and 2005 Bali Bombings have had their sentences reduced to coincide with the end of Ramadan.  What is the Federal Government’s response to this, Treasurer?

TREASURER:

Well, the Federal Government’s response is we don’t support the death penalty.  We don’t support it in Australia obviously and nor do we support it outside of Australia.  So the…

TRIOLI:

So Amnesty International is on the right track here, when it argues against the death sentence for Amrozi?    

TREASURER:

We would argue for clemency for Australians who are facing the death sentence but this doesn’t undermine in any way our abhorrence of crimes such as terrorism, or crimes such as drug smuggling.  We do not condone those one iota and we believe the full force of the law ought to be thrown at those crimes and that those crimes ought to involve, if necessary, life in jail. 

TRIOLI:

Changing subjects entirely, you are a keen follower of the AFL and you of course were in Melbourne for the Grand Final.  How do you account for what seems to be now a very dangerous culture of drug use amongst some AFL players as shown by the really shocking death of Eagles great Chris Mainwaring?

TREASURER:

I think the AFL has had a drug problem.  I don’t think there is any point in hiding it now.  It has become public with the Ben Cousins affair.  I think the AFL’s drug code has been too soft.  They would say to you, well we test more than other codes and they do test on non-match day, that is true.  But when they get those tests back, they overlook the first offence, they overlook the second offence and it is only on the third offence that the player is eligible for some penalty.  And I think that has sent the wrong message.  I think the AFL has to get a lot tougher on its drug code.  I think the NRL – the rugby league – has done better and I think that the AFL now has to sit down and take a very hard look at its drug code.  It is talking about reviewing it now that the season has ended, I think it has got to send a very clear message that drug taking in the AFL will not be tolerated.  It is plain that some players have been taking drugs and their lives and their families are affected.  And I would ask the AFL, now that the season is over, to review its code and to get a lot tougher and send a message.  Now, they would say: ‘oh well look, this is tough on the players.’  Look, introducing a code which is designed to stop a player abusing drugs is not tough on the player.  That is helping the player.  Because if you let this problem go unattended, as you have seen in some recent cases, it has terrible consequences. 

TRIOLI:

Very briefly, Federal Treasurer, I don’t know if you have anyone in your household at the moment doing the HSC, we’re in HSC season right now, you had one last year, I think, when is the next one sitting (inaudible)?

TREASURER:

In a couple of years, but the economics teacher in the local school always sends me the Year 12 economic exam to do as a test and makes me fill it out and send it back to her for marking, so…

TRIOLI:

How do you do?

TREASURER:

Well I normally do all right.  A few years ago I got 80 per cent because they had 40 multiple choice questions and I got all of them right.  And then they had an essay question which was for 10 marks, I think.  The essay was: give the arguments against GST.  And I said: ‘there are none.’  And got nought out of ten for my essay question.

TRIOLI:

There is some justice out in the world.  Peter Costello, it was good to chat, thanks very much. 

TREASURER:

Thanks very much