Doorstop Interview

Senate Courtyard

Parliament House, Canberra

 Tuesday, 5 June 2007

2.20pm

 

SUBJECTS: ABS figures on number of births, risk of Labor to the economy, broadband, carbon trading, economy, infrastructure bottleneck in QLD

TREASURER:

Well the figures for 2006 show that 266,000 Australian children were born – the highest number since 1971 and the second highest in Australian history.  Now, the records go right back to the 1860s and this is the second highest number of children ever born in Australian history.  This is a good thing, because if we are able to increase the number of children and young people in our society over the long term – 40 years and more – this will actually help us cope with the ageing of the population.  And we are seeing, albeit slightly, the fertility rate start to lift.  And this is good for our future and it will be a great improvement really, in the way in which we cope with these long term demographic changes. 

Now of course one of the reasons, I think, why the birth rate is lifting, is that people are confident about work, more people are in work than ever before, they are confident about their prospects.  But the Government has also put in place policies to improve access to childcare, improve childcare assistance, the introduction of the Baby Bonus I think has had an effect.  And all of this is now coming together with a very positive vote for Australia’s future with 266,000 children being born, the second highest on record.

JOURNALIST:

So you are claiming the credit for this?

TREASURER:

Well I think a lot of it has to do with the fact that people are confident, that they are feeling secure about employment, that they think it is a time to start a family and that they will be able to raise their family and I think some of the policies have helped as well.  But it is a great vote of confidence in Australia’s future. 

JOURNALIST:

Your measures don’t seem to have hit the erogenous zone of New South Wales where the birth rate went down, Treasurer.

TREASURER:

I am no expert on erogenous zones if I may say so, but I just look at the global picture here. 

JOURNALIST:

So you can’t give an explanation to what is happening in New South Wales?

TREASURER:

Well look, when you think about why people might be having more children than in the past, I think it has got a lot to do with the fact that they are confident about work, they are confident about the economy, they think it is a good time to start a family, there is childcare assistance and Baby Bonuses and I think that is part of it.  But I think this is a vote of confidence in our future coming out of economic security.

JOURNALIST:

Why hasn’t housing affordability affected fertility…it is at an all time low?

TREASURER:

Well let me say in relation to housing affordability, the thing that that is measuring is that house prices have gone up.  Now that is a problem for people trying to get into the market.  For people who are in the market that is precisely what they want, incidentally.  So, housing affordability and house prices are a two-edged sword.  For those people that have a house, they don’t want to see prices fall, for those people who don’t have a house they probably do want to have, see houses fall, prices fall, right up until they day they buy theirs, after which they want to see them rise again. 

JOURNALIST:

Mr Costello, would electing a Labor Government affect our fertility rate?

TREASURER:

Well, I think, seriously if I may, electing a Labor Government is going to put a big shudder through our economic prospects.  If you have near full employment at 4.4 per cent and you have huge business investment going on and you go back to a system where AWAs are abolished and collective agreements negotiated by the unions are re-introduced, that will put unsustainable pressure on our economy.  And that will mean inflation will break out as it has during previous times of prosperity and when inflation breaks out it always ends in a bust.  And that is the great risk of a Labor Government and its economic policy.

JOURNALIST:

Has Cabinet made any decision on broadband and the role of the ACCC?

TREASURER:

Cabinet had a very good discussion today about broadband.  We want to see a situation where fibre to the node is built, built quickly and built on terms which make it affordable for consumers.  This is a very big point.  It is not just having it built but it is having it built at a price which will make it affordable for consumers.  Now, there are at least two companies or consortia that are offering to do that at the moment.  One is Telstra and the other is the G-9.  Neither of which incidentally require any public money.  So we had a good discussion about that and about the way in which this might proceed.

JOURNALIST:

And how will it proceed?

TREASURER:

Well I am not in a position to announce that at the moment but I can assure you it will proceed in a way which will mean that fibre is built at no cost to the taxpayer and at the best price to the consumer.

JOURNALIST: Is it going to be rolled out quicker than what you had expected?  Is the roll out going to be quicker than what you had expected?

TREASURER:

I don’t think the roll out would take all that long, actually.  I think at the moment you have got two consortia, each promising a very big roll out without any taxpayers’ dollars and the main issue seems to be who is going to be able to do it with the cheapest prices.  And I think the consumer is interested in not just the product, but the price. 

JOURNALIST:

Will the ACCC be bypassed?

TREASURER:

No, the ACCC has more experience in relation to this than any other regulator and it has been dealing with Telstra a long time.  In fact the ACCC has been dealing with these interconnect and access issues ever since competition was allowed in Australia and the ACCC is very much a part of ensuring that we have a good competitive framework. 

JOURNALIST:

Treasurer, on carbon trading, do you think the general public understands that costs for many of their everyday goods may go up, and have you got concerns about how that will flow through the wider economy?

TREASURER:

Well, you see, part of getting people to reduce their reliance, and our society as a whole to reduce its reliance, on carbon emissions is to make those goods and services where there are carbon emissions less attractive.  And that involves a price response.  People have got to understand this.  If we move to a trading system which is designed to make coal fired power stations less attractive, the electricity that comes from coal fire power stations will become more expensive.  If we want to encourage people to use less petrol in their cars, one of the consequences of that is that petrol will become less affordable.  This is all part of responding to carbon emissions.  There is no such thing as a cost-free reduction in carbon emissions.  Even today, where you have mandatory renewable energy targets, the retailers and distributors are buying that electricity at a much higher price, which is being passed onto the consumer.  And if they buy more renewable energy, they will be buying more electricity at a higher price and more of the cost will be passed on. 

JOURNALIST:

Treasurer, given that you took a Cabinet Submission some time ago to get a carbon trading system up and running, why has it taken the Government this long and are you happy that you have finally prevailed in that within the Government?

TREASURER:

Well I am not going back into past history but I think a carbon emission trading scheme is the right response.  I think it is a better response than a legislated reduction or a legislated tax which are other responses.  I think it is a good market mechanism which can spread costs over the whole of the economy.  Now, it is going to take a while to get such a system up and running and schemes like this are still in their infancy around the world.  In fact ours would probably be the most comprehensive once it is implemented.  So I am very pleased that we are moving towards that, yes.

JOURNALIST:

Will the roll out of high speed broadband start before the election?

TREASURER:

I am not putting any time limits in relation to this.  I am making the point that there are at least two consortia that want to build fibre to the node and want to build it without any taxpayer dollars.  That is, they will build it, two private consortia will build it, at no cost to the taxpayer.  Now, the only question is, really, the price.  And you would want to make sure that you got fibre to the node built for the best price. 

JOURNALIST:

How quickly would you like to see it rolled out?

TREASURER:

Oh I would like to see it rolled out as quickly as possible.

JOURNALIST:

Did Cabinet discuss the response to the Shergold Report before John Howard announced it, announced the Government’s response?

TREASURER:

Emissions Trading?  Well look, I don’t go into what Cabinet does or doesn’t discuss, I think as I made clear earlier in relation to another question.  They are the rules of Cabinet.  I am afraid, I can’t tell you who said what and I can’t tell you who was there and I can’t even show you the submissions.  I don’t think I have shown you a submission in the last 17 years.  But I can assure you of this: that the Emissions Trading Scheme was discussed very extensively at the highest levels of the Government. 

JOURNALIST:

Treasurer, do you think that the ACCC has become an obstacle to the broadband proposals that have been put up?

TREASURER:

No.

JOURNALIST:

Are you concerned about the integrity of the competition framework if you are going to set up a panel, even if it does have an ACCC staff member on it, to deal with something that really should have been dealt with under the laws extended?

TREASURER:

I think the ACCC has got tremendous experience here and I think it probably knows more about these pricing things than anybody else and it has to be part and parcel of the whole situation.  Now, Telstra is one company in Australia and like every other company it is subject to the law.  And in relation to access and pricing and all of those sorts of things, we have a regulator which has particular expertise and that regulator is going to be very much part of pricing and access issues in relation to telecommunications, just as it is in relation to ports or rail or any other area of monopoly infrastructure.  

JOURNALIST:

Treasurer the current account deficit is above $15 billion for the second quarter in a row, do you have concerns about this and is there anything the Government can do to improve the (inaudible)?

TREASURER:

Well, the trade deficit narrowed a little, but we saw for the quarter that imports were up more than exports.   Now, one of the reasons why exports were weak for the quarter of March was the drought – it’s been the worst drought in a hundred years.  And we are not exporting much in agricultural commodities.  Secondly of course we know during the March quarter that cyclones hit the West Australian coast and affected some of the big mineral exporters.  And you can’t do much about cyclones.  But the third point is we also know that there are, in other industries, bottlenecks which are holding back Australian exports.  And the biggest, of course, is our coal industry at Dalrymple Bay, where bottlenecks on the rail system owned by the Queensland Government meaning that you’ve now got 50 boats, 50 ships waiting to get Australian exports.  And Australian exports we are looking to lift and we have 50 ships sitting of the coast waiting to load.  Now, you can imagine how I feel about that.  I have been raising this as a matter of urgency for nearly three years and urging action in relation to Dalrymple Bay.  And in fact the Commonwealth has offered to take management of the export ports and to attend to some of the issues which are causing the delay.  Unfortunately there is no private rail operator.  The private rail operator is owned by the Queensland Government.  So, short of getting the Queensland Government to do something in the midst of the greatest increase in price that we have seen for coal, ships will languish off the coast and our exports accordingly will be affected. 

JOURNALIST:

Well Mr Beattie is bringing down the Queensland Budget today, are you hoping there might be something in there, and the Queensland Government is also suffering, they are saying, from water and the need to fund the health system, do you have some sympathy for them?

TREASURER:

Well, the Queensland Government, yes as a Government, has many issues to manage.  I understand that.  Like all governments around Australia, we all have many issues to manage.  We are all managing drought and we are all managing other challenges. But I am putting this point: coal, I think, is Australia’s number one export.  The price of coal is higher than it has ever been.  Our exports are not growing and one of the major reasons is 50 ships, at any one time, sit off the Queensland coast.  They are ready, willing and able to take our exports.  But this commodity, which is in demand all around the world, cannot be brought down the Queensland rail track with sufficient speed and in sufficient volumes to meet the demand.  Now, this is not a new problem, this has been going on for years.  And if you decided today to fix it, it would probably take you another two years to fix – in terms of either getting additional capacity or infrastructure or competition.  I was urging that this be looked at and dealt with three years ago.  It’s a matter of regret that it has taken so long.

JOURNALIST:

(inaudible) why can’t we get a long-term aspirational target before the end of the year?

TREASURER:

Well, I have got to say to you that these things require enormous expertise and they require a lot of assumptions to be made.  There are people that have built models, private sector that have built models in Australia – we think some of them are good, we think some of them are bad.  We’re doing a lot of work to try and bring the best of the best all together and to put it together.  But I’ll say this to you – there’s no established modelling on climate change, back from the 1900s and the 1920s and the 1930s and the 1940s and 50s and 60s and 70s – we’re not drawing on historical experience here.  There is a lot of work and there is a lot of technical assumptions and you’ll find with a lot of this modelling work it depends very much on your assumptions.

JOURNALIST:

But when do you start that process?

TREASURER:

We’ve started that process.

JOURNALIST:

The Liberal Party in South Australia has had a target for two to three years, they went to the last election with this target.  Are you saying the Liberal Party in South Australia is able to do the sums but you can’t?

TREASURER:

Well, I haven’t seen the modelling behind the Liberal Party in South Australia but I don’t think the modelling would be that extensive. 

JOURNALIST:

The head of your nuclear taskforce last night was happy enough to accept the 2050 target of the 60 per cent reduction (inaudible).

TREASURER;

Well I don’t think that’s right.  I heard him say that there was no known policy to meet that target.  That’s what he said – there was no known policy anywhere in the world. 

JOURNALIST:

I thought he said that the target was a reasonable enough one?

TREASURER:

Oh well, that’s what I heard him say.

JOURNALIST:

Treasurer on broadband – are you ruling out any changes to the existing regulatory regime for telecoms and access?

TREASURER:

I said to you earlier that I’m not making any announcement today in relation to broadband.  What I’m saying is that there are at least two consortia who want to build it.  They want to build it without taxpayers’ money.  The critical thing is the price.  What we want to make sure is not only that it is built, but that it’s built at a price that people can afford.  And I also said that the regulatory agency, the ACCC, has more expertise in this area than any other arm of Government and we would want it to be very much a part of the process.

JOURNALIST:

No need for changes to the actual regulations?

TREASURER:

Well, you’ve heard my answer.

JOURNALIST:

Treasurer, can I get back to (inaudible) do you ever get accosted by whinging singles complaining about all the family assistance, Baby Bonus et cetera, and if so what’s your reply to them?

TREASURER:

Well sometimes I do.  Sometimes single people say ‘we don’t get Baby Bonuses and we don’t Childcare Assistance and we don’t get the Family Tax Benefits’.  And that’s true.  That is true.  But the flip side of that, of course, is they also don’t have children to support. And anybody who has children to support knows that it is a lot of additional cost.  I’ll warrant to you that even after a family with children has had their childcare assistance and their Family Tax Benefit and their Baby Bonus, their disposable income would still not be as great for a single person on the same income.  I’ll warrant that to you.  I will make this point – nobody ever had children to make a profit.  At the end of the day, and I’m encouraging Australians to have children, at the end of the day I must be honest with you, you won’t end up in front in financial terms.  But in terms of emotion and family and in your investment in your own family life, there are lot of other benefits.  And that is why I would recommend it for people. 

JOURNALIST:

Will that be your new ad campaign?

TREASURER:

Well, you know, I’m out there advertising – have been for a long time – the benefits of one for Mum, one for Dad and one for the country.  Thanks.