ALP Advertisements; The Greens; Interest Rates; The Economy; Childcare; Taxation; Private Health Insurance – Interview with Liam Bartlett, ABC Radio 720

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ALP Advertisements; The Greens; Interest Rates; The Economy; Childcare; Taxation; Private Health Insurance – Interview with Liam Bartlett, ABC Radio 720




Interview with Liam Bartlett

720 ABC Perth

Tuesday, 28 September 2004

8.30 am


SUBJECTS: ALP Advertisements; The Greens; Interest Rates; The

Economy; Childcare; Taxation; Private Health Insurance


Treasurer, good morning to you.


Great to be with you Liam. Thanks very much.


Good to see you here in Perth.


It is always a pleasure. Beautiful day.


Well, we turn it on for you. I was just wondering, you know, when we talk

about caretaker governments and calling you Treasurer, or maybe I should

call you a caretaker Minister or maybe Prime Minister in waiting would be

more appropriate. Have you seen Labor’s TV ad?


The, which one is that?


You know, the one where John Howard’s head is rubbed out.


Oh yes, yes, I have seen that, yes.


And yours appears as the replacement.




Tony Abbott’s quite candid in that ad isn’t he?


Well I think that was footage that was taken from some time ago. I don’t

think Tony actually filmed for the ad.


Oh, but it is interesting to hear his comments. I mean I take it they are

not putting words in his mouth. ‘Cause he is saying well you know Costello

for two years, Howard for one year or maybe Howard for two years, Costello

for one. What was he thinking?


Oh well, as I say, I think it was an interview which was given some time

ago. But I saw the ads they were running during the Grand Final. I was quite

amused by them. I thought that they were particularly perplexing actually.

And very ineffective. And I thought to myself, the good thing about it is

that running them during the Grand Final, the Labor Party would be paying

an awful lot for them and getting very little value out of them.


That’s an interesting way to think of your position relative to the PM’s

though isn’t it? Scratch and match?


Oh well, it is a bit of a gag. I think the Labor Party produced these tickets

a long time ago and you know, I can imagine them all sitting down there

in their little tactics meeting saying, what are we going to do with these

tickets? We had better do something. We had better cut an ad. Oh we had

better put it on in the Grand Final. But I must say, if that is the best

they have got, you know, waste your money on it by all means fellas.


I tell you what, you will certainly be Liberal leader if today’s polls

are right and you lose the election, won’t you?


Well the polls are very close Liam. The reality is that Mark Latham could

be elected. And that is enough to send a shiver down anybody’s spine I think.

You want to trust your mortgage to Mark Latham, your business, your job?

As at today, either side could win the election. And there is no room for

margin or protest here. It is very, very close.


The polls are interesting aren’t they? You’re ahead on the primary but

you’re four points behind overall thanks to preferences.




Primarily from the Greens who are polling seven per cent.




Do you believe that?


Oh yes, yes I would. What happens is that essentially most of the minor

Parties preference against us. So, we nearly have to win it on our own.

If we can’t get to 50 per cent or close to 50 per cent we don’t get preferences

from other people. And the Greens are polling well, and at the end of the

day the Greens won’t win seats in the House of Representatives but a vote

for the Greens will deliver a vote to the Labor Party.


Why are they so strong?


There, look there is always I think room for a third Party. With the demise

of the Democrats I think they have picked up a lot of that third Party type

vote. And it looks in this election as if the Democrats are not going to

do well. I think they are down at about 1 per cent. So a lot of that has

just moved across to the Greens. The difference is, with the Democrats,

they used to split their preferences about 40/60. With the Greens, they

split them about 75/25 or 80/20. So that has been a huge benefit to the

Labor Party because as I say, when you vote, people should remember, you

have got to do 1, 2, 3, 4, 5 if you vote 1 Green and follow their ticket

which goes to Labor, that vote ends up with the Labor Party.


Do you think the Democrats are rueing the day that they jumped into bed

with your Party and did the GST deals? That was the beginning of the end

for them wasn’t it?


Oh not really. I think the Democrats have been on the slide for a while.

They have had, how many leaders have they had? They have had four leaders

I think in the last four years. They had Lees and Despoja and Bartlett and

Greig. And they, I think there are only, what are there seven of them? I

think seven or is it nine? I forget. But nearly everyone has been a leader

at one time or another in the last four years. They have got a lot of chiefs

but no Indians. And I think that has been a big problem for them and the

Greens have swooped on them. But as I keep on saying, if you vote 1 for

the Greens and you follow their ticket it ends up voting for the Labor Party.


Where’s the heart and soul in this election though Treasurer? Is it in

the sand pits of childcare centres?


Well I think childcare is an important issue. I think education is an important

issue. But I think at the end of the day the biggest issue is going to be,

who do you trust with your mortgage? Who do you trust with your business?

Who do you trust with your job? Because at the end of the day, if you can’t

service the mortgage, pay the interest payments, if the business can’t make

a profit, if you can’t keep your job then not much else is going to count.

And I think that is going to be the heart and soul of this campaign in the

next ten days.


Well, there is a not a lot of science in the childcare dutch auction is

there? You have got a billion dollars for childcare, Labor bids it up to

$1.6 billion.




You are going mad with money.


…there are important differences I think. The Government’s proposal

is that 30 per cent of your costs you can claim back as a tax rebate. Labor

says, well if you have got a four or a five year old you can have a subsidised

day. Well that is all very well if you have got a three or a four year old

sorry. That is all very well if you have got a three or a four year old

but if you have got a one year old, a two year old or a five year old it

is not much use to you.


But it is all pretty cynical stuff isn’t it? I mean, it’s all back pocket

vote grabbing. You know, all these billions your Government has managed

to find over the past four and a half weeks, billions of dollars, your side

says it’s the sign of a strong economy but it’s simpler than that isn’t

it? Doesn’t it just mean that we have been overtaxed?


Oh no, it is the strong economy. We have actually cut taxes. But revenues

are strong.


Well you have cut some taxes.


Why, why are revenues strong? Well the biggest reason is that there are

now 1.3 million people more in work. If you have got 1.3 million more people

in work instead of drawing down for unemployment benefits, you save all

of those unemployment benefits and then they go into the workforce and they

pay tax.


But your maths still doesn’t add up. That doesn’t fully explain the billions

you have been dishing out.


Oh that is the biggest part of it. There are two really big parts of this,

one is we have 1.3 million people more in work, and that in the biggest

part, who are not drawing unemployment benefits but are actually paying

taxes. The second big part of it Liam is company profits are strong. The

business sector has been profitable and when you tax company profits that

has also added to the revenues. So strong company profits give you strong

revenues but they also give you jobs and those jobs give you revenues as

well. So this is the benefit of a strong economy.


But you dish out these feel good rebates to target votes. With all this

extra money, wouldn’t it have been fairer, more equitable, to give it back

via the general tax system to all workers?


Well we have cut taxes. We have also increased payments to families. And

with a rebate for childcare, the way I look at it, if Mum is going to go

into the workforce and one of the expenses of going into the workforce is

childcare, then it is fair that she get a rebate. It is almost, for most

people it is tax deductibility. For low incomes it is tax deductibility,

for higher income earners it is a little less than tax deductibility because

it is 30 per cent. But if your tax rate were 30 per cent, a 30 per cent

rebate is as good as tax deductibility.


It must be wonderful to play with taxpayer’s money in such a way that it

makes them feel honoured to be getting back what was already theirs?


Well I think you have raised a fair point Liam which is this, at the end

of the day Governments don’t create jobs or generate income. What Governments

do is they create an economic climate in which businesses can create jobs

and generate income. Now I don’t go around saying that the Government created

1.3 million jobs but what I do say is the Government created a low interest

rate, low inflation, growing economy, the climate in which business was

able to prosper and create jobs. And because people were able to get jobs

and pay taxes, the Budget has been strengthened. Look I have done nine Budgets

now, seven surplus Budgets. That is a very, very strong record. And I can

tell you, when I started, there weren’t surplus Budgets Liam. My first Budget

I was confronted with a $10 billion deficit. And it has taken us a while

to get to where we are but the benefit of good economic policy is, if you

get people in work, that is what it is all about, if you get people in work…


How is it good economic policy to build up this mountain of money and you

know, just coincide with the last (inaudible) four or five months that you

were heading into an election, this mountain of money, how is that good

economic policy? And then sort of turn around and say publicly, well you

know, we’re good economic managers and we have fantastic largesse and we

are going to give it all back to you now in various ways and target various

marginal seats and various sections, demographs of the population so that

we ensure we are re-elected. How is that good economic policy?


Well Liam I don’t actually see it as a mountain of money. I see it the

reverse. We had a big crater of debt and we have managed to fill in the

crater. When we were elected the Commonwealth debt was $96 billion. We have

now filled in the crater and reduced it by $73 billion.


Simon Crean says you have spent $66 billion in just six months. Is that



No. Because you see, Mr Crean has this funny attitude that if you cut taxes

it is actually spending. Cutting taxes isn’t spending money. It is cutting

taxes. It is reducing the amount of money. He says, oh well, if you cut

people’s taxes that is an expenditure. No, no, no if you cut people’s taxes

it is not actually it is a reduction in the amount that you take. And you

know, just to finish that last point I was making, your $96 billion of Commonwealth

debt, a big crater of debt, we have now filled it in, $73 billion we have

reduced that by in net terms and we don’t have to pay as much interest anymore.

That’s where you get your saving. You have reduced your mortgage, your interest

payments have come down, you have got a saving, you can spend that money

on things like health and education.






We will go to the phones in just a second. We are talking to Treasurer,

Peter Costello. If you would like to give him a call 9484 1720 or 1800 626

720. On that subject of interest rates, the claim that interest rates will

go up under Labor. Are you embarrassed by that?


Well interest rates always have been higher under Labor. I just put the

record out there Liam. I say…


Let’s look at it scientifically.




You deal with numbers all the time.




You are still struggling to find one single analyst who agrees with that



Well this is the way I put it. You can compare Labor’s record and our record.

Let’s not go into the argy-bargy. It is a very simple thing. Labor was in

Government, were they aiming for high interest rates? No. They had every

opportunity to get them low and they averaged 12 ¾ per cent.


But how far do you want to go back?


Were we aiming for high interest rates? No. We had every opportunity to

keep them low. And what have they averaged? 7.15 per cent. There is the

record. You know, the record is there, I just think it is an incontrovertible

record myself.


Just give me the name of one decent analyst, one respected analyst who

agrees with your opinion.


Oh there are numbers. There are numbers.


Just give me one.


But well I could give you all sorts of people but you know, I am not here

in the business of giving publicity to particular analysts who are quite

capable of getting publicity for themselves. I will put my record out there.

Liam I have been the Treasurer for nine Budgets, I have brought down seven

surpluses. I may know a little bit about economic policy by now. I put in

the place the current interest rate policy. I entered into the agreement

with the Governor of the Reserve Bank. I appointed the Governor of the Reserve

Bank after, and then we entered into this agreement. The agreement has been

spectacularly successful at keeping interest rates low. When I announced

this agreement the Labor Party said they would sue me. They said it was

an illegal agreement and that they would sue me. And now fortunately for

me the writ never arrived. But these are the arrangements that have delivered

us low interest rates. And the record is there for everybody to see. I just

say, judge the record. That is what I say.


Let’s take some calls Treasurer. Graham is first up. Hello Graham.


Hello. How are you?


Good morning.


I would like to talk about the childcare rebate. When we had the health,

private health care rebate of 30 per cent, then private health fees all

went up, you know greater than the CPI or whatever it is, you know. So I

was wondering how can he stop the same thing with this childcare?


Well I don’t agree that it was the rebate that was responsible for

price rises. In fact I would say if it wasn’t for the rebate the price

of private health insurance would be very much greater than it is today.

And similarly, in relation to childcare, if you get a 30 per cent rebate

you are going to be paying less than you will if you don’t get that

rebate. Now, there will be all sorts of things will go into the cost of

childcare. All sorts of things. And there will be competition in the sector.

But at the end of the day if you are getting a 30 per cent rebate you will

be paying less than you are without that 30 per cent rebate.


You don’t think it will push up prices?




But if the prices go up then instead of getting a 30 per cent rebate you

only get a 20 per cent?


Well you always get 30 per cent of whatever you have paid.




Now, as I pointed out earlier, I think if there is anybody in this industry

that decides to try and price take I think they will be knocked around by

their competitors quite quickly. And of course, as in most things, it is

competition that drives prices down. And if you are getting a 30 per cent

rebate you will actually be only paying, what, 70 per cent of the costs

that you are currently paying.


Graham, thanks for calling. Hello Howard.




Good morning.


Yeah good morning. Treasurer up front I am a Liberal voter. I employ 46

people and in my business I ask my staff what issues concern them. It is

not child rebates, it is not university costs, it is not those things. It

is the fact that if I offer them a pay rise they understand they only get

about, in real terms only about 30 per cent of the pay rise. What they actually

ask is if they could be paid and take the money home. They will make the

decisions about what they will buy with that money. They will make the decisions

about childcare or health care. They will make those decisions. What we

see happening today is that you’re making all those decisions and

dispersing this money where you see fit, albeit in marginal seats where

you can win an election. Don’t you think it is time you gave the right

back to individuals who earn the money to spend the money in the way they

see fit and take care of themselves. Are we getting too close to the ‘nanny

state’ is what I am saying?


Well look I think you make a fair point. And what we have done is we have

ensured that most people in Australia only have a 30 per cent tax rate.

People earning average wages now face a top rate, and that is only their

top rate by the way, of 30 per cent. Before we started reforming the tax

system you were paying 48 ½ cents in the dollar at $50,000. Now we

have got that down and for most Australians, over 80 per cent of Australians,

the top tax rate that they will face is 30 cents in the dollar. I agree

with your call. I think we have got to keep those rates low so that people

can enjoy the fruits of their labour.


Just on that point, you say 30 per cent, but you have other taxes in place

that are called levies now. We have got rid of the word tax. We have a Medicare

levy, we have a gun buy-back levy, which is a tax. You know, what I am physically

saying is these people that work for me, and they are low, they are not

the highest paid in society, you know they are on $30,000 a year. What they

would like to see is the $120 – $140 every fortnight that is taken out of

their pay put back in their pocket rather than you deciding, you know, in

your wisdom what to do with that money. They would like to take on board

their own private health care, their own child education, their own childcare,

they would like to spend the money and make the choices.


No it is a fair point…




…if your employees are earning $30,000 then the top tax rate that

they would be facing is 30 cents in the dollar. It is true that there is

a Medicare levy, always has been at 1 ½ per cent. But they don’t

pay things like gun levies. I mean, there was a one-off gun levy back in

1996 to get guns out of the community. Nobody is paying a gun levy anymore.


All right, thanks Howard for your call this morning. Good morning Anthony.


Yeah. Hi there. Treasurer.


Hi Anthony.


You may not know that our economy in WA is running at something like over

8 per cent, our unemployment is under 5 per cent (inaudible). Now how important

is this WA economy to your economy when that is all we hear about, is how

strong your economy is? How important is WA’s economy to you? Like

for example, our unemployment is under 5 per cent.


Well the economy of Western Australia is very important to the national

economy. It is out of Western Australia that some of our great exporter

industries operate. We signed recently one of the largest contracts in Australian

history with a 20 year LNG deal up into China. You got companies in the

Pilbara that are shipping iron ore out to China and Korea and Japan that

are at full production. They are really helping Australia’s export

industries and I want to make one point here, for the mining industry, that

people who work in the mining industry should know this. That under this

Government you get a full rebate of excise paid on diesel in the mining

industry. Labor’s policy is to introduce excise on diesel in the mining

industry, 4 cents a litre, and it is a very anti-mining policy which will

affect big companies in Western Australia that are earning export dollars.


Anthony thanks very much for you call. Good morning Lynne.


Good morning. And good morning Treasurer.


Good morning Lynne.


I wanted to ask you Mr Treasurer what you intend to do for the old age

pensioners? I am not talking about self funded retirees, and I know that

you are putting money into care homes for the elderly but the ordinary everyday

bloke, what are you doing for us?


Well there was a pension rise this week on the 20th of September, I think

it was $5.40 or was it $6.40…


Yes there are two indexations…


…for a fortnight…




…for the single person.


Don’t spend it all at once Lynne.


Well there was a rise. And there will be another rise in March of next



But they come every year. We get two indexations every year.


That’s right. And we have legislated so that the indexations are

based on wages. Now because wages are running faster than prices that means

that the aged pension is going up faster than the Consumer Price Index.

So, it is actually increasing in real terms. And we had that increase on

the 20th of September and we factored it into the Budget (inaudible) in

March of next year.


Is there anything else around for pensioners?


In addition to that we have announced for older Australians, that we are

going to increase the private health insurance rebate so that at the moment

it is 30 per cent. But if you are over 65, you are going to be eligible

for 35 per cent…




…and if you are over 70…


…health fund…


…you will be eligible for 40 per cent. So that older Australians

will get a better deal in relation to private health insurance. And they

of course are the heavier users of private health insurance.


For those people who can, for those pensioners who can afford it.


(inaudible) can’t afford it, can’t afford to be in a health



Well actually we find that older Australians are the people who take out

private health insurance at a much higher rate than anybody else. And the

reason for that of course is that towards the, well as you get older you

tend to draw down more on health services.


Lynne thank you for calling. Hello Bob.


Hi Liam. Hi Mr Costello.


Hi Bob.




Yes he is listening.


Can you hear me?


Yes we can.


Oh okay. Mr Costello, every time I turn on the radio it frightens me because

of the bidding war provoked. And I know your Government’s at least

has put us in this position but my concern is whether it is sustainable.

And if the economy goes down, what is going to happen? Are taxes going to

go up or are interest rates going to skyrocket or services given away?


Well we have got to make sure that we don’t have an economic downturn.

That’s, I have always thought that the principle object of economic

policy is to keep an economy growing and to keep it out of recession. Now

we haven’t had recession in the last eight and a half years. The last

recession we had was the one that Paul Keating said we had to have, remember

in 1990. And other countries around the world have gone into recession,

the United States has, France, Germany, Japan, they have all been in recession.

So the principle objective is to keep the Australian economy out of recession

and that is what I focus my efforts on. I am confident that if we can keep

the reform programme going in industrial relations, if we can keep it going

in other areas as well, particularly business regulation. We can keep our

companies profitable, that we can keep the Australian economy out of recession

and interest rates low. That is the object of economic policy.


Bob thanks for your call. And Treasurer thanks very much for coming in

and taking some calls for us this morning.


It is great to be with you Liam. Thanks very much.