Transcript No. 2000/52

TRANSCRIPT

of

Hon. Peter Costello MP

National Press Club

Wednesday, 10 May 2000

12.30 pm

SUBJECTS: Budget

Ladies and Gentlemen welcome to the National Press Club and today’s National

Press Club Telstra Address. It’s the day after Budget day and our guest is obviously

the Treasurer. Please welcome Peter Costello.

Thank you so much to the members of the Press Club and the guests that are here today.

It’s a great pleasure and honour to be here, down here, I believe at my ninth address

to the National Press Club. And someone was kind enough to say nine – zip, its starting to

sound like your football team’s record this year. As we look at this particular

Budget, I want to focus on it as part of our medium and long term strategy for Australia.

As we faced up to this Budget we had some very important objectives in mind. Firstly, we

wanted to secure Australia’s financial future. And I believe that this Budget will

secure that future in a way which we would not have really thought possible 4 or 5 years

ago. Secondly, we wanted to show that there could be social benefit from good economic

policy. How good economic policy can amount to good social policy. To give the Budget an

opportunity to come together and to draw together those things that we believe in deeply,

both from an economic and a social perspective. The third thing that we wanted to do of

course is we wanted to put together in this Budget, the framework which shows how the

largest reform of the Australian taxation system ever, will come about. And the effect

that that will have on Australia’s economy. And I have a feeling that when people

write economic history in a decade or two. They will be looking back to this Budget,

they’ll be looking back to the tax system that’s coming into effect on 1 July

and they will see it as one of the turning points of Australian economic history.

Today when we look at taxation in our country we look back to the Second World War and

uniform taxation and we say that was the great structural change when the Commonwealth

took over income tax, to finance the Second World War effort. That when people look out in

40 or 50 years they’ll look back and they’ll say and there it was in July of

2000, when the great reform of Commonwealth – State financial relations was

accomplished. When the indirect tax base was broadened, when the income tax rates were

cut, when capital gains tax was cut, when business taxation was modernised, when family

assistance was reformed. They were the great structural changes in relation to the

Australian taxation system and they happened in July of 2000. And this was the Budget that

drew them together and told the economic story and gave a picture of where we are and

where we want to be and brought about some of the great structural changes in Australian

economic policy. This is a Budget which could secure our financial future, it could secure

social goals, it could secure structural change and will set Australia up as part of that

structural change I believe, with opportunities in decades ahead.

Firstly, this is the Coalition Government’s fourth surplus Budget in a row. Not

only are we forecasting surpluses for the future budget year, we will deliver in this

financial year a Budget surplus of about $7.8 billion, in fact double what we were

forecasting at the Mid-Year-Review. And we will deliver surplus budgets on current growth

projections right across the forward estimates. Not only will we be delivering a surplus

Budget, but we will be delivering a surplus Budget with substantial income tax relief. You

know I’ve been out on the radio airwaves today, I think I’ve done 10 radio and

television interviews already today, and I’ve been asked a lot of questions about

income tax relief, a lot of curious questions, how will it apply, when will it apply, what

will it mean? And I said to one of the interviewers, you know, there is a very large

proportion of the Australian public which has no experience of income tax cuts. If

you’ve been in the workforce for 10 years, you’ve not known what an income tax

cut is. There’s a substantial number of people who’ve never lived through them.

And I was thinking back through my own experience of taxation policy, of my own experience

and I can vouch for someone who has been in the workforce for about 20 years. Was that

whenever we seemed to get to the barrier on income tax cuts, for some reason or another

they were never paid. Sometimes they were promises, sometimes they were L-A-W, but very

rarely were they P-A-I-D.

Yesterday it was 53 days and today its 52 days and on 1 July Australia’s largest

ever income tax cuts are going to take effect. They are a reality. And for many

Australian’s the first experience they will ever have in relation to income tax cuts.

I saw one of the commentators remark I thought fairly in the paper today, the usual

experience of governments has been to promise income tax cuts and take them away. This is

the first Government that promised a tax rise and took it away. And that journalist of

course was referring to the East Timor levy. When we announced the East Timor levy at the

time of the Mid-Year-Review in November of last year, we were anticipating a cost for

Australian troops in East Timor of around about $1 billion. It was a cost over and above

and unanticipated at that time. And that cost would have driven the Australian budget into

deficit. They were our projections in November of last year. We were defending a wafer

thin surplus. We’d had the Australian Senate, which had punched a hole through our

tax package of $1.8 billion a year. And in November of last year we were defending a wafer

thin surplus, which with $1 billion worth of East Timor spending would have driven the

budget into deficit. And we said to the Australian people our troops in East Timor are

going to lack for nothing. They are going to be given every funding that is required. And

didn’t they do a valiant and wonderful job. And we said the second thing we’re

going do is we are going to keep the Australian budget in surplus. We can’t do both

and so for one year only, in this financial year, the 2000-2001 financial year, when the

costs of the damage inflicted in the Senate bear most heavily upon us, we will have a 12

month levy to keep the budget in surplus to the tune of $500 million. That was a solemn

promise that we made to the Australian people. And as the year went through, growth was

stronger than we expected, revenues were stronger than we expected, the budget outcome

this year which we thought would be $3.4 billion will in fact be $7.8 billion of surplus.

And it became increasingly apparent that we could fund the East Timor levy effort and

keep the budget in surplus without introducing that 12 month levy. And we thought it

wouldn’t be right to go to the Australian people on something as serious as that, to

ask them to shoulder a burden for a defence effort and keep the budget in surplus when

things had improved and we could keep that budget in surplus without it. A lot of people

have said to me today, why didn’t you keep the East Timor levy? It wouldn’t have

been right. It wouldn’t have been right to say to the Australian people it was

necessary to keep the budget in surplus and once it became clear that that was no longer

required to keep that levy, in place it would have broken what we considered a very solemn

trust with the Australian people. And I hope that the Australian people will agree with us

that was the right thing to do, the necessary thing to do and I hope that it builds trust

between Government and people. The kind of trust that we’re going to need as we

accomplish the big economic changes that lie in front of us. A journalist said to me

yesterday, why didn’t you keep the levy then you could have spent it on something

new. We told the Australian people that was for East Timor and it wouldn’t have been

right to treat it otherwise.

So this year, our fourth Budget surplus in a row, we will pay down another $9 billion

worth of debt. If I could just leave you with one picture, because I feel so often we use

these words billion and people lose sight of the numbers that are behind them. In the last

five years of Labor Government after they had raised all of their tax and raised all of

their revenues and made all of their expenditures, they had to go out and borrow to fund

the difference, to fund the deficit and over five years they borrowed $80,000 million. $80

billion. After five years of Coalition Government, after we raised our revenues, and our

non-tax revenues and paid our expenses we weren’t short for a dollar. We have not

borrowed one dollar since our Government was elected. And then we did something else, with

our surpluses and our asset sales programs we repaid $50,000 million of that $80 billion

borrowing. Five Labor Budgets building up $80 billion in debt, five Coalition Budgets

paying off $50 billion. 5/8ths of the way there. And to put that into international terms,

a debt to GDP ratio of 7 per cent which would be considered amongst major industrial

economies of the world to be one of the strongest Government fiscal positions, Europe 50

per cent, the United States 50 per cent, Japan 50 per cent and rising, Australia 7 per

cent. And if the Senate should pass our proposal to allow the Government to sell the

remaining equity in Telstra, something that is important for the future of Telstra and

worth doing for that reason alone, we would clear all Commonwealth debt. Our debt to GDP

ratio would be zero, nothing.

I asked the Treasury to find the last Government that did not borrow a net dollar

during its term. And they went back through the Keating Governments and the Hawke

Governments and the Fraser Governments and the Whitlam Governments and through the Menzies

Governments, which even at periods during the Menzies Government there were borrowing

particularly in the credit squeeze of 1961, and then they went through the Chifley

Governments and the Curtin Governments and back through the Scullin Governments, back

pre-World War I. And I heard this criticism this morning from the Labor Party that we

should be building bigger surpluses to pay off more of their debt. No doubt, hoping that

one day they could fall into Government and spend it again. Ned Kelly goes to the bank in

Jerilderie and robs it and says, why didn’t you have more in the vault. Kim Beazley

and Simon Crean say why haven’t you paid off more of our debt? We hope one day to get

back into office so we can spend it again. More money in the vault please before the bank

robbers make their raid. The Labor Party policy in relation to fiscal management.

And I make this point also. When a Budget runs in surplus, that is when you raise more

than you spend, you save it. And if you’ve got no debts you save it by building an

asset position. If you’ve got debts you save it by reducing your debt. You can’t

do anything else with a surplus. And one of the journalists said to me yesterday, why

didn’t you keep the East Timor tax that would have given you a bigger surplus and

then you could have spent it on something else. If you spend it, it is not a surplus. A

surplus is where you save it.

You can’t do anything else with a surplus except to pay down debt if you have

debt, or to build an asset position if you don’t have any debt. And if we had built a

$1 billion higher surplus, instead of paying of $9 billion this year we would have paid

off $10 billion. Instead of at the end of the year having paid of $50 billion of

Labor’s debt, we’d have paid of $51 billion of Labor’s debt. But we have a

strong fiscal position and what we decided to do in this Budget as our debt comes down and

our interest payments come down, we one redirect some of that expenditure in the areas

which are priorities for us. We redirect it out to regional Australia and health services

in regional Australia. We redirect it to families. And yes we redirect it to another area

which is a priority for us, cutting income taxes.

There are a lot of people that are saying, oh well income taxes are there somehow to

sugar coat the GST. That is not the point at all. Income tax cuts were deserved in

Australia. Our income tax rates are too high. Sure, we are taking the opportunity when we

reform the income tax system to reform the indirect tax system as well. And you’ve

heard me on this point before, the Australian taxation system consists of what I call the

indirect tax system – the ITS, the personal income tax system – the PITS, the business

income tax system – the BITS, the ITS the PITS and the BITS. You would’ve had to

be reforming the PITS anyway, but we took the opportunity to reform the ITS and the BITS

and the family assistance and Commonwealth/State relations. But we would have had to

reform income tax rates anyway. We were at the situation in Australia where somebody on

average weekly earnings was paying 43 per cent marginal rate on every extra dollar they

earned. It was wrong. You can’t have average earners paying nearly half of their

income in marginal income tax rates. The Australian people had had these tax rates which

hadn’t been reduced after the L-A-W became the F-R-A-U-D, and they were deserving of

income tax relief. It was part of re-energising the Australian taxation system. And so we

were reforming the income tax system anyway and we took the opportunity to reform the

indirect tax system as well. Middle income Australians need to have incentive. And our

personal income tax rates, particularly as they impacted on middle income earners were too

high. And so as we built that stronger financial position, as we started paying down the

Labor debt, we wanted to reduce the income tax burden on income earners in this country.

We took the opportunity to reform the ITS, the indirect taxation system as well.

And we’ve also decided to reprioritise Commonwealth spending. And in this Budget

we are delivering real practical help to regional Australia. Now I know that there are

some people that have said the test of your policy in regional Australia is not so much

the programs but the amounts. And they say look at the amounts, amounts if they’re

high mean good policy and if they’re low, not so good policy. Well I don’t think

like that. I don’t think ill-defined expenditures across a wide area are likely to be

near so effective as targetted expenditure in a narrow area. I’d rather focus and

deliver a lot than promise a lot and deliver little.

And when we said to regional Australia what’s the biggest problem, the message

that came back to us was health services. What’s more important to people than their

health? The number of doctors – in the metropolitan area, one doctor per thousand, outside

the metropolitan area one doctor per 1500. This is a real area of unfairness and

disadvantage. You can’t describe it any other way. Some people were saying ‘oh,

aren’t you giving more to the bush’. We’re not giving more to rural and

regional Australia. We’re just trying to get them up to the standard that’s

being enjoyed in the metropolitan areas. More doctors, better health services. And so

we’ve said in this area, in this area of policy where there is real disadvantage,

let’s focus on this area and let’s make sure we fix it.

And this coordinated range of program measures I believe is the most concrete,

practical, workable series of measures that could possibly be put together.

Firstly, we say every Australian medical faculty with a clinical school in regional

Australia. So every medical student trains in regional Australia, and while they’re

training deliver services in regional Australia.

Secondly, we say 100 new medical places for people who’ll enter a bond to practise

in regional areas once they’re qualified, and in return a $20,000 a year scholarship.

Money for specialists to pay them their travel and incentive to go out into the rural

and regional areas.

New health services which bring together medical services which may not be offerable on

stand alone basis, but when you put them together can give a regional health service.

More undergraduate medical scholarships.

And incentives for allied health professionals, psychologists, and podiatrists to go

out into those regional areas and deliver services.

This is practical, real, tangible, focussed, difference making initiative. And I think

the people of regional Australia who have heard lots of promises and sometimes wonder what

they amounted to will say this is a government that’s been honest and real about

focussing and targetting changes.

Now of course the Australian Labor Party, whilst it says it really believes in higher

surpluses, I often wonder how Kim Beazley says that word without stuttering, has said not

only are they in favour of higher surpluses, but they’ve criticised the Budget on

this basis. Little or no new investment in education, science, infrastructure, regional

development, jobs and industry, no extra money for public hospitals. So presumably what

they want is more money on science, infrastructure, regional development, jobs, industry,

public hospitals, education and a higher surplus.

Now when Kim Beazley on Thursday night gives his Budget Reply and announces his

rollback of the GST, which I presume he’s going to announce on Thursday night,

he’s got to say how much it costs, and how he’s going to pay for it. On Thursday

night when he announces his rollback of the GST, that is how he is going to reduce the

revenue base, he’s got to put his costings, how much of this supposedly iniquitous

tax that he’s going to rollback and how much that he’s going to save, and then

he’s got to say, how much more money he’s going to put on education, science,

infrastructure, regional development, jobs, industry and public hospitals. And then

he’s got to announce his tax rates to pay for it. Because if he stands up there on

Thursday night and says, ‘here’s where my rollback is, and I’d like more

money and I’d like an increase surplus and by the way, I’m going to guarantee

all of the revenue to the States’, it will be a prolix speech but it won’t have

content. That’s the challenge for him on Thursday night with his rollback. And

I’ll be very interested to see how far that rollback goes because a rollback is one

of those things that seems to be shrinking by the day. You know the policy that dare not

speak its name. The Party that has for two years fought GST and now lo and behold, if they

ever get elected have decided they want to keep it. This tax, this GST, which the Labor

Party said could never be made fair, they’re going to keep and roll it back. And

I’m looking forward to his speech on Thursday night.

One other thing that I’d say to the Labor Party and that is this – that if

they are genuinely interested in the fiscal position, I assume they will be passing all

budget measures in the Senate. No point running around saying that they’re interested

in the budget bottom line and trying to vote down measures in the Senate which will worsen

it. Again these are budget measures. And once upon a time budget measures used to be

enacted through the Senate, but then again once upon a time if you put a policy to the

electorate and won a mandate, you got your measures through the Senate as well.

I well remember standing up here in May of last year, let me take you back, and the

criticism of the Budget then was ‘Treasurer, this Budget, it’s all premised on

something that’s not going to happen, isn’t it? It’s all premised on

revenues from GST which haven’t been enacted by the Senate and won’t be enacted

by the Senate.’ And I remember at the end of the week, I flew up to the APEC Finance

Ministers’ meeting and I got off the plane in Singapore and Senator Harradine had

made his speech, and everyone said, ‘well that was the end of that Budget’,

premised on GST revenues which weren’t enacted and wouldn’t be enacted. But they

were, not as well as we would liked, but they were. And we put our measures into the

Senate and we fight for them because we have a mandate for them and we have a vision. We

have a vision for a better tax system. We have a vision for Australia which has a secure

financial future. We have a vision for Australia where our economic goals and our social

goals come together. We have a vision of spending on priorities like regional Australia.

We have a vision of spending on families. We have a vision of creating a strong economy

and this Budget, our fifth Budget, continues that policy and builds for the future, a

future for Australia which will, in my view, give better opportunities to our people

because we cared enough to make the big and the tough decisions, we cared enough to try

and build for the future.

Thank you very much.

Thank you Treasurer. Our question period today begins with Belinda Goldsmith.

Yes Treasurer I wanted to ask you what implications this Budget has for the operations

of the Australian Office of Financial Management. You forecast further reductions in debt,

can you give some details of what kind of assets you might buy to offset this given your

commitment to retain a liquid bond market?

Sure. There’s been a bit of concern I notice in the financial markets that our

debt reduction program means that there won’t be enough Commonwealth Securities on

offer and as a consequence that will lead to an illiquid bond market. For the Australian

journalists that are here just let me tell you the first question I am always asked when I

go internationally is why aren’t you borrowing more money. Because amongst the

finance houses they want to issue Australian bonds and in fact if the Telstra sale were to

go through we wouldn’t be borrowing at all. But it is important we believe to keep

some bonds and some securities out there so that you can get the yield curve and you can

keep the market liquid. So we would still do gross issuings to keep a liquid market and we

would offset it with assets if we got to an asset position. That would be the

responsibility of the Australian Office of Financial Management to manage the bond issue,

to keep the market liquid and marry it up with an asset position. We would be one of the

few countries in the world which would be managing a net asset position. There are some

others. I think Singapore is one, but we would put that in the hands of the independent

Australian Office of Financial Management and charge them with managing the net asset

position in the most profitable way and frankly it’s a problem I’d like to have.

I would like to have the problem of deciding where to invest the net asset position of the

Commonwealth because I don’t think anyone has had that problem at least since before

the first World War and maybe even before that.

Treasurer, there is in fact some recent analysis that shows foreign investors have

reduced their holdings of Australian bonds. And given the steady fall in the value of the

Australian dollar since the start of the year, what can you say to reassure foreign

investors about their investments in Australia.

Well in relation to investment in Australia I think the most important thing we can do

is we can run a strong economy. A strong economy with low inflation, with a good fiscal

position, with a low tax position and certainly in the case of foreign investors I point

to at least two things which have changed recently in Australia. One is we have cut

capital gains tax. Do you know there’s a lot of people that don’t really know

we’ve cut capital gains tax. Capital gains tax was cut on 21 September last year and

for foreign investors particularly pension funds which are not subject to taxation in

their home jurisdiction, they can come in and they can make investments in Australia now

capital gains tax free where they are engaged in the venture market and the like.

We’ve also reduced company tax starting on 1 July and we will have one of the lowest

company tax rates in Asia. It will be lower than anything in America or Europe and one of

the lowest in Asia. In relation to the exchange rate, the exchange rate moves for a whole

variety of factors and some of it is because our exchange rate is moving and a lot of it

is because the exchange rate that we measure ourselves against is moving. And I ask you to

bear that in mind when you assess exchange rates. You could look at the exchange rate for

example on the Euro and the US dollar. You’ve got to always bear in mind that where

there are two variables the movement in any one can create the difference. But it’s

important to make sure that we run a strong economy and that’s what we intend to do.

Treasurer, you talked about the social benefits of economic reforms that you have

already undertaken like tax reform. What further reforms do you plan and, or are you just

going to sit on your laurels?

I don’t know Louise. How big are those laurels? I suspect you think they’re

too small to sit on and I agree with you. And they’d be rather prickly too. I was

going to answer that question. Let’s get our way through tax reform which is going to

take place in 1 July. Let’s get our way through our privatisation programme which is

hopefully going to continue and I have indicated that I think that there are some other

areas, financial areas that need a little bit of simplification and if we were to get

through these great challenges perhaps we could turn to simplifying some other areas which

are very complicated at the moment. It starts with S.

I wanted to know firstly, how your health was and whether John Fahey had been breathing

too heavily on you in the preparation of budget given that he’s taken a few days off

to be treated for Legionella and the second thing is the budget forecasts that the

September quarter inflation rate will jump to four and a half which means that in the year

to September inflation could be reaching towards six or seven per cent. Given that how can

you continue to urge workers that they should not chase wage rises because of that and if

they did would that have an impact on interest rates?

What we’ve said is that there will be a spike in the Consumer Price Index for the

September quarter because on 1 July wholesale sales tax is abolished and goods and

services tax is imposed. If a product has a direct wholesale sales tax that comes off the

product, goods and services tax goes on it. And that more or less happens immediately. But

then over the course of the next months or quarters embedded wholesale sales taxes come

out of prices. Embedded wholesale sales taxes are the wholesale sales taxes which are

built in to the production process. The distribution process. The transport process. And

those embedded costs unwind over a period of time so you get a spike and then as your

embedded wholesale sales taxes come out you come off the spike and actually at one point

you go negative with ongoing inflation assumed to be constant. And I think there is a

graph of that in the glossy budget papers. And over the course of the year, as you look at

the overall effect in the year the average effect of the one-off price change is two and

three quarter per cent.

Now with wage earners it is important that rather than looking at the spike and

assuming it’s spiked up and it’s going to continue, it is important that they

understand there’s the spike and then the embedded costs come out so that the spike

comes off again. And that the overall effect is two and three quarter per cent on an

average over the year. It is also important that they remember that income taxes means

that on the same wage they’re now taking home more money. Income tax cuts mean that

on the same wage they’re now taking home more money. And family assistance

improvement means that if they are a family they have increased family assistance for the

care and the nurture of their children. It is important that they remember that it’s

their after tax position, it’s their disposable income which counts in dealing with

price changes. Some prices will go up, some will stay the same, some will come down. But

the average over the year will be two and three quarter per cent, and a lot of work has

been done on this now. A lot of work has been done on this now and I think it has been

generally agreed that with the effect of those income tax cuts and family assistance

changes, even after price rises they are all better off. Those wage and salary earners and

there are no grounds for seeking wage increases. And if the wage increases were sought,

worse if they were granted and they flowed into a second round, then you would get a

second round effect. It’s the Government policy to have a first round effect. To make

it clear that that shouldn’t flow into wages it is recognised by the Reserve Bank

that we ignore the one off effect and we look through to ongoing inflation, we keep the

ongoing inflation in the band, then that’s the figure that we’ll be focusing on

during the course of 2000-2001.

Well how’s my health, good I hope. Very busy time for Treasurers. I think this

morning I had done ten radio and television interviews and a Press Club and a Question

Time and a function tonight, so it’s a heavy programme. My colleague John Fahey has

been toiling with me in budget preparation. It is an incredible strain and he perservered

through that with Legionella in the last week or two. I pay tribute to the work he has

done. He’s gone home to rest. He told me that all the medical advice is that if he

rests that he will be right after the period of rest is ended and we wish him all the

best. You asked me whether he had be breathing on me? And by that I meant breathing on my

kneck rather than breathing to my face. I asked him that, strange as it may seem, and

apparently it is not communicable except through airconditioning. Not suggesting there

would have been a problem if it was communicable.

The Treasury seems very bullish about the prospects for low unemployment. Do you

believe that a five per cent unemployment rate is within Australia’s grasp and, if

so, when do you think this might happen?

The experience of the last four years that the Coalition Government has been this, that

if the economy grows at around four per cent and employment grows at around two per cent.

You take about a half a per cent off the unemployment rate. So after four years we have

taken about two per cent off the unemployment rate. The unemployment rate which when the

Coalition was elected was about 8.6, 8.7 is now 6.7, 6.8. The point then is if you did it

for another four years, if you did it and that is a huge ‘if’. If you were to

grow at four per cent for another four years and employment growth therefore grew at two

per cent and you took off half a percentage point, you would see where the unemployment

rate would be, but that’s the huge ‘if’. Now we’ve come off a pretty

good growth spurt and nobody predicted that it would be as good as it was in the past. Is

anybody going to say you could do it for another 3 or 4 years. What I do know is this,

that by reforming our economy we increase our chances. That’s what I know. I know

that by reforming our economy whatever it would have been it will be better. And if it

would have been a 2 per cent growth it may be that we’ll get 2 . If it

would’ve been 3 maybe we’ll get 3 . As we reform the Australian economy, we

lift the speed limits at which we can grow. And I’ve said this before, the great task

of the Australian economy at the moment is how do we prolong the cycle. Coming off 11

quarters now where growth has been at 4 per cent. We’re coming off a positive run of

growth which is even longer than that and the task now is how do you prolong the growth

because every year you prolong it is more people that are going to get jobs. And we have

to think in our minds how do we keep this economy growing. That is the great task of

economic policy.

Malcolm Farr from Treas… from the Telegraph Treasurer.

Don’t let on you’ve been our plant all these years Malcolm.

We did pretty well on the front pages this year didn’t we.

How did you get that story on beer so wrong?

We’ll talk later. Treasurer, two things if I may. When the, the first week of the

GST the Prime Minister is going to be celebrating the Federation of Australia over in

London, what sort of message do you think that sends, sends to the public, and secondly

what elements of the Australian superannuation system do you think could be improved or

replaced?

I don’t want to go on to the next thing before we have finished the current thing.

But if you’d reform the taxation system and your privatisation program is on track

and your debt reduction program was on track, and your Budgets were in surplus and your

structural reform to your labour markets was continuing and you ask me what are other

things in Australia that need improving, I think the complexity in superannuation needs

improving. And I think superannuation is now so complex, that it should be simplified. Now

all I’m saying is that’s something that’s down the track and it may even be

another Treasurer after me and I’m not going to start on that until we’ve

finished what we’ve done here. But I think I was asked what are the other great

challenges of economic policy and I think that’s something that one day will have to

be done in this country. In relation to the Federation, the hundred year celebration of

Federation, look I think it’ll be a great occasion actually. A hundred years as a

nation. To celebrate it and for the Prime Minister to lead those celebrations is entirely

correct and proper and I make this point. I think I’m right in making this point.

He’s going to be accompanied by all the State Premiers, including the Labor State

Premiers. As far as I know the Labor State Premiers are going to be there in London, in

July, and I know that Federal Labor likes to criticise the Prime Minister over this but

they’re not joined in that criticism by the State Labor Leaders who consider it

absolutely appropriate to be there and I think it’ll be a wonderful time. I think

it’s appropriate that we mark these occasions, a hundred years of Federation.

It’s a good story in Australia. Look I know that there are areas where we

haven’t done as well as we would have liked. But a hundred years, no wars, no civil

disturbances. We’ve provided a home for people all over the world. We are still

considered an opportunity society and I think that’s worth remembering and

celebrating.

You’ve told us in the past about how your Budget, Budget’s fire-proofed us

against the Asian meltdown. The first international reaction to this Budget was negative

bouncing back to I guess neutral. Can you guarantee that this Budget, in fact fire-proofs

us against whatever the world might be throwing at us, and in that respect is it

especially fire-proof us against what Dr Greenspan might throw at us?

Look for 2 years during the Asian financial crisis the task was how do we cope with a

regional recession. I think what your adverting to, what’s on everybodys mind at the

moment, is how do you cope with an American boom? I’d rather have a strong world

economy than a weak one, frankly. I’d rather have a stable one. And I think

that’s what’s on the minds of the American policymakers, how do they get stable

growth in the United States. But the fact that world growth has picked up is a good thing.

I keep making this point. World growth is a good thing for Australia because it’s

going to give us export opportunities that we haven’t had. We’ve come through a

period of recession. The world is picking up. That is going to be a good thing for

Australia. We’re going to switch our growth into exports and that will have an effect

on commodity prices and that will be a good thing for Australia. One indicator in this

Budget of that, is we expect our current account deficit to decline from 5 to 4 – per

cent. It’s going to be good for Australia, that is part of the export story and from

my point of view, whilst I would like strong consistent stable growth I would always

rather have a world economy growing than a world economy or regional economy which is in

recession. And I say to the Press Club, thank you for coming today. It’s been a great

opportunity for me to talk to you and to enjoy the company of my friends in the press and

I hope that you all have a very happy after-budget day. Thank you very much.