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May 9, 2000
Doorstop Interview: Budget, Telstra
May 12, 2000
May 9, 2000
Doorstop Interview: Budget, Telstra
May 12, 2000



Transcript No. 2000/49




Hon. Peter Costello MP


Radio 3AW Breakfast Show

Wednesday, 10 May 2000

8.05 am



Tell me this Treasurer. When I read that we have a nice Budget surplus, and I read, as

the papers tell me, cause I know nothing about economics, I’m just a lawyer, that the

surplus is almost, is generated by a sale of a mobile phone spectrum, the expression

“banana republic” tosses itself up to me?


Well, that’s probably because you are not an economist. As you said.


But it makes me worry that in order to achieve a result, this is not a criticism of

you, this is an assessment of the Australian economy, that we sell a mobile phone network

and bang that makes all the difference.


No. We license people to use the spectrum. Just as we license radio stations to use the

spectrum and television stations to use the spectrum, and they pay for the right to do so,

which they should because they’re public assets. Then that’s a revenue to the

Government. When we sell publications, that’s a revenue to the Government. My view

is, by the way, we should try and maximise all of these revenues to the Government because

if you don’t maximise the revenues to the Government from the public assets, then all

that will happen is that you will be paying higher taxes. And I’d much rather frankly

have good sound commercial management which maximises the return on these public assets

than say people have to pay higher taxes.


You must be a bit disappointed, turning your mind back to 1998 when the three

commercial television networks got the bonus?


Well, they pay annual license fees and they’ve now been given additional spectrum

to move into digital television. But if you actually speak to them they’ll reckon

that they are paying license fees which are incredibly high, from my point of view I think

they ought to be paying a fair return on community assets and that is what the community

would expect. I think the community would say to us, you are in control of these community

assets get us the best return you can and if that means we have to pay lower taxes so much

the better.


Is it right when you auctioned air space in March and you got $1.3 billion in the kick,

you were actually expecting $300 million?


We were expecting a lot less than we got. And the good thing about it is that it came

in at $1.3 billion, because the Budget is in surplus any of these proceeds go to retire

debt. We were able to pay off another billion dollars of Labor’s debt. In the last

five Labor Budgets they accumulated $80,000 million of debt. In our first five Budgets

we’ll have balanced the budgets and we’ll have repaid $50,000 million of the

$80,000 million Labor debt. So 5/8th of the way there, 50 billion out of 80

billion. And this is the Budget which keeps that economic management going.


Brings home the bacon, Treasurer?


Well, it brings home some financial security that we didn’t have a year or two



And you’ve pumped some money into the bush. You are going to stick a doctor into

every home in the bush and you are going to spend a bit of money up there. Now listen I

want to form the ordinary city dweller faction, so that we can get our own black mail

candidates in the city just for ordinary folks. What do we have to do to get some dosh?


Well, you are getting the largest income tax cut in Australian history on 1 July,

that’s the first thing.

And I don’t know what salary you fellas earn but for average income earners now

their top marginal tax rate is 43 per cent and that’s coming down to 30 per cent. And

that will be the largest income tax cut which Australia has ever had, everybody benefits,

all rates are cut, every taxpayer gets an income tax cut. This is the first time we have

had a genuine income tax cut for well over a decade, a lot of people can’t even

remember what it is like to have an income tax cut. And there are some people that say you

shouldn’t be cutting income taxes, that’s nonsense. That is what a Liberal

Government is all about, cutting income taxes.


Are you going to be better off yourself?


Oh, I would get an income tax cut along with every other taxpayer in Australia. Yes.


The thing that worries me, the thing that gave me the old neeaahh when I saw you doing

it last night on the TV, is the bit about inflation going to whatever it is going to and

the effect of the GST is going to have on the inflation rate. That makes me worry cause I,

you know, I’m old enough to remember the inflation rate under Gough Whitlam, not that

we are talking about the same figures, and the way that that can eat away at what

we’ve got. How concerned should we be about that inflation rate?


Well, this is, there is going to be a one-off price effect of the indirect tax change

which we think will be 2 – per cent, but provided people understand that that’s a

one-off effect, there is no need for wage claims, because everybody is getting income tax

cuts then it will flow through the system. And this is not unique to Australia.


So will it go back down again?


Oh yes. The ongoing inflation when we take out the one-off impact of the tax changes is

going to remain at about 2 per cent. But this is not unique to Australia, practically

every country in the world has introduced a GST or a value-added tax. And this has always

been the case that you have this one-off price effect. The important thing is to make sure

you don’t feed it into a second round and bring it back again.


Well, there are fifty odd days away now before the introduction of this tax, or the Tax

Package as it were. Will this not mean that at some stage in the next six or seven months

you are going to have to have a mini Budget?


No. The tax changes are totally factored into this Budget. This is the Budget which

delivers the income tax cuts, the abolition of wholesale sales tax, the deduction in

diesel fuel, this is the Budget that increases the family assistance and this is the

Budget that imposes the GST. So, I think I said last night fifty-three days, so that must

mean fifty-two days to the introduction of Australia’s New Tax System, which is our

biggest tax shake up in seventy years. 


Tell us, have you factored into your Budget the fact that you are going to have to bail

out NSW after the Olympics over our dead bodies, because I saw Michael Knight recently was

asked how’s the budget for the Olympics going and he said we’re going to break

even. So can you imagine who bad it really is?


Well, there’s been a lot of money, including a lot of Commonwealth money by the

way, which is going into those Olympics in terms….


You are going to bail them out I guess Treasurer is what I’m asking?


Well, we’ve already bailed in. We’ve bailed in already. We bailed in for some

infrastructure and for some security.


And customs.


And customs. At the end of the day what I hope is that that’s a great and

successful event, and I think that Australians will think it was worth it.


Yeah, yeah, yeah, yeah. But what about when the Member for Bennelong comes to you and

says, excuse me but we’re really juicy fruit of the Olympics completely and

we’re up that well-known ditch, now listen Peter get one of those canvas bags from

the back of Treasury that’s got the surplus in it and bail the people of NSW out.


The good news is, and one of the things behind the thinking on tax reform is that with

GST coming in on 1 July, all of those tourists coming into the Olympics of course, will be

paying taxes to Australia. And that is the way that it ought to have been. Whenever we go

off to another country…..


Didn’t you say that you exempted some aspects of the Olympics from the GST?


No. They will be paying their taxes in relation to restaurant meals, and accommodation

and all that sort of thing. When we go overseas, you fellas would know this, you go off to

England or somewhere, you pay tax, you pay value-added tax.


Then you get it back at the Airport.


Well you don’t get it back on anything that you consume in the country. And

we’ve been the mugs around the world that everybody has been charging us with GST

when we go to their country, we’ve never been charging anybody GST when they come to

ours. From 1 July we’ll go to world practice and that will be another benefit for the

Australian taxpayer.


When are you going to take off that silly airport tax in Sydney? Yeah, come on

you’re a Victorian pal? Why do we have to keep subsidising. They must have double

glazed the whole of Sydney twice by now. Can I put in an order for a window?


That’s to knockout the view. The views are so beautiful in Melbourne that you

don’t need double glazing fellas.


Well, when are you going to get rid of that one?


When the, I’m not entirely sure, but when the program of noise insulation is

completed then I imagine the levy will come off. But I’m not quite sure of the timing

on that.


I don’t know your weekend reading habits, but Phillip Adams in The Australian

two weeks ago wrote you a letter in which he said you for the good of the country should

knife John Howard. Did you read it?


Well, my weekend reading habits don’t extend to Phillip. I was probably on the

sports pages at that stage Ross or the cartoons.


I happen to know you are a Baptist so if …(inaudible)….watching do you want

to have another attempt at it. Did you read the article?


No. I was concentrating on the sports page.


I know somebody who read the article.


Who was that Ross, was it?


No. The Member for Bennelong. I notice you that you’ve bunged in $49 million for

detention centres for illegal immigrants. Now, is that something that you personally

yourself wanted to do or something that you bunged in as a bit of window dressing for

Jonesie and Zamarnek?


No. We’ve had real trouble with people smuggling. Nobody would begrudge the fact

that there are people who are genuine refugees and they’re at risk of their life and

they apply for refugees status in Australia, that’s one thing. The second thing is

there appears to be people smugglers who for money will try and smuggle people into

Australia and we want to stop that. And we are going to build a new detention facility in

Darwin, we are going to take a very tough attitude if people get into this country

illegally then they are going to be put into detention and properly processed, but the

more important thing is to stop them getting in illegally in the first place.


You put on your serious voice, so that must be showing up in the poll?


Well, I think it is something that people are genuinely concerned about. They wonder

why it is that people smugglers can traffic in people. Just as there are smugglers who

traffic in drugs you know, there are smugglers who traffic in people. And for money will

try and smuggle people into the country.


Do you sometimes feel as Treasurer when you got to look at your figures, and

they’ve all got to add up, and you’ve even got blokes like, because you know you

are going to be under pressure. Terry McCrann wrote that the Budget was somewhere between

a disappointment and a disgrace before he’d even read it.




So you know that you are going to be under pressure. Do you feel like sometimes ringing

up the man who designed the Collins Class submarine and say, well thanks very much, you

know, 128 million because you can’t build a submarine that is quieter than a jumbo

jet, you know, I could have used that 128 million?


Yeah. I feel like that. I really do feel like that. We entered into a contract for

submarines for a particular purchase price and you pay your money and you find that it

doesn’t meet the requirements. I don’t have to ring up the bloke by the way, who

was responsible for the Collins submarines because he sits opposite from me in the

Parliament. It was Kim Beazley. So you can actually lean across the table and I have done

this and say thanks for the Collins Class submarine, that was a real help to the Budget.


You’re having a field day with Kim Beazley at the moment aren’t you?

You’ve got him leading a small African nation on Sunday.


Well, the Labor Party’s been running this line that Australia shouldn’t have

GST or a value added tax, you know, it is good enough for France and Germany and England

and Japan and Singapore and every other nation in the world, but what this country really

needs according to the Labor Party is wholesale sales tax. And I had a list when we

started this of four nations that took the same view as Beazley and Crean. There were four

nations in the world that agreed with the Labor Party on the need for a wholesale sales

tax. They were the Solomon Islands, Ghana, Botswana and Swaziland. And over the last

couple of years the Solomon Islands and Ghana and now even Botswana have given up on the

wholesale sales tax. So if Beazley is right the only people who understand world taxation

either lead the Labor Party or are in the Government of Swaziland.


There you go, you got a free kick to do the line again. Hey listen, we know you’ve

got to go, but a quick one, we spoke with your brother early on and he was complimentary,

he marked the Budget 7 out of 10, but he said, he said…… You don’t like

that mark?


Well, I don’t know he could have been a little more generous this morning. He

could have gone a 7 couldn’t he?


He is a Baptist for goodness sakes, 7 is, you know, paroxysms of delight.


Is it? What that’s half way to heaven is it?


It is. He said that you shouldn’t have, and this is a view that we certainly

don’t share I must say, he said you shouldn’t have taken off the Timor tax.


Well, he’s wrong. We said that to fund East Timor which would have put the Budget

into deficit there would have to be a 12 month levy to fund East Timor and keep the Budget

in surplus. Because the economy has grown stronger the Budget is in surplus and we funded

East Timor anyway. You can’t got to the people and say we need a levy for East Timor

and when it appears you that don’t need it because the Budget has strengthened say,

oh by the way we will keep it anyway. That would be a massive breach of faith. A lot of

the journalists said, well why didn’t you keep it? I said we didn’t keep it

because it was there for one reason to keep the Budget in surplus while we paid for Timor

and when we could the Budget in surplus and pay for East Timor without it this was a

question of keeping faith. And we felt very strongly about that.


Well, he’s given you 7 out of 10. You told him he’s wrong so I’d get a

taster before you have the roast beef next time you’re around enjoying a Sunday.


Well, yeah but now that he understands that he might remark me up to 8, don’t you



Good on you. Hey listen we know you’ve got to go, many thanks for making yourself

available, as the Bombers cruise towards ten straight.


It’s looking pretty good and I think it’s the Crows on the weekend isn’t



Yes, and for once we are all on your side.


Thanks fellas you are a hard audience.


Peter Costello, Treasurer of the nation. Mr Costello thank you for your time and have a

good day.


Thank you.