Transcript No. 2000/43

TRANSCRIPT

of

Hon. Peter Costello MP

Treasurer

Joining us now from Canberra is Federal Treasurer, Peter Costello. Mr Costello good

morning.

Good morning.

What are you most proud of in this Budget?

Well, it continues the economic management that we’ve put in place since we were

elected. Budget in surplus for the fourth time and just as Labor ran up $80 billion worth

of debt in its last five years, not only have we made the Budget pay for itself, but in

five years of Coalition Government we’ll pay off $50 billion of the Labor debt. And

that’s just getting Australia out of the debt trap. Our interest bills are going

down. As our interest bills go down we can spend some more on areas like doctors for rural

and regional Australia and help for families.

Alright, let’s look at your rural package. Is health spending which is the focus

of your rural initiatives going to be enough to turn around resentment in the bush?

Well, one of the things that worries people in rural and regional Australia is the lack

of medical services. If you live in a metropolitan area there’s one doctor per

thousand people, outside the metropolitan areas it is one doctor for every fifteen

hundred. So it is hard just to get to see a doctor. So what have we decided to do about

that? We are going to double rural medical undergraduate scholarships, we are going to put

additional places into the universities for people who will train as doctors and give a

bond that they will go and work in the country for six years. We are going to introduce

new clinical schools so every university sends their medical students out to rural and

regional Australia for some part of the training where they work while they are being

training, and we’re going to have 85 new services which are not fully hospitals

because some small towns can’t support a full hospital, but which put together the

health services that couldn’t be justified by a full hospital but be delivered with

one of those health centres.

But is this going to win them over in the bush? They felt so disaffected and so

isolated and basically forgotten by Canberra?

Look, if this package which is $562 million over four years can’t increase medical

and health services in rural and regional Australia, nothing will. This is the biggest

coordinated program that we’ve ever had to address this problem, it is a focused

program and it is real and concrete and designed to improve medical services.

OK. What about roads and infrastructure spending, or are you saving that for next year

before the election?

Oh no. The Budget continues road funding and it continues a number of infrastructure

projects. One of the ones, for example, that we are continuing with, and I think the sods

already been turned, is the Alice Springs to Darwin railway. Something that has been

talked about for a hundred years, a huge infrastructure program which I expect will be

completed within years.

Alright. The markets took an immediately dim view of your surplus given that it existed

almost entirely on the spectrum sales.

Well, the Budget was in surplus for the fourth time and the good news is…..

Not by much without the spectrum sales though.

Well well, for the fourth time the Budget was in surplus. And let me make this point,

not only was the Budget in surplus, that is we pay for every expense, but we are going to

repay $9 billion of debt. And when we repay $9 billion worth of debt this year, then we

will have reduced Labor’s $80,000 million debt by $50 billion.

OK.

Now, let me make this point because this is an important point. This Government is yet

to borrow a dollar. In five years in office, and I asked the Treasury boffins to go back

and find another Government which in five years of office had not borrowed a dollar,

you’ve got to go back a long time.

Alright. But let’s address this issue of the $2.6 billion windfall. It is an

abnormal payment and the markets have passed judgement, the dollar went down last night,

what they’re saying is that they wanted a more solid foundation for the surplus.

Well look, the dollar has moved down and its moved up in the last 24 hours.

It has moved up to about 58.36 cents.

Yeah.

It’s down from 66 cents a year ago.

Well hang on, hang on, you asked me about the Budget last night. So let’s talk

about the last 24 hours. The dollar moved down and the dollar moved up. And obviously

there are a number of factors that are taken into account in relation to the dollar. But

let’s come to this question of license fees. License fees for the use of spectrum are

always included in the Budget. This channel, as it continues to remind me, pays a license

fee to broadcast. And it’s only proper that the Government actually charges license

fees to broadcast and puts them in the Budget because it’s a public asset and people

who make money out of using public assets, if they can pay for it and they should pay for

it, can relieve the burden on taxpayers. And I make no bones about this fact, that we will

in the interest of taxpayers maximise the license fees that people get from using public

assets.

When you look at the judgement that the financial markets have passed on this surplus,

do you think you might have scrapped the Timor tax too quickly?

Oh no. Look, the Timor tax was announced last year because this country undertook a

huge financial commitment and moral and humanitarian commitment in East Timor. At the

position we were in November of last year, that commitment would have driven the Budget

into deficit. And we said to the Australian people, we don’t want the Budget to go

into deficit and we want to fund our troops properly in East Timor and so we will put in

place for 12 months a levy to fund East Timor and to keep the Budget in surplus. Now, as

the economy has picked up and improved we were able to fund East Timor and keep the Budget

in surplus without that levy. And it wouldn’t have been right to say, oh we no longer

need the levy but we are going to keep it anyway. It wouldn’t have been right to say,

we need the levy for East Timor and when it became clear that the Budget would be in

surplus we’d spend it on something else. This is a question of keeping faith with the

Australian people. This is a Government that said we will have a levy for one purpose and

one purpose only and when that purpose ended so did the levy.

Alright. Your economic predictions are buoyant, good growth, lower unemployment. How

does that fit against higher interest rates, a falling dollar, fluctuating sharemarket,

the GST affect on inflation, uncertainty over the US economy?

Well, what we are predicting is that growth will come off a little bit. We have been

growing above 4 per cent over the last three years and we think in the next year that

growth will be a little under 4 per cent. In relation to interest rates, home mortgage

interest rates outside of our Government are the lowest they’ve been since 1973, I

think. Under 13 years of Labor….

But they’re going up. They’re going up in the prelude to a GST.

Tracey hang on. In 13 years of Labor Government you never saw an interest rate this

low. We’ve come off record lows and interest rates have gone up by about 1 per

cent, but you’d have to go back a long time to find an interest rate which was in the

7’s. I think you’ve probably got to go back to the early 70’s, back to the

Whitlam Government. So interest rates have moved up a little as world interest rates have

moved up. But why have world interest rates moved up? It’s because the world economy

is strengthening and a stronger world economy, as I keep on saying, is not a bad thing. A

stronger world economy is a good thing for Australia. We’ve come through an Asian

financial crisis, the world worked against us. And as the world economy picks up that is

going to be good for our exporters.

Alright. Well we’ll leave it there. Thank you for your time.

Thank you.