Budget, Defence, Al Qaeda, Health Spending, Dollar – Doorstop Interview

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Budget, Defence, Al Qaeda, Health Spending, Dollar – Doorstop Interview



Hotel Grand Chancellor

Thursday, 22 May 2003

12.20 pm

SUBJECTS: Budget, Defence, Al Qaeda, Health Spending, Dollar


It’s good to be here in Hobart again, as part of events coming off the Federal

Budget. The Federal Budget which we brought down last Tuesday provides increases

in funding for the government of Tasmania, in fact, under the GST arrangement,

by which all GST income goes to State governments, Tasmania now receives more

than it would have under the previous funding system. Around $7.5 to $8 million

more in 2003-04. In addition to that we will be looking as to whether or not

the State government will return some of that income in terms of tax cuts in

the budget which will be brought down today or whether it takes the opportunity

to alleviate some of the State taxes and it has a good opportunity to do that

with that additional revenue.

The Federal Budget also brought down increases in funding for health, with

a 17 per cent real increase over the next five years and we have guaranteed

to any State that matches that, that 17 per cent increase, so will be looking

very carefully at the Tasmanian State budget today to see whether or not they

have a 17 per cent real increase in their share of health expenditure which

will match that of the Commonwealth. But the Budget as a whole enabled the Commonwealth

to attend to priority areas such as health and education, the military commitment

in Iraq, to balance our budget and also to reduce taxes. I think that is a fair

allocation of responsibilities and certainly strong economic management which

we intend to continue. Any questions?


Has the Federal Government received an approach from the US about setting up

bases in Australia?


Well, I think Senator Hill made a statement about that yesterday. The Australian

Government has joint facilities already with the United States. They are part

of the defence relationship and they are very important for Australia’s security.


Are there moves to set up more bases though?


Well I think Senator Hill commented on that yesterday, did he not? That is

a matter for Senator Hill.


Can I ask for your response to the alleged al-Qa’ida tapes your immediate reaction

to the naming of Australia and others as a specific target for the organisation?


Well, Australia has been named by al-Qa’ida previously, by Osama Bin Laden,

in a tape which is thought to be the voice of Osama Bin Laden, he named Australia

as a terrorist target. In the context, actually, of East Timor, that Australia

was a terrorist target because of the role that we had played in relation to

East Timor, so it wouldn’t be the first time that Australia has been named by

a senior person of al-Qa’ida, or threatened you might say by a senior person

in al-Qa’ida. Al-Qa’ida as you know is opposed to countries of the West for

its own sick reasons, because we believe in liberty and the rule of law, and

we take a strong line for individual freedom. And the Government will not be

intimidated by that. It means that we will have to be careful with our security

and we will be, and we have been putting in place a lot of measures over recent

years to actually heighten Australia’s security response in relation to travel

reports and airports and other areas and it means that we must continue to focus

on these areas.


You mentioned East Timor, but the tape listed the countries involved in the

Iraq conflict, misnaming we suspect included (inaudible), Norway and meaning

Denmark. Doesn’t that add, though, to the Opposition’s claims that the Government

should really admit that now, as a result of our actions in Iraq, we are a greater



That was a point I previously made. Osama Bin Laden, had previously named Australia

as a terror target, prior to Iraq and did so specifically in relation to East

Timor. Now, I think that it was wrong in the way in which he described Australia’s

engagement in East Timor, which was as part of the legitimate aspiration of

the East Timorese to an independent nation. There’s certainly no action against

Islam in Australia’s motivation in relation to East Timor, but that’s the fact

of the matter. Before Iraq, Australia had been named by this terrorist organisation.

I think you are wrong to think that a terrorist organisation acts in a logical

way. If it were a logical organisation it wouldn’t kill and maim innocent people.

This is an organisation which, for ideological reasons, is bent on killing innocent

people. It doesn’t operate logically and to say that in some way you can negotiate

or appease it I think is to make a mistake. This is an organisation that exults

in killing.


Mr Costello, can you get back to the Federal Budget and what you were talking

about, a 17 per cent real increase in health expenditure in Tasmania. Can you

report to (inaudible) Tasmania in fact, going to dip out, miss out by up to

$30 million? Can you clarify that?


Well, I want to make this very, very clear because I think there has been a

little bit of misinformation on this subject. The five year Australian health

care agreements, these are the agreements between the Commonwealth and the States,

with Commonwealth sharing funding for public hospitals, provide for an increase

over and above the last health care agreements, of $10 billion, or a 17 per

cent real increase. That is, allowing for inflation, after inflation, a 17 per

cent real increase. Now, State governments can certainly say, oh well we would

like an 18 per cent increase or more. But they cannot say that the Commonwealth

has cut funding. Now, the Commonwealth is offering a 17 per cent real increase

and so we will be looking very carefully at the State budget today, to see if

the State government is matching it. Because, at the very least, they should

have in their budget today, a 17 per cent real increase in health funding if

they want to match the Commonwealth’s commitment.


What does it mean though if in fact they go above that, say to 18 per cent?


Well, if they go above that, that will be good for the hospitals and I don’t

think anybody will complain, but we will be watching very carefully to make

sure that they don’t go below that.


What does it mean in laymans terms, a 17 per cent increase? What sort of dollars?


Well, I can give you the, well it means that the Australian healthcare agreements,

the five year term will be $10 billion more, and it’s a $42 billion commitment.

That’s the overall amount…


But in (inaudible)?


…between all of the States and Territories. I would have to break it down

in relation to Tasmania, but that is the overall increase for all of the States

and Territories.


Can you say what that would be for this State?


We can get you those figures, sure.


Another question, what do you make of Parliamentary Secretary for Family and

Community Services, Ross Cameron’s comments in The Australian today, that people

who whinge about healthcare and what not, make him sick?








…what do you make of those comments? Is that appropriate do you think?


Look, as far as the Government is concerned, and as far as I am concerned,

it is important that we properly fund health and education. These are very important

areas of Commonwealth expenditure. It is why we have a 17 per cent increase

in Australian healthcare agreements in the Budget. It’s why we had a $1.5 billion

increase in higher education in the Budget. So that’s the Government’s position

and it’s my position. We are making these priority areas and we are increasing

funding in these areas and we are also doing it at a time where we are reducing

taxes as we introduced a tax cut in the last Budget.


Do you think that it is appropriate that he makes such comments at people who

have concerns about…


Well, whatever he says, I am telling you what the view of the Government is

and what the view of the Treasurer is, and I am sure it’s the view of the Prime

Minister as well.


He seems to be the first of senior Liberals to actually come out and admit

that Australians will pay more, middle Australians will pay more under the changes

to Medicare.


Well, Australians won’t pay more under the Government’s policy and let me ask

rhetorically, how could that be the case when the Government is increasing funding?

I still don’t understand the argument. The argument is that somehow, by increasing

funding, this will lead to higher charges. Now I know that is the Labor argument,

that’s for political reasons, but for those that carefully consider these things,

I don’t even follow the logic of how they allege that by increasing spending

by $917 million, that somehow leads to higher fees. I would have thought that

by increasing that spending, you would be reducing the pressures for higher



He also says that compared to other countries, for example Japan, Australians

simply visit their doctors too often. What do you say to that?


Who says that?


Same man. Ross Cameron.


I haven’t seen those comments.


What impact does the rise in the Australian dollar likely to have on the growth



Well the fact that the dollar is rising against the US dollar, makes it harder

for exporters, particularly those that are dealing in US dollars. That means

that the really competitive situation which our exporters had, say a year or

so ago, when the dollar was much lower than it is today, that really competitive

situation has abated. But you have got to bear in mind that when the Australian

dollar was at those historical lows, and I think I made the point at that stage,

that it was at those historical lows because of the US dollar rise, and at some

point the US dollar would stop rising. That’s what has happened and so you have

had that correction in the market.


So Labor’s suggesting that the Budget has been framed around the 60 cent rate,

is that correct?


We always frame the Budget on the 30-day or the 90-day average at the time

of framing the Budget, which was around 60 cents and that’s the way we always

do it. We have to make an assumption and we are very clear about those assumptions.


So the rises to about 65 and 66-cent levels, will they have an effect?


What you are actually trying to do when you are bringing down a budget, is

that you are trying to give an average rate over the course of the year between

1 July 2003 and 30 June 2004. Now, if anybody can tell me now what the average

is going to be between 1 July 2003 and 30 June 2004, I will gladly accept it.

But none of us can, obviously, so what we do is we take a 30-day or a 90-day

average at the time we lock in our assumptions. OK, thanks very much.