Interview with John Miller and Ross Davie

4BC

Monday, 16 May 2005

7.35 am

SUBJECTS: Budget; GST; IR Reform; Schapelle Corby; Vivian Alvarez.

JOURNALIST:

And joining us live in the studio this morning, the Federal Treasurer,

Mr Peter Costello. Mr Costello good morning.

TREASURER:

Good morning John. Good morning Ross.

JOURNALIST:

Good morning Mr Costello. On the night of the Budget, the Budget was described

to me by a senior Canberra identity who shall remain nameless for obvious

reasons as saying, unlike some past Budgets, particularly under Labor Governments,

which were Robin Hood Budgets as in stealing from the rich and giving to

the poor, this was a Sheriff of Nottingham Budget which stole from the poor

and gave to the rich. Your reaction Sir?

TREASURER:

Well, you know, colourful phrase but not accurate. This is a Budget in

which we reformed the welfare system, invested for the future with the Future

Fund and gave tax relief to Australians. When you can bring all those things

together it is hard to do but it is well worth doing. And as you know, particularly

when we cut taxes, we cut them for all Australians including those at the

lower end of the income scale. They have had their rates cut from 17 cents

to 15 cents and those at the upper end who pay 47 cents, still pay 47 cents

but they pay it only when they cross a higher threshold which will go up

to about $125,000.

JOURNALIST:

Kim Beazley rearranged your tax package somewhat and took some of those

tax cuts back off those higher income earners and redistributed them amongst

the lower income earners. Isn’t that a fairer package?

TREASURER:

Well look, Kim Beazley got himself in awful trouble didn’t he. Because

he said he was against tax cuts and he is going to vote against them and

then when there was an outbreak on his backbench, saying how could we possibly

be voting against tax cuts, he said, oh I have got this new idea. And you

know in 24 hours a bloke who was against the tax cuts actually became in

favour of tax cuts – just weren’t the ones that were announced

in the Budget. Now of course it is a complete stunt because we have already

moved the Bill to cut these taxes. He has no Bill. He has no chance of getting

it through the Parliament. All he can do is oppose what the Government is

doing, and it is a complete stunt. And I don’t think anybody in Australia

who looks at these things carefully will have thought, oh this is a long

thought out plan. If you go back and you see what he was saying before the

Budget, he had been calling for a rearrangement of tax cuts? No. Did he

say that on the night? No. Just a stunt to try and get him through his Budget

reply I think on Thursday night.

JOURNALIST:

All right.

JOURNALIST:

You called it cobbled together after his Budget reply speech.

TREASURER:

Yes.

JOURNALIST:

Is that accurate?

TREASURER:

Oh yes because I am probably one of the few people that reads these things.

I read it very carefully and it does not even have the full explanation

as to how it is supposed to work. And luckily for Mr Beazley nobody has

asked him yet.

JOURNALIST:

Well Laura Tingle in today’s edition of the Financial Review writes

that the, and I will quote her here “The Howard Government’s

Welfare to Work package of employment assistance and training was partially

offset by a $500 million cut in spending on some of Australia’s most

disadvantaged job seekers”.

TREASURER:

We have a thing called the Job Network which provides money to private

businesses that are able to get people jobs. It has been very, very successful.

This used to be done by the old CES. It is now done by private providers,

Job Network, and there is a formula which provides the amount of money you

get as a private operator if you can find someone a job. Now at a time when

unemployment is low it has been easier for the Job Network providers to

get people into work. And so the Government has had to very carefully look

at all of the formula for remunerating these people, the formulas are reviewed

every time the contract is renewed because people want us to get value for

money. We are going to get value for money for the taxpayer. It is not a

question of taking money out, it is a question of getting a formula which

adequately rewards people in the private sector and gets the best value

for taxpayers.

JOURNALIST:

But gee whiz, I mean, she is writing here that buried in the Budget papers

is a $457.4 million cut in spending on the Job Network.

TREASURER:

This is a multi-billion dollar contract which is up for renewal and it

will still pay out multi-billions of dollars. There is nothing buried about

this. This is a question of getting value for taxpayers money. Why should

the taxpayer pay a private provider a windfall to get someone in a job when

that private provider is being adequately remunerated. The taxpayer will

want to know they are getting value for money.

JOURNALIST:

Your Futures Fund, money that will go into an account which is untouchable,

is locked up, except it will be invested obviously on the stock exchange,

stock market. That almost smacks to me of the Government having so much

money you didn’t know what to do with it so let’s put it into

a fund for the future. Could you not have taken half of that and put that

into health?

TREASURER:

Well, health spending in this Budget is the highest we have ever had in

Australia and more than double what it was nine years ago. But it is important,

I believe, to save for the future. This is not unknown. There is a thing

called the Queensland Investment Corporation here in Queensland which does

much the same thing on behalf of the Queensland Government. It has been

operating for years and years and years. You would have heard of QIC? The

Commonwealth Government’s never made provision for future liabilities.

Our balance sheet as a consequence is not as strong as the Queensland Government’s.

People will be surprised to hear that.

JOURNALIST:

Peter Beattie keeps telling us.

TREASURER:

People would be surprised to hear that as a consequence because we haven’t

done this before our balance sheet is not as strong and what the Commonwealth

Government is doing is it is catching up in areas where it hasn’t

properly made provision for the future in this generation. Now, why do I

do this? I do this because it is important for the young people. If we don’t

catch up and start provisioning for some of these liabilities, the young

of today, and gee they are going to have enough problems in 20 years time,

are going to have a whole lot of accumulated debts rattling around their

ears. So I want to do something for the young people of Australia. Give

them a go. We already know with the ageing of the population, old fellas

like you and me are going…

JOURNALIST:

Oh I am still 18. I live as if I am 110 but that is another story.

TREASURER:

It has been wicked and you have been punishing it for years. Old fellas

like us are going to be in retirement in say 20 years time. The young people

of today are going to have to support more people in retirement. That is

going to be hard enough for them but it will be even harder if the people

of today haven’t adequately managed their finances. This is a question

of putting something aside for them.

JOURNALIST:

Who will manage this fund?

TREASURER:

It will have an independent board and a statute. As I say the Queensland

Investment, the QIC does this and it has an independent board and people

carefully manage the finances and hopefully on behalf of taxpayers get a

good return.

JOURNALIST:

Infrastructure has become a bit of a buzz word I suppose in South East

Queensland, certainly in recent months, and we have been carping about it

and we have been taking heaps and heaps of calls about the fact that we

don’t have sufficient – well water supply is a big issue, roads

are a big issue – all of these things. Terry Mackenroth is complaining

that there is nothing in the Budget for Queensland, I hesitate to use the

word which has almost become a clich – infrastructure.

TREASURER:

Well honestly. Queensland gets more GST than any other state in Australia.

And all Mr Mackenroth has to do is bank his cheque every month. You know,

when I, he did nothing to introduce it, he does nothing to administer it.

All he has got to do each month is bank his cheque. That is the biggest

obligation that he has. Now when I go around other States by the way, I

constantly get attacked as to why Queensland gets so much in GST. This State

is rolling in GST. You know, we all know that. It is getting the biggest

windfall of all the States. All the States are getting windfalls, but it

is getting the biggest windfall.

JOURNALIST:

Mr Costello, for people who don’t understand why, why does Queensland

get more?

TREASURER:

Well we have an independent umpire called the Grants Commission and the

GST is about $35 billion and this Grants Commission is in charge of allocating

it between the States. None of it comes to Canberra. So if one State gets

more, another State gets less. It is, that is how it works. It does not

go to Canberra. It is just allocating it between the States. The formula

that they use takes into account numbers of factors including the States

own financial capacity and one of the big factors that counts Queensland’s

way is it is one of the most diversified States. In the other States a very

large proportion of your population lives in your capital city. Whereas

in Queensland you know with the Gold Coast and Brisbane and the Sunshine

Coast and Rockhampton and Toowoomba and Townsville and Cairns it is a very

decentralised population. And because it is a decentralised population the

Grants Commission says well Queensland needs an extra loading and that is

one of the things that counts in its favour. The consequence of all this,

is that as between the States, Queensland gets a bigger windfall than any

other State. And as I said, when I go, you will never get a complaint in

Queensland about this formula by the way but if you go into New South Wales

or Victoria…

JOURNALIST:

Bob Carr doesn’t like it much.

TREASURER:

No he doesn’t like it. He takes out ads against it and he says Queensland

is getting money at the expense of New South Wales. And if you are a Queenslander

you would be quite happy about that but in New South Wales they are not

so happy, and Mr Mackenroth sits back there and receives his GST cheque

and the biggest problem he has each day is which bank he will put it into.

That is his biggest problem. And then he says he has not got money for infrastructure.

Give me a break.

JOURNALIST:

All right. Okay. Now let’s move on to industrial relations. We are

going to see that signed off according to press reports we’re reading

in the next week or so and according to the, again I am quoting the Fin

Review here “John Howard has taken personal control of industrial

relations and has Federal Cabinet prepared to sign off on its long awaited

blue print as early as next week”.

TREASURER:

Well Cabinet is not meeting this week, it will be meeting next week. We

have had a couple of discussions already about industrial relations. As

you know the composition of the Senate is changing on 1 July so we will

have the opportunity to reform industrial relations in a way that we haven’t

before. And I imagine that there will be further discussions between now

and 1 July to try and get, and this ought to be the object, to try and get

an industrial relations system which will be as competitive as possible,

allow people based on higher productivity to get higher wages and drive

Australia’s economic growth. That ought to be the object.

JOURNALIST:

All right. Can we get your thoughts on air, I realise you are very, very

short of time. Just your thoughts on a couple of burning issues at the moment

– the Schapelle Corby case. Do you think the Government should have

been a little bit quicker in actually acknowledging that there may be a

problem there with baggage handlers?

TREASURER:

Well I think there are two things here. One is, obviously we want to see

Schapelle Corby get a fair trial and put her case in the best possible light.

The second thing is you have got to remember this is not the Australian

justice system this is the Indonesian justice system and you have got to

remember that you can try and push people too far. You can imagine what

would happen if a foreign country came in and told the Australian courts

how to manage a trial. They might be very resistant to that. So you have

got to be careful enough to recognise that this is a sovereign country with

its own justice system but to also put the best possible case that can be

put on behalf of Schapelle Corby.

JOURNALIST:

It has taken an awful long time for this to be acknowledged.

TREASURER:

Well bear this in the mind that we did facilitate a prisoner coming out

of Victoria to go and give evidence in Bali and you know, that was a pretty

big step. And the Government was willing and able to assist and the Government

has always said that it will be willing and able to assist her to put the

best case forward. But you have got to remember this. Bali is not Australia.

There is some people that think that you know Australia somehow runs the

Balinese system. It doesn’t. Bali is Indonesia. It is a sovereign

country with its own justice system and just as the Australian courts wouldn’t

be heavied by the Indonesian Government, you got to remember that Indonesian

courts can’t be heavied by the Australian Government.

JOURNALIST:

All right. And finally Mrs Alvarez has spent the last four years in a convent

in the Philippines her legal people advising her say that she has a case

against the Federal Government and may sue for a couple of million dollars.

Does she have a case?

TREASURER:

Well I don’t know whether she has got a case or not but obviously

this is a situation where things haven’t worked according to the way

they were intended. This shouldn’t happen. But you can’t actually

say why this has occurred until you have had a full investigation which

will be done but you know, I have heard a lot of talk as to how this actually

happened. An investigation will get to the bottom of it, but it shouldn’t

have happened. And…

JOURNALIST:

Well speaking of bottoms, once the investigation is done will a few of

them be kicked?

TREASURER:

Well if somebody is found to have failed in their duty, yes. Yes. But it

is too early to say that. I have heard different stories as to how this

happened. You see sometimes people don’t identify themselves. It is

not as if somebody walks in and says you know I am John Miller. Oh well

send him to the Philippines. We know who he is.

JOURNALIST:

Could you do that?

TREASURER:

Well I don’t think your viewers would be too happy if I did would

they?

JOURNALIST:

Oh I don’t know.

JOURNALIST:

Gee thanks mate.

TREASURER:

Might give Ross a go. People don’t always identify themselves in

that way. And that is the problem. Mistaken identity can arise in different

ways. But having said all that, no, it should not have happened. There is

no two ways about it. If she was an Australian citizen it shouldn’t

have happened.

JOURNALIST:

All right. And finally now because we do have to let you go, but, and I

know, I think what the answer is going to be but I am going to put the question

anyway, when are you going to be Prime Minister?

TREASURER:

I think you know what the answer is.

JOURNALIST:

Well no.

TREASURER:

Great to be with you anyway.

JOURNALIST:

All right Mr Costello.

TREASURER:

All right. Thanks very much.