TRANSCRIPT

THE HON PETER COSTELLO MP
TREASURER

Interview with David Speers

Sky News

Tuesday, 11 May 2004
(Pre-record)

SUBJECTS: Budget

SPEERS:

Treasurer, thanks for your time. This is your largest spending Budget so far,

your ninth and largest spending, is it fair for us to ask though, in the run

up to an election, is this just a vote buying exercise?

TREASURER:

Well when you say it’s a large spending, it’s the largest measures

of family assistance we’ve had in Australia and it’s a large tax

cutting Budget. We’ve got more than $14 billion of tax cuts in there.

So what we’ve tried to do, is two things, one is to assist Australian

families and to particularly assist mothers as they come out of the workforce

to have a child and go back into the workforce afterwards, maybe with part-time

work, so they’ve got those work incentives. And also to provide more childcare

places to ease the pressure on them juggling work and family.

In relation to income tax, at the moment in Australia you can go on the top

rate of tax at $62,500. That’s too low, you shouldn’t have to pay

the top rate of tax. And I have a proposal to lift that to $80,000, so that

you would not pay the top rate of tax in Australia until you are on $80,000.

Now I think that will give more incentive. People want to do overtime, get a

promotion, they get to keep more of what they earn, I think that’s good.

SPEERS:

There’s no change in the marginal tax rates though for people earning

less than $52,000. Clearly you could have afforded it though?

TREASURER:

Well, when we originally reformed the tax system back in 2000, we introduced

very large cuts at the bottom end, but we were never able to get relief at the

upper end through the Senate. The Labor Party opposed it as you know. And I’ve

always regarded that as unfinished business and so I think this is the second

leg which never got done in 2000, which ought to happen now.

SPEERS:

It puts a bit of pressure on Labor too?

TREASURER:

Absolutely. Does Labor think that you’re rich at $62,000? That you should

be paying the top rate of tax or does Labor think, as I think, that a lot of

people out in the suburbs on incomes like that are probably doing it pretty

hard, and they shouldn’t be paying the top rate of tax.

SPEERS:

But won’t they simply say that you need across the board tax relief?

Those on the low income brackets are getting nothing.

TREASURER:

I don’t know what Labor will say, but I would recommend to them that

they pass this package because it’s an integrated package. It’s

got assistance for families, it’s got income tax reductions and it’s

got savings incentives. And I think if you lob any one of those three packages

off, you are going to get a very unbalanced package.

SPEERS:

The Budget’s swimming in a lot of money you say from company tax profits,

profits are soaring at the moment. How long will that last?

TREASURER:

Well as long as we keep the economy strong. The company profit share as a

proportion of the economy is higher than it’s ever been in Australian

history, and that means that companies are paying more tax than has ever been

paid, and people are getting to share in the benefits of that and this shows

that some people say, oh, what’s in a strong economy for me, it doesn’t

matter to me if companies are profitable, this is a demonstration as to how

families can benefit, how the aged care sector can benefit from strong Australian

business and companies.

SPEERS:

I’m interested in the planning of this Budget, how long have you been

aware that you could do this for families and the tax relief as well?

TREASURER:

Well we started the Budget about six months ago, but you develop various contingency

plans and a lot of it’s actually come together in the last month or so.

SPEERS:

And was it a bit of input from the Prime Minister as well?

TREASURER:

Sure. We work on these things together, but the Treasurer is responsible for

the document and it’s been a lot of work.

SPEERS:

This Budget week inevitably has pulled a lot of focus onto your future ambitions,

a lot of talk about leadership, and some criticism of some loose comments from

you, have you spoken at all to the Prime Minister lately about the leadership

issue?

TREASURER:

Sure, we talk about issues all the time, and…

SPEERS:

In the context of what’s happened this week though?

TREASURER:

…well, you know, we see how people work themselves up into a lather about

this, but we actually just get on with Government. And you know what’s

been on my mind this week. The Budget. This is the biggest assistance to families

we’ve ever had in this country. The dimensions of this are huge. The media

says, oh, what’s your feeling about this, that or the other, the important

thing is not my feeling about this, that or the other, the important thing is

what’s happening for Australian families, that’s the big issue here.

SPEERS:

You mention you and the Prime Minister talk about these things, have you given

any commitments, has he given any commitments to you on leadership?

TREASURER:

Well, the commitment I give is this – I’ll be working for the

re-election of the Howard Government,…

SPEERS:

Has he given you a commitment?

TREASURER:

…that’s the commitment I give, and I think I’ll be

working as hard, if not harder than anybody else to do that. I don’t think

Australia could afford a Labor Government. This will be worse than Whitlam,

Mr Latham, and I think we owe it to Australians to put the Government in the

best shape to keep this economic management going.

SPEERS:

Do you deserve a commitment from John Howard?

TREASURER:

Well, we don’t go into those sort of things.

SPEERS:

Okay. Peter Costello, you’ve got a big job ahead selling this Budget

over the coming days and weeks, and we appreciate your time tonight. Thank you.

TREASURER:

It’s great to be with you.