TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Pre-Recorded Interview David Speers

Sky News

Wednesday, 14 May 2003

7.20 am

SUBJECTS: Budget

SPEERS:

Treasurer, welcome.

TREASURER:

Thanks David.

SPEERS:

I am interested to know, how late was the addition of these tax cuts to the

Budget and whose idea were they?

TREASURER:

Well, in this Budget, the big items that we had to contend with obviously were

the war in Iraq, and funding the war in Iraq, the increase in security coming

off the Bali bombing which was only six months ago, we had to fund very extensive

measures for drought and we wanted to keep the Budget in surplus. And once we

had attended to all of those expenditures and we had that surplus, then I thought

it was right that we have a return to the taxpayers. And it is a modest return

to the taxpayers but I think the taxpayers should get some of the benefit of

the good economic management.

SPEERS:

As you said last night, you could have made it simply a bigger surplus next

year instead, why the change of heart?

TREASURER:

Well, if we’d had a bigger surplus we could have paid off more Labor debt,

but we have already paid off $63 billion of Labor debt, if we’d had a $2 billion

extra surplus we could have made that $65 billion, but having paid off so much

Labor debt and got our debt down, and I think it is down to pretty manageable

levels now, it is one of the best in the world, I thought that it was prudent

to return some of that money to taxpayers.

SPEERS:

You have often been described by Labor as the highest taxing Treasurer in Australia’s

history, is this designed in part to try and counter some of that criticism?

TREASURER:

No, because that was always a false claim and you would be wrong to respond

to false claims. We thought it was important to establish this principle, that

if you could meet your expenditures – finance a war and a drought – and having

a strong position, having paid off $63 billion of the Labor debt, then we thought

it was important to establish the principle really that the taxpayers should

get some return from that. They’d see something in their hip pocket.

SPEERS:

Well, they have been rubbished by the welfare groups and Labor saying they

are the smallest tax cuts in Australia’s history. You are still going to end

up paying more because of other changes in Medicare, higher education, are they

really that small, they’re the smallest in Australia’s history?

TREASURER:

$2.4 billion and $10.7 billion over four years. So, as I say, these are affordable

and they are responsible.

SPEERS:

But what about bracket creep too because next year…

TREASURER:

Well let me make this point. How many, name another country around the world

which has balanced its budget and is cutting taxes.

SPEERS:

Well, comparatively we are looking okay as you pointed out. But still, your

income tax take next year is still going up even though you are cutting taxes.

You are going to collect more than $5 billion more in income tax next year because

of bracket creep, because of more people in work…

TREASURER:

No, because of more people in work. This is a very important point…

SPEERS:

But bracket creep is a factor too is it not?

TREASURER:

No, no, look, it is because of more people in work.

SPEERS:

So there’s no…

TREASURER:

It is true when more people go into work, more income tax is collected. And

I will tell you another thing, more people go into work, you pay less in unemployment

benefits. That is one of the reasons why you want to get as many people in work

as possible. Now, that is not something that is to be criticised, that is the

whole object of economic policy. And if you can get more people in work, and

collect tax from more people in work, those that have been carrying them can

get a tax reduction. That is the object of economic policy.

SPEERS:

Treasurer the higher education reforms unveiled last night, do you concede

that some students at least will be facing higher fees as a result?

TREASURER:

The universities have flexibility and universities can put up their HECS charges,

they can bring them down. So yes, universities can. If there is student demand

and if the student feels that it is worth it, then the university can put up

that charge and that student will be given an interest free loan to cover it

which they don’t have to pay back until they are in work and earning above $30,000.

SPEERS:

So it’s not going to make it harder for any students to find a place?

TREASURER:

No, because they don’t actually pay anything, you don’t need any money up front.

The Government pays that for them and they repay once they get into the workforce

and earn above $30,000.

SPEERS:

Do you concede that this Budget, that the surprise tax cuts and some of the

other changes that you have made do set the stage now for an early election?

This sort of sweetener came out of the bag, it certainly has heightened speculation

that an early election may be in the wind. Is it at least being considered by

the Government?

TREASURER:

Look, the election is due in November of next year. And if the Senate passes

the Budget as I think it should then the Government could get on with governing.

So, we have been elected to a three year term, we want to run a three year term,

we just want to be able to govern.

SPEERS:

Is there room to negotiate on the higher education in the Senate?

TREASURER:

Look, we put together a huge ambitious package, and I think the public expects

the Government to govern and I would say to the Senate, let the Government get

on with governing. The public elected us to do a job and we want to do it.

SPEERS:

And if the Senate doesn’t allow you? I mean, a double dissolution would allow

you to clear the slate on all these sorts of reforms. That’s pretty, must be

a pretty attractive option?

TREASURER:

Well the most attractive option for us is to get our Budget through the Senate.

And I think the most attractive option for the public, they don’t want to have

another election, would be to see the Opposition be constructive for once in

its life. I don’t think this negative carping is doing Mr Crean much good. I

think he would be better to take a positive attitude towards the Labor Party

role in the Senate.

SPEERS:

Just finally, do you have a ninth Budget in you?

TREASURER:

Well, we have brought down our eighth Budget and obviously we have to get it

enacted and I am totally focussed on doing that.

SPEERS:

Can you do a ninth?

TREASURER:

Let’s do an eighth before we start talking about anything else.

SPEERS:

All right, Treasurer, Peter Costello, thanks for you time.

TREASURER:

Thanks very much.