TRANSCRIPT
of
THE HON PETER COSTELLO MP
Treasurer

Interview with
Jeremy Cordeaux
5DN
Wednesday, 15 May 2002
9.45 am

SUBJECTS: Budget

CORDEAUX:

Treasurer Peter Costello how are you?

TREASURER:

Good morning Jeremy. Great to be with you.

CORDEAUX:

Good to be with you. Now tell me, what was the reaction, are you pleased with the reaction so far?

TREASURER:

I think that people understand that in a difficult world environment where we have had threats from terror as we previously couldn’t have imagined, where we have Australian land, sea and air operations in Afghanistan that it’s important to upgrade Australia’s security. And I have always said that the first job that a Government has is to look after the security of the nation. That is why we’re securing our airports, our flights, we’re developing an incident response regiment in case, heaven forbid, heaven forbid we should ever have a biological or a chemical incident and I think the Australian public wants to know that its Government is making provision for these things and it is.

CORDEAUX:

Your job is to manage and there’s a sense in the community I suppose that your real job is to please absolutely everybody and not rock anybody’s boat but it can’t be done. I was saying earlier that if we, we tend to react and spend money when we’re given the dramatic need to do it instead of doing it incrementally over many years…

TREASURER:

That’s right.

CORDEAUX:

…we wait until we get a September 11 or a foot and mouth disease or a something like that kind of threat and then we have to spend up big. Wouldn’t it be better to do it in little bits over many years?

TREASURER:

Well we keep trying to do that. Take foot and mouth, we upgraded Australia’s quarantine defences in last years Budget. The proof is in the pudding I think, touch wood, we haven’t had an outbreak of major foot and mouth like they’ve had in Europe. That was money well spent. Let’s take domestic security. We’ve got a very strong upgrade in this Budget. We haven’t yet had an incident in Australia, have we? It’s not as if we are responding after the event, we haven’t yet had an incident in Australia. I hope we never will have one. But I agree with you. It would be no point after an incident occurs saying, oh we’d better raise a regiment now. It would be too late. And that is why I’m doing it now. We’ve assessed the security situation, we learnt that terrorism can strike the world’s most powerful nation. We have to make sure that we are adequately prepared. If none of this is necessary I will be the happiest man in Australia. But what would people think of their Government if something did happen and the Government hadn’t prepared against it.

CORDEAUX:

We’re going to slip into deficit for, what, this year and then we will be back in surplus next year and progressively greater surpluses for the next what? Five years?

TREASURER:

Yes. We are projecting surpluses in the forthcoming Budget year and the three years after that on current economic conditions as the Australian economy grows in strength. Jeremy we’re at, the moment we’d be the strongest growing economy of all the developed nations of the world, stronger than the United States…

CORDEAUX:

Can we keep it up?

TREASURER:

Well I hope so. It’s what we’re determined to do, stronger than Britain and France and Germany and Japan and all of these developed nations of the world and we’ve come through a global slowdown in better shape than anybody else and we’ve got to make sure that we stay at the front of the pack. That’s what we’re determined to do.

CORDEAUX:

I was thinking the other day that money that Australia gave as its contribution to the countries affected by the Asian financial crisis. It was a loan, will we get those billions of dollars back and if so when?

TREASURER:

We, the only loan that was taken up in the end was by Thailand and the Thais are gradually repaying it. We offered loans to Indonesia but the Government changed and fell and we actually never advanced the money.

CORDEAUX:

Yeah, I see that we’ve got to go and bail out Nauru, that it’s virtually, if a country can go bankrupt it is bankrupt. Is that really our role? Should we be doing that?

TREASURER:

Well, we are helping Nauru in relation to refugee claims and refugees that have arrived there we are giving them assistance in relation to that. We give them, we give them some aid. Nauru is in our part of the world. We have always operated in a program in relation to Nauru and a lot of these small Pacific Island nations rely pretty heavily on Australia’s help. Papua New Guinea is one too.

CORDEAUX:

That’s about what? $360 million a year?

TREASURER:

Yeah, well we used to be, there’s a reason for that. We used to be the colonial power up in Papua New Guinea and so we have substantial aid obligations but I’d also make this point to the Australian public that we have a security interest in maintaining a stable.png as well. Think back through Australian history, we fought the Second World War in.png..png was absolutely vital to Australia’s defence and the defence of Australia involves hopefully stable countries on our northern borders.

CORDEAUX:

Hmm. Helping people stand on their own feet is a very good thing to do. I think that is probably what you’re getting at with the disabled pension situation. How many people do we have labeled disabled in this country Treasurer? Do you know?

TREASURER:

Well, I think the number on the disability support pension is about 600,000.

CORDEAUX:

Is that possible? Could we have 600,000 people?

TREASURER:

Well, the way in which this happens is that if you are assessed as being incapable of working 30 hours a week, you are assessed as being disabled and you can go on a disability support pension. The largest single class of people on the disability support pension are people with bad backs. And they, who are assessed as not being able to work 30 hours a week. Now our view is that some of these people could work part time. They could get some rehabilitation and work part time.

CORDEAUX:

Will you help them?

TREASURER:

And so we’re producing more places for rehabilitation and training and we’re saying that if you can work part time, 15 hours a week, then we’ll help you back, try and help you back into the workforce rather than just have that person remain on the disability support pension for the rest of their lives. Now some people say, oh you know you’re attacking disability support pension and the public thinks, oh they must be talking about the blind. This does not affect the blind. This affects people who are capable of part time work and the largest single category are people with bad backs. And I don’t think we should say if you’ve got a bad back you can go on the disability pension for ten or twenty or thirty years without making some attempt to get them back into the work force.

CORDEAUX:

I’ve had a bad back. I am sure you have had a bad back. Everyone’s had a bad back.

TREASURER:

Well, if you’ve got a bad back, maybe you can’t work a full time labouring job but you might be able to do a desk job. You might be able to do a part time job and with a bit of rehabilitation we want to encourage people to do that.

CORDEAUX:

But are there any 15 hour a week jobs out there?

TREASURER:

Oh there’s lots of part time jobs. Part time jobs in our community have been increasing quite a lot. Part time work you will see people that, for example, do call centre work or people that do handyman, you know lawnmowing sort of, there’s a lot of people that work part time work in the community.

CORDEAUX:

Well it’s probably true, it’s probably true in the sense that a lot of employers because of the wrongful dismissal laws are reluctant to do anything but employ casual or part time so that’s probably very true.

TREASURER:

It’s a fast growing area and there are a lot of employers and you know maybe someone has got a bad back and they can’t come back in to a heavy lifting job but they might be able to do a desk job and it’s to try and encourage people, rather than just remain on the disability support pension for years at a time, to get back into the workforce. Which I think is in their interests and it’s certainly in the taxpayers’ interests as well.

CORDEAUX:

Anyone who has ever done a Budget knows that it’s about making ends meet and prioritising the money that you’ve got available and you kind of know that you’re going to have too much month left over at the end of the money. But your job is to try and please everybody. Over many, many years governments, successive governments have said you can have free hospitals, you can have free medicine, you can have free drugs, you can have free education. You, we are a very spoilt country with a small taxpayer base, are we living beyond our means?

TREASURER:

Well, I put out an Intergenerational Report as part of this Budget and what it shows is if you continued on that path in twenty or thirty years time the system would break. The path is not sustainable. It’s okay for, things are going, you know we can sustain all of these services at the moment but as our population ages and as the number of people in the taxpayer base declines relative to the number of older people in the community we’re going to have to make some changes and the message I’ve, I’m trying to make to people now is if we make the changes earlier they will be much smaller than if we sit around and let the whole thing build up like a pressure cooker. Because if you let the pressure build up too much it will explode.

CORDEAUX:

Well you will never get to the Democrats, they are so far out to the Left, they are never coming back. But isn’t it possible for you to sit down with the Labor Party and say, well whether it’s in the years to come a Liberal Government or a Labor Government, this problem we do not wish to pass on, let us deal with it now and let’s start to get a more sustainable financial basis for this country going forward.

TREASURER:

Well that’s precisely our message to the Labor Party. And it’s a big test for the Labor Party. See, for the last five years they just sort of opposed everything. Remember they opposed GST and said it was going to destroy Australia and they were going to roll it back and they came out last week and they said, well we didn’t really believe in that, and if we ever get elected we’re going to keep everything. Now what I would say to them is, you tried that opportunist attack for five years, it didn’t work, you ought to sit down and support the Government because if you the Labor Party ever want to get back into Government you’re going to need these changes as much as anybody else. And I think it’s a big test, this will be a big test for them, whether they are going to give away the five years of cynical opportunist politics or whether they are going to start looking like they are interested in policy.

CORDEAUX:

But in a way it’s our fault because you politicians stand up and offer us a grab bag of goodies and then they offer us a bigger grab bag of goodies and we, without any thought as to who is going to pay the bill at the end of the day, we will vote for the people who are going to give us the most free stuff.

TREASURER:

Well at the end of the day you have got to remember this Jeremy, that governments don’t have money, what governments do is they raise, they provide services and they raise taxes to pay for them. At the end of the day if people want more and more services then the Government is just going to have to engage in more taxes. And so what I am saying is we want low taxes and we want good services. We have got to make some hard decisions to put our services on a sustainable basis. And you are absolutely right. somebody runs around and says you can have everything for free. You can’t have everything for free.

CORDEAUX:

No but we’re spoilt and we expect it.

TREASURER:

What they mean is, you know, we will offer this service for free and by the way everyone will have to pay a higher tax if it is to be delivered.

CORDEAUX:

Treasurer, Karen called in she is studying Indonesian and she is disappointed that the Asian languages program has been sunk to save money. She says surely that we need if we are going to have stability in Asia-Pacific area we need to be able to communicate effectively with our neighbours. Is this a smart way to save money?

TREASURER:

I agree that Asian languages are very, very important. But you have got to remember this, that the Commonwealth doesn’t run schools. State Governments run schools. What the Commonwealth does is it sends money to the State Governments, every last dollar of GST goes to the State Government of South Australia there to run its education system. And the Commonwealth shouldn’t be overlapping and duplicating programs with the States. What we want to do is we want to fund the State Governments to run their education system. We would encourage them in providing languages.

CORDEAUX:

Treasurer good to talk to you. Thank you. You’ve got a busy day I know and thanks for your time.

TREASURER:

It’s great to be with you Jeremy. Thank you.