TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with Jeremy Cordeaux

5DN

Wednesday, 14 May 2003
9.45 am

SUBJECTS: Budget

CORDEAUX:

Treasurer, congratulations.

TREASURER:

Thanks very much Jeremy, good to be with you.

CORDEAUX:

And I say congratulations because against a backdrop of all of the security

problems that we have, the East Timorese thing and the ongoing expenses there

and in our region, a drought and a war, you still managed to give us back something.

I know people are somewhat critical of the size of it but it is something…

TREASURER:

…yes…

CORDEAUX:

…and you have got a surplus as well.

TREASURER:

Well, the most important thing this year was to fund the war, obviously, and

we, we are spending about $740 million on that. We had the worst drought in

100 years and assistance to our farmers was our next priority and we are spending

about $740 million on that as well. And then we thought that if we could keep

the Budget in balance, if there was some additional money then it should be

returned to taxpayers. And as you say people would always like larger tax cuts

but I think these are responsible having funded those high priority items, and

I think the right thing to do was to return some of it to taxpayers and that

is what we did last night.

CORDEAUX:

Then against the international reality of a down-turn where nations that were

the envy of the world are struggling and we are growing, perhaps not as fast

as we were a couple of years ago, but we are growing.

TREASURER:

Yes. Our growth has come off a little bit as you say, from say 2 or 3 years

ago, but when you look at what has happened in the United States, Japan, and

Europe, Australia is pretty much a stand-out. And the fact that we are still

growing at a bit above 3 per cent means that we are leading the world, the developed

countries of the world. It is a difficult time, we have had this war, you have

got SARS which is now starting to threaten a lot of the Asian tourist industry

and of course we have had this drought. And we just hope that the drought breaks,

there has been some good rain in the last week but I do not think it has fully

broken yet either.

CORDEAUX:

You know, everyone expects you to please everyone, everyone wants to be pleased,

but the truth of the matter is I don’t know how people can criticise what you

put on the table last night because after all, unemployment is the lowest in

10 years, interest rates are probably the lowest in 30 or 40 years, inflation

is way down, what more could people possibly want or expect?

TREASURER:

Well, you know, I suppose people always want you to go one better, don’t they

and to do the best that you can. But the point I would make is this, I think,

compared to the other economies of the world, we regard as comparable economies,

you know, like the United Kingdom or like the European countries, Australia

is doing pretty well. Now it has taken us a while to get there, we have had

to do a lot of reform, and people have come with us in that reform. We had to

do GST, we had to balance our Budgets, I think the fact that we have repaid

$63 billion of Labor’s debt has really given us a lot of strength. Seeing as

we have repaid that money over the last 7 years it means that our interest bills

are down and that has given us a lot more flexibility in relation to our Budgets.

CORDEAUX:

And if we compare that debt, what is left of it, how much is left by the way?

TREASURER:

It is about $30 billion but it is, the way you measure it is, you measure the

debt as a proportion of your economy, so it is under 4 per cent…

CORDEAUX:

But how would that compare with say, England or America?

TREASURER:

America is about, we are about 4 per cent, America is about 50 per cent…

CORDEAUX:

50 per cent?

TREASURER:

…their debt to their economy so it is comparing like to like. And the United

Kingdom is about 40 or 50 per cent too. Their debt ratios are about ten times

ours.

CORDEAUX:

This just came in, on the wires, the 2003 World Competitiveness Year book ranks

Australia second behind the United States as being the most competitive nation

in the world among the world’s larger economies. That’s pretty good.

TREASURER:

Yes, we moved up that table quite a lot since the Coalition Government was elected

in ’96. I think we were down about ten or eleventh, and the reforms that have

been put in place have moved us up. And that’s part of trying to keep the economy

competitive, and get investment and get jobs for our young people. And the thing

about these rankings, Jeremy, is everyone else is trying to go up the table

too so you have got to work hard just to stay the same and you have got to work

doubly hard to move up it, so that is why we have got to keep working on good

economic policy.

CORDEAUX:

Was there anything you wanted to put in or to cut back, or to give money to

that you just weren’t able to?

TREASURER:

We are still having trouble with the Senate, Jeremy, they are still blocking

a whole lot of legislation, and that is my regret. I think Australia could do

even better if the Senate would pass some of these measures. And it makes it

hard, obviously, for a Government if the Senate is bent on obstruction. And

I heard even the day before the Budget that Mr Crean was going to try and block

the Budget again in the Senate, so we just hope that he won’t be successful.

CORDEAUX:

I can’t imagine those Senators and the Opposition wishing to choose, or choosing

to give you another, or yet a range of new triggers to pull on a double dissolution?

TREASURER:

Yes, well, you know, their theory is that if they can block measures and, you

know, if things turn down as a consequence then we will get the blame. But we

are pointing out that if the Senate starts blocking their measures then the

Senate is to blame and we hope they don’t try and take that tack.

CORDEAUX:

Any dangers on the horizon, is there anything that you are fearful of, that

could jump out and bite us on the bum?

TREASURER:

The biggest threat of course is if the American economy remains weak. The American

economy is still the world’s engine and if it is weak, and it has been weak

now for about 2 years, that is going to knock down stock markets and that will

make it hard for our exporters. So, that is a risk. The other thing that we

still haven’t got a complete handle on is SARS. This is really beginning to

affect tourism, mainly in Asia, but it will be affecting Australian companies

like Qantas and so on. So, I just hope that the health authorities can get SARS

under control as soon as possible.

CORDEAUX:

A lot of people expected something on maternity leave. I have always thought,

you know, the moment maternity leave is introduced people are simply going to

discriminate against women of child bearing age and just won’t employ them.

Were you tempted to do something with maternity leave?

TREASURER:

Well, a large proportion of the work force has access to maternity leave either

in the public service or in the larger companies. If you were going to fund

it from the taxpayer you have to get a tax increase somewhere to fund it. And

I just am of the view that our taxes, we should be working on reducing taxes

not increasing them, so that is why we weren’t attracted to a policy which would

require tax increases.

CORDEAUX:

Were you tempted to do anything about superannuation, after all it is, it is,

I mean I have spoken to superannuation experts and even they don’t understand

a lot of what is on the table. And there are, I think there are three stages

of taxation within superannuation instead of one.

TREASURER:

Well, I think the thing that is worrying us about superannuation and it will

be worrying a lot of people who have got their money in superannuation, is the

funds are having negative returns.

Now, why are they having negative returns? Well, that is because when you put

your money in a superannuation fund they have got to do something with it, they

have got to invest it and try and make money. And mostly they have been investing

in stock markets, not just in Australia but around the world, and stock markets

around the world are well down and so they are actually reporting losses. I

am not sure that much can be done about that until such time as the world economy

recovers. What we have got to do in Australia is just make sure that we can

strengthen the Australian economy against a very difficult international climate.

CORDEAUX:

I note that the Government is reasonably keen to keep people at work longer,

yet with superannuation you, after a certain age, can’t even make contributions

to it?

TREASURER:

Yes, now going from memory here but I think we have, or are trying to lift that

to seventy so that you can continue to make contributions. We certainly looked

at increasing it, I know that, I know that from, Jeremy, it was sixty-five,

I am not sure if we have got it to seventy yet but that is certainly the way

we are moving.

CORDEAUX:

I am sure the ABC is bleating this morning because they didn’t get what they

wanted, or didn’t get enough, or didn’t get anything.

TREASURER:

Well, look, Jeremy, they are well funded, they have not had any cuts, they will

have their usual, annual increase and, you know, the taxpayers of Australia

are funding the ABC, they won’t be funding your radio station, so I don’t think

the ABC should be complaining. They will be getting their normal, annual increase.

CORDEAUX:

People are talking about, and almost as a fait accompli, that this is your last

Budget. They are saying this is the eighth Budget and this is the last one.

Almost as though they were a fly on the wall somewhere when the deal was done

between you and the Prime Minister.

TREASURER:

It is amazing, isn’t it, that all sorts of experts know all sorts of things.

But as far as I am concerned, look, I’ve brought down a Budget. We now have

to get it into law. To get it into law, we have to get it through the Senate.

It’s going to be long and hard and I’m focussing on that and nothing else.

CORDEAUX:

Have you done a deal with the Prime Minister?

TREASURER:

We don’t have those sorts of discussions, Jeremy.

CORDEAUX:

Would you like to have done a deal with the Prime Minister?

TREASURER:

Well we don’t, we don’t speculate on those sorts of issues.

CORDEAUX:

How important was it with this eighth Budget for it to be, well, a rabbit out

of a hat?

TREASURER:

Well, look, it’s not so much a rabbit out of a hat. It’s a principle, the way

I see it. If you’ve got your debt under control, if you can meet your defence

expenditures, if you can cover the drought and there’s still some money left

over, why not return it to the taxpayers. Now people would say, oh well it’s

not enough, but it’s the principle that we’re now returning to taxpayers and

if we can establish that principle, I think it would be a great step forward

in Government.

CORDEAUX:

It must be a great strain trying to please everybody, so putting the last finishing

touches on Budget Number 8, how do you look back on that? Is that, what was

the best, what was the best Budget of your eight? The first one must have been

the hardest.

TREASURER:

The first one was the hardest, because remember when I became Treasurer, we

weren’t talking about surplus Budgets. The Budget was then $10 billion in the

red, and that’s what Labor had left. And so we had to try and take a Budget

that was $10 billion in the red and try and balance it, and boy, that was hard.

That was hard work. In those days, the focus used to be on how big your deficits

were, now we’ve just completely changed that and the focus is how big the surpluses

are. So, things have come a long way in the last eight years.

CORDEAUX:

So this last one was something you’re particularly proud of?

TREASURER:

Oh yeah, well, look I’m pleased that we were able to put it all together in

the way that we did.

CORDEAUX:

Was it yours or did the Prime Minister have some input?

TREASURER:

Well Treasurers are always responsible for Budgets, but obviously we all, it’s

a team effort, we’re all engaged and all of the senior ministers have to support

it and they do.

CORDEAUX:

You haven’t really left the Labor Party anywhere to go at the next election,

have you? How much of a part did that tactic play?

TREASURER:

Well, look, I don’t know what Labor’s policies are, but if they want to announce

some policies, then they’ll have to show them how to fund them, and that’s fair

enough. And the public can make up their own mind whether they would like such

policies and whether they’re prepared to pay the cost. So, but that’s a matter

for them.

CORDEAUX:

When you look at national security and economic management, it would be hard

to find in difficult times a better team than John Howard and Peter Costello.

Why would you guys seriously want to dismantle that? Why wouldn’t you want to

keep that going way past the next election?

TREASURER:

Well, look, we’ve worked pretty well together as a team for the last seven

years, seven years in Government and of course in Opposition before that when

John returned to the leadership in 1995 I think it was and I was then in Opposition

with him. We’ve worked, probably eight years or more together and we’ve tried

to accomplish a few things and I think we’ve done a few things and it’s up to

the people to judge whether or not they think we’ve done a good job. But, we

have worked together well and we’ve always tried to do the right thing by Australia.

CORDEAUX:

So you’re happy to go to the next election if that’s John Howard’s decision?

TREASURER:

Oh, I’m not focussing on elections, Jeremy, I’m just working on this Budget.

CORDEAUX:

Could be closer than you think.

TREASURER:

We’ll try and get this one through.

CORDEAUX:

One last question, if the free trade with the United States comes off, how significant

would that be to our economy in an upward direction?

TREASURER:

Oh, it would be good for us. It would mean that we’d get many more of our exports

into the United States market, which is the largest market in the world and

that would be good for us. That would really help us, and it would particularly

help our farmers.

CORDEAUX:

Great to talk to you, sir. Thank you very much for your time. I know how busy

you are.

TREASURER:

Thank you very much, Jeremy. Good to talk to you.

CORDEAUX:

Good to talk with you. Peter Costello, our Treasurer.