Budget – Interview with John Faine, 3LO

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Budget – Interview with John Faine, 3LO





Interview with Jon Faine


Wednesday, 15 May 2002

8.30 am




Peter Costello is the Federal Treasurer. Joining us in our Parliament House

studios, Mr Costello, good morning.


Good morning Jon.


Simon Crean on AM a few moments ago said that because you promised a surplus

and you delivered a deficit, because he cares about Australian families and

he doesn’t think you do, he may block your Budget in the Senate. What will you



Well would you be surprised if Mr Crean would take an opportunist position?

No. He’s been doing it for the last six years. Remember this is the man that

said for six years that GST would bring a plague on Australia and throw our

economy into recession and then announced last week that he really isn’t against

it anyway and if he were ever in Government he would keep it. So, what Mr Crean

does, and it’s his standard tactic, is he opposes anything that has to be done

and is necessary for the country and secretly hopes that we get it through so

that if he ever gets into office he can take advantage of it.


You’ll need to negotiate with either the Democrats or the Labor Party if indeed

they both adopt the stance that they don’t approve of some of your budget measures.


Well if the Labor Party and the Democrats decide to join up against the Budget,

that would be a great difficulty, but they would be doing Australia short. They

would be doing damage to the long prospect, long-term prospects of Australia

and at the end of the day people will suffer because of opportunist politics.

We’ll argue our case and we will put forward to the Australian people the measures

that we think are necessary to keep our economy strong. We’ve dealt now for

six years with a cynical and opportunist Labor Party and I predicted that Simon

Crean would be more opportunist than Kim Beazley and I think you heard on his

radio interview this morning that he hasn’t disappointed us.


What ever happened to the aspirational voter, Peter Costello? In the last election

you appealed to the very people who get nothing from this Budget.


Jon, when you say nothing, this is a Budget which keeps Australia’s economy

strong, stronger than America or Britain or Europe or Japan, the comparable

countries. Which sees unemployment falling and predicts it will be at six per

cent next year, which is territory we’ve not been in since the, Labor’s recession

of 1990. It’s a Budget which keeps taxes low, income taxes, which lays down

a program for further tax reductions over the next years and it’s a Budget which

delivers additional benefits to families. And I think it’s a very responsible,

pro-family, pro-employee, pro-aspirational person’s Budget.


There’s a huge emphasis on defence, billions of dollars on defence. This is

the same organisation that’s wasted billions on Collins submarines that are

years late, Seaspright helicopters, $780 million. There’s $31 million being

spent on a maintenance contract for helicopters that haven’t even been delivered.

The Bushmaster Personnel carrier, two years late. And the war against terror

is virtually over. What’s going on here?


Well, let’s hope it’s over, but Australian Special Forces are still on operations

in Afghanistan.


Hardly doing much. They’re just mopping up.


Well, I wouldn’t say that to any of the Special Operations fellows Jon. We

have Hornets in Diego Garcia.


Also not doing much.


Well, providing air defence. With all due respect Jon, I wouldn’t say that

to the pilots of the Hornets. We have amphibious ships and we’re patrolling

the Gulf in support of UN sanctions in Iraq. Now let me come back to your original

point. Yes, I believe that in relation to these defence contracts, we expect

the Defence Department to be as scrupulous and as tight-fisted with every dollar

as the taxpayer wants them to be. And I’m not disputing your opening proposition

in the slightest. But in relation to the war against terror, our Special Forces

have performed magnificently in Afghanistan and they’ve won the respect of a

lot of other countries as well. And I think that the support that the Government’s

given has been very necessary.


And despite all that money on supporting President George W Bush, yesterday

he decided to dud us on farm subsidies. In exchange surely for some military

support and expenditure of the magnitude that you announced yesterday, we’re

getting no dividend whatsoever from our support for the USA.


Well can I separate out these issues. We don’t do this to support George W



I thought we did.


We do it because it’s in Australia’s interests. Let’s go back a step here.

Australians were killed in the World Trade Centre. You know Australians died

in that terrorist attack. Let’s not forget that. Let’s also remember that we

are in a defence alliance with the United States, which says that where there

is an attack on any one of us, we’ll both respond. And Jon, if there’s an attack

on Australia, we expect the United States to respond. When there’s an attack

on the United States, we respond. That’s our treaty. That’s the ANZUS alliance.

Now let me come to the question of the American administration. I actually

thoroughly oppose their farm bill and that’s a point that we’ll be making. We

thoroughly opposed their tariff decision on steel. We were able to have some

improvements made. These are domestic policy arguments we will have with the

United States, but we are military allies, we work together on military matters

but we don’t do it for them, we do it for us as much as anybody else. Can I

make this point Jon. If the Al Qaida and Taliban networks were to be wound up

in Afghanistan, then a lot of the domestic security matters could be relaxed.

And fighting the roots of Al Qaida in Afghanistan, in my view, is much better

than having the potential of these terror networks hitting at home.


So you might unwind some of those defence announcements in the event that the

outcome in Afghanistan is quicker and better than expected?


Look, Jon, nobody would be happier than me if we could responsibly take the

decision that the war has been successfully concluded or that threats to domestic

security have abated. Look I said last night, I’ll say it again, one of the

things we’re doing here is, we’re raising a permanent regiment to deal with

chemical biological nuclear incidents, like an anthrax outbreak.




Or an attack on, let’s say, a nuclear reactor that we have at, say, Lucas Heights

or somewhere.




I hope there isn’t another one. I hope, I hope that regiment is never called

out. You know nobody will be happier than me if it never is. But let’s suppose

we did have an anthrax outbreak, we’ve got to have somebody who can respond,

and I think you’d all be sitting around here saying, well what’s the Government

done to prepare for this. So we have to make preparations. As I said last night,

we’re prepared for the worst and we hope for the best.


Alright. Nearly twenty minutes to nine. We’ve only got a few more minutes Peter

Costello before you move to your next interview appointment. On health, the

Pharmaceutical Benefits Scheme, it’s costing more and more. No measures though

to stop the drug companies from their rampant advertising of these drugs on

television which is surely much of the demand. Why not try and, in some way

cap, their marketing power?


Well we’ve got a four-point plan actually in the Budget. The only one that’s

been attracting attention for obvious political reasons is the co-payment. But

our plan is to involve doctors, pharmaceutical companies, consumers and the



But they’re putting ads on television telling us to go and see your doctor

and get something for weight loss, for your sex life, for smoking, it’s endless.


Well hang on, hang on. You know, some of these drugs we don’t subsidise. You

know my ears pricked up when you said sex life. They tried to get Viagra onto

the subsidised scheme and we wouldn’t allow it. So we don’t even subsidise Viagra.

A lot of these other things we don’t even subsidise. There’s a very strict process

to get a subsidised prescription onto the scheme. Now once you’ve gone onto

the scheme, the pill or the prescription may cost $200, it may cost $1000, but

if you’re a pensioner you only pay $4.60. That’s why we’ve, one, got to control

drugs coming onto the scheme. Secondly, what we say here is we are now expecting

the drug companies to go around to doctors and to disclose to doctors tight

conditions in which these prescriptions can be given. We are asking doctors

to be very careful in the way in which they prescribe them. We’ve got measures

to crackdown on fraud.


The first homebuyers’ grant, Peter Costello, has in many ways driven the domestic

economy. About 250 people have used the first homebuyers’ grant to buy properties

worth more than a million dollars. Are their measures in the Budget to stop

that from happening?


No Jon, the first homeowners’ scheme is available to all people who have not

previously owned a home. We don’t operate an income or an assets test.


Well why not? It’s just a waste of a couple of million bucks. It’s a rort.


Well hang on, $7000. Let’s suppose, how many people did you say?


250 people. It’s cost nearly $1.75 million so far.


Well in relation to that can I say that the money which the State Government

will have made out of stamp duty by having those people buy those homes would

have been a very, very large sum indeed. And when I see the State Government

complaining about all these sorts of things, I never hear them offering to give

back the stamp duty which they’ve collected on those sales.


Peter Costello, it seems that it’s a Budget without any big ideas. Either,

is it that you’ve run out of big ideas, or are you keeping your powder dry for

when you’re the Prime Minister?


The new thing, which we’ve never done before in this Budget is an Intergenerational

Report which tries to project 40 years. Now, people say, and they quite validly

say, how can you be precise about what the nature of society will be in 40 years,

and I fully accept all of that. But within reasonable assumptions, and we set

them all down there, we try and talk about what will be happening in 40 years

time and what the cost pressures driving the Australian economy will be. We

try and identify now the cost pressures for 40 years time and my message is

in relation to these cost pressures, and medical science is one of the greatest

cost pressures that we’re facing, because medical and science is improving all

the time Jon. More and more treatments for more and more conditions, more and

more sophistication. There’s more and more costs. And my message is, that if

we don’t take moderate steps now to try and prepare for the future, you’re going

to have to take drastic steps in the years to come. And I want to say to people,

moderate, gradual adjustments to the long-term cost pressures which are emerging

in our society will give us a vision of 20 and 30 and 40 years time with a decent

society and a decent aged care system and a decent health system and a decent

pharmaceutical system.


Sixteen and a half minutes to nine on 774 ABC Melbourne. Peter Costello, my

guest on the program this morning. More Budget reaction coming up shortly. Don

Watson, in his book on working for Paul Keating as his speechwriter, remarks

that Keating always thought he spent so long as Treasurer that he ran out of

horsepower, that he ran out of energy by the time he became Prime Minister.

Are you at risk of doing the same thing?


Well Jon, I try and keep myself energetic and active. But look Budgets are

a huge amount of work. And you get locked-up unfortunately for weeks at a time

doing them. The Budget is a $160 billion operation every year and you can imagine

the care and the effort that goes into that. But I’m not complaining. That’s

my job. And I’ve got to do it and it’s been a difficult year. The US recession,

September the 11th, Al Qaida and the Taliban in Afghanistan, border



Did the Prime Minister last night at any stage take you aside, give you a handshake,

give you a nod and a wink and say don’t worry Peter, all’s okay, you’ll get

there sooner or later mate?


He took me aside and gave me a handshake. Put it that way.


I saw that.


I think he said good Budget.


Jeers, jeers from the Labor side of the benches.


Oh well what would you expect them to do. You don’t actually hear very much

policy from the Labor side of the benches.


You’re not going to comment any further on what’s clearly the burning and most

pressing issue in Canberra politics at the moment?




Alright. Specifically on Victorian issues, the MCG funding for the Commonwealth

Games redevelopment seems to have hit some sort of a hurdle in Tony Abbott’s

office. Are you going to poke your nose in there and tell him that it’s an important

and vital project for Victoria?


Well it is an important and vital project for Victoria and we allocated $90

million for the redevelopment of the MCG for the Commonwealth Games. And what

we are asking is that the industrial relations arrangement on that site respect

freedom of association and the Government’s policy on industrial relations.

We don’t want to get into a situation like Federation Square where the building

unions have been able to delay the whole thing and cause cost blow-outs. And

I call on Mr Bracks to stand up to the CFMEU and the other unions, to tell them

that he is the Premier of Victoria, that they will not be controlling these

building sites. That this is important for the people for Victoria and freedom

of association and proper terms and conditions will be respected.


Stephen Gough from the MCC told us yesterday that he thought it was the Commonwealth

that should be compromising.


Well the Commonwealth has principles to protect freedom of association and

good industrial relations. And we can’t put taxpayers’ money into a project

which is run by the CFMEU and delayed and blows-out. We’ve got to have good

industrial relations on that site. And it would be nice if the State Labor Government

could stand up to the CFMEU and tell them that.


Our time is up. I’m grateful to you. Thank you indeed.


It’s a great pleasure. Thank you very much Jon.