Interview with John Miller & Ross Davie

4BC

Wednesday, 11 May 2005
8.22 am

SUBJECTS: Budget

JOURNALIST:

Mr Treasurer, good morning.

TREASURER:

Good morning. Great to be with you.

JOURNALIST:

You’ve still got that smile on your face?

TREASURER:

Well, I think that the Budget that came down last night has done important

things for Australia. Encouraging more people into work, cutting tax and funding

the future, which as we know, is going to be tough with the ageing of the population,

laying down a funding plan for the future which will make Australia a much better

place for decades to come.

JOURNALIST:

Did you hear down the line what Wayne Swan just had to say?

TREASURER:

Well, I heard some of it, yes.

JOURNALIST:

Your reaction? Particularly, on the thoughts of his welfare reform package.

TREASURER:

Well, he does not have a package. Ask him for a policy one day. The whinge

is good but the policy is light on.

JOURNALIST:

Right. Okay.

TREASURER:

You will be able to ring him any day of the week and you will get the whingeing.

He is very good at whingeing but I do not think I have ever heard a positive

policy from him. No, I do not think so.

JOURNALIST:

All right Mr Costello. Please explain to us the Future Fund and the point I

am going to make here – and it’s one that’s been made on this programme

this morning – is if you have so much money to put into a Future Fund which

is going to be re-invested etc could not some of that money been kept away from

there and funnelled into the contentious areas of health, education and infrastructure?

TREASURER:

Well, look there are very substantial packages in this Budget for health and

infrastructure. As I said last night, $12 billion in relation to land transport.

As I said last night, Commonwealth health spending $45 billion. So, do not think

that we have not provided for land transport or health. They are massive sums

– in fact double the amount is spent on health today than was spent in

1996.

But we know that we have got a big demographic change going on in our society.

We know that the proportion of older people in our society is increasing all

the time. That is because people are not having as many kids. We know that as

a consequence there will be fewer taxpayers to support more people in retirement

in 10, 20 and 30 years time. We know that unless we make provision now, we will

be unable to afford the bills of 10, 20 and 30 years time.

And so what I have said in this Budget, is let us do something for the future.

We know we have got this problem. Let us start making provision now, because

if we can build a financial investment over 10 or 20 years, in 20 years time

future generations will be able to fund their services without having to pay

back liabilities of today. This is the most longreaching, farsighted reform

that has ever been put in place under Australian financial management.

JOURNALIST:

Mr Costello it has been suggested to us this morning that you have done such

a great job on this Budget, why would we ever want to lose you as Treasurer?

Why would people want to see you as Prime Minister when the team that is in

place at the moment is doing some great stuff?

TREASURER:

Well, it is important that we do do what we can for the Australian people.

This is what I am absolutely focussed on. This is what motivates us to try and

produce a situation where every Australian, as I said last night, every Australian

who wants to work should be able to find it. That ought to be the object of

economic policy and that is what this Budget is firmly directed towards.

JOURNALIST:

Nothing in there for low income earners yet again. And single mums with kids

between the ages of 6 and 13 are obviously going to be disgruntled as are a

certain number of sick people and indigenous Australians. Let’s look at

all of those areas which seem to be the only areas where we are going to have

some disappointment.

TREASURER:

Well, we do cut taxes for people on lower income. The 17 cent tax rate that

they pay at the moment will be cut to 15 per cent. So we do actually cut their

tax. And for many people including unemployed people, the income tests for their

benefit is made more generous. So they will be able to keep more of their part-time

income. Can I say in relation to mothers, that no mother who is currently on

benefit will be affected. I just want to make that point absolutely clear. No

mother that is on current benefit will be affected. What we are talking about

is rules in the future. And in the future the rule is going to be, and everybody

knows it now, we have given a lot of notice, that if you are on the single mother’s

pension, you still get all of your Family Tax Benefits and maternity payments

and all the rest of it, but if you are on the single mother’s pension

when the youngest child goes to school we are going to ask people to look for

part-time work.

JOURNALIST:

Well, when is the future?

TREASURER:

From 1 July 2006.

JOURNALIST:

1 July 2006, okay, so it is not far away though is it?

TREASURER:

No, but if you are already on the benefit you are not affected. For people

that are coming on to the benefit, from 1 July 2006.

JOURNALIST:

I see. All right, so I am a 42 year old woman, I am not…

TREASURER:

You do not sound like one.

JOURNALIST:

Thank you. And when my youngest kid starts school, if I come in under this

new regulation in July 2006, where do I get a job?

TREASURER:

Well unemployment is the lowest it has been in 28 years. There are more jobs

than ever before in the Australian community, many of them part-time. As we

know many of them involved, many people involved in caring, in retail, there

is a lot of job opportunities out there. And let me make this point –

somebody else’s benefit is just somebody else’s tax. There is a

lot of single mothers out there working at the moment. They will be saying to

themselves I am paying tax to pay other people’s welfare. Shouldn’t

I know that when I pay my tax to those other people that they have an obligation

to look for work too. Don’t you think that’s fair? The welfare benefits

that are being paid in Australia today are being paid by the taxes of people

in work. And if we get more people in work then everybody is going to be paying

lower tax. But if you have large numbers of people that are taking Government

benefits and not obliged to look for work then everybody’s taxes are going

to be higher.

JOURNALIST:

We had a question from a low income earner who asked why a person who’s

earning a good income $75K a year plus is entitled to a bigger tax cut than

someone on $25K a year?

TREASURER:

Well they are both entitled to tax cuts but let me say this. For families on

$25K a year they would not be paying any tax.

JOURNALIST:

Okay well…

TREASURER:

So you can not cut tax if they are not paying it. For a family on $25K a year,

the family tax benefits that they are paid exceeds their tax liability.

JOURNALIST:

All right, well let’s make it $35 to $40K versus $100K.

TREASURER:

Same thing. A single income family with a child under five does not actually

become a net taxpayer until they pay more than $40,000. The family tax benefits

are so extensive that for families the reimbursement they get through the family

tax benefit exceeds their tax liability. So, the answer to the question is,

you cannot cut tax for people who are not paying it. We have cut tax for those

down on the lower income, because they are not paying as much, it does not sound

as much in nominal dollars but it is greater in percentage terms.

JOURNALIST:

All right. Well, with a headline in the Courier Mail this morning saying “Money,

Money, Money. Everyone’s Happy” people, mostly we get the impression

are loving you this morning. Does this open the door to the Lodge for you? When

will that happen?

TREASURER:

Well, look we are totally focussed on the Budget and doing what is right for

Australia. And this Budget is not over you know, it will take months to enact

this Budget. We have got to get it in place before the 30^th of June.

And if the Labor Party blocks it, last night they were saying they were going

to try and block the tax cuts. I do not know if they have changed their position

over night. This could take quite some time to get in place.

JOURNALIST:

Just as a matter of interest, who would inherit your spot should you move into

the number one position? Alexander Downer?

TREASURER:

We are not going into any speculation because we are totally focussed on the

Budget.

JOURNALIST:

That’s a short and succinct answer. Lovely. All right. Treasurer the

situation with infrastructure, particularly in relation to a hot issue up here

which of course is the Ipswich Motorway. Is that funding in place? Will we see

some action there?

TREASURER:

Oh well the Commonwealth Government under its AusLink programme has set aside

money in relation to that and we will be delivering the money as announced in

our AusLink programme.

JOURNALIST:

Okay. I also notice there is money for the Bruce Highway, that’s good

as well. Mr Costello unfortunately we’re hard up against the news and

we’re going to have to leave you. We really do thank you for taking the

time.

TREASURER:

Thank you very much for your time. It is great to be with you. Thanks.