Budget – Interview with Jon Faine, 3LO

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Entry Into Force Of the Protocol Amending the Australia and United States Double Tax Treaty
May 13, 2003
Labor’s Budget Response – Doorstop Interview
May 15, 2003
Entry Into Force Of the Protocol Amending the Australia and United States Double Tax Treaty
May 13, 2003
Labor’s Budget Response – Doorstop Interview
May 15, 2003

Budget – Interview with Jon Faine, 3LO


Interview Jon Faine


Wednesday, 14 May 2003
8.30 am



Peter Costello is the Federal Treasurer, the Liberal Member of Federal Parliament

for the seat of Higgins. Mr Costello is in our Canberra studios, good morning

to you.


Good morning Jon.


The tax cuts that you announced yesterday, it’s not even making up for bracket

creep Treasurer. With one hand you take away and then you give a little bit

back with the other. People don’t seem to be too impressed so far this morning.


Oh well Jon, what we did in relation to this Budget is we had to fund the war

in Iraq and that’s about $750 million. We had to fund drought assistance, that’s

about $750 million, we announced a big security upgrade and the Budget was still

in surplus. Now we could have had a bigger surplus and repaid more Labor debt,

but we have repaid $63 billion of Labor debt so I thought it was fair to return

some money to taxpayers.


If you were serious about them, if you were serious about cutting into bracket

creep you would index the points in the tax scale where people pay higher tax

rates the way the Victorian Government permanently indexed fines last week.

You would keep them indexed to the cost of living wouldn’t you?


Well the way the Victorian Government indexed fines last week was to put up

300 taxes. I am not in that business. They, the Victorian Government increased

300 taxes. Now, not only does the Commonwealth not increase taxes, we cut them.


If you wanted to address bracket creep you could index the tax rate.


Well Jon, indexing the tax rates by the Victorian Government was a measure

of putting up taxes. I am not putting up taxes, I am cutting them. I am not

going to do what Mr Bracks did. He put up 300 taxes.


He did indeed. But we’re not talking about that. I am saying if you wanted

to seriously address bracket creep, there is a way of doing it, there is a simple

mechanism and you are not doing that.


Well Jon, I was just taking issue with your urging me to follow the Victorian

Government. I won’t be doing that for a moment. That is the point I was making.

No, in relation to income taxes Jon, the view we take is this, that the Government

has certain responsibilities particularly when you are in a time of war. And

the most important thing in our view is to fund the troops. We are also experiencing

the worst drought in Australian history. So we are going to fund those things

before we do anything. If you have a chance to lower taxes then you should do

so. And we have done. So I don’t overstate it, but I think a tax cut is better

than tax rises.


The GST revenue take overall is up though, surprising 14 per cent, far more

than in last year’s Budget you were expecting. Shouldn’t you then give some

of that back not just a tiny fraction of it? Overall the global take that the

Commonwealth gets from the Pay as You Earn or Pay as You Go and the GST, we’re

all paying much, much more tax than we used to.


Let me make this point. We give every dollar of GST back. The Commonwealth

doesn’t get a single dollar of GST revenue. That all goes to the States. And

let me tell you how much Mr Bracks will be getting – $6,649.5 million from GST.


They say they only get back 83 cents of every GST one dollar that you take.


Well hang on…


That Victoria only gets back 83 cents in the dollar.


All GST revenue is received by the States.


Collectively, but not Victoria, we don’t get back as much as we pay.


There is an agreement between the States for the bigger States to subsidise

the smaller States which they have been doing since 1901. When they subsidise

other States, it is not the Commonwealth they subsidise, it is other States.

Now the GST revenue which Victoria will get in this year is $6,649 million.

So that is a pretty big whack.


What happened to last year’s promise Peter Costello of simplifying the GST

system, the BASs? When we spoke after last year’s Budget you said that was still

being urgently considered. It seems to have slipped off the agenda.


Well, we made an announcement simplifying the BAS as I recall at the beginning

of 2001. We have a full reconciliation which the overwhelming majority of taxpayers

do and we have another system by which you can make an estimation and that was

introduced at the beginning of 2001 as I recall.


So you’re not wanting to look at it again? You’re happy with the way it’s working

now because a lot of businesses, particularly small business people say it’s

still got them bewitched and bewildered.


I think it is running reasonably well. We have had the GST system now since

July 2000, so it is three years. Jon you can recall when we were introducing

the GST system, everybody said that, you know, Australia would go into recesssion.

The Labor Party said that people would lose their jobs. Three years later there

are more people in work, Australia is probably the strongest growing economy

of all of the developed economies of the world. I think that there have been

some adjustment problems but I think that predominatly it has gone pretty well.


If things are going so well you can afford to give us a bigger tax cut than

$4 a week?


Well Jon, the point I make is this, that we have had a war, we have had a drought,

we had the Bali bombings, we had the increase in security. Our Budget is still

balanced. I don’t think there would be many countries around the world that

have a Budget balanced and I don’t think there would be any that I know of that

have been able to cut taxes at all. And if you want to look back at Australia

as I have pointed out, other than the Commonwealth, nobody is cutting taxes,

they are increasing them. The Victorian Government increased 300 of them.


In the build up to the Budget, the Victorian Government was placing a number,

a series of ads in the newspapers making seven points that they said they wanted

dealt with in the Budget. Three of them were to do with road funding. I have

had a look through the Budget paper reports, it seems the money for the Scoresby

Freeway is still there for the State Government to collect but it still depends

on it being a Freeway not a Tollway. And the State Government announced unequivocally

that the road will be built as a Tollway so why have you left the money in the



Well Victoria can have, and I think it is $425 million, it is over $400 million…


$445 I think it is.


…$445 okay, $445 that is right, $445 million for the building of the Scoresby

Freeway today. Today.


But you know that there is a condition attached to that, that they have already

said will not be met.


It is not a condition. There is a signed agreement. All they have to do is

say that they will honour their agreement to have $445 million and make it a



But this is pointless Treasurer because you know the decision has been taken

that it will be a Tollway.


No it is not pointless at all. If the Victorian Government is prepared to honour

its agreement, the people of Scoresby can have a Freeway. The Commonwealth is

not going to put $445 million into a road which Steve Bracks then charges a

toll on.


Why not? You contribute to tollways in New South Wales in their construction.

Why can’t you contribute to a tollway in Victoria?


Because we promised the people of Scoresby a Freeway. And Steve Bracks promised

the people of Scoresby a Freeway. And as far as we’re concerned we’re going

to keep our word and Steve Bracks should keep his word.


What the people have actually said they want is they want a road that they

can drive on, whether it’s a Freeway or a Tollway, I am not sure that matters

that much to them, they just want it built.


Jon go and ask them. Because I have. Go and ask them whether they want a freeway

or they want to pay tolls every day on their way to work and tolls every day

on their way home…


Well I am sure they would rather not pay tolls but they would rather that the

road was built.




(inaudible) on talkback they want the road built.


Hang on Jon, go and ask them whether they want the Commonwealth and Steve Bracks

to keep their word or whether they are happy for Steve Bracks to break his promise.

Go and ask them. I have never seen an issue like this out in the eastern suburbs

of Melbourne. I tell you, the Liberal Party is going to stand up for those people

and we are going to have, hold Mr Bracks and Labor accountable. We feel very

strongly about this.


So you acknowledge that that’s a political decision…




…rather than a funding or a road construction decision?


It is not a political decision Jon.


Well you just said it was. The Liberal Party will campaign on it you just said.


No, I said the Liberal Party will stand up for the people of the eastern suburbs

of Melbourne. And we will expect Mr Bracks and the Labor Party to honour their

word. We will stand up for them. We said to them we would pay $445 million.

Steve Bracks said he would pay $445 million. We signed an agreement for no tolls.

We have our $445 million and I say to Mr Bracks today, meet me today with your

cheque, honour your promise and Victoria can have the Scoresby Freeway without

a toll.


But you fund tollways in New South Wales. Why won’t you fund a tollway in Victoria?


You don’t have to fund tollways. Tollways are paid for by tolls.


Then why contribute to them in other States?


Freeways are paid for by taxpayers money. That is why we have $445 million,

that is why Steve Bracks promised $445 million, that’s why it ought to be built.

It is that simple Jon.


But you have contributed to the construction of Roads of National Importance

in New South Wales that have ended up being tollways. It is the same thing here

and you won’t do it.


Well Jon, I don’t want a tollway. And the people don’t want a tollway. Steve

Bracks promised them they wouldn’t have a tollway. We have a written agreement

signed by Peter Batchelor that says no tollway. Why not do that?


All right. Let’s move on. Treasurer the reality is that this is an ambit claim

Budget. The Labor Party are saying that the Medicare reforms and the university

funding measures won’t make it through the Senate. Where do you go?


Well, we are a Government, we bring down a Budget, as you know, a Budget has

to be legislated through the House of Representatives and the Senate. Now when

it has been legislated through the House of Representatives, we will ask the

Senate to pass it. Now you point out that the Labor Party is full of negativism

and is threatening, they were actually threatening the Budget the day before

it was delivered. But I don’t think it is going to get Mr Crean anywhere. So,

we will have to start negotiating with the Democrats and Meg Lees and try and

get the Government’s programme through the Senate.


So when do you start doing that? When is your first appointment?


Well, we haven’t enacted it through the House yet, so after we have done that.


Does it have to wait? It’s going to go through the House, there’s not much

debate about that.


Well, Jon we have got to move all the Bills. We have got to have a look at,

we will start trying to negotiate the Government’s programme. But can I make

this point? People elect a government to do things. And they want us to do things.

And I think the Senate should recognise that the people of Australia do want

the Government to do things and to get on with governing and this attitude that

Crean’s got of negativism and whining I don’t think it’s going to do him any



Well that’s generous advice to him from you Peter Costello. The cat and mouse

game for an early election has begun. The Prime Minister on AM on ABC radio

this morning says there’s no need for one. But surely it’s your call isn’t it

because it’s your election not his?


Well I don’t think there is a need for an early election. We’re halfway through

the term and the next election is not due until November of 2004. And if the

Government is able to continue to govern I think people don’t want early elections.

So I would say that it’s pretty straightforward that the Government should be

allowed to run its term and the Senate should let the Government get on with



But you didn’t disabuse me of the notion that it’s your election to run, not

John Howard’s?


Well Jon, I don’t speculate on those things because there’s no point in speculating.

The only point I would make and I am sure it’s the same point that John Howard

has made is that the Government should be allowed to run its full term.


The apprenticeships over for you now isn’t it Peter Costello?


Well I have been Treasurer for the last number of years. We have been able

to do some good things and I am now busily trying to get this Budget through

the Senate. That’s what I am focussed on.


You are like a racehorse on Cup Day chomping at the bit. You are in the stalls

and you are just waiting to go.


Well I am on the Budget racehorse and I am trying to bring it through the Senate

finishing post.


But with one particular winning post in mind and that’s the Prime Ministership

and the chance to show the Australian people that I can go to Gallipoli and

make speeches about national identity. I can do all sorts of things other than

just fiddle the books here and keep high spending Ministers under control.


I don’t think that I would accept that I fiddle books Jon, but a Treasurer’s



I wasn’t meaning that in any insulting way.


But as the Treasurer, I, you know, I am responsible for the overall economic

management of Australia. I think Australia is in as good as a position as any

country around the world actually and it’s been a difficult period. And that’s

what I am focussed on, trying to keep us there.


All right. We have to let you go. Just one final question before we move to

callers. Peter Costello should the Governor-General have resigned rather than

just standing down, standing aside?


Jon, my view on the latest allegation, the one in the Victorian Supreme Court

is that nothing has been proven against him. Nothing has even been to court.

He is an innocent person until somebody proves or goes on evidence or a court

finds to the contrary. And I think it would be a really bad day for Australia

if the issue of writs like that forced people out of public life. It could happen

to anybody. It could happen to you. It could happen to me. I don’t think that

the issuing of that writ and the circumstances should mean that people can,

should be forced to leave public life. I really don’t.


Thank you indeed for your time this morning.


Thanks very much Jon.