TRANSCRIPT

THE HON PETER COSTELLO MP

TREASURER

Interview with Laurie Oakes

Channel 9

Tuesday, 11 May 2004

Pre-record

SUBJECTS: Budget

OAKES:

Mr Costello, welcome.

TREASURER:

Thanks Laurie.

OAKES:

Is it fair to say that this is the biggest vote-buying splurge since Paul Keating

stole the 1993 Election?

TREASURER:

It is the biggest measures of family assistance that we have seen in Australia,

because it is not only increasing the amounts but it is changing the structure

of our payments so that families have help as Mum comes out of work to have

a child and they have help as Mum goes back into work after the birth of the

child. And so, in addition to that, there’s childcare places, another

40,000 outside school hours childcare places, so it is a very large Budget of

family assistance.

OAKES:

And there’s $15 billion in tax cuts…

TREASURER:

Tax cuts were also introduced because what is wrong with out tax system Laurie

is it doesn’t give enough incentive. You can go on the top rate of tax

in this country at $62,500, that is too low, it is too low by world standards,

means that people who are doing overtime or going for promotion can get on those

top tax rates and they shouldn’t. So we’re pushing that top tax

rate out to $80,000, you won’t go on it until you earn $80,000 or more.

OAKES:

The scale of the spending is enormous – a couple of billion dollars

here a billion more there. If you can magically produce that kind of money just

before an election why shouldn’t people be cynical?

TREASURER:

Well, it is not magic. This comes from running strong economic management

now over eight years. You see what has happened in Australia is our economy

is growing, we have got more people in work than ever before. There are more

Australians with jobs than ever before.

OAKES:

Sure, but you approved most of this stuff, the Government approved most of

this stuff at least eight months ago, some of it over a year ago, and you have

held onto it until now. I mean that’s cynical isn’t it?

TREASURER:

No, because this is such a big package – one, it took time to do and

secondly if we hadn’t, if we had done it any earlier it wouldn’t

have been of the dimension it is. But just let me finish, we have more Australians

in work than ever before which means they’re paying tax. Australian companies

are more profitable than ever before in Australian history and they’re

paying tax. It is a strong economy that gives you the capacity to do these kinds

of things but it all starts from economic management.

OAKES:

But you couldn’t have done it earlier?

TREASURER:

No, because back earlier when we were first elected the Budget was $10 billion

in deficit.

OAKES:

We are talking a year ago when Cabinet approved all this.

TREASURER:

You couldn’t have these benefits then. But we have been working on this

work/family, you know, Mum struggling to juggle the kids and work, part-time

work, and all of that, and I believe the way it has come together is a great

package.

OAKES:

Well then the political reason for this is pretty obvious, for all this spending.

What is the economic justification, and isn’t it a danger that a massive

stimulus like this of creating inflation, maybe putting pressure on interest

rates?

TREASURER:

Well, the stimulus is half a per cent of GDP. But what we’re actually

forecasting is that if anything growth will be coming off a bit in the next

year. Still, a fair click, 3 per cent, but a little bit less than this year

and that is after you add in this stimulus. So, I don’t think we see run

away inflation in the Australian economy. We have entrenched low inflation,

more people in work than ever before, and that enables you to do things in your

country that would have been unthinkable without good economic management.

OAKES:

You put the Senate in a difficult position in that they are standing between

the voters and a big bucket of money. Do you think that is why the Labor Party

has decided to pass this Budgetary measure?

TREASURER:

Well, you have always got to read the fine print with the Labor Party. If

they pass it then I think they will have done the right thing. And I hope they

do pass it. Because bear this in mind Laurie, these tax cuts operate from 1

July this year. We have got five or six weeks and you have got to do it earlier

than that because employers have got to know how much to take out of people’s

wages. So I hope it sails through.

OAKES:

But you will need to ram this through Parliament in a limited few weeks?

TREASURER:

Oh yes, it has to be done. If this is delayed into late June…

OAKES:

You miss the election.

TREASURER:

Well you will have trouble in the workplace because the Tax Commissioner has

got to publish the instalment notices so that employers know how to take, how

much to take out of someone’s wage. And they have got to know what the

law is. This has to be done in the next four weeks.

OAKES:

And you want all this in place before the election?

TREASURER:

We want all this in place before 1 July because on 1 July the tax changes

are due to take effect.

OAKES:

Now as I understand what the Labor Party is saying, they will pass this, but

they reserve their right if they win Office to then make changes. That’s

fair enough isn’t it, as long as they announce the changes in the campaign?

TREASURER:

Oh look if the Labor Party wants to run to the election with the proposal

to take these tax cuts away and it wins the election it is entitled to take

the tax cuts away and increase income tax. Yes it is. But it has got to be clear

with the public that its platform is to increase tax if it is elected. And if

it is clear and if the public votes for the Labor Party in the clear knowledge

that it is Labor’s policy to put income tax up, yes Labor is entitled

to do it.

OAKES:

Now there is criticism of this package, that people are saying that there

is not much in it for the Howard Battlers, they’re saying there are six

million families who will get nothing out of the tax cuts or the family benefits.

What is your response to that?

TREASURER:

Oh look the biggest package for families ever, income tax relief for middle

income earners, new savings incentive where you can get 150 per cent of any

voluntary contribution in money. I think this has a lot in it for people in

what I would call that middle income range of $40,000 and $50,000. Many of those

people are battlers.

OAKES:

You say that Mark Latham can’t be trusted to run the economy, but if

you won’t commit to staying on as Treasurer, voters can’t be sure

who will be running the economy if the Coalition wins Government.

TREASURER:

Well, I have made it perfectly clear I am working for the return of the Howard

Government in which I would hope to serve. You can’t be any clearer than

that.

OAKES:

It doesn’t mean you will be Treasurer?

TREASURER:

Well, the person who will be next Treasurer will be decided by the electors.

OAKES:

No, no, no, it will be decided by the Prime Minister.

TREASURER:

If we are re-elected I hope to serve in a Howard Government. I can’t

be any clearer than that. But let me say this…

OAKES:

But since you won’t commit yourself then people might think Danna Vale

is going to be Treasurer.

TREASURER:

No, the electors will decide who will be in the next Government and Laurie

if it is a choice between me doing economic management and Simon Crean, they

can make that decision accordingly.

OAKES:

But if you won’t commit yourself it is a choice between Simon Crean

and person or persons unknown.

TREASURER:

Don’t you worry about my commitment. My commitment is very strong, Laurie,

very strong.

OAKES:

Mr Costello, we thank you.

TREASURER:

Thank you.