TRANSCRIPT
THE HON PETER COSTELLO MP
TREASURER

Interview with Rena Sarumpaet

SBS

Tuesday, 11 May 2004
8.45pm

SUBJECTS: Budget

SARUMPAET:

Peter there is a lot largesse in this budget but there is no tax cut for anyone

less on than $50,000 a year. Why are the tax cuts directed at the most well

off.

TREASURER:

Well, I don’t think I would say that people on $55,000 are well off.

I think they’re middle income earners and I think they don’t deserve

to be on top marginal tax rates. If you compare Australia’s tax system

with those overseas, their top thresholds cut in at much higher levels, generally

speaking, than ours and I think that you shouldn’t have to go on the top

tax threshold in Australia until you hit $80,000. That is about twice average

earnings. I don’t think people on average earnings should be near those

top rates.

SARUMPAET:

Haven’t low income Australians without children though, also suffered

as inflation has put them into higher tax brackets?

TREASURER:

Well, we have now one bracket at 30 cents between $21,600 and $52,000, so

those people are on a lower rate already. 30 cents in the dollar is their top

rate, we introduced that some time ago. But we do not want those people knocking

into a 42 cent rate or a 47 cent rate. So you have got to push those thresholds

out, so that the income earners at $55,000, $60,000, $65,000 do not go on top

marginal rates. These are the people working overtime. They might be upgrading

their skills and they need more incentive.

SARUMPAET:

You have a surplus of $2.4 billion for 2004-05 year. Does that leave room

for more spending announcements before an election, to reply to what Labor might

through out?

TREASURER:

I think that it is a prudent surplus. We want to keep the budget in surplus.

It took so much effort to get it there and it’s the 7^th surplus

that our government has delivered so I call it prudent. I would not say that

it has room for great spending measures.

SARUMPAET:

Why have you waited until an election year to recognise needs such as for

subsidised insulin pumps and support for full-time carers?

TREASURER:

Well, you always work at improving things as the finance becomes available.

You could not have done these things eight years ago because the budget was

deeply in debt so we did not have any money. So we had to balance the budget

first of all, repay $70 billion worth of Labor’s debt and now we are in

a stronger financial position and people can share in it.

SARUMPAET:

What about the inflationary concerns of stimulating demand through these tax

cuts. Mightn’t that be a mistake that the Reserve Bank might just have

to fix by lifting interest rates?

TREASURER:

No, the stimulation is about half a percent of GDP and we are actually forecasting

growth to slow somewhat. Next year, 3.5 per cent, it’s a good clip by

world standards but a little slower than this year. So I do not see any inflationary

consequences there.

SARUMPAET:

Well Treasurer, thanks very much for joining us at SBS.

TREASURER:

It’s a great pleasure to be here, thank you.