Transcript No. 2001/065

TRANSCRIPT

of

THE HON PETER COSTELLO MP

Treasurer

Nine Network – Interview with Laurie Oakes

Tuesday, 22 May 2001

9.00pm

 

SUBJECTS: Budget, Self-Funded Retirees, Pensioners, Motor Cars, Welfare,

Rollback

OAKES:

Treasurer, welcome to the programme.

TREASURER:

Thanks Laurie.

OAKES:

Is it fair enough to say this Budget is aimed at winning back traditional

Liberal supporters that you had alienated?

 

 

 

TREASURER:

It is a Budget which is economically responsible, which continues prudent

management, and it allows us to share some of the benefits of good economic

policy. We have paid down $60 billion worth of Labor debt. We dont have to

spend as much in interest as we used to, we are able to distribute some of that

benefit to pensioners, and some to self-funded retirees, and some to business

with tax cuts.

OAKES:

And it is the self-funded retirees particularly, that Shane Stone, in his

memo, said were traditional Liberal supporters that the Government had

alienated. Was that your thinking in the frame of this Budget?

TREASURER:

Well, when, before, under the Labor Party, Laurie, you used to pay tax at

$5400 if you were a self-funded retiree. Some years ago we increased that to

$11,000, but tonight we take it to $20,000, so that a self-funded retiree or a

pensioner with additional income, doesnt have to pay tax until they go above

$20,000, or if they are a couple above $32,000. So, that is an enormous tax cut

and its back-dated, its back-dated to 1 July of last year, so, as soon as

you put in your tax return you will be able to get the money back.

OAKES:

Well, the self-funded retirees do okay, but the ordinary pensioner doesnt

do nearly as well – $300 one-off – it disappears with the election, basically,

its an election bonus. Is that fair?

TREASURER:

If you are an ordinary pensioner and have additional income you get the

benefit of those increases in tax-free threshold

OAKES:

But if you dont have additional income

TREASURER:

If you have no additional income then you will get a one-off payment, a

non-taxable payment, $300, Im not sure this has ever been done before, $300

to a pensioner, or a part pensioner. There is 2.2 million of those people and if

the legislation goes through the Parliament by Thursday it will be paid next

month.

OAKES:

But they see this as compensation for the GST, that they, and you get it for

one year, and the GST goes on forever.

 

 

 

TREASURER:

The compensation for the GST was the pension increase on 1 July last year and

the pension is 2 per cent higher in real terms, and will always be. Thats the

compensation for the GST.

OAKES:

But the pensioner groups still say that wasnt enough to compensate.

TREASURER:

Well, Laurie, you know, ever since the pension was introduced people have

always been saying it should be higher, and I dont begrudge anybody that. But

because the economy was stronger in the last year, and the Budget position was

better, the economy could afford it, the Budget could pay for it, and were

now making it to people who deserve it, and you can always say, oh well, only

$300, but this is $300 that I am not aware has been paid before by way of a

bonus to pensioners.

OAKES:

Now, part of your aim, I think you said earlier, was to stimulate the economy

with this $300, the other measure that is stimulatory is the tax cuts for cars

bought by businesses. Did you have advice that without that stimulus the economy

would go further into a hole?

TREASURER:

No, the economy has been weaker this year than it was last year and so it can

afford some stimulus, and we have got the stimulus of tax cuts.

OAKES:

Afford it or need it?

TREASURER:

Well, whichever way you put it, it would benefit from it. So, we have got tax

cuts, we have got the pensioner bonus, we have got the bring forward of

reductions in taxes on cars – that will be very good for the motor car industry

by the way – and we then expect that growth will strengthen through the course

of next year, so the economy will benefit from it, the Budget can afford it and

the people deserve it.

OAKES:

Well, you said on Sunday that this Budget would lay down some markers for a

third term agenda for the Coalition. What were they?

TREASURER:

Welfare reform, this is the biggest reform and overhaul of Australias

welfare system that we have ever had, and what we are trying to do here, Laurie,

is we are saying the Government will invest more money but it will ask more of

people in return. If you are receiving an unemployment benefit it will ask for

Work For The Dole. That is, put back into the community. If youre a single

parent on a parenting payment it will ask you to try and think about the

possibility of getting back into the work force once your kids get to high

school and its much more of a mutual obligation. The community invests more

but it asks more, and it is a reform, really, over 10 years. The other big

reforms here of course are Defence. A 10 year programme on Defence. There is

also the re-investment in the 5 year Natural Heritage Trust to 2006 – 2007, and

we continue the abolition of indirect taxes which will make Australia, I hope, a

business centre into the next decade.

OAKES:

Now, you concluded your Budget speech with a quote from the first Treasurer

100 years ago, but what is the forward looking vision here, I mean is there one?

TREASURER:

The forward looking vision here is having now worked to reform the tax system

we take on welfare, we re-build our defences, we invest in our human capital,

and we re-build Australias environmental resources, probably one of our

greatest challenges for the next four or five decades.

OAKES:

The figures in this Budget were interesting, a surplus of $1.5 billion,

growth picking up in the next financial year, to what, three and one quarter per

cent. Are you confident about those figures?

TREASURER:

I think so. As you know we have had an incredible bring forward of housing

construction before GST, consequently it fell away because it had been brought

forward

OAKES:

And contributed to the slump

TREASURER:

and now it is coming back. The First Home Owners Scheme up to $14,000 for

a new home, lower interest rates, its coming back. Its going to support

growth, our exports are booming and so we have got exports contributing to

growth and I think we have got pretty good prospects in 2001-2002.

OAKES:

Now, can you guarantee that the figures in this Budget will still be current

in November?

TREASURER:

Well, barring international catastrophe, these are the best figures that

could be put together.

OAKES:

But they are different to the figures from the figures that you issued 6

months ago?

 

 

 

TREASURER:

Well, I think in relation to Budget outcomes, I think each year we have come

in better than I forecast. Even this year, 2000- 2001, we are going to come in,

you know there was a lot of talk this time last year, people said, oh its all

spectrum sales, spectrum sales didnt do as well but we came in stronger than

we were expecting.

OAKES:

The reason I ask the question is that Labor says they cant rely on these

figures still being current so they have got to wait until the election before

they give us their costings. Now, there is some validity there isnt there.

TREASURER:

No.

OAKES:

Why not?

TREASURER:

Labor cant give you a policy because it hasnt written one yet. Thats

its problem.

OAKES:

Well, they have issued fifty-one policies, the problem is there is no dollars

attached to them, and they say the reason for that is they have got to wait for

the Budget honesty figures (inaudible) of the election campaign.

TREASURER:

No, Labor cant give you a policy on tax because it hasnt written one.

The Labor Party can fund the abolition of GST. This is a very important point,

you can abolish GST tomorrow.

OAKES:

That, of course, is not their policy.

TREASURER:

Well, who knows what their policy is?

OAKES:

But they have said (inaudible)..

TREASURER:

All you have got to do is re-introduce Wholesale Sales Tax, re-impose

Financial Institutions Duty, double Capital Gains Tax, increase company tax, and

increase income tax. It is because they are not prepared to do any of those

things that they have stymied themselves on their own policy. Have you ever seen

a group of people run away from their own policy to the extent that the Labor

Party does? If Labor was proud of its policy to abolish GST dont you think it

would be out there talking about it.

OAKES:

But, its policy is not to abolish the GST, isnt that the point?

TREASURER:

Well, who knows what its policy is. It opposed the introduction of the GST so

I assume its against it. Its a fair assumption, isnt it?

OAKES:

Well, its against but says it cant be changed.

TREASURER:

Well, of course it can be changed. Laurie, its a one line Bill. The Bill

is, the GST Act is repealed. Of course it can be changed, I mean lets not

fall for that one. They are ashamed of actually putting it out, thats the

problem.

OAKES:

Ill put that to Simon Crean. Mr Costello we thank you.

TREASURER:

Thank you.