TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with Neil Mitchell, 3AW
30 July 2003

10.05 am

SUBJECTS: Charities, Housing Affordability, Leadership

MITCHELL:

We have spoken a couple of times today about the issue involving the

Federal Treasurer, specifically, and a most detailed report in the Financial

Review, and the Democrats are screaming about it as well. That charities

and churches that criticise Government policy could lose their tax-free

status. This is draft legislation up for discussion. I have spoken to

a number of groups about it. On the line is the Treasurer, Mr Costello,

good morning. Okay well, it’s there for discussion. Let’s, can we deal

with this tax-free status first? What’s, what is it about, what are you

trying to do?

TREASURER:

Well, this was a request, mainly from the charitable sector to take current

law, which is contained in case law, and put it in a statute. That is

to keep the features of the current law in a statutory form.

MITCHELL:

Well is an effect of that, that if a charitable group criticises or attempts

to change government policy by lobbying it, that they lose their tax-free

status?

TREASURER:

No.

MITCHELL:

What if that group is perhaps an umbrella body over the individual body

over the individual groups that are doing the work?

TREASURER:

No, what’s happening is that the law proposed in this statute is exactly

the same as the current common law.

MITCHELL:

Well, how does it work? If I am running…

TREASURER:

Well, much like it does today. It works like it does today. That is,

if you are a charity you get what’s called gift-deductibility. People

give you gifts, it is tax deductible. Just like it does today.

MITCHELL:

Okay. Well what are you writing in? And why are you writing it in?

TREASURER:

Well, we wrote in the ability for people who aren’t considered charities

today to get that status. That is we have widened it in some respects,

in the respect of non-profit childcare and in respect of contemplative

religious orders.

MITCHELL:

But why is it relevant if I am attempting to change the law or government

policy?

TREASURER:

If you are a lobby group, that is, if you set up a lobby group to lobby

the government you are not a charity.

MITCHELL:

What if I work as a charity and as a lobby group?

TREASURER:

Well, if you are a charity, that is you have a purpose which is to help

the poor, or the sick or education, you are a charity. This is the current

law.

MITCHELL:

Can I also act as a lobby group?

TREASURER:

Well, you can and they do.

MITCHELL:

(inaudible)

TREASURER:

Catholic Health is a classic example. They can and they do.

MITCHELL:

And they will not be affected by this?

TREASURER:

No, because this replicates the current law.

MITCHELL:

Yes I understand that. But I still don’t understand why we have this

written in about attempting to change the law or government policy. That

should be irrelevant to this, to anybody.

TREASURER:

Oh no. No. Because you have to be a charity. You have to actually try

and help the poor. Now if in the course of helping the poor you want

to lobby, that’s fine, that’s not a problem. But if all you want to do

is be a lobby group…

MITCHELL:

But don’t…

TREASURER:

Let’s suppose you and I say, you know, Liberal Party Friends of the Federal

Government. We can’t be tax deductible because we are a lobby group.

MITCHELL:

But isn’t it correct that some of these charities would have over them,

involved, a sort of, over them if you like, an organisation which opts,

acts as a lobby group but it is in fact over the top of the charities

themselves? What happens with them?

TREASURER:

Well, whatever happens with the current situation.

MITCHELL:

And what is it?

TREASURER:

Well, as I understand it, under the current situation, if you are a charity

and you are helping the poor, you have got tax deductibility and you

can in the course of that lobby government. But if you are just formed

to be a lobby group, if that is all you have been formed to be, you wouldn’t

have at the moment tax deductibility.

MITCHELL:

So what if all the soup kitchens in Melbourne decide to get together

and get a group that specifically lobbies the Federal Government. They’re

paying for it. Is that…?

TREASURER:

If that’s a charity that’s providing a soup kitchen its gift deductible

and it will stay gift deductible.

MITCHELL:

No, but it’s a group put together by the soup kitchens to lobby government?

TREASURER:

No, well, it’s a question of whether it’s helping the poor or not.

MITCHELL:

It seems to me that we are introducing a pretty dangerous area.

TREASURER:

No, I don’t think so Neil. Because if the law is not passed, it just

stays as it currently is. It’s no skin off anybody’s nose. You know,

this is one of these areas, frankly, where it is very easy, you know,

to sort of try and ascribe improper motives to people.

MITCHELL:

I am not doing that. I am saying that…

TREASURER:

No, no, I am just saying…

MITCHELL:

…when possible the Tax Department will muck it up.

TREASURER:

No, no, I am saying that you know I think the Australian Democrats who

raised this, this was announced eleven months ago, by the way, I think

the Australian Democrats when they announced it did ascribe some improper

motives and the object of course is to try and scare charities and try

and whip up a political storm.

MITCHELL:

Okay.

TREASURER:

Now, I just want to say this to the charitable sector, because that’s

the people I really want to get this message to, what this proposal does

is in this respect it is designed to replicate the existing law and there’s

no reason to be scared by this, the whole idea, which came at the request

of the charities was to try and put into a statutory form what the current

law is on this point. And that’s what it’s trying to do.

MITCHELL:

Well, we have been told the CFA and the State Emergency Service could

be affected? Is that right?

TREASURER:

I don’t know who told you that or why.

MITCHELL:

Well, they say you can make a tax deductible donation to an individual

unit but a major sponsor going sort of to the entire operation wouldn’t

be able to?

TREASURER:

Well, you know, again I don’t know who says these things. But, you know…

MITCHELL:

They’re wrong?

TREASURER:

This was announced eleven months ago. It was done in a way so that everybody

could have part of the discussion. The discussion is going on. It’s not

affecting anybody who’s currently recognised as a charity. So…

MITCHELL:

Okay. Just…

TREASURER:

The only thing I would say, is you know, I know people thrive on conflict

in this area but I just think this is one of the areas where it’s not

worth the Democrats or anyone else trying to scare people.

MITCHELL:

Well Catholic Health as you say are worried about it. They have also

raised the area of moving the surplus from one part of an organisation

to another. They use the example of moving it from the hospital, say

they are running a hospital, to another part of that same organisation.

Now will that be a problem for them?

TREASURER:

Well can I say if Catholic Health are worried about it, we have been

consulting on this for eleven months and we now have the Board of Taxation,

who is consulting with the fellow who handles the whole of the Catholic

Church’s operations here in Victoria, who came to me and asked could

he be part of the consultation on behalf of the whole Catholic Church.

So I don’t know if Catholic Health has not been notified, but the Catholic

Church has been part of the consultation process on this.

MITCHELL:

Okay.

TREASURER:

And all of these things have been part of the consultations with the

Catholic Church. Now, I am going to get onto the Catholic Church and

ask them if they’ve been, if they can bring Catholic Health into the

loop. But it’s just not worth anybody, the Democrats or anybody else,

trying to create a scare. At the end of the day, this is a proposal which

the charitable sector asked for.

MITCHELL:

Yeah, but it’s a matter of getting it right.

TREASURER:

Yes, absolutely. It was announced eleven months ago. The consultation

has been going on since and there is no hurry on any of this legislation.

And you know, if at the end of the day the charitable sector says, well

look just leave the law as it is, it’s no skin off anybody’s nose.

MITCHELL:

All right. Well you know who the loudest lobbyists on these issues in

Victoria is anyway?

TREASURER:

That’s what, Francis Sullivan?

MITCHELL:

No. You grew up with him. I mean, if you were going to stop religious

organisations and charities lobbying, we would never hear from your brother

again.

TREASURER:

But we’re not going to.

MITCHELL:

I didn’t think you’d be game.

TREASURER:

We’re not going to. You know, you sometimes you get frustrated by all

of this. A charitable sector comes and says look, will you please put

into legislation what the law is. OK well I can do that. We announced

it eleven months ago. You set up a consultation period, you put somebody

from the Catholic Church on it…

MITCHELL:

Righto.

TREASURER:

….we have a board discussing all of these things. You know, we can

only do them one by one. There is no hurry as I have said. If they don’t

want legislation they don’t have to pass new legislation. One day you

wake up and somebody’s run a story that says there’s a plan to stop people

criticising government policy which is so far from the mark that you

feel, you know, how could anybody in clear conscience say it.

MITCHELL:

Righto. Just another quick issue. You are having a go at the States to

cut stamp duty. Have you got a, stamp duty is one of the great irritants

in this society at the moment, particularly in Victoria, where it’s particularly

high. Have you got any hope in getting them to cut it?

TREASURER:

I think if…

MITCHELL:

(inaudible).

TREASURER:

…if the public, look if the public is concerned enough about levels

of stamp duty I think the Victorian Government will respond.

MITCHELL:

Well, they haven’t yet and they have been screaming at them, we have

all been screaming for years.

TREASURER:

Well, the fact of the matter is, and this is the point I was making,

is house, because interest rates have come down, house prices have gone

up. When house prices went up, the State Governments did not change their

thresholds or their duty amounts. So that the levels which had been set

in decades past to apply to luxury houses now apply to standard houses.

For example a standard house in Melbourne back in 1996 attracted a stamp

duty of $6,000 and today it’s $16,000.

MITCHELL:

So, what would you do?

TREASURER:

That is a $10,000 windfall on the same house.

MITCHELL:

What would you do?

TREASURER:

Well, what I am saying to Mr Bracks is, I think they have to adjust thresholds

to take into account the fact that property prices have gone up.

MITCHELL:

Now I know you need to get away. We had a $20 bet to go to charity on

the Melbourne v Essendon game, I think Essendon won, where does it go?

TREASURER:

Odyssey House.

MITCHELL:

Odyssey, you were out there recently?

TREASURER:

Yes, well I am going out there, I have been before, but I am going out

there again, and I really appreciate that Neil. That would be great.

MITCHELL:

It’s snowing at the Black Spur. And one last question. Why shouldn’t

John Howard be Prime Minister?

TREASURER:

Well, he is…

MITCHELL:

But you didn’t want him to be?

TREASURER:

…and he has been elected to see out his term and he is.

MITCHELL:

Why shouldn’t he be?

TREASURER:

Well Neil, I have supported, nobody has supported John Howard to be Prime

Minister more than me.

MITCHELL:

But you told Channel Nine recently that you told him he should go? Why?

TREASURER:

No I didn’t. No I didn’t.

MITCHELL:

What did you say?

TREASURER:

What I said is we discussed the process of transition in the Party and

I had strong views.

MITCHELL:

Strong views that he should go?

TREASURER:

That is all I said.

MITCHELL:

Well that is the question. Have you got strong views about when he should

go?

TREASURER:

And when I was asked whether we discussed it, I said I did. And that

was the truth. I thought I should tell the truth and we discussed it.

But let me say this Neil…

MITCHELL:

Yes.

TREASURER:

…there’s nobody who has supported John Howard more than me through

three election campaigns, I think it has been a pretty successful government

as you look back through the last seven and a half years.

MITCHELL:

As of today, do you think he should step down?

TREASURER:

I think he knows that there is probably no person that’s given their

all more than me in relation to the government.

MITCHELL:

As of today do you think he should step down?

TREASURER:

Neil, it’s not worth me going through all of these things because I know…

MITCHELL:

(inaudible)

TREASURER:

…when you do, then you just give rise to further stories which I don’t

intend to do.

MITCHELL:

So, that’s a no comment?

TREASURER:

It’s a, I don’t think it’s worth going into further stories.

MITCHELL:

Thank you for your time.

TREASURER:

Thank you.