Economy; Taxation; National Water Initiative; Mental Health Funding; Labor’s Tax Hoax; Tax Office Compliance – Interview with Alan Jones, Radio 2GB
September 23, 2004ALP Advertisements; The Greens; Interest Rates; The Economy; Childcare; Taxation; Private Health Insurance – Interview with Liam Bartlett, ABC Radio 720
September 28, 2004TRANSCRIPT
THE HON PETER COSTELLO MP
TREASURER
Interview with Neil Mitchell
3AW
Monday, 27 September 2004
8.30 am
SUBJECTS: Coalition’s Election 2004 campaign launch, Budget surpluses,
Childcare, Tech Schools policy, drugs, James Hardie, economic management
The Federal Treasurer Peter Costello, good morning.
TREASURER:
Good morning Neil.
MITCHELL:
Now these promises are unbreakable are they?
TREASURER:
Yes.
MITCHELL:
What if the predicted surplus’ don’t happen, do you run down the surplus,
even go into deficit or do you adjust the promises?
TREASURER:
Well we have looked at the spending very carefully. We think this is affordable.
It still leaves the Commonwealth in a positive position and it gives us
some margins so I am very confident that the margin will be there to cover
any unforeseen events.
MITCHELL:
What will it bring the surplus down to?
TREASURER:
Well in next year the surplus would be around about $2.7 billion and the
year after about $4.5 billion.
MITCHELL:
Not a lot of room for error there, I mean if interest rates go up, the
economy turns down, what do you do? Do you break the promises or go into
deficit?
TREASURER:
Well not a large room for error but that is about ½ per cent of
GDP and about ¼ per cent of GDP. We were forecasting amounts of that
order but less in the Budget so we are actually in a stronger position we
think, after these promises, than we were at Budget time.
MITCHELL:
How is that?
TREASURER:
Because since Budget time we have actually revised our projections up and
we think we have got a stronger starting position than we did at the Budget
time.
MITCHELL:
But they are projections…
TREASURER:
Yes.
MITCHELL:
…they are fragile…
TREASURER:
Yes.
MITCHELL:
…do you agree?
TREASURER:
Well when you say they are fragile, I have done nine Budgets. When I did
my first Budget the Budget was $10 billion in deficit. Since then, there
have been seven surpluses. So you would have to say that the track record
is pretty strong. I don’t think there’s been another Government that has
had as successful financial management as we have. I don’t think there have
been seven surpluses out of nine for a very long time in Australia so, we
don’t take it for granted Neil, but I think it is affordable.
MITCHELL:
Are you promising to stay in surplus?
TREASURER:
Yes, whilst the economy grows, yes we do.
MITCHELL:
OK, so what if the economy stops growing? What happens to these promises?
Do you go into deficit or do you cut them back?
TREASURER:
Neil if the economy goes into recession everything gets knocked apart.
MITCHELL:
Including these promises?
TREASURER:
People get unemployed, Budgets go into deficit, businesses collapse. The
most important job that I see myself as having is keeping this economy out
of recession. The recessions destroy economies. We had a recession in 1990,
Paul Keating put interest rates up to 17 per cent. We had a recession, it
smashed the Budget, it smashed employment, it smashed business, it smashed
retail. Now, I just want to say this Neil, people shouldn’t think that there
is anything inevitable about economic growth in Australia. Sure we have
had eight good years but countries bigger than ours have been in recession
– the United States has been in recession and France and Germany and
Singapore and all of these countries – so, what I am absolutely focussed
on is keeping this economy out of recession because as long as you do that
you keep people in work and you keep your Budget strong, that is what gives
the framework to everything.
MITCHELL:
But that is exactly the point, countries bigger than us have gone into
recession, there are other factors which influence us, if we are forced
towards recession or just a downturn, how do you pay for this?
TREASURER:
Well you have got to keep your country out of recession. That is what you
have got to do Neil. Because let me tell you, if Australia were to follow
say, the United States went into recession, in previous years, in the seventies
and the eighties and the nineties, we were always in recession when the
United States was in recession. How did we keep Australia out of recession?
Well we kept low interest rates, we had improved industrial relations, we
had a strong Budget position. All of these things come together, but what
is your object? Your object is to keep your economy out of recession or
you lose everything…
MITCHELL:
You also had a healthy surplus which helped keep interest rates down. Do
you agree this spending potentially puts pressure on interest rates?
TREASURER:
Well how did we get our healthy surplus? It didn’t just materialise, we
built it.
MITCHELL:
Yep, but are you risking it?
TREASURER:
No, you see, I often, Neil I often, I am amused when I hear the Labor Party
talk about spending surpluses, you know. When I became Treasurer, nobody
talked about surpluses, let alone spending surpluses. The big present that
I got becoming Treasurer was a $10 billion deficit, that was what Labor
was into the business of doing and the only thing I say is, here is the
track record: nine Budgets, seven surpluses, $73 billion debt reduction.
We are much stronger than we were eight years ago and we are going to keep
it that way.
MITCHELL:
Is it possible this package puts interest rates under additional pressure?
TREASURER:
No.
MITCHELL:
Why not?
TREASURER:
Because at the end of this package our Budget bottom line is still stronger
than we were forecasting back in May.
MITCHELL:
Have you worked out how many dollars this could mean to the average family
over a year or whatever you like?
TREASURER:
It depends who you are. If you are family that had children in childcare
it could mean quite substantial dollars.
MITCHELL:
But that childcare thing isn’t means tested, correct?
TREASURER:
Well you have to qualify, you have to be in work to get the childcare benefit,
you have to qualify for the childcare benefit, but it is not means tested,
no.
MITCHELL:
Is it capped?
TREASURER:
No it is a 30 per cent rebate on your tax.
MITCHELL:
Well how do you know that it won’t blow out? The health care rebate did.
TREASURER:
Well because we know the number of children in Australia today that are
in childcare, we know the kinds of expenses that are being incurred by families
and we are giving a 30 per cent rebate. Now what that means is that you
are not getting all of the costs back, you are getting 30 per cent back,
so you still have incentive for people to minimise their costs but you have
a really good encouragement for them.
MITCHELL:
What if I hire a Nanny for my kids, do I get a 30 per cent rebate?
TREASURER:
Well that is not classified as childcare.
MITCHELL:
So there is no rebate on Nannies?
TREASURER:
Not on private, not a private situation, no you have got to qualify in
an approved childcare provider.
MITCHELL:
Are there enough places with approved childcare providers? People tell
me they have trouble getting in.
TREASURER:
Well look, over the years we have increased them very dramatically. Now,
I can’t promise that there is no vacancy, that there is no over commitment
in any place, I mean there are people that will always, in particular areas,
have trouble but gee, the number of places have increased dramatically and
there are all sorts of different forms – there is long day care, there is
centres, there is home based centres, but you have got to be able to qualify
for that childcare benefit.
MITCHELL:
What is your answer to the claim that it is just middle class welfare?
TREASURER:
Well, what, a reduction off your tax is now called middle class welfare
is it? You know, I would have, these people are paying tax by the way, they
are in the workforce, they are paying tax and what, you reduce their tax
and people say that is welfare? I have got to say, you do have to be working,
you do have to be paying tax. Somebody comes along and says we would like
to defray the cost to you of childcare which enables you to get into the
workforce to pay these (inaudible) and someone says that is middle class
welfare. I don’t think it is, I think it is tax relief myself.
MITCHELL:
You have expressed a lot of interest over the last year or so in talking
about areas outside of your portfolio which is why I ask you about this
tech schools idea. Now, what do you see that achieving and one of the issues
that you have picked up often is children, the issue of kids and their directions,
is that the theory behind the expansion into tech schools?
TREASURER:
Absolutely, when I was young and you were too, we had tech schools remember
and at the end of primary school some kids would go to the tech school and
some kids would go to the high school. And the idea if you went to the tech
school was that you would have a technical education, you would get a much
more practical education, mostly you would have the opportunity of taking
up an apprenticeship and you would go into a trade-type occupation. Then
tech schools were abolished and everybody went to high school and then the
ambition seemed to be everybody go to university. I don’t think university
is for everybody actually. And we now have this situation where we have
lots of kids with university degrees who are looking for jobs and shortages
for plumbers, electricians, tilers, where employers can’t find people. And
the funny thing is Neil, if you become a plumber or an electrician, you
are probably going to end up making more money than you will in a desk job
with a humanities degree or some such unless you get a really good desk
job. So why is it that these high paying jobs, we have shortages, when in
other areas we have oversupply? And I think that it is because we haven’t
explained to kids the value of a technical education, we haven’t given them
the career opportunity. We are facing looming skills shortages in Australia
at the moment and we want to do something about it and a technical college
to say to these kids, look, don’t think technical education is second class
education, this is fantastic first class education, it is going to give
you a great career. Get into this tech school and you will be set up for
life, that is the idea. I think it is an absolute ripper of a policy.
MITCHELL:
$200 million a minute, it is estimated that the Prime Minister spent yesterday
during his speech, $66 billion since the Budget, are you making savings
anywhere?
TREASURER:
Yes, we have put in place some savings…
MITCHELL:
How much?
TREASURER:
…and we may even be announcing some more.
MITCHELL:
…more cuts in an election campaign?
TREASURER:
No, no, not cuts, savings for good Government, you know there are still
areas where we can push ahead and make sure that we get best value for dollar.
MITCHELL:
So $66 billion in spending, where have you saved? How much have you saved?
TREASURER:
I don’t know where you get these figures from…
MITCHELL:
Well (inaudible) the Budget together.
TREASURER:
…well let me say the (inaudible) are costed at $6 billion over four
years leaving cumulative surpluses over four years of 17.
MITCHELL:
So how much have you saved?
TREASURER:
So let me just put that into context. Well, I can tell you Neil, the biggest
amounts that we have saved under our Government we have saved on unemployment
benefits by getting 1.3 million new people into work, that is the biggest
saving we have made. Now not only have we saved on their unemployment benefits
incidentally but those people have become taxpayers and where you get more
people into work and they are contributing rather than drawing down, that
is the best way to strengthen your Budget.
MITCHELL:
We will take a break and come back with more from the Treasurer, I see
you now you even support independent contractors, that is a change.
TREASURER:
Always have.
MITCHELL:
Rubbish. More from the Treasurer. Did you like being warm up man again
yesterday?
TREASURER:
Are we still on air?
MITCHELL:
Yes, you can answer it honestly anyway.
TREASURER:
Yes, I did actually, I tried to, I wasn’t the immediate warm up man, I
was warming up and then John Anderson came on and then the Prime Minister
came on so I was only second warm up man yesterday, I have been demoted
by one.
MITCHELL:
Who is going to be your warm up man if you are Leader?
TREASURER:
Well look it is a hard mantle to pick up Neil and I am not sure I would
wish it on anybody.
MITCHELL:
A break and more from the Treasurer.
[AD BREAK]
MITCHELL:
Eleven to nine, the Federal Treasurer is with me. Mr Costello, is there
a chance you will merge with the Nationals after the election?
TREASURER:
I don’t think so.
MITCHELL:
(inaudible)?
TREASURER:
No, I think if there were a merger between the Liberal Party and the National
Party, you would probably get some new rural based Party which would try
and set up a bit like One Nation or Bob Katter or something like that and
would try and siphon votes off for that kind of agenda so I am not sure
it would solve the problems that it is designed to. We work pretty well,
we don’t have arguments with the National Party, and the Coalition, I think
it has been very stable.
MITCHELL:
You were interviewed yesterday talking about the (inaudible) Christmas,
is there a possibility you will step down as Treasurer?
TREASURER:
No.
MITCHELL:
Is there a possibility you will get out of the Parliament?
TREASURER:
No.
MITCHELL:
So what are you consulting with your family about at Christmas?
TREASURER:
The man said would you like to spend time with your kids at Christmas and
I said yes, I would.
MITCHELL:
So you are not…
TREASURER:
Which I thought was a pretty unobjectionable statement, I would like to
spend time with my kids at Christmas. I’ve been away, (inaudible), 30 or
40 weeks during the year and if I can get a Christmas holiday I would like
to spend time with them. But to say on the back of that that is foreshadowing
some kind of career change is completely wrong.
MITCHELL:
Are you happy to stay Treasurer for the next three years?
TREASURER:
Yes, I have said, I am running again to be Treasurer.
MITCHELL:
For three years?
TREASURER:
For as long as it takes.
MITCHELL:
As long as what takes?
TREASURER:
As long as it takes to make sure that the Australian economy is strong.
It might take longer than that for all I know and I am running again for
Treasurer because I can’t believe that Australia will want the damage that
Mr Latham will to do to it.
MITCHELL:
Are you offended by those Labor ads that sort of cross out or paint out
John Howard and your face comes up as Leader?
TREASURER:
No.
MITCHELL:
Does it not irritate you that you are seen as a negative as a Leader?
TREASURER:
I think they are really weak actually. I don’t think, I think what they
are designed to do is it try and hearten the Labor Party Branch Members.
You know, the Labor Party Branch Members feel, oh go on, you have got to
have a go, you have got to get stuck into somebody, you know, look, get
stuck into Howard or get stuck into Costello, you know, and I think they
go to the Branch meetings and say, oh, great, fantastic. But amongst thinking
people I think they are particularly ineffective.
MITCHELL:
But they are saying you are a liability.
TREASURER:
I think they are particularly, (inaudible) I don’t know what they are trying
to say, but whatever they are trying to say they are not very effective
at saying it.
MITCHELL:
As I said before you are interested in other areas, what would you like
to achieve personally if you are re-elected? What do you want to achieve
in Government in the next three years?
TREASURER:
Well I think the biggest thing that is facing Australia is the ageing of
the population. I bought down the Intergenerational Report. It is a picture
of where Australia will be in forty years time with declining birth rates
and extended life expectancy and my message to Australia is this, if we
don’t start now, the country is going to have big problems in 20, 30 and
40 years time and we have got to start to change and we have got to start
to adjust and I want to put in place the policies that will put us there
in 10, 20, 30 and 40 years time.
MITCHELL:
What about the youth issues, because you have expressed interest in that,
the sort of violent music and that sort of thing. We had the video footage
last week of the bunch of, a group of, gang of youths beating up a security
guard, there was the house invasion I was talking about earlier. Do you
think we have got a problem with kids?
TREASURER:
Well I think our society is as affluent as it has ever been, that kids
today have material prosperity of a degree that their parents never had
and their grandparents never had. They have got good education and we want
to keep it that way, but that doesn’t solve the values problem. You do have
these episodes and you know, you ask yourself what fuels it and what can
be done about it. Now obviously alcohol is a big part of it, drugs are a
big part of it, the availability of drugs to our kids still scandalises
me, and I think it is every parent’s nightmare that their child could be
given drugs or take up drugs. I am, you know, really scandalised by the
fact that we have got these gangs that control the drug trade in Melbourne
and kill each other for the profits. That is what has been happening. All
of these gangland murders, do you know what that is about? That is about
killing people to get the profits out of the drugs trade of supplying drugs
to our kids, that is what that is all about.
MITCHELL:
Well I presume that the court will make a judgement on that.
TREASURER:
Well I think, no, no, no, I don’t think there is any doubt. The court will
make a judgement as to who has done the killings, but I don’t think there
is any doubt as to why the killings have been taking place because the drug
barons want to control the right to supply drugs and ruin our kids lives.
That is what they want to do and that is happening in Melbourne as we speak.
So the problems of drug abuse, alcohol abuse, violence, are still with our
kids. It is not to say that all of our kids are bad kids, they are mostly
really good kids, but we have still got some problems that we have got to
work on here, Neil.
MITCHELL:
(inaudible) a couple of other areas to touch quickly, James Hardie, do
you think they should be boycotted as a company?
TREASURER:
Look, the first thing I would like to say is that the people who are suffering,
I think have the sympathy and the support of everybody in the public, and
to die from a disease like this is tragic and they require full compensation.
The only thing I would say is that if this company is going pay full compensation
it is going to have to have profits, it has got to have profits to pay the
compensation. Now there are also, I believe, 600 other employees still employed
by James Hardie, not in this business (inaudible) asbestos business but
in other businesses. If you boycotted the company and put those 600 out
of work and the company’s profits fell, I don’t know how they are going
to pay the compensation, that is the only thing I would say. This company
needs to trade to make profits to pay the compensation and a boycott is
not going to help it do that.
MITCHELL:
David Hicks, do you think he should come back here to trial?
TREASURER:
I think that the trial should proceed in the United States under the rules
that have been laid down and if people say bring him back here for trial,
it is very unclear what the legal situation of Hicks would be in Australia,
it is very unclear what the charges would be. He was picked up in a foreign
country fighting with the, well we don’t want to prejudice his trial, but
he was in some pretty bad company, let’s put it that way.
MITCHELL:
Are you going to win the election?
TREASURER:
It is very tight.
MITCHELL:
What is your instinct?
TREASURER:
Either side can win.
MITCHELL:
Schools policy, Labor’s schools policy is one issue that has had, really
held public attention, the rest I am not sure it has, (inaudible) dull this
campaign?
TREASURER:
I think the schools issue is a huge issue. You know, I know from talking
to my own constituents, parents who are struggling to put their kids through
these schools suddenly being told they are rich and they ought to have money
taken away from them. Even on Sunday, I was talking to mother who was working
on Sunday and she raised this schools thing and I said, why do you raise
that? And she said, ‘the reason I am here working on Sunday is to
try and pay the fees for my kids.’ And they don’t like to hear anybody tell
them that they are rich and they ought to have money taken away from them.
That is number one. Number two, what they don’t like about this Neil, is
the way it is pitting parent against parent. You know, you go down and you
see which schools are on the hit list and which aren’t, there is no rhyme
or reason to it except that Labor has singled some people out for punishment,
and for political reasons, quarantined others and I think it is has given
a really bad taste and a feeling to a lot of parents, that.
MITCHELL:
(inaudible) is a bit dull though, maybe people, they are certainly not
talking about it in the streets, have they made up their mind, or are they
waiting?
TREASURER:
I think they are talking about it in the streets, you know, I was standing
out in the street corner in my own electorate on Saturday morning and they
were certainly talking to me about it, I can assure you of that.
MITCHELL:
Do you agree that this policy launch yesterday, that this will decide it,
they will either say, yes this is for us, or else it is economically responsible
and not vote for you?
TREASURER:
No I think that people make their decision on a broader canvas Neil. I
think they will say well here is the Coalition, here is its record, here
is its experience of economic management. Here is Mr Latham, here is his
record, here is his experience. And I think, well, this is what I hope,
at the end of the day I think they will say, who am I going to trust with
my mortgage, my job, my farm or my business and I think they make these
decisions at a much broader level.
MITCHELL:
Now in Government would you legislate to have a Melbourne Grand Final every
year?
TREASURER:
Yes, keep going.
MITCHELL:
Well, what did you think of it, (inaudible) I know you are an Essendon
supporter, you support Melbourne footy…
TREASURER:
Well look it was a good game, that is the first thing that I will say and
I think it was good for Melbourne in the sense that it was probably good
for our tourism industry. It was hard to get a hotel bed here. But I think
the AFL has given too many concessions, particularly to the Brisbane Lions,
in relation to salary caps and in relation to draft picks. You know, they
have won three premierships on the trot. When was the last time anybody
did that? They are still getting concessions and poor Victorian Clubs, like
the Essendon Football Club…
MITCHELL:
And others.
TREASURER:
…are being persecuted under this policy.
MITCHELL:
You must be happy they didn’t win four in a row.
TREASURER:
Well you know, I said, two out of three ain’t bad, three out of three is
almost unheard of and four out of four is too much in football.
MITCHELL:
Don’t apply it to politics.
TREASURER:
But there are different rules when it comes to politics.
MITCHELL:
Thank you for your time.
TREASURER:
It is great to be with you Neil.