Transcript No. 99/30

Hon Peter Costello MP

Doorstop Interview

Thursday, 10 May 1999

12:30 pm

SUBJECTS: ANZ job ads, Budget, private health insurance, unemployment

TREASURER:

Well I welcome the ANZ job ads this morning which shows that jobs growth is

continuing in the Australian economy. The Australian economy is on an even keel, and

we’ve targetted tomorrow’s Budget very much with that in mind to keep it on a

straight, solid, growing, course. We’ll have a number of initiatives, carefully

targetted initiatives tomorrow night in our Budget. And the most important thing is

we’ll be funding those from money that we have. Unlike the Labor Party we won’t

be spending money we don’t have. I noticed that Mr Beazley this morning says,

he’s in favour of surplus Budgets. He was Finance Minister of Australia for two years

and in one year he had a deficit of $10.3 billion and in the other year a deficit of $13.1

billion. In two years he presided over cumulative deficits of about $23 billion. Mr

Beazley, as Finance Minister of Australia, personally racked up 25 per cent of

Australia’s debt in two years. Thank heavens he was in favour of surplus Budgets.

Imagine what he would have done if he was in favour of deficits. But, we’ve changed

that and we won’t be spending money we don’t have. We won’t be putting it

on the ticker, the credit card, borrowing like Mr Beazley used to do when he was Finance

Minister. They’ll be fully paid for and this will be a responsible economic strategy.

He also says that this Budget is going to be an education fraud and that you’re

not going to be putting back into education the money that you cut out in the first few

Budgets.

But, he is in favour of surpluses, he said he’d have a bigger surplus. So

presumably tomorrow night he’ll be naming the areas where we shouldn’t have

spent, rather than where we should have spent more. I mean, he can’t have it every

way. You can’t run up $23 billion of deficits then say you’re actually in favour

of surpluses and then say the Government’s not spending enough. I don’t think

anybody else believes Mr Beazley, but I think the way he’s starting to talk now he

could hardly be believing himself. The whole economic strategy of Labor in the last term

was to fight our expenditure changes to prevent the Budget from going into surplus. After

we get it into surplus you find out they were always in favour of surpluses, all along.

Let me make this prediction: It will be the same on tax, Labor will fight us every step of

the way, we get a new tax system and in three years time Beazley will be out saying I was

always in favour of tax reform.

Mr Costello, will there be incentives in the Budget for people aged under 35 to take

out private health insurance? Is that a problem in the private health insurance area?

Well, I’m not announcing particular measures because they’ll be announced

tomorrow night in the Budget. But, I do make this point, that the Government has sought to

encourage private health insurance. We’ve already put at least two measures in place.

One is that the Commonwealth Government will pay 30 per cent of every person’s

private health insurance rebate. Every person, every eligible Australian can have 30 per

cent of their premium paid by the Commonwealth Government. That’s the carrot and the

stick is if you happen to be a higher income earner you pay an additional 1 per cent

surcharge if you don’t take out private health insurance. So we are trying to

encourage private health insurance.

Do we need more carrots or more sticks?

Oh well, you know, carrots, sticks, honey, sugar, incentives . . .

Do you think the whole approach is flawed though, because you have put in a lot of

money over the years to encourage people into insurance and yet it doesn’t seem to

work beyond a limited degree . .

I think the evidence now is that the rate of decline has stopped and I think there is

some evidence of a turning. Now, I’m pretty confident that if we hadn’t put any

of those measures in, the rate of decline would have become, by this stage, catastrophic.

So to have arrested the rate of decline shows that something is working but it means that

we continue to work on our policy.

Mr Costello, is an unemployment rate of 5 per cent now achievable given the job ad

figures out today?

Well, what I do think is this, that if Australia engages in the big structural changes

in the next decade, in the first decade of the 2000’s, we can lift Australian growth

rates and we can make even further inroads into unemployment. It’s the economic

changes that we brought three years ago that gave us the benefits this year. It’s the

changes we do now which will give us the benefits in the next decade. And I think we can

make big inroads. But you won’t do it of course, you won’t do it if you want to

stick with a 1930’s tax system. You won’t do it if you want to stick with a 1904

type industrial relations system. You won’t do it if you don’t run a good

economic policy and I just see this as a time of wonderful opportunity. If you look into

the next decade, not so much the year in front of us, the year in front of us is going to

be a pretty tight year in the sense that the world economy is still weak. But looking down

the track I think that there are wonderful opportunities ahead for Australia.

Thanks.