TRANSCRIPT

THE HON PETER COSTELLO MP
Treasurer

Interview with Mike Carlton

2UE

Thursday, 22 July 2004
8.10 am

 

SUBJECTS: Drugs in sport, credit card debt, housing, superannuation, election

CARLTON:

Our special guest this morning, you would almost think there was an election

on, joining me in the studio, the Treasurer, Peter Costello, morning.

TREASURER:

Good morning Mike.

CARLTON:

Well, I am sorry we haven’t got a snake for you to play with.

TREASURER:

I am relieved that you haven’t got a snake for me to play with.

CARLTON:

How about these funnel web spiders here, are they alright?

TREASURER:

Yes, yes, really nice, the elephant out the front was nice too, it was a good

touch.

CARLTON:

Wonderful isn’t it? It is almost a phoney election campaign, you have

been playing with snakes on television, Mr Latham has been to the Big Brother

House, the Prime Minister is chatting up kindergarten kids, when are you going

to get down to business?

TREASURER:

It is getting a bit that way. Pythons are very heavy, that was about a 30 kilogram

python, I was staggering under the weight of it yesterday and it just curled

itself around my leg and into my pocket which was a most unsatisfactory feeling.

CARLTON:

I am sure it is, it is normally the other way around, you are into our pockets.

TREASURER:

That is what I said, tax relief in there, python.

CARLTON:

Same, same. I just, I would like to talk about things economical in just a

minute obviously, but I just wondered curiously if you had any thought on this

drugs in sport thing? The concerns about our Olympic athletes going to Athens,

worries that some of them might not be clean?

TREASURER:

Well, first of all we should say that the overwhelming majority of our athletes

are clean and they should not be tainted with the activities of a couple, or

a very small number. But as to the question of drugs in sport, it is cheating

and I think we ought to take every effort we can to find the cheats and get

them out of the team.

CARLTON:

Have we been a bit holier-than-thou in Australia…?

TREASURER:

You know, I suspect we are probably tougher on this than nearly every other

country, yes, I suspect that there are other countries that are sending athletes

that don’t care as nearly as much as we do, but it is not the Australian

way is it? Drugs is cheating, and if you happen to be a clean athlete and you

are beaten by somebody who has taken drugs, you have been beaten unfairly, and

that is the way that I see it, I see it as a matter of fairness for good and

honest sportspeople, they are the ones that we are actually trying to protect

in all of this. Let’s remember, at the end of the day, if the only way

to get into a team is to take drugs, and the pressure comes on to take drugs,

athletes will be injured for life in some cases, they will lose their lives,

so it is protecting the athletes (inaudible).

CARLTON:

Some of them don’t seem to realise that, yes. Let’s move on, I

wanted to ask you a few things about the economy but not now, the big economic

picture, but things that really concern Australian families. And one is the

level of credit card debt. I had a look at the Reserve Bank figures, they tell

us that Australians owe something like $27 billion on credit cards, is that

right? That is huge.

TREASURER:

Well, certainly there is a lot of money borrowed and certainly it has been

quite strong in recent years…

CARLTON:

Each family owes more than $5,000 on its credit cards, is that, doesn’t

that worry you?

TREASURER:

…well, it depends what their income is and it depends what the assets

they have on the other side of the equation are. One of the reasons why people

have been borrowing recently is that there has been a very big build up in wealth.

I think you might have seen in one of the papers this morning talking about

the fact that over recent years in Australia we have had a growth, incredible

growth in people’s assets, whether it be in the property market, shares,

there are millions of Australians that own shares now, but that never used to

be the case. So, if you have got assets, you can have liabilities. Now…

CARLTON:

But credit card debt isn’t on assets, it is a liability.

TREASURER:

It is a liability, but they may have assets against that, they may have a car

or they may have a house or whatever. But having said all of that Mike, there

are people that probably have borrowed more than they can afford on credit cards…

CARLTON:

Well it suggests more than that, it suggests that we are on a bit of a credit

card binge in this country doesn’t it?

TREASURER:

Well, we look at it overall and overall it is true to say that people’s

liabilities have grown, but it is also true to say that people’s assets

have grown more.

CARLTON:

Mmm.

TREASURER:

Right, so you have got higher assets, higher liabilities, your net position

is the same, or it may be even improving. Now, having said that, when you break

down the figures, yes, inside those figures will be some people that have entered

into debt more than they should have.

CARLTON:

There are more bankruptcies, there are more and more people, and they are not

going broke for very big amounts, $11,000, $12,000 (inaudible)…

TREASURER:

I would have to look at the statistics, I don’t know that the bankruptcy

rates are higher today than they were say, four of five years ago…

CARLTON:

I think they are, they are getting up.

TREASURER:

…but, yes look, there are people that borrow too much and what is the

message for such people. First of all, don’t borrow if you can’t

afford to service it. Be careful. Seek financial counselling. We have financial

counsellors that are available that can help people that get into trouble like

this, remember at the end of the day, everything you borrow one way or another

has got to be paid back.

CARLTON:

Absolutely. Next question, the housing boom, what do you think is happening

there? It looks as if it has eased off a bit, but it is still going, isn’t

it?

TREASURER:

We think that it is easing off, that prices in the big capital cities are steadying,

in some parts of the market, falling, maybe, in the unit market…

CARLTON:

(inaudible), yes.

TREASURER:

…I think falling. Not so much in the established home or the self-standing

or free-standing home, but in the unit market, falling. Now, this is not unexpected,

prices have been going up very strongly for four or five years. It would actually

be a good thing if there were a pause in prices, because the kind of growth

that we have seen would be unsustainable over the longer term and I have been

warning people for 18 months-2 years, don’t think the property market

is a one way bet, don’t think it always goes up, markets can go up…

CARLTON:

Yes, what goes up, must come down.

TREASURER:

…it may not come down Mike, but it won’t keep going up at that

rate and particularly in the investment market. A lot of people have bought

units…

CARLTON:

Is there a glut of units at the moment, especially Sydney, Melbourne probably

Brisbane?

TREASURER:

…I think in some parts of the market, yes, oversupply, and when you get oversupply

in a market, what happens? Prices fall, and people who are going into this as

an investment thinking it is always going to go up, it is not like that. You

saw the stock market correct itself and come down, it is growing again now,

when you get to oversupply in a market, the same thing can happen. I keep on

saying to people who are buying investment units, there are only so many tenants…

CARLTON:

Yes.

TREASURER:

…and to have all these units out there, and if there are more units than

tenants…

CARLTON:

You have got a problem.

TREASURER:

…you have got a problem.

CARLTON:

Supply and demand, two curves, they don’t always meet. What, or they

don’t always meet happily. What has caused it? Is a lot of it to do with

one, your First Home Buyers Grant and two, the huge benefits, the tax benefits

for negative gearing, pushed a lot of people into that market?

TREASURER:

Look, I think a lot of people, look there are a lot of people who have gone

into property investment, and as I always say, that is good if you have got

a tenant, if haven’t got a tenant, it is not so good. It is like any other

investment, some investments are good, some are bad, it is like the share market,

some shares are good, some shares are bad, people should be careful. There is

no such thing as a one way investment bet, bear that in mind.

CARLTON:

The thing that concerns a lot of people, and I think especially in Sydney and

maybe especially in my generation, the baby boomers, is how our kids are ever

going to afford to buy a house, even with that First Home Buyers Grant, buying

a house in this town seems to be increasingly out of reach to people in their

twenties and thirties. Couples working, maybe paying off a HECS debt, they just

can’t see it happening to them, what do you tell them?

TREASURER:

Well, I think when property prices are strong, obviously it is harder to get

into the market and if prices ease off a little, that will probably help many

of those first home buyers.

CARLTON:

Come on, that is a pious hope isn’t it?

TREASURER:

Well, as I said earlier, I think prices are easing off, but it is also important

to help people get that first stake in the market if you can, we have a First

Home Owners Scheme of $7,000 which can go towards the deposit, it is important

that we keep interest rates low for those young home buyers and the other thing

that would really help them is if they were able to get stamp duty concessions

and I notice that some of the states are now responding to take stamp duty off

those first home buyers and I think they are the kinds of things the Government

can do…

CARLTON:

It just seems the gap is widening, you know, between the housing haves and

the housing wannabes and the wannabes are finding it really, my generation,

I will put this to you, my generation of fifty-somethings, baby boomers, is

increasingly looking at having to fund, trying to fund our kids, loan the kids

a quid to get into their own home and that is just going to take a lot out of

people’s retirement money you know, isn’t it?

TREASURER:

Well, the other side of that of course is that that generation has sat on a

very large accumulation of wealth…

CARLTON:

True.

TREASURER:

…in their own properties…

CARLTON:

We are selfish and greedy us baby boomers, no doubt about that!

TREASURER:

…and this generation more than any probably has the capacity to help

the kids. But bear this in mind, in a housing market where prices go up, there

are two sides of it, prices go up, sure, it is harder for new entrants but for

established entrants like yourself and the baby boomers, it has been an absolute

windfall…

CARLTON:

True.

TREASURER:

…and a little bit of generational sharing, Mike, might not be astray.

CARLTON:

You want us all to bloody work until we are 70, keep going in the workforce

so we can fund our kids into houses. We want to retire and spend it.

TREASURER:

Well, you the baby boomers and I don’t really consider myself a baby

boomer, I am a little but younger…

CARLTON:

You are on the cusp.

TREASURER:

…yes, on the cusp, you the baby boomers have enjoyed the biggest accumulation

of wealth in Australian history…

CARLTON:

That is true.

TREASURER:

…and you know, helping the kids might be something to think about, but

to come back to the work, by the way, I only said you have to work until you

are 65…

CARLTON:

Oh yes, no; you didn’t, you want us working much longer than that.

TREASURER:

…65 is the retirement age.

CARLTON:

You were saying a couple of months ago, work till you drop, you were.

TREASURER:

Well, when are you going to drop Mike, I am only backing you to 65.

CARLTON:

Gee, you will be lucky to get that out of me.

TREASURER:

65 is the retirement age, that is when you qualify for retirement, I think

the problem we have got in Australia is the superannuation age is 55 and there

are a lot of Australians that say well, I can get my super at 55 and retire

at 55, 55 is too young for retirement.

CARLTON:

I am glad you brought that up, superannuation, you have changed the rules to

try and give Australians more access to different funds, move it around, make

it more flexible, fair enough, but I am constantly getting letters in from people

saying, I am trapped in an old under-performing fund and they are going to take

half the money as a exit fee. What are you going, you said the other day you

would talk to the funds about that, have you?

TREASURER:

Well, yes…

CARLTON:

What did you say to them?

TREASURER:

…well, I don’t think there should be steep exit fees, I am trying

to get a handle on it, the funds actually say that there aren’t that many

funds that have these fees, we are trying to get a handle on it, but can I say

that the bigger problem has been that up until recently you couldn’t take

your money out anyway.

CARLTON:

Yes, that is right.

TREASURER:

You had no right to take your money out.

CARLTON:

But even now if you do they are going to hit you for half of it.

TREASURER:

Well, the law changed at the end of June to give people choice, so you have

now got a bit of choice, it is like putting your money into the bank and if

the bank lost it you couldn’t take it out again, but now you can take

it out, this question has now arisen about exit fees, and yes, we are talking

to the funds to try and identify where they are, the funds say there aren’t

that many and what we are going to do about those ones that still have them.

CARLTON:

Would you hope to talk them down?

TREASURER:

Yes.

CARLTON:

Really? (inaudible) only do that, you can’t legislate for it though,

can you?

TREASURER:

Well, I will try and talk them down first.

CARLTON:

Ok, but you might consider changes to the law if some of those exit fees are

too excessive?

TREASURER:

Well, I will keep all of my arrows in the quiver, see if the first one works.

CARLTON:

Ok, interesting though. Can we talk raw politics…

TREASURER:

Is it a quiver, what do you keep arrows in?

CARLTON:

A quiver.

TREASURER:

Is it? Ok, thank you.

CARLTON:

Raw politics, do you still want to be Prime Minister?

TREASURER:

Well, I am Treasurer, I am very happy…

CARLTON:

Don’t give me that…

TREASURER:

…I am very happy being Treasurer…

CARLTON:

…don’t give me that, do you want to be Prime Minister?

TREASURER:

…and if vacancies arise in the future, well we will handle that when

it arises.

CARLTON:

There has got to be a vacancy sooner or later, surely.

TREASURER:

If vacancies arise in the future, we will handle it when it arises.

CARLTON:

The expectation seems to be that the Prime Minister, John Howard will probably

quit in 18 months if re-elected and toss it over to you. Would you expect that?

TREASURER:

Well, look, the Prime Minister has made his position clear, and he has re-emphasised

that over and over again that what happens in the future remains in the future,

I can’t speculate about it now…

CARLTON:

Come on, what happens in the future remains in the future, that is the most

tortured piece of English I have heard you utter in a long while.

TREASURER:

You haven’t heard a lot of my utterings, I have much more tortured words

than that.

CARLTON:

Worse than that?

TREASURER:

Much worse.

CARLTON:

What if John Howard decides to keep going? He is fit, he is mentally alert,

he loves the job, he like living in Kirribilli House, how long are you going

to hang around as second fiddle?

TREASURER:

Well, obviously I am running for the next election and I am seeking re-election

to serve during that term so, you know, I take every term as it comes, every

time I nominate I intend to get re-elected.

CARLTON:

You don’t want to keep on handing out Budgets the rest of your life,

do you?

TREASURER:

Well, I have said, I have said earlier that while I can make a useful contribution,

I will continue to do so Mike.

CARLTON:

Oh dear, I am not getting anywhere with this, am I?

TREASURER:

No.

CARLTON:

No. I can’t even trap you into a Treasurer you know, drop hint, time

for Howard to go?

TREASURER:

You are working hard.

CARLTON:

I am trying but not getting anywhere. But you must have the ambition to become

Prime Minister?

TREASURER:

Look, when you go into politics you try and make the best contribution you

can, sometimes you get opportunities in one place, you take them, but it is

a question of opportunities arising.

CARLTON:

Maybe you should have him around for a barbecue. Yesterday you said that you

have never had John Howard around for a sausage.

TREASURER:

No, I haven’t actually.

CARLTON:

Well, why not?

TREASURER:

Well, that is a good question, maybe I should. I think probably I think he

is too busy.

CARLTON:

Call Bill Kelty around to do a deal for you.

TREASURER:

…I don’t know if it would be a happy threesome would it?

CARLTON:

Probably not, no.

TREASURER:

Me and Bill and John.

CARLTON:

No. It is probably time you had him around for a sausage.

TREASURER:

I think it is probably, I suspect he is used to higher standards than my sausages.

CARLTON:

We have got him there. Costello slams PM’s sausage (inaudible).

TREASURER:

My sausages are not great culinary delights, Mike.

CARLTON:

Last question, is it going to be a tight election, a close election?

TREASURER:

Yes.

CARLTON:

Who is the underdog?

TREASURER:

Well according to the polls, Labor is in front.

CARLTON:

By a whisker and not on the primary vote, they might have to go to Greens preferences

to get in.

TREASURER:

Yes, but you see, the Greens preference the Labor Party and this is the point

people should realise if they vote Green, and that that vote generally speaking

ends up with the Labor Party. And people who are intending to vote Green I would

urge to think very carefully about their second preference, not just to follow

a card but to think very carefully about it, because if it just flows through

to the Labor Party it is the equivalent of voting for a change of Government.

CARLTON:

I think it is important, one of the papers this morning though suggests Liberal

Party private polling suggests that you are coming out of the woods a bit, particularly

in marginal seats.

TREASURER:

Look, I don’t know where all of these stories come about private polling…

CARLTON:

Journalists make them up.

TREASURER:

That’s my suspicion Mike, I have been waiting for somebody to admit that

for a long time.

CARLTON:

Well, there you go.

TREASURER:

I don’t know about that…

CARLTON:

You think it will be really tight?

TREASURER:

…look, in my experience and I have seen private polling, I don’t

think there is nearly as much of it as the press seems to think. In my experience

private polling by and large is very similar to public polling. It is very,

very unusual…

CARLTON:

It is done by the same people.

TREASURER:

…it is done by the same people, it is very unusual to have a public poll

saying one thing and a private poll saying another. And by the way, why if that

happened, would you suspect the private poll was right and the public poll wrong.

Now, what the public polls will tell you is it is very, very close and Labor

is in front.

CARLTON:

When do you think it will be?

TREASURER:

Well, I don’t think it will be in August, because it looks like we are

going back to Parliament in August so what that means is September, October,

I guess.

CARLTON:

October and probably before the American Presidential election, November 2.

TREASURER:

Possible. The American election is on Melbourne Cup day isn’t it?

CARLTON:

I think it, I think you are right, it probably is, yes.

TREASURER:

That is another way of putting it, probably before Melbourne Cup Day, it could

be after who knows.

CARLTON:

Bugger them, alright. You better invite him around for this barbecue, he might

tell you.

TREASURER:

He might give me a tip for the Cup too.

CARLTON:

Would you rely on that?

TREASURER:

(inaudible).

CARLTON:

Its good to talk to you.

TREASURER:

Good to be here Mike, thanks for your time.

CARLTON:

You are out to Parramatta today?

TREASURER:

Yes.

CARLTON:

Alright, I will see you there, thanks for coming.

TREASURER:

Good on you Mike, bye.