Transcript No. 99/62

It’s eleven minutes past seven and joining me live in the studio here in Brisbane

I have Treasurer Peter Costello. Mr Costello good morning.

TREASURER:

Good morning.

MILLER:

Now obviously as the Treasurer it is not strictly your ministerial area of

responsibility, but no doubt like all of the other members of the Cabinet you’ve been

very fully briefed on the situation in East Timor.

TREASURER:

The Cabinet has been meeting in Canberra in emergency sessions on Wednesday and the

National Security Committee on Tuesday to have a look at the developments. The Government

has decided to do everything diplomatically possible to get support for a joint peace

keeping operation. It is obvious that there is a terrible tragedy unfolding in East Timor

and we want to do what we can to ensure safety and prevent the loss of life, and we are

leaving no stone unturned in the diplomatic efforts to make a contribution to that.

MILLER:

Can you understand the feeling of frustration in the Australian community when we see

this happening and then yet we seem so powerless to stop it?

TREASURER:

Well, of course there is a lot of good will in the Australian community towards the

people of East Timor and horror at what is going on. The point is of course, that East

Timor is still today a part of Indonesia, although the East Timorese have voted for

independence there has to be a endorsement of that and subsequently a hand-over. So if you

were to put troops in without the consent of the Indonesian Government, you’ll be

putting troops on Indonesian soil. And putting troops on another country’s soil

without its consent is really an act of hostility. Now nobody I think believes that that

should occur, what we do believe should occur is that either with the Indonesians’

consent or as part of some kind of UN operation, Australian troops should lead the way to

keep the peace, and that is the diplomatic effort which we’re now engaging in.

MILLER:

The Australian newspaper this morning has picked up on a story that we were talking

about a couple of days ago here, and that is there appears to be emerging a picture of

(inaudible) intelligence sources are confirming that there is a very organised operation

on the behalf of a couple of Indonesian Generals and their Defence Ministry to almost

depopulate East Timor in the wake of the vote for the successful vote for referendum.

TREASURER:

Well, the Indonesians are responsible for security on East Timor, they’ve got

something like 24,000 troops there, which is obviously a significant force. And if those

troops were genuinely working to keep the peace, you wouldn’t see the rioting and

looting that you’re currently seeing. So you got to ask yourself the question, why is

it with all of those troops there, you’re seeing the looting that’s going on in

the streets. Now, we have made the strongest possible representations to Jakarta and in

international forums about making sure that those soldiers are actually engaged in keeping

the peace, and if they can’t or if they won’t, whether or not an international

force will be allowed to come in and do the job. It’s a job that’s got to be

done, it’s a job that Indonesia agreed to do as part of the settlement with the UN,

and it’s a job that must be done.

MILLER:

But you don’t subscribe then to the theory that this is being orchestrated from

the very top of the Indonesian military?

TREASURER:

Well, you would have to ask yourself, why is it that it’s not being done. Is it

because they haven’t been given the right orders, or is it because they’re not

following the right orders. But it appears that in sections of the military they are not

prepared to do their duty and are co-operating with the on the ground violence. Now,

whoever is allowing that to occur, whether it’s at a mid level or a higher level,

shouldn’t be doing so, and it’s very important that if they won’t do the

job that another force be allowed to get in there and do it.

MILLER:

It brings an interesting question to mind. If the Indonesian Government is not in

control of the military at whatever level, and then the Indonesian Government says yes

bring in an international peace keeping force. How do we then know that the Indonesian

military wouldn’t buck and fight the incoming peace keeping force in defiance of

their government as they already plainly are?

TREASURER:

That’s one of the matters that you’d have to assess. And we would most

certainly want some indication from the military as to their attitude before any

peace-keeping force was to actually engage in East Timor. You’ve got to know of

course what the odds against you are going to be. But we’re seeing a situation I

think in Indonesia, extreme political difficulty, you’ve got a President who’s

more or less lost an election, you’ve got the Consultative Council ready to meet to

decide who is going to be running the Government, you’ve got a military which is

extremely powerful and has been connected to political power for nearly 30 years,

you’ve got a military which is now on the ground in a whole lot of trouble spots

throughout Indonesia, and it’s not entirely sure that you’ve got firm a civilian

direction coming in relation to those operations.

MILLER:

Well, at least I think we can say that the Prime Minister, yesterday afternoon in his

news conference, seemed to be somewhat more upbeat about a possible US involvement.

TREASURER:

Yes, the US Government has given positive indication that it would support any

international force, and of course the President of the US, and other leaders will be in

Auckland at APEC over the weekend. Of course discussions will continue in relation to

that. The better news this morning is that the UN is going to stay with a smaller

presence, but it’s still there. And I think whilst the UN is still there and on the

ground this is giving at least some international statement and holding the line. At the

end of the day, what’s got to happen in East Timor, at the end of the day East Timor

has to be in accordance with the ballot recognised as independent. And the UN has the task

on the ground of staying there with whatever military support is required, and actually

bringing that about. And it’s very important that that presence if it can be, is

maintained.

MILLER:

Well we’ll watch that whole situation with interest. Let’s go back to some

domestic issues now. We saw jobless figures yesterday that showed a little swing up. But I

guess you could fairly call that a lift. World wide like in America, they’re now

saying that they’ve got the best employment situation in 29 years. Are we continuing

to look fairly strong?

TREASURER:

The Australian economy is in strong shape. We grew at 4.5 per cent in the last year,

which is faster than the United States and Europe and the developed world generally. Even

the figures yesterday, although they showed a slight blip in the unemployment rate, they

also showed 26,000 new jobs for the month. And that means in the last 3 years there have

been half a million new jobs in Australia. Nearly 500,000 new jobs. So the Australian

economy is in pretty strong shape, strong growth, low inflation, budget in surplus,

unemployment at a ten year low. Now we don’t sit back and say gee we can all stop

now. But to have got the economy into that kind of shape against the backdrop of the

biggest financial crisis of our life time occurring to our north, in Asia, indicates just

the strength of the domestic policy and we’ve got further work to do and we’re

going about it now like reforming tax. But I actually think the other good news that we

had yesterday which will be important for us, is that Japan grew. Japan has been in its

biggest recession since the Second World War and it’s our biggest trading partner and

we’ve been doing this economic performance against the world. If the world starts

swinging back into growth, that will be very good for, very positive for Australia as

well.

MILLER:

Okay the tax reform package, the GST, are things going smoothly towards the

introduction of that? I know that we’ve had various industries saying hey you’ve

got to help us because people are not buying motor cars, for example. And there’s a

lot of strife out there. We’ve had some concessions towards those, are other

industries going to get similar sort of concessions?

TREASURER:

Well we, we want to bed down the system with, with rules that people know and can take

decisions in the context of, rather than continuing to change the rule. Now there will be

some transitional adjustments. Some people are bringing purchases forward of some items,

some people are pushing them back because some prices are going up and some prices are

going down. If prices are going down people tend to push their buying decisions back, if

they’re going up they’re tending to bring them forward. So you can’t ease

completely the transition in every industry and in fact from an economy wide point of view

you would want to bring forward and to push back to really try and balance itself out. But

we are alive to some of those particular industries and we are engaging in consultation as

far as possible. Let me make the point though, The New Tax System starts on 1 July of next

year which gives us, I don’t know, approximately nine months to go. It’s very

important that business starts preparing for that. They will have already got a booklet,

every business in Australia has got a booklet, important to read it. In November we will

start asking businesses to take out a registration number so that they’re registered

and then we have a progressive rollout. We always said this would take twelve months, we

shouldn’t be losing any time in implementation and particularly on the business front

people should be now starting to think about the commercial decisions and how the tax

system will influence their commercial decisions for next year.

MILLER:

Okay, let’s move on. And going to another subject matter of course is the vote on

whether or not we should be an Australian Republic. And may I say that it was raised with

me yesterday in the talk back session on the program where people were saying well have a

look at who first of all put their hands up to say they would come in with us in a

peacekeeping mission in East Timor. New Zealand, Canada, Great Britain, the Yanks backed

off and as one dear lady said to me we should remember that when we are voting on a

Republic.

TREASURER:

Well it’s a fair point to remember, but I’m not sure what it says about

Australia’s constitutional arrangements. I think that in relation to our

constitutional arrangements it’s important that we step forward and I think Australia

has been changing over the last several decades. I think we now think of ourselves in a

different way. We don’t really think of ourselves as a monarchy anymore and I

actually think that we could get a lot more public confidence in the role of a Head of

State if that were taken by an Australian – that’s my view. And others will have

different views, obviously enough, but that’s why we have a referendum.

MILLER:

That’s why we have a referendum and that’s why we have a democracy and

I’m of the view that until someone can show me what the tangible benefits are to my

children who are going to have to live with this, then I say why change. But that’s

my view and everyone’s entitled to have their own and that’s as you say why we

have a referendum.

Just one final question before we go, and harking back again to the situation in East

Timor. How confident is Cabinet that we will get this peace keeping force eventually off

the ground?

TREASURER:

Well the Indonesians have not accepted that idea and as I said earlier unless they

accepted the idea, you’re basically putting troops, armed troops on to their soil.

And that amounts to an act of war.

MILLER:

… war. Exactly. Yes

TREASURER:

So we are still working to try and change their mind or alternatively to change the

position with the UN and get some kind of UN support for that particular operation. But

this is now proceeding at a diplomatic level. Look the whole thing could be solved

tomorrow if the Indonesian military were prepared to do what their duty is, what they were

tasked to do under the settlement that Indonesia agreed to with the UN and with Portugal.

Namely to maintain the peace and the order during this transitional period. Now we say

again, if they are not able or not willing to do it, our argument is they should allow

somebody who is able and somebody else who is willing to do it, namely an international

force of which Australia is prepared to be a part.

MILLER:

Alright Mr Costello we’re out of time we’re going to have to leave it there.

Thanks for your company this morning.

TREASURER:

Thank you very much.