TRANSCRIPT Of
THE HON PETER COSTELLO MP
Treasurer

Interview with Steve Liebmann
Today Show

Thursday, 4 March 2004
7.10 am

SUBJECTS: Economic Policy; Tax Cuts; Budget; Commonwealth Grants Commission; GST Revenue

LIEBMANN:

Mr Costello good morning to you.

TREASURER:

Good morning Steve.

LIEBMANN:

Do you get the impression that in spite of the good economic numbers you keep

producing that John Howard is in trouble, and power is slipping away from the

Government?

TREASURER:

Well, I think as the polls show, the next election will be close, no denying

that. Anybody who thinks that it is decided one way or the other I think is

mistaken, but we are concentrating, and I am concentrating on keeping Australia’s

economic management strong. This doesn’t happen by accident, it has taken

a lot of work to get to where we are now, and I want to continue that work.

LIEBMANN:

But it must concern you as Treasurer and indeed as an alternative Liberal leader,

that if you look at the latest polls, Labor is gaining on the Government when

it comes to managing crucial election issues, like the economy, like education,

health, even national security.

TREASURER:

Well, I don’t think the polls, or anyone, show that people think Labor

has credibility on the economy, in fact quite the reverse. People remember what

Labor is like in government when we had 17 per cent interest rates and we had

budget deficits as long as the eye could see, and they built up $96 billion

worth of debt. And people remember that, they remember that Labor can’t

manage the economy. So on the economy, the polls in fact do show that the Government

is regarded as the better economic manager. But having said that, I agree with

your point, they show that an election would be tight, and would be close, and

that is why I would say to people, the government of Australia could change,

and if it did change then we would go back to the kind of bad economic management

that we had eight years ago, and it could effect families very dramatically

on their interest rates and inflation and their job prospects.

LIEBMANN:

Given what you say will be the closeness of the election, then let me ask you

this. If you thought a leadership change was the only way to save the Government

and win the election, would you be part of any move?

TREASURER:

I am not getting into questions like that, because I am focused of course on

the job that I am doing and I am in the middle of preparing the budget, it is

going to be a hard budget, it has been a hard year. We have come through the

worst drought in a hundred years, and the world economy has been affected by

SARS and the Avian Bird Flu, and we have to make sure that we keep Australia

strong, it doesn’t happen by accident, it takes a lot of work to do this

Steve.

LIEBMANN:

You are throwing cash around at the moment and a lot of people would say you

are doing it to sure up support. Can you keep doing that and keep the budget

in surplus while seriously thinking about tax cuts?

TREASURER:

Well, I want to keep the budget in surplus, I have laid down that principle.

We have had six surplus budgets and we don’t want to give away the game

now, just when Australia is starting to come through some of these challenges.

But, the principle is this, if our debt is low, and we have now got it low,

we have paid about $60 billion of Labor’s debt back, we have paid it off

so we have got our debt down. If our debt is low, if our budget is balanced,

after meeting our defence needs and our security needs and our health needs

and our social welfare needs, if there is room to reduce taxes, we should…

LIEBMANN:

Then you will.

TREASURER:

…and as we did last year, well that is what we did last year, we reduced

taxes last year for every Australian income tax payer. These are not large sums,

they are large sums collectively, individually they are less obviously but if

you can do that then you should try and do it. You should try and have taxes

as low as is consistent with a decent society well defended with secure borders.

LIEBMANN:

What do you say to Bob Carr and John Brumby this morning? They are blaming

you, the Howard Government, for reducing their proportion of Commonwealth funding.

TREASURER:

Well, it is the GST revenue, let’s be clear about this. This is an argument

between eight Labor States and Territories as to who gets a bigger share of

GST. Because every GST dollar, as you know, goes to Sydney, Melbourne, Brisbane,

Hobart, Adelaide, Perth, to all of the State capitals. Now, in 1933 the Commonwealth

Grants Commission was set up, so that it would arbitrate arguments between the

States, that has been meeting since 1933, and the decision which it gave is

the decision which will be followed. If they have arguments, they have to take

it between themselves to the Commonwealth Grants Commission. This is not done

by me, it is not done by Mr Howard. This is the way in which GST revenue is

allocated according a formula laid down by a commission established for the

purposes of arbitrating between the States in 1933.

LIEBMANN:

OK, so what you are saying is work it out amongst yourselves. Thanks for your

time.

TREASURER:

Work it out amongst yourselves and you know, the Commonwealth will just follow

the agreement as laid down by the Commonwealth Grants Commission if there is

no agreement.

LEIBMANN:

Good to talk with you, thanks for your day.

TREASURER:

Good to speak to you Steve.