Election, Victorian economy, Unions, ANZUS, Tax cuts, Daimaru – Coles Myer

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Election, Victorian economy, Unions, ANZUS, Tax cuts, Daimaru – Coles Myer





Interview with Neil Mitchell, 3AW

Wednesday, 26 September 2001

8.45 am


SUBJECT: Election, Victorian economy, Unions, ANZUS, Tax cuts, Daimaru

– Coles Myer


Mr Peter Costello, good morning.


Good morning Neil.


There is a bit of a whisper you were meeting with the Prime Minister today?

When is the election going to be?


I have just come from a meeting now, but, we didn’t get around to that. I said

to him I haven’t got time finish the conversation, John, I have got Neil Mitchell

on the phone.


And what did he say? Go and do it.


He said, he is more important than I am, and he is quite right, he is quite



What about the election, when do you think it will be? Did you discuss it with



Look, obviously we discuss timing all the time, Neil, it’s, we, I think at

the end of this week we have now run three years, so the Parliament has run

its full term, so, we have got to have an election shortly. It can be in November

or December, and either way it will be outside the three years, one of the longest

Parliaments that we have ever had in Canberra.


Is a decision made yet?




Is CHOGM going ahead?


At this stage it is, yes. CHOGM should go ahead, if things remain as they are.

If there is an outbreak of hostilities in Afghanistan, or, if there are foreign

leaders, that decide for one reason or another they can’t come, or if the Secretary-General

changes his mind, then you would have to take that into account. But none of

those things have happened.


Onto the economy, is it, are you able to tell us what you discussed with the

Prime Minister? Is it to do with the economy?


Oh, we, this morning you mean? Well, yeah, we had a bit of a chat about the

economy. I’m going to be releasing the Budget Outcome for the year just finished,

30 June 2001. Today we had a bit of a discussion about that, and, well, we just

had a bit of a discussion about the issues of the day as we do every morning.


And perhaps the election?


And then I was giving a tip in the Grand Final, too.


Okay, Victoria. Eight thousand jobs gone in a fortnight, what can Victoria,

you remember those early ’90’s when Victoria was a basket case, a rust bucket?

We’re nowhere near that of course, but what does Victoria need to do to stop

the drift? To stop the possibility of falling in to that rust bucket?


I agree with you, I don’t think it’s as bad as it was under the Cain and Kirner

days, but I do think there is a sense of drift in Victoria, there is a sense

that you have this new Government for two years that, it has been taking things

quietly. I guess that was okay in the first year, people waiting for a bit of

direction and decision, and . . .


Well, what should it be?


I think they have got to look more carefully at some of their their tax positions.

I think help in relation to things like payroll tax would be one of the things

they could look at. The good thing they have got going, we have got going for

us in Victoria, now, is we have actually got some migration into Victoria, and

that is obviously a good thing. The house building industry is a good thing.

That has been supported by low interest rates, and the Commonwealth Government

First Home Owners Scheme, but, I think they were, if I were them, and I have

got enough problems of my own, so I won’t set about solving their problems,

I would start looking at some of the taxes on business.


On payroll tax?


I think some of those things ought to be on their agenda.


Other taxes, banking taxes?


Well, we’ve, you know how we pay the GST to State Governments, and this year

we have paid them GST to abolish Financial Institutions Duties, and as the GST

revenues grow, they will be able to abolish other stamp duties. So, I think

we have got a good program in relation to that but I think, I think, looking

at things like payroll tax. The second area I would say, and I think this is

a big issue in Victoria, there is a perception that since the Bracks Government

came to office the union militancy has grown. You have the run through incident

out at Skilled Engineering, remember when the union officials ran through and

destroyed property. You have had delays on many of the building projects, and

I think if the Government could give a clear indication that it is prepared

to take on the unions and stand up to them, that would also pick up.


Okay, well, that is two things, payroll tax and Union militancy, anything else?


Oh well, if they could fix those, then I think they will make a good start.


Okay, what can you do to help? You are Federal Treasurer, you are Victorian

based, what would you do to help?


We will continue to run a low interest rate regime which has been very important

for the home building industry which is, which is coming on stream, and has

much more growth left in it in Victoria. We are running our First Home Owners

Scheme, where you can get $14,000 for the building of a new home.


Are you going to extend that?


Well, I would say to people this, if you want to be guaranteed of getting your

$14,000, you have got to make your application by December.




And that is the one way of being absolutely sure, that you get the full $14,000

for your first home.


Is it correct that the pressure now on the Federal Budget means that the tax,

taxation cuts, could be in jeopardy?


Look, this, year, this financial year, which is 2001-2002, will be a tight

year, with unanticipated expenditures in a couple of extra areas. The first

is in relation to illegal immigrants.




The stand that we have taken there. The patrolling of Australian northern waters.

The second, of course, is, we have activated the ANZUS Alliance, which means

an attack on the United States is considered an attack on Australia, and we

will jointly defend our interests. And we have not received a request, yet,

for military contribution to any fight against terrorism in Afghanistan, but

if we should, that would obviously put another pressure on the Budget.


Okay, so what does mean to tax cuts? (inaudible)


Well . . .


. . . what does it mean to the way we live our lives?


What it means in this financial year 2001-2002, it will be a very tight position,

and there is no room for additional spending in that financial year. We also,

of course Neil, as you know, have guaranteed to underwrite the entitlements,

unpaid wages and holiday leave and long-service leave for Ansett workers, that

could in addition be a new expenditure up to $400 million. So I can say to you

in the current financial year, there is no room for additional expenditure,

certainly no room for new initiatives, because we’ve got to fund those initiatives.

The defence of Australia against terrorism abroad, against illegal immigrants

at home, are our first priority.


Does that mean that if there is no room for additional expenditure there is

no room for any offer on new tax cuts?


Well, it is the same thing. You can’t, cutting a tax is the same thing as a

new expenditure and in the 2001-2002 financial year there would be no room for

tax reductions.


Will there be, well apart from no new spending, will it be so tight that you’ll

have to look at cutting spending?


Not in the current financial year. We brought down a budget which was in surplus

for the fifth time and we left ourselves a bit of room.

We didn’t anticipate obviously what is going to happen in relation to the war

against terrorism, we didn’t anticipate what has developed in relation to illegals,

but we left ourselves the room for some of these contingencies, so we’ll be

able to fund those contingencies.


Will the surplus still be delivered?


Oh yes. We are budgeting for our fifth consecutive surplus. We didn’t put the

Budget into surplus to give it away that easily, we had to fight so hard. Today

I’ll be releasing the outcome from our fourth surplus which was the year ending

30 June 2001 and, you know, having taken a Budget which was hemorrhaging at

$10 billion in deficit and driving it into surplus, I can tell you I want to

keep it there.


What about Ansett? What is the Government going to do on Ansett? Are you going

to offer a guarantee that gets Ansett flying again?


Well, we’ve made it clear that we will be looking after the employees because

we think the employees are number one here.


Yeah, but the administrator is saying that they could be flying again and the

Government is going to guarantee tickets. Is that right?


Can I just go through it step by step. One, employees. We have made it clear

we will guarantee pay, pay in lieu of notice, holiday pay, sick leave, redundancy

up to 8 weeks, that is $400 million.

But, and this is a very strong proviso, we are not going to let these directors

off the hook. The thing that worries me in all of this, is, you’ve got to remember

these companies were run by directors and by management who bear a very heavy

responsibility. And, as far as this Government is concerned we are going to

pursue the recovery of the monies that those directors owe.




Secondly, we have offered insurance to Ansett, indeed to all Australian airlines.

After the World Trade Centre, international insurers withdrew insurance for

airlines and we’ve stepped up to the plate with an underwriting up to $10 billion.

Thirdly, we were discussing the wet leasing with Qantas, that seems to have

fallen through. Fourthly, I read in the paper this morning that the administrator

has got some new proposal, we don’t know what it is.


What, you haven’t seen it yet?


No. I haven’t. And the administrator, if he wants to pursue that proposal,

should come to Canberra today and put it before the Government. I’m not going

to rule anything out or anything in until we have actually seen the detail of



Well, you are open to ideas. He seems to be saying that it was there. So the

Government’s not aware of it?


I think officials may have discussed it, Neil. But the decision is going to

be made by senior Ministers, and the senior Ministers are not aware of the detail.

I think the administer, if he is serious about getting the assistance of the

Government, ought to hop on the first plane and come and present it to senior



And just very quickly. The GST, Steve Bracks blames the GST for problems in

retailing. Is there, in Victoria, any truth in that?


Neil, it was one of the weakest most opportunistic statements. Honestly. All

I can say is I hope he was caught unawares. Daimaru has not made a profit in

the last ten years. So, how he can say the GST is responsible for Daimaru, it

has not made a profit in any of its ten years of trading. In relation to Coles

Myer, Coles Myer is having a management revamp, as they said, I’m not saying

whether it is good or whether it is bad. But Coles Myer have had a lot of troubles,

they’ve just changed their Chief Executive, as you know, and I think management

realises the big ask in front of it.

And for Steve Bracks, to effectively come along and say, oh, this is not the

responsibility of anybody who is actually running the company, oh no, no, no,

no, I’ll make a political point here, it is all the responsiblity of the Federal

Government. Really, it is pretty irresponsible and pretty weak.


Thank you for your time. Bombers?


Tough actually, Neil.


Okay. Now you squeezed me in between John Howard and who? Who is next? John

Anderson? Peter Costello.