TRANSCRIPT

THE HON PETER COSTELLO MP
Treasurer

Doorstop

Parliament House, Canberra

Thursday, 13 March 2003

11.50 am

SUBJECTS: February Job Figures; Budget reforms; Iraq; Graeme Samuel; ethanol

TREASURER:

Well, Australians will welcome the fact that the unemployment rate fell in February

to 6 per cent, which is the lowest rate since Labor’s recession in 1990. In

addition to that the very, very strong jobs growth that we saw in December and

January, has been more or less maintained, a slight reduction in the number

of jobs, but coming off increases of very substantial proportions in December

and January means over the last four months, something like 190,000 new jobs

have been created. Considering, in the light of the worst drought in a century,

the difficult international situation, rising oil prices, weakness on international

share markets, it demonstrates a very strong resilience in the Australian economy,

the kind of resilience that was noted by the OECD in its recent report. So in

the face of shocks in the Middle East on oil prices, domestic buffeting from

the worst drought in 100 years, for unemployment to have fallen and to be at

the lowest since the recession of 1990, is something that all Australians will

welcome.

JOURNALIST:

Leading indicators are suggesting that we may see a slowdown in the rate of

jobs growth in mid-2003. Do you subscribe to that?

TREASURER:

Well, you have got to remember this, that we forecast an unemployment rate of

6 per cent by the end of the financial year, which is June. We have already

arrived at that forecast. The prospects for the Australian economy in the coming

year will be influenced by a very difficult world situation, the threat of war

in Iraq, rising oil prices. One thing that could go for us, we hope, is the

breaking of the drought. You only get a drought like this every hundred years

or so. So that will be going for us, the international situation will be going

against us. But the resilience of the Australian economy, I believe, will mean

that we can come through those difficulties.

JOURNALIST:

Given that resilience, do you think there is now a good chance that the unemployment

rate could fall below 6 per cent since, the first time since the early `90’s?

TREASURER:

I think to get the unemployment rate below 6 per cent and to keep it there will

require further structural change. It will require the passing of the Government’s

industrial relations legislation, in particular, the passing of the Government’s

Budget measures from last year, in relation to pharmaceuticals and welfare reform.

It is possible with these figures bouncing around, that it will bounce up and

it will bounce down, but to take the unemployment rate down below six and to

keep it there, will require the implementation of the Government policy. I call

on the Senate and I call on the Labor Party in particular, to cease their campaign

of opposition in the Senate, to pass the Government’s legislation and let us

get on with the job.

JOURNALIST:

What sort of levels do you think we could see these reforms do pass through

the Senate?

TREASURER:

If the Government’s programme passed through the Senate I think you could see

the unemployment go below six and stay there. But these reforms have now been

held up, some of them for 3 and 4 years, and who is suffering because of Labor’s

opposition – people who are looking for work.

JOURNALIST:

Do you think you need to learn some more Senate seduction techniques to get

those things through?

TREASURER:

No, I think that what we need is a responsible Opposition Leader. I think you

would have to agree this is probably the most irresponsible Opposition Leader

we have seen in a very long time.

JOURNALIST:

Treasurer, can you say whether the Government backbenchers are completely unanimous

in their support for the Government’s position on Iraq?

TREASURER:

In my experience, having talked to a lot of backbenchers, not all obviously,

but has moved around a lot of the backbenchers, I believe there is a very high

degree of agreement in the Coalition parties on the Government policy in relation

to Iraq. Yes I do.

JOURNALIST:

Would you have handled the situation any differently if you were leader?

TREASURER:

Look, I think that the critical issue here is the disarming of Saddam Hussein

from weapons of mass destruction. And I think that is the objective that we

have got to keep in mind. We all want peace, every one of us wants peace. But

peace is both short-term and medium-term, and medium-term, dictators with weapons

of mass destruction are not a recipe for peace.

JOURNALIST:

(inaudible) the Budget surplus of 2003-04 with the cost of a possible war?

TREASURER:

Look, we have already made allowance for the pre-deployment of Australian troops

in our Budget figures, hundreds of millions. Now, I can’t go any further than

that because I don’t know whether there is going to be a war and I certainly

don’t know its extent or its duration. But I can tell you, that we have managed

to make allowance already, and keep our Budget in a very strong position. Can

I make this point – Australia is forecasting a budget surplus, slim surplus,

in 2002-2003, the current financial year. There are very few other countries

in the world that are in that position. Certainly not the United States, certainly

not the United Kingdom, certainly not Europe, certainly not Japan. So the position

of the Australian Budget compared to developed countries around the world is

strong. It is very strong.

JOURNALIST:

Treasurer, are you considering any other nominations for the head of the ACCC

with Graeme Samuel now in deadlock?

TREASURER:

We support the best qualified person and I have not heard anyone suggest that

Mr Samuel is not the best qualified.

JOURNALIST:

Treasurer, do you believe that Tony Blair’s position as Prime Minister in England

is under threat?

TREASURER:

Look, I have got enough trouble understanding Australian politics to comment

on British politics.

JOURNALIST:

Treasurer, there was a report in this morning’s Australian that Cabinet would

mandate a 2 per cent average ethanol content in petrol. Is that correct and…

TREASURER:

Not as far as I know.

JOURNALIST:

…do you support any ethanol being in petrol?

TREASURER:

Well, what I read in The Australian today, was that a Minister was proposing

this. It is the first time I have heard of it. I find it very unlikely. Very

unlikely. I suppose Ministers can propose anything they like, you had better

ask him, but I found the story very unlikely.

JOURNALIST:

What about the reported $150 million subsidy, the oil companies, do you think

that’s a good idea?

TREASURER:

Well, as I said, I found the whole story very, very unlikely, but you’ll have

to go and ask the Minister. As far as I know there is no such plan. It hasn’t

reached my ears, I can assure you of that.

JOURNALIST:

The market is still awaiting a replacement for Dick Warburton, will that replacement

be sitting around the Central Bank’s board table come early April at the next

monthly board meeting?

TREASURER:

Could be, it depends on when the Cabinet decides on these things.

JOURNALIST:

Have you put any names to Cabinet?

TREASURER:

What I put to Cabinet is a matter for Cabinet.

JOURNALIST:

Treasurer, does the Prime Minister have a difficult job today selling the war

at his lunch time address?

TREASURER:

Look, this is a difficult time, let’s not mince any words about it. We have

a situation where the world is looking at the situation in Iraq and there are

different countries taking different positions. And Australia has pre-deployed

its troops and believes it is important for the disarming of that dictator,

and this is a difficult time. And people will want to know whether we are doing

the right thing. And the point that the Prime Minister will make and it is the

point I have made, is, we all want peace. But you have got to consider it in

the immediate and the medium-term. You won’t get peace by walking away from

a bigger problem in the medium-term. And to think that a dictator can hang on

to weapons of mass destruction, and the message that that will send to other

would-be dictators around the world, is not a recipe for peace. It is a recipe

for greater difficulties down the medium-term. Now these things have to be balanced,

you have to make judgement calls, and I am sure the Prime Minister will be making

such in his speech today.

Thanks.