Housing market, economic management, Labor’s tax policy costing black hole – Doorstop Interview, Queanbeyan

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Housing market, economic management, Labor’s tax policy costing black hole – Doorstop Interview, Queanbeyan




Doorstop Interview

Ryleho Home Solutions

High Street


Thursday, 23 September 2004

10.30 am

SUBJECTS: Housing market, economic management, Labor’s tax policy

costing black hole


Well we are down here at the Ryleho factory today which engages in shop

fitting and joinery. This is one of the success stories of the local area

in Queanbeyan. Over the last two years this factory has put on an additional

seven employees and that is indicative of a strong housing sector and a

strong business sector which has created job opportunities for Australians.

In fact in the electorate of Eden-Monaro since 1996 when the unemployment

rate was 7.5 per cent it is now down to 4.7 and as low as 3 per cent in

Queanbeyan which economists, most economists would think is pretty close

to full employment.

You can’t have a strong business environment unless you have good economic

management and if interest rates were to go up and the housing sector were

to cool down and business investment were to come off, people in factories

like this would lose their jobs. That is the fact. Strong economic management,

low interest rates, stable interest rates, has created jobs for Australians

and we have met some of the Australians that have had jobs created for them

in this factory here today.

And I would say to the Australian people when they are looking at voting

on the 9th of October, think very carefully about the alternatives

because economic management counts. And if you get it wrong ultimately people

lose their jobs and it would be in factories and shops like this all over

Australia that the consequences of bad economic management would be felt.

I want to pay tribute too to Gary Nairn the Member for Eden-Monaro who

has been representing this area so well over recent years and who is running

for re-election and looks for the trust of the people of Eden-Monaro in

this next election. He has been a fantastic Member. Whilst he has been representing

this area it has gone from strength to strength and long may that continue.


Mr Costello you are talking about the housing market, the IMF is saying

that Australian house prices are actually over-valued in the sense that

they can’t (inaudible) by fundamentals, doesn’t that mean that the market

is going to slow quite rapidly if that is true?


I have repeatedly made the point that the kind of appreciation in prices

that we have seen over the last three or four years couldn’t continue in

a sustained way, repeatedly made that point. And a big part of economic

management over the next two years is going to be managing the housing cycle.

Making sure that the housing cycle plateaus but doesn’t crash. And those

people that think that all of the problems of the Australian economy have

now been fixed ought to be very wary. There are big problems out there for

Australia still, which are going to require disciplined economic management.

There are some people that think all of our problems have been fixed so

we can risk it on someone with no experience, they are wrong. We have big

problems out there and it is going to take a lot to manage them.


Do you think that the labour market is too dependent on housing?


Well look, housing is great for the labour market because it has a huge

multiplier effect. If people are building houses then joiners are in business,

glaziers are in business, whitegood manufacturers are in business, carpet

layers are in business, pavers, landscapers, concreters, it is great for

the labour market. So we wouldn’t throw off at that, we wouldn’t underestimate

its importance, we will take strong housing market that creates jobs any

time. But it is important that you have a balanced economy, yes, you are

quite right about that. We also need strong agricultural industries, we

need strong mining industries, we need strong service industries, but if

you can keep your housing industry strong you will get good employment results.


Mr Crean who has said today he will submit the Tax and Family package for

costings to Treasury and he also said to you that you had egg on your face

because his policy adds up, what do you say to that?


Well Mr Crean hasn’t said that he will submit his policy. This is a very

important point. Mr Latham said on the Channel Nine programme that he will

submit elements of his Tax and Family policy. Mr Latham

has to submit the complete policy. In fact, why not submit it today? That

policy was released 16 days ago. There are 16 days until the election. I

can’t understand why he hasn’t submitted it on any one of the last 16 days.

Now, this morning he said elements – elements is not good enough.

The full thing has to be put in so it can have a full analysis and today.

Not in a weeks time because what will happen in a weeks time is they will

find some other reason for delay. Today. Full package. Independent costing.

Let’s get the verdict in relation to this package so people have enough

time to consider it before the election.


We have got the situation that could arise of Treasury and Finance releasing

very potentially explosive information very close to the election. Do you

think that is a good position for the Secretary of the Treasury to be in?


I think it is a terrible position, that is why it should have been put

in 16 days ago. Why would this be close to an election? Let me tell you,

it could have been released 16 days ago, 15, 14, 13, 12 – any one

of those last 16 days this could have been put in. All you have got to do

is send it off. Why has nothing happened for the last 16 days? We have only

got 16 days to go. He is now saying elements and then he is saying elements

in a week. Excuse me, why wait for another seven days? Why can’t it be done

today? The full thing, today. Now, if that were done then at least we could

have it let’s say, two weeks, before the campaign. But if he waits for another

week and if he puts in elements and if the Treasury is therefore unable

to cost the whole thing you are going to have a situation where this information

will be either put out on the eve of the election or, as I think Labor hopes,

after the election. That is what happened in the 1998 election, the policy

went in so late that the report never came back until after the vote was

over and I think that is what they are trying to organise now.


Is there an argument for reviewing the Charter of Budget Honesty system

so that policies are automatically sent in and if they are not that the

Treasury gives an assessment anyway as you did yesterday?


Well you see the reason it was set up like this is that people from time

to time you know, say things and then you go and have it costed and they

say, well that wasn’t really a policy, that was just an idea, and so it

was set up so that you would actually determine it was your policy and when

you had determined your policy it could be costed, you know. The other thing

of course is that when these policies are presented they have got millions

of questions in them, millions of questions. I mean, it now appears for

example as if one of the things we weren’t told about this tax policy is

that 1.1 million Australians won’t be getting any benefit in the first year,

and that is not in the document. That has never been mentioned before. Mr

Latham forgot to mention that 1.1 million Australians are not expected to

get any weekly gain. Now, when these things go in all of the details have

to be there before you can cost them and if you just had a Treasury that

was picking them up from newspapers, I don’t think that you would be able

to do that.


Mr Costello you have sort of put your credibility on the line here to some

extent, with this document that you released yesterday, how come you are

so confident given that it has, what it has come down to is your word against

a couple of economic forecasters?


Well put the policy in for costing. We have had 16 days, there are 16 days

to go, put it in for costing. Not elements, put it in for costing. You know,

what emerged today, and I am just going on hearsay because NATSEM hasn’t

released anything today, but the hearsay today is that NATSEM under costed

that working tax bonus because they assume 1.1 million people won’t get

any benefit. Now that is new information. Did Mr Latham tell any of you

that on his weekly benefit tables 1.1 million were not expected to get anything?

It is just new information. You put some acid on these policies and a new

fact pops out. Now, I am the person that is looking carefully at this policy

but you know, if you want an independent assessment, it is there, it is

free. You know something, you don’t even have to pay for it. They can put

it in today and it can all be done. OK, thanks.