Treasurer

Interview with Neil Mitchell

3AW

Wednesday, 13 April 2005

9.05 am

 

SUBJECTS: IGA, GST, Medicare, Polls

MITCHELL:

Peter Costello good morning.

TREASURER:

Good morning Neil, good to be with you.

MITCHELL:

Thanks for your time. Now, it is reported that you have won, that the States

in this brawl over the GST, them cutting taxes in return for GST money, that

you have won, is that right?

TREASURER:

Well I don’t think it is a question of who wins between the Commonwealth

and the States, it is a question as to whether both levels of government keep

faith with the Australian people.

MITCHELL:

Well is it over, is the deal done?

TREASURER:

Well, the deal that was put to the Australian people was when the GST was introduced,

nine other taxes will be abolished. I want to keep faith with the Australian

people, some of the States have agreed with that proposition, that it is a question

of timing and sequencing, but I have never seen this Neil as a contest between

the Commonwealth Government and the States, this is an issue between the people

of Australia and their elected governments and they were told that these…

MITCHELL:

You have been making one point, the States have been making another, and they

said they were digging in, there was talk about ripping up the deal, is it now

going to be resolved?

TREASURER:

Well I hope so.

MITCHELL:

Well it looks like it doesn’t it? It looks like they are agreeing with

it.

TREASURER:

Well as I said, some of the States have agreed to abolish these taxes and uphold

the agreement, I haven’t heard from all of them yet, but the signs are

very positive. And this is a win for the Australian people.

MITCHELL:

Who have you heard from?

TREASURER:

Well the matters are still under negotiation and I don’t want to jeopardise

the finalisation.

MITCHELL:

If they don’t all agree, if, I mean the suggestion I think Western Australia

is holding out, if they don’t all agree, can you do the deal with the

other States and somehow not Western Australia or not whichever state causes

a problem or is it all in or none?

TREASURER:

Oh no, if there are one or two States that decided to keep the existing taxes

and break the agreement, that would be their problem. But if the majority of

States as I believe they will, agree to abolish these taxes, then they will

be entitled to receive the GST under the agreement.

MITCHELL:

So if you had some States not agreeing to abolish the taxes, would you withhold

payments from them?

TREASURER:

I am not going to go into what would happen, but the reality is this Neil,

everybody in Australia knows this, that when the GST was introduced it was introduced

not to reduce but to abolish other taxes. The GST has been introduced, those

other taxes have to be abolished. Now, you can have an argument about the timing,

you can have an argument about which ones are abolished first, but those taxes

have to be abolished. And the Australian public was told that they would and

if the outcome of all of this was that they got the GST and those other taxes

stayed in place, that would not be keeping faith with the Australian people.

MITCHELL:

On another tax issue, and it is almost related to the GST, would you put this

on the agenda for discussion – the GST as it applies to petrol excise?

Because if that was removed now, petrol would come down four cents a litre and

it is at horrendous levels.

TREASURER:

Well when we entered into the agreement with the States, we got their agreement

for the abolition of these nine taxes in return for the GST. We got their agreement,

that is the agreement I am trying to uphold. We didn’t get an agreement

that if the GST revenues increased, they would reduce the tax on petrol. We

didn’t get that agreement.

MITCHELL:

Well will you try to get it?

TREASURER:

Now, well Neil, the point I am making is that I am finding it hard enough to

get them to adhere to the agreement I did get without asking them for progress

on an agreement I didn’t get.

MITCHELL:

But you are going to have to re-negotiate anyway aren’t you, why not

put this on the table?

TREASURER:

I make this point, there is one State that uses its GST revenue to reduce the

cost of petrol. That is Queensland. One State does it. Now, it is a matter for

the other States, they could do it as well. But I don’t have their signature

on a piece of paper obliging them to do it, I do have their signature on a piece

of paper obliging them in relation to these other taxes, that is why I am seeking

to uphold that agreement.

MITCHELL:

But will you raise this issue with them? Petrol is crucial as you said the

other day yourself, it is crucial to the economy of this country, the economy

of the world. Petrol prices are hurting this country.

TREASURER:

Well I am prepared to make the point as I am now making that the States, now

that they are sitting on a windfall in relation to GST do have the capacity

to do that if they so choose and that is a matter for them.

MITCHELL:

So they have got the money to do it you reckon?

TREASURER:

Well Queensland does it.

MITCHELL:

And you think, well Victoria, has Victoria got the money, could Steve Bracks

say, ‘righto, we will give that back, that is four cents a litre cheaper?’

TREASURER:

Well it is a matter for the Victorian Government, they are sitting on a windfall,

what are they going to do with that windfall? Well, the first thing they have

to do is they have to observe their Agreement and abolish the nine taxes. The

second thing obviously that they have got to do in Victoria is cut land tax,

everybody knows that. After they have done both of those things they would still

have the capacity to look at other areas, that is a matter for them.

MITCHELL:

Including petrol.

TREASURER:

That is a matter for them.

MITCHELL:

Ok, Safety Net, Medicare Safety Net, will it be cut?

TREASURER:

Well the Medicare Safety Net is a scheme which says after your out-of-pocket

medical, out-of-pocket out-of-hospital costs, I think is the way it is expressed,

out-of-pocket out-of hospital costs go above a certain level then you can get

an 80 per cent refund. It is something that this Government introduced, it is

something that the Labor Party opposed, we have to make sure that all of these

things are kept on a sustainable basis, that is what we are doing at the moment.

MITCHELL:

What does that mean?

TREASURER:

Well what it means is that we have got to make sure as the ageing of the population

means that there is a heavier and heavier drawdown on medical services that

all of the ways in which we fund health services in this country are put on

a sustainable basis.

MITCHELL:

And a sustainable basis means if necessary you have to cut it.

TREASURER:

I am not going into future decisions because people say, ‘oh what are

you going to do in a Budget?’ And I don’t confirm or I don’t

deny, but when people ask me about this, it has been an extraordinary benefit

for people, this Government introduced it, this Government will be keeping it.

But this, but you have got to always make sure that you keep it on a sustainable

basis.

MITCHELL:

This Government will be keeping it but not necessarily at this level?

TREASURER:

Well as I said I am not entering into the speculation.

MITCHELL:

Well you are aware of the speculation?

TREASURER:

Sure, I read it in the newspapers.

MITCHELL:

Is it on the agenda?

TREASURER:

I am not going into the speculation other than to say this Government introduced

it and certainly the Government will be keeping it.

MITCHELL:

At a level of some sort.

TREASURER:

Well I am not going to speculate any further.

MITCHELL:

Ok, broad brush, the Budget, how close to finished?

TREASURER:

Well about four weeks close to being finished.

MITCHELL:

Can we expect a surplus larger than predicted?

TREASURER:

Well I think some of the commentary has again just been purely speculative

Neil, but again I can’t confirm or deny, we will all know on Budget night.

MITCHELL:

You sound weary, have you had enough of the Budget?

TREASURER:

It is a hard road and it is a $200 billion Budget so we have got to put together

$200 billion on the revenue and the expense side, we have got pressing defence

commitments which are occurring at the moment, we want to start laying down

the reform which will make a response to the ageing of Australia’s population,

our largest challenge over the next 40 years, and it takes a bit of work, yes,

it doesn’t just do itself.

MITCHELL:

You must be relieved this is the last one?

TREASURER:

I could see where you were going.

MITCHELL:

And what is the answer?

TREASURER:

You know every year I get asked if this is the last Budget. I think seven Budgets

ago, I think I said it was seven Budgets ago it was the last one and I am still

here Neil.

MITCHELL:

And it is still the last one.

TREASURER:

I am not going into any speculation.

MITCHELL:

Just finally, I noticed a newspaper poll yesterday saying you are not as popular

as the Prime Minister in the way you do your job.

TREASURER:

Oh look, polls come and go and I think it turns very much on the questions

and how you ask them.

MITCHELL:

Do you think you are popular?

TREASURER:

I think, I don’t think Treasurers are paid to be popular, what they are

paid to do is to take hard decisions which produce popular outcomes. That is

to take the decisions necessary to keep interest rates at 7.3 per cent rather

than 10.5 per cent…

MITCHELL:

Do you think you are admired?

TREASURER:

…to take the decisions which have got unemployment down at 5.1 per cent

rather than 8.6 per cent and put 1.3 million more people in work. Now, you don’t

produce outcomes like that by taking popular decisions, you take right decisions…

MITCHELL:

Do you think you are admired?

TREASURER:

…and look, it is for other people to say Neil, but…

MITCHELL:

Do you want to be respected?

TREASURER:

…my job is to get people in work, keep their interest rates low, balance

their budgets and prepare for Australia’s greatest challenge in the future

and the record is there, everyone can see it, you can measure it against other

countries or other Treasurers.

MITCHELL:

If you don’t mind, just before you go another non-economic thing, are

you across the damage that is allegedly happened at Gallipoli? Have you had

a look at the photographs?

TREASURER:

Well I have only read it in newspapers.

MITCHELL:

Ok. Are you concerned by it?

TREASURER:

Look Neil, Gallipoli is one of Australia’s most sacred sites, I have

been there, I had the privilege of addressing the dawn ceremony a couple of

years ago. Two things about it, one, you want to see the battlefield as it was,

two, you want to be able to get in there to see the battlefield and you have

got to have a road there but it has got to be done in the most sensitive way

possible.

MITCHELL:

Thank you very must for speaking to us, I think Melbourne played Essendon the

first game of the year.

TREASURER:

I don’t think we had a wager, did we?

MITCHELL:

Oh I think we have a standing wager for the benefit of a charity.

TREASURER:

Alright, name your charity.

MITCHELL:

We will talk about it. Thank you very much for speaking to us.

TREASURER:

Thank you.