Transcript

of

THE HON PETER COSTELLO MP

FEDERAL MEMBER FOR HIGGINS

Interview with Alan Jones

2GB

7.15 am

E & OE

SUBJECTS:  Budget

ALAN JONES:

Peter Costello good morning.

MR COSTELLO:

Good morning Alan.

ALAN JONES:

What is this bloke up to?

MR COSTELLO:

I think where the rot set in is shortly after the last election the Government, Mr Rudd and Mr Swan started using Ken Henry to do press conferences in order to try and back them up.  They were new, they were on the job, they wanted to show that they had somebody with a bit more experience and they started doing photo calls and press conferences with Ken Henry.  I think it is a very bad principle.  I think the Minister should do the press conferences, the Minister should take the questions, the Minister should take accountability and I wrote in the newspapers at the time that this was a very dangerous tactic for them to adopt.  And I think Rudd and Swan, they have now been in office for nearly 18 months, they have got to be man enough to now stand up and take responsibility.

ALAN JONES:

But one of the tactics, yeah you are right, but one of the tactics by the red hot media apologists for the Federal Government is to argue the criticism of the Budget is a criticism of Treasury.  Since when was any Budget owned by Treasury?  Once the Budget is presented all its contents, its rhetoric, its promises, its projections are the property of the Government are they not and the Government is answerable for them?

MR COSTELLO:

Absolutely.  If you look at the front page of the Budget it says circulated by the Honourable Wayne Swan and the Honourable Lindsay Tanner.  They are the guys that have got their names on this.

ALAN JONES:

But the Government has sent this Dr Henry out to do its bidding and Henry seems more than happy to do it.  I mean how stupid is Henry to agree?  If Treasury is off doing the bidding of the Government why would Statement 3 say “The Government has been prepared to make the hard decisions now in order to position Australia for the future”?

MR COSTELLO:

Well you see this is part of the spin.  This is a Government of spin.  I think they have been fairly open about this, that they have learnt the tactics of Blair in Britain and when they get into trouble they always resort to these public relations type episodes.  Now you have highlighted what they say there in Statement.  I found it extraordinary that Mr Rudd is on the television, he is asked how much the Government is going to borrow.   He will not utter the word.

ALAN JONES:

No.

MR COSTELLO:

And when it was actually put to him that it was going to be in gross terms $300 billion he would just say 300.  He will not say $300 billion.

ALAN JONES:

Just for the benefit of my listeners I will quote, he said on Monday night on the ABC that the debt would peak by the way Peter Costello I will ask you to comment on this, he was completely incorrect in what he said.

MR COSTELLO:

Yes.

ALAN JONES:

Indicating that he doesn’t really understand the figures but he said “the debt would peak at a gross figure of 13.8 which comes out at about 300” so they won’t use the word billion or whatever but the statement is completely wrong because a gross figure of 13.8 there has been no value attached to that in the Budget at all.  The 300 that he is talking about of course is what it is going to be in this cycle who says at the end of four years.

MR COSTELLO:

It is all true.  Now let me give you another example.  I was in the Budget Speech in the House of Representatives on the Tuesday night.  The Budget Speech was delivered to all of us.  I flicked through it looking for the bottom line.  Now Mr Swan did not mention what he was budgeting for.

ALAN JONES:

No not at all.

MR COSTELLO:

Now let me tell you Alan, I have done 12 Budgets and I have watched a few more, when you introduce a Budget the point of the Budget is to tell people what you are budgeting for, right?  Now you might be budgeting for a surplus, you might be budgeting for a deficit, but you are budgeting for something.  What we had on that Tuesday night was the most extraordinary thing I have ever seen.  We were not told what you were budgeting for.  Now I got up and I walked across and got the Budget Papers.  One of the papers incorrectly said I walked out.  I did not.  I walked across to get the Budget Papers.  Do you know why? Because I had to find out what he was budgeting for.  It was not in his speech.  Now I have never seen people go to such lengths to try and cover up what they are actually doing.  So we have Swan on Budget night, he won’t tell us what he is actually budgeting for.  He won’t utter the words $58 billion deficit.  We have Mr Rudd on TV he won’t tell us what the debt limits are going to be.  He will use a figure like 300.  Well 300 what?  300 runs by Don Bradman?  What is this 300 – $300 billion but he will not say the words.  Now I have read in the papers today Alan that the reason he will not say the words apparently is he is worried that if he says the words and it is on television that the press will be able to replay these words as a record of what he has done.  And so he is almost tyring to expunge…

ALAN JONES:

Plus the Opposition will have an opportunity to use that as advertising material.

MR COSTELLO:

Well not just as advertising, forget about advertising material, you know when things go south what will happen is that the media will be able to say well look hang on this is what you said and they will play it.  There will be a record.  He wants to make sure that there is no record of this $300 billion debt, that there is no record of this $58 billion deficit.  So people won’t have the opportunity to actually know what has happened.

ALAN JONES:

And then you have got this 4.5 per cent in three years time growth claim and he claims these are independently nominated by the Treasury.  It would be foolhardy for any government to reject the independent advice of the Treasury on something as fundamental as the forward growth forecasts whether they were on the upside or the downside.  Now you know I mean that is codswallop.

MR COSTELLO:

Look Alan anybody is entitled to look at these forecasts and form their own view.  Now if I were interviewing Mr Rudd on this particular point – I have heard him say that oh you can’t contest the Treasury, oh this is the Treasury, this is best advice – just ask him this – what did the Treasury say last year in May of 2008 would happen in the following 12 months?  What did it say?

ALAN JONES:

They said there would be revenue growth.

MR COSTELLO:

$20 billion surplus growing…

ALAN JONES:

Yeah revenue growth, jobs growth.

MR COSTELLO:

Okay.  We now know that in 12 months time its forecasts were hopelessly wrong.  Right?  Hopelessly wrong.  Now it couldn’t get the forecasts right from May 2008 to May 2009 so don’t question whether it is right from May 2009 to May 2012 you can’t question that.  Now all I would say is this.  Just as Treasury forecasts between May 2008 and May 2009, a period of 12 months were hopelessly wrong, what confidence could you have that their forecasts for 7 or 8 years are going to be entirely accurate.  Now Alan they might be accurate, they might well, but you are entitled to question that particularly given the fact that this is an uncertain business and particularly given the fact that in the last 12 months we know they were hopelessly inaccurate.

ALAN JONES:

That’s right.

MR COSTELLO:

So you have every right to try and assess whether or not this is the best forecast or projection for 8 years.

ALAN JONES:

Well then knowing that he has got a massive problem with debt and deficits, massive problem, therefore he has got the infrastructure hat on and even though we are only going to get $1.7 billion spent in the next financial year, but he has got the infrastructure hat on to try and distract from debt and deficit, now telling us that there will be a relatively rapid recovery.  If there is to be a relatively rapid recovery wouldn’t it have been more responsible to have lower Budget deficits in the next two years and where is the Treasury advice on any of this?  Where is the Treasury advice about the impact of the stimulus packages?  Where is the Treasury advice and assessment of the changes to workplace relations?  Where is the Treasury model that tells us about the consequence of the affordability or otherwise of the Broadband Network?  Where is the Treasury advice on the Emissions Trading Scheme?  There is none.

MR COSTELLO:

Exactly right.  Well here is an interesting question why doesn’t he release the Treasury advice which said before Christmas that he should be doling out cheques of $1,000 per child and per pensioner?  Where is the Treasury advice that says after Christmas he should be doling out $900 cheques?

ALAN JONES:

Well you know Treasury, you know Treasury, is there any do you reckon?

MR COSTELLO:

Where is the Treasury advice that says the Government should enter into a $43 billion program to build fibre to the home?  Where is this advice?  Now presumably Mr Rudd would have you believe he only ever acts on the Treasury advice, he only ever does what Dr Ken Henry tells him to, so presumably these Minutes will be around and he can release them.  But of course he won’t because they’re not.  What happens here is that when it suits him he will hide behind the Treasury skirts but when there are no Treasury pieces of advice he is strangely silent.  Now the only thing I would say to the press is this Alan, look if he wants to hide behind Dr Henry’s skirts lets have everything that Dr Ken Henry has advised out in the open.  We are entitled to know it.  He is apparently calling the shots so we’re entitled to know what he has actually advised.

ALAN JONES:

Well let me just, on that advice, let me ask you this question about debt now, right, we’re now going into the debt market at a time when now we won’t be alone in raising funds.  The United States are after $2.4 trillion, Europe, Japan will be scrambling to issue their own bonds into the same pool of capital that will be targeted by the Australian Government.  So capital providers, those with the dough, those providing the money will be able to demand better returns because everyone wants the money.  Now we’re not told anywhere that taxpayers will have to bear that and I mean what consequence is it going to have to be for the poor taxpayer would be paying higher interest rates for years and years and years.

MR COSTELLO:

Well this is the point people have got to remember – those cheques that people are receiving at the moment  the $900 cheques, you have got to remember this, that is borrowed money.  The Government has gone out and borrowed money to send out a $900 cheque.  Now that is very nice, now that the $900 cheque has been sent to you, but it’s borrowed money.  Now that means the Government will have to pay the interest bill on that money and eventually repay it.  And who of course will have to pay the tax to give the money to the Government to find the interest bill and who of course will have to pay the tax to find the money to repay it?  Well taxpayers will.

ALAN JONES:

That’s right.

MR COSTELLO:

So what’s happened here is that people have been sent $900 cheques and for years they will be sent a tax bill for collecting interest to service that borrowing and eventually one day the tax bill to actually pay it back.  Now it is a very interesting question as to when this debt will be paid back because the Government…

ALAN JONES:

Well it is never, never stuff isn’t it.  I mean then you say about Treasury estimates you have got this nonsense in the Budget that they will hold spending to only 2 per cent a year for many, many years.  Now you have been a Treasurer for 12 Budgets, I mean that is just ludicrous.

MR COSTELLO:

Well these are the guys who in the last year have increased payments or outlays or Government spending 13.5 per cent.  They have been in Government one year and in that year they increased spending by 13.5 per cent and what they are telling you is in a couple of years time for a period of what 5 or 6 years they are going to increase it by 2 per cent.  In other words just get a load of this, they have done more in one year than they reckon they are going to do in the next 5 or 6 right.  Now if you believe that…

ALAN JONES:

You will believe anything.

MR COSTELLO:

…you will be heroic.

ALAN JONES:

And I see this just quickly, because you have got to go and I have got to go, the employers offering their employees shares, we are the only country in the world attacking an employee share scheme and I see today though we shouldn’t bring spouses into it, Kevin Rudd’s wife is a very successful businesswoman actually has a share scheme for her top executives.  It will be safe of course because it operates in another part of the world.  I mean do these people know what they’re doing?

MR COSTELLO:

Well this share ownership, the crack down on share ownership is ridiculous.  It wasn’t thought through.  Share schemes have been suspended.  These are very good incentives for people including working people who are actually very committed to their businesses.  They will have to reverse it.  It is obvious that they had no idea what they were doing…

ALAN JONES:

In the first place.

MR COSTELLO:

…and unfortunately a lot of people will suffer in the interim.

ALAN JONES:

Good to talk to you.  Thank you for your time.

MR COSTELLO:

Thanks very much Alan.

ALAN JONES:

That’s the former Treasurer, Peter Costello.