The Hon Peter Costello MP

Federal Member for Higgins 

Transcript 

of

Interview with Fran Kelly, ABC Radio National

Friday, 11 September 2009

7.45am

E&OE

SUBJECTS: Economic record.

KELLY:

Former Liberal Party Treasurer Peter Costello joins us now in our studio.  Peter welcome back to breakfast. 

MR COSTELLO:

Thanks very much Fran.

KELLY:

Peter Costello what is Kevin Rudd doing to your economic legacy?

MR COSTELLO:

Well I think this is a new phase in the evolution of Kevin Rudd.  Before the election you will recall he was an economic conservative and wanted to be elected to continue the things that we had put in place.  At the beginning of this year was the second phase when he wrote that article you will recall for The Monthly saying that economic neo-liberalism had been a thirty year failure.  And he repudiated not just what the Howard-Costello Government put in place but what the Hawke-Keating Government had put in place.  And then this week we had the third movement in this phase which was economic liberalism was good under Hawke-Keating but bad under Costello and Howard.  So it is bit like Labor good – Liberal bad.

KELLY:

Well his point now is that he describes the Howard-Costello Government as the neo-liberalists, free market fundamentalists, he says the eleven years of the Howard-Costello Government was indolent and marked by opportunities squandered rather than opportunities seized.

MR COSTELLO:

Well of course you see when Hawke and Keating deregulated interest rates, which made them much, much higher incidentally, and when they floated the currency Kevin Rudd says well that was good but when the Howard Government reformed the taxation system or paid off debt that was apparently bad.  So neo-liberalism was quite good when Hawke and Keating were practising it, it only got bad when Howard and Costello practised it.  I think that’s the latest incarnation of the argument.

KELLY:

Are you vulnerable to the accusation though that you squandered the global resources boom and didn’t pour enough into productivity enhancing infrastructure?

MR COSTELLO:

I think the record of…

KELLY:

Too much middle class welfare?

MR COSTELLO:

I think the record of our period of Government from 1996 to 2007 speaks for itself.  I don’t think there is a better period of economic management in Australian history.  And that is the reason why I set what the real record was out in my book.  This was a period where 2.2 million new jobs were created, where unemployment was halved from 8 ½ to 4 per cent, where all Federal debt was retired, where a new monetary policy was put in place, where inflation was halved, where the GST was introduced, where capital gains tax was halved, we had income tax rates cut, you can go on and on and on.  This was the period, I don’t think there is any doubt about this Fran, you can stack these eleven years up against any other eleven years or ten years or decade or whatever you want to do in Australian history.  I don’t think there is any doubt about the record.  The record speaks for itself.  What I think is the most interesting in relation to this is that Mr Rudd is yet to find his ideological position.  I think he would be better frankly to say yes I inherited an economy which was in a very good state, to pay recognition for that and to say now I intend to take it in the following direction.

KELLY:

I can hear Paul Keating laughing as he listens to this, if he is listening, because you spent many years of course attacking Labor’s economic record talking about the Beazley Black Hole and paying no credit at all to the achievement of the Hawke-Keating years and the legacy it left.

MR COSTELLO:

I give credit to the Hawke-Keating years for deregulating interest rates – as I just did – and for floating the currency and for reducing tariffs.  But at the end of the Hawke-Keating years, and these are facts, you can’t deny them, unemployment was above 8 per cent, the Budget was in deep deficit, we had $96 billion worth of debt, we had a taxation system which was unbalanced because it didn’t have an indirect tax.  So these are facts, so what we were able to do is we were able to take the good things out of the Keating years and address the failures which we did.

KELLY:

So why do you think Kevin Rudd doesn’t seem to be doing that at the moment?   What would you put it down to – arrogance, narcissism, or just raw and brutal politics?

MR COSTELLO:

I don’t think he really has come to grips with economic policy.  This is the point I would make about Kevin Rudd, I don’t think Kevin Rudd was part of any of the great economic debates of Australia’s modern history.  He wasn’t part of the debates over tariffs, he wasn’t part of the debates over industrial relations, he wasn’t part of the debates over the GST, he wasn’t part of the debates of the independent monetary policy.  See he hasn’t lived through any of these debates and so he hasn’t got a firm position in relation to them.  One day he is in favour of them, the next day they are all neo-liberal failures.  And I think you have got to bear in mind he is somebody who came to the Prime Ministership essentially through foreign affairs.  He wanted to be the Foreign Affairs Minister and through various circumstances became Prime Minister.  And because he hasn’t lived these debates he doesn’t have a firm understanding of them himself and I think it’s something that he’ll have to grapple with.  I would recommend to him that he take an independent view and conclude on the basis of recent history that many of these things were in fact very good, that they have put Australia’s position ahead of the world going into this financial downturn and he that he ought to give credit to it.

KELLY:

Peter Costello not so long ago Kevin Rudd was sweet-talking you into a possible position maybe on the Future Fund or an overseas job when you leave Parliament.  Do you think that job offer is still on the table or does this all change that?

MR COSTELLO:

Look Fran I don’t think anybody who is interested in public policy should pull their punches or rewrite history.  I don’t think Mr Rudd should do it, I don’t think I should do it.  These are facts.  You can’t walk away from the fact that the reforms of the last 30 years, including our reforms in relation to prudential regulation, put Australia in the strongest possible position to face this downturn.  Australia is not going to get through this downturn better than other countries in the world because of what was done in the last 12 months, Australia is going to get through this downturn better than other countries around the world because of what’s gone on over a period of many, many years.

KELLY:

Okay.

MR COSTELLO:

And that’s what’s given this government an enormous inheritance and the only point I would say is it might be worthwhile acknowledging it.

KELLY:

Okay.  It looks like this debate might go on for many years in the future too.  Peter Costello thanks very much for joining us.

MR COSTELLO:

Thank you Fran.

KELLY:

Former Liberal Treasurer, Peter Costello.