Interview with Virginia Trioli

702 ABC

Friday, 17 February 2006

8.35 am

SUBJECTS: Kerry Packer Memorial Service, NSW Treasurer, tax, RU486, AWB

TRIOLI:

Good morning.

TREASURER:

Good morning Virginia.

TRIOLI:

You are here for Kerry Packer’s state memorial service. You are in charge of the purse strings of course, did you have any qualms about taxpayers paying for the service of Australia’s richest man?

TREASURER:

No, I think Kerry Packer was a very significant Australian, in his contribution in media, in business, in a whole range of areas of public life. The Government is sponsoring the memorial service and I think a lot of people will be there, it is going to be televised live and I think it is something that there is enormous public interest in.

TRIOLI:

Is (inaudible) contribution to Australian life in your view?

TREASURER:

I guess in the media, the Nine Network, the World Series cricket, we can’t help thinking of that as some kind of sub-set of the Nine Network…

TRIOLI:

And (inaudible).

TREASURER:

…it is almost like the Nine Network came to own it after a while, and the way he revolutionised sporting events. He was a very significant media player by world standards. Of course he dominated in Australia. By world standards, he was a very significant media player.

TRIOLI:

There will be some protesters there today I understand protesting the fact that public money is going into the memorial service. What is your view of that?

TREASURER:

What is the point of protesting at someone’s funeral? They have gone and I think you should let people rest in peace, that is my view, and I don’t really care who it is. Can you imagine turning up at other people’s memorial services? I think it is totally misguided and if they think they will win any public support, they won’t.

TRIOLI:

With the passing of Kerry Packer, do you think the time of the great dynastic families is over? Australia’s wealth is largely in institutional hands now, the Macquarie Banks of this world, rather than families. What does that mean for bold and visionary (inaudible) now?

TREASURER:

It is an interesting one. I do think the family business is passing. There are still some families that are very significant in Australian business…

TRIOLI:

Yes that (inaudible) with great interest this morning.

TREASURER:

…the Lowy family, the Smorgon family for example, the Myer family.

TRIOLI:

Do they take risks with investment structures (inaudible)?

TREASURER:

Well they are people who generally pioneer businesses. They have built business and the business has become part of the family and you get to a certain stage, and it is happening even with Westfield I think, where if you want to go to the next stage you have got to bring in many, many more people and their saving. And they float these companies and the family side loses its interest and as time goes by it becomes like another public company. But I think families and individual entrepreneurs will still be the crucible through which these things will start and grow but savings are now so diverse, particularly superannuation funds, that you have got to bring in those what we call, the technical expression, liquid capital markets, to get the business to the next stage.

TRIOLI:

Well speaking of liquid capital, (inaudible) the New South Wales Treasurer, Michael Costa, has called for a State-Federal Summit on funding and called on you not to bring in personal tax cuts in the next Budget and instead direct the money towards infrastructure and essential state services. Are you interested in such a discussion?

TREASURER:

I think the thing I would say to Mr Costa is don’t get stuck in this old State versus Commonwealth argument, it has been going on now for 106 years.

TRIOLI:

Well, (inaudible).

TREASURER:

I have listened to a succession of New South Wales Treasurers during my time as Federal Treasurer play that card. It is an old one. The truth of the matter is that New South Wales like every other State will get GST funding. This year New South Wales will be getting about $10,400 million and next year $11,000 million. And the important thing is to manage that wisely and well…

TRIOLI:

Is it managed wisely (inaudible)?

TREASURER:

It is a lot of money, isn’t it? $11,000 million. This is talking about one year. It is a lot of money, isn’t it? And in addition to that of course the State Governments have had growing revenue bases of stamp duty and land tax because they have had this property increase over the years, so I think the important thing is to manage that wisely and well and that would be my advice, don’t fall into the old State versus Commonwealth thing. It is always easy to play that in a State where you have State based media because you can rely on the State’s newspapers to carry your line if you are a State politician. But we put in place the GST, producing revenues for State Government which we didn’t think would be possible, and the important thing is to manage that wisely and well.

TRIOLI:

Well you did make it harder for us of course, we are paying in terms of the GST and then we pay in terms of our Federal taxes as well, the money keeps flocking in but it is extremely irritating for the taxpayer.

TREASURER:

Sure, I think the money has got to be used wisely and well.

TRIOLI:

Yes but the irritation goes in both directions, it is directed at the Federal Government in terms of the taxes we can’t avoid and then the taxes we pay everyday in terms of the GST.

TREASURER:

Sure, well the GST is put in place so that State Governments would have a growing revenue base to fund their schools and their hospitals, and it is a growing revenue base. The Federal income tax which is the principal revenue source of the Commonwealth Government has also grown, as more people have come into work and that pays for defence and higher education and welfare benefits and the Medicare system and I think the important thing is that each level of government take responsibility for those areas that it is providing services.

TRIOLI:

So on the call today by New South Wales Treasurer, Mr Costa, you are not interested, not interested in a State-Federal Summit…

TREASURER:

Oh no, there will be one…

TRIOLI:

…in dropping our personal tax cuts in favour of investment?

TREASURER:

Well the Commonwealth Government will decide what it does with income taxes. We note what Mr Costa has said. We take that into account with all other submissions…

TRIOLI:

Are you leaning that way, towards personal tax cuts?

TREASURER:

…but I don’t know that it has got great appeal to me to increase funds flowing into the New South Wales Labor Government…

TRIOLI:

Because it is a Labor Government?

TREASURER:

…well all State Governments are Labor Governments…

TRIOLI:

If there was a Liberal Government would we be having a different conversation…

TREASURER:

…probably not Virginia. You know I used to have the same attitude to some State Liberal Governments. But over and above what $10.5 billion that they are getting this year and the $11 billion they are getting next year as GST, I note their submission that the Commonwealth should give them more money and we take it on board but it doesn’t have a great deal of appeal.

TRIOLI:

Mr Costa has also accused you of not being alive to the issue of an ageing population. He said you have talked about it a lot but you have haven’t provided any solutions. Is he right?

TREASURER:

Well, Mr Costa, how long has he been in the job?

TRIOLI:

Oh, just overnight.

TREASURER:

(inaudible).

TRIOLI:

Well he is not entitled to have a view?

TREASURER:

Well, well…

TRIOLI:

When you became Treasurer did you (inaudible)?

TREASURER:

…he has become an expert overnight on intergenerational issues, I don’t think so. In 2002 I brought in the Intergenerational Report which mapped out where Australia was going over the next 40 years and it made assumptions, the best assumptions that were possible, as to the population fertility, the ageing demographic, the expenses that that would raise, particularly in health along with technological change. We said to the Australian public we have a problem. And we began doing things about it. One of the things that we put squarely on the map was the fertility rate. You know, we introduced the Baby Bonus. Another thing that we said is that there was no faster area of Commonwealth expenditure than pharmaceuticals and we put in place to measure cost effectiveness in relation to pharmaceuticals. One of the things we did was we extended the ability of people to make superannuation contributions. We introduced the new provision by which you could draw down on superannuation and remain part-time in the workforce.

TRIOLI:

So you are saying you have done enough.

TREASURER:

No, I am saying that Australia leads the world. When we had the Finance Ministers Meeting in Beijing of the 20 top economies in the world in November last year, I did a presentation to the 20 top Finance Ministers and Central Bankers in the world on the Australian experience with demographic change. I am going to host the same function in Australia this year and people want to know what the Australian experience is. Now, we have a looming problem. I have been talking about this for a very long time and you know, it is going to challenge us in a (inaudible). And the only thing I can say to the Australian public is this, it is a problem for us but we are probably better placed in adjusting to it than any other country in the world.

TRIOLI:

(inaudible) at 18 minutes to 9, the Treasurer, Mr Peter Costello is at the studio on 702 ABC Sydney. On that issue of the fertility rate and the Baby Bonus, someone like Danna Vale might say then that you are contradicting yourself in a sense in your support for the abortion drug, RU486. On the one hand suggesting that we have more babies, on the other hand making it easier to obtain an abortion.

TREASURER:

I don’t think this makes it easier to obtain an abortion. This is not a debate about the availability of abortion. It was a debate about the process for the registration of a particular drug, and as I said in my speech there is no evidence in those countries that have registered this drug that the abortion rate increased. Now, I also said in my speech I think abortion is a harrowing experience for all involved and I for one would not recommend it as a first step but as an unavoidable last step. But having said that, the question was, what would the procedure be for the registration of the drug? Would it be a Ministerial approval, or would it be an assessment by the Therapeutic Goods Agency? My view was that assessment by the Therapeutic Goods Agency and that was the decision that was made.

TRIOLI:

This debate has been described by commentators and also interestingly many of our listeners too as a watershed in Parliamentary debate and an honestly felt discussion on all sides. Would you like to see more conscience votes?

TREASURER:

I think it shows the Parliament at its best, where individuals confront the issue and I listened to nearly all of the debate. I thought people spoke sincerely and well and honestly and it was a good debate.

TRIOLI:

So (inaudible) the Parties’ rules constrain that kind of debate?

TREASURER:

Well in our Party you can cross the floor on any issue if you want to.

TRIOLI:

If you are brave enough.

TREASURER:

Well you can and nothing happens, you don’t get expelled or anything. I guess the reason why you have Parties Virginia, and I was thinking about this, with RU486 it took in the House of Reps nearly the whole week. Everybody wanted to speak. You have to do a lot of work to research the issues, to come to a view and it took a lot of time and the Parliament was at its best. The pressure of legislation as such – and the Parliament did one Bill practically in the whole week – the pressure of legislation as such where the Parliament is enacting probably several Bills a week of incredible complexity, but where the Party system gives the advantage is you effectively say, I may not be an expert on this area of legislation but I am a member of a Party whose leadership I chose and therefore I will follow their guidance. If every vote were a conscience vote the proceedings would be better – I have no doubt about that – but they would be much lengthier and the Parliament would not enact anything like the necessary legislation that a modern economy needs to make itself competitive.

TRIOLI:

That might be a good or a bad thing…

TREASURER:

Well you know, I guess the Parliament was basically an institution which is modelled on British experience centuries ago, and that is that way it use to work, but in a modern society you see, with the pressure of legislation, with immediacy of communication, the ability to do that you know, summoned down from the provinces of Britain to Gladstone’s Parliament of the 19^th century to think about the Irish Bill or something like that, you just don’t have the time to do that kind of thing these days.

TRIOLI:

(inaudible)…

TREASURER:

By the way Virginia too, the Parliamentarians of Britain when they were founding the Parliament didn’t spend a lot of their time on talkback radio either.

TRIOLI:

And a pity too. But the Cole Inquiry into AWB’s Oil for Food scandal has uncovered now countless and sometimes quite staggering incidents of wilful and deliberate sanction breaking and we don’t even have the Commissioner’s findings yet. Given all of that do you think it is appropriate that the AWB Chairman Brendan Stewart is included in our delegation to Iraq to argue in defence of Australian wheat sales?

TREASURER:

Well he is included because he is the Chairman of the company that has got the wheat.

TRIOLI:

He is the Chairman of the company that is under sustained criticism and by anyone’s measure (inaudible) to the final findings, by anyone’s measure has been up to its neck at the very least in misleading the UN Volcker inquiry into this.

TREASURER:

Sure, I don’t defend the AWB, I have made it very, very clear that if it paid bribes that is a disgrace.

TRIOLI:

But you defend his inclusion.

TREASURER:

Well hang on, if it paid bribes. Now, we have a contract tender going at the moment, why is the Chairman of the company going? Because he has got the wheat. If we can get into that tender and sell the wheat, you have got to have the volume, you have got to have the stock and he is the man that has got the stock. The Government doesn’t own this wheat, the Australian Government doesn’t have this wheat, the Wheat Board has it.

TRIOLI:

So you are saying you are hamstrung, there is virtually nothing the Government can do, it is obliged to include Brendan Stewart in the delegation?

TREASURER:

Yes, because the Wheat Board has the wheat. If there is going to be a sale and we are going to produce the volume it is going to be a sale by the Wheat Board. But let’s see how it goes, come back to your original point…

TRIOLI:

But do you like the idea of him being there representing us?

TREASURER:

…well we will leave aside, when you say representing us…

TRIOLI:

I mean Australia.

TREASURER:

…well you have got to be, let’s just remember AWB is a private company. It has got this fancy name, Australian Wheat Board, people think, ‘oh, it must be some kind of Government agency.’ AWB is a private company of which Mr Stewart is the Chairman. Now, if this private company paid bribes in contravention of Australian law in Iraq and circumventing the UN Food for Oil programme, that is a disgrace and if the Cole Commission finds that, then it is in trouble and the full force of the law will come down on them.

TRIOLI:

Well in a sense we know that don’t we? I mean we have had evidence before the Cole Inquiry saying that the AWB had known since 2001 that its transport fees so-called were being funnelled into Saddam Hussein’s regime. I mean it knew, we all now know from reading day after day the testimony being heard in the Cole Inquiry. What elements of doubt remain in your mind Treasurer?

TREASURER:

Well the AWB started off by saying in its evidence that it had never paid a bride with kickbacks. As the evidence has come out I think a lot of people reading that evidence will come to the kind of conclusion that you have just put.

TRIOLI:

Can you come to that conclusion, yourself?

TREASURER:

But we are paying…

TRIOLI:

You are a thinking, reasoning, intelligent man, did you come to that conclusion or is the Government somehow insulated from drawing conclusions from what it reads?

TREASURER:

…I may have my private views but we are paying Commissioner Cole, who after all is hearing the evidence, to make his conclusions and it is only right that we listen to that.

TRIOLI:

So Brendan Stewart still goes as part of this delegation?

TREASURER:

Yes.

TRIOLI:

Are you shocked, are you angry? I mean we have heard now that the AWB claimed its kickbacks from Saddam Hussein’s regime as a tax deduction, have you ever heard of a company as brazen as this?

TREASURER:

Well again, you know, let’s go through. The AWB claimed that it was paying a transport company to transport wheat. If it was paying a transport company to transport wheat that would be tax deductible, of course it would be.

TRIOLI:

But we know now that is not so…

TREASURER:

If the Commissioner…

TRIOLI:

…there is no point wasting time.

TREASURER:

…no, if the Commissioner says that wasn’t a transport fee, that was a bribe, if he says that then not only you are up for possible prosecutions of bribes but you can’t claim it as a tax deduction either.

TRIOLI:

So tax fraud.

TREASURER:

So you have got another problem coming into the whole mix if that is the case.

TRIOLI:

It would seem to be the case and that is money right out of your coffers, out of our coffers, isn’t it firmly in your bailiwick?

TREASURER:

And that is why you have a Royal Commissioner and the Royal Commissioner is uncovering all of this and when the Royal Commissioner reports which I understand will be next month unless he asks for a extension, then if anybody has done anything wrong they are in big trouble.

TRIOLI:

Given the significance of this and how profound it is for our reputation and to the issue more importantly of our wheat, what is to be lost by allowing senior bureaucrats to answer questions in front of this Commission? Why gag them when surely as Treasurer and with evidence as outrageous as this you would surely want to get to the bottom of it?

TREASURER:

Well Virginia, senior bureaucrats will answer questions before this Commission. You have got to be very careful. The senior bureaucrats will be called before the Commission, anyone Commissioner Cole wants. That is a different issue to the senior bureaucrats going into the Senate Estimates. That is the thing they are not doing, they are not doing the Senate Estimates. But they are available and will be called in the Commission. And you say to me, well why not have them in the Senate Estimates as well? Well, personally I think it is going to be more gruelling in the Commission, (A) because you have got a counsel who cross examines you, (B) because you are on your own, (C) because you know you have got Commissioner Cole and from their point of view they’re likely to get a fairer hearing I would have thought from Commissioner Cole than they might be from “unbiased” Labor Senators.

TRIOLI:

Are you itching to have the book thrown at the AWB legally?

TREASURER:

If a company has paid bribes and if a company has circumvented the UN Food for Oil Program, that is a disgrace. And if the findings are that there is a basis for prosecution, yes, I think they should be prosecuted with the full vigour of the law.

TRIOLI:

And what should happen to those perhaps in the Department of Foreign Affairs and Trade and other senior officials who may have known of this or who have had it brought to their attention again and again in many ways? Is there any responsibility there that you see Treasurer?

TREASURER:

Virginia I don’t think there is any evidence at all that people in the Department of Foreign Affairs and Trade knew, that they were told. You know, this company as late as the opening of the Cole Royal Commission was maintaining that it never paid a bribe. And that is what it was maintaining all the way along to the officials of DFAT. Now Commissioner Cole has got all of the telexes, all of the emails that have gone to and from the Department of Foreign Affairs, he can call anyone in the Department of Foreign Affairs, and I must say to you and I do follow this carefully, there is no evidence at all that has come to light that the Department of Foreign Affairs and Trade knew about this.

TRIOLI:

Given the massive nature of the Chinese economy in the market and the nature of doing business abroad as we are constantly told by some commentators that elements of what are hearing in the Cole Inquiry are, well look it’s just what you have got to do to get business done, it’s not that bad. Do you have concerns that some Australian businesses may have been up to something similar or might be at the moment in China for example?

TREASURER:

Well it is a bit different. China is not under UN sanctions. China can buy and sell freely whatever it wants.

TRIOLI:

Well no, but corrupt business behaviour is corrupt business behaviour. You don’t have any concerns that well any of our companies are up to something similar there or elsewhere?

TREASURER:

No. I don’t see any evidence of any of that in China. No.

TRIOLI:

The commentary in the Sydney Morning Herald today, the strong suggestion in that piece is that for a conservative you are not terribly conservative on issues like abortion, republic, aboriginal reconciliation and that your attempts, according to this piece at differentiating yourself with the PM, have taken you beyond a conservative boundary. Is that fair?

TREASURER:

Well I have genuinely held beliefs which I have thought about very carefully and I am very sincere about. I expressed them on this recent vote. I also indicated in the vote that these are not short-held views, not views that I came to during the week. These are views that I came to through personal circumstances 18 years ago before I was in the Parliament. So the suggestion that somehow I thought this up overnight, can I say to you in this debate Virginia, that Tony Abbott quite rightly in my view said that people should not be critical of his views because they are held on genuine religious conviction which I respect and admire. By the same token people should not be critical of others views which are genuinely held in accordance with their religious and moral conviction.

TRIOLI:

Is your religious belief very important to you when it comes to your generally held views?

TREASURER:

Absolutely. And we should all be given I think, the decency of people understanding that our views are sincerely held. My views are sincerely held. I have my own strong religious convictions. I don’t appreciate people suggesting that somehow I didn’t listen to them or I came to a view of convenience any more than Tony and other people who came to a different conclusion should have the suggestion thrown at them.

TRIOLI:

But do those people…

TREASURER:

That they shouldn’t have the right to their own deeply held religious convictions.

TRIOLI:

But those deeply held views as genuine as they are on all those subjects do they make you then an unusual conservative and perhaps conservative doesn’t quite fit the contemporary model?

TREASURER:

Look I don’t know about the word conservative. I am very conservative with some issues Virginia. You know I am married to one wife with three children and I live in a suburban house and you know I clean the pool on a Saturday afternoon. You know me, I am not some raging clubber. And I am very conservative on finance. I believe in balanced budgets, low taxation, low inflation, I believe in business opportunities. So you know, I am very conservative on some things. People might say oh you are not conservative enough. Well you know, Virginia, the fact is, I am a member of the Liberal Party. That is what it is actually called.

TRIOLI:

And the word Liberal is (inaudible)?

TREASURER:

Well, you know, that is what it is actually called. You know me Virginia I don’t think you would regard me as some “trendoid”. I think in the ABC frame of reference I would be very much on the right hand side.

TRIOLI:

I don’t think trendiness is the accusation but nonetheless we only have a couple of minutes left just a couple of quick issues if we can race through them. Were the AFP wrong on the Bali nine to take the frantic warnings of the parents of Scott Rush and let the boy go through with it and expose him and others to the death penalty? Would you have liked them to have done it differently?

TREASURER:

I think the AFP had to co-operate with the Indonesian authorities and they had to stop drugs getting into Australia.

TRIOLI:

The Indonesian authorities could have co-operated with us and said we will pick them up on the plane.

TREASURER:

All very well you know with the wisdom of hindsight to say we could have done this, we could have done that and we could have done another thing. You know, but suppose with the wisdom of hindsight they hadn’t done anything and this heroin had got on to the streets of Australia – how many kids would that have killed?

TRIOLI:

So the AFP is right now to keep saying in the same circumstances they would do it all again…

TREASURER:

I think so.

TRIOLI:

…with the benefit of hindsight?

TREASURER:

Yes. I think so. I think the AFP was apprised of information that an illegal drug shipment was going to take place, they told their Indonesian counterparts and I think they were right to do so.

TRIOLI:

And how far is the Government prepared to push its relationship with Indonesia to get those two death sentences converted?

TREASURER:

Well look we will make representations. Australia is opposed to the death penalty and we will make representations because they are Australian citizens. But you know, I will just make another point, it is worth making this point. You know, anybody who thinks transporting heroin isn’t a serious offence ought to use this as an opportunity of a wake-up. If somebody gives you a ticket and say go to Bali and have a holiday and by the way I would like you to bring a package back, don’t. Don’t do it. The consequences could be life in jail or worse.

TRIOLI:

Treasurer, ever considered going quail shooting with John Howard?

TREASURER:

I am not much of a shot myself.

TRIOLI:

Not a good shot?

TREASURER:

No.

TRIOLI:

That could be an interesting afternoon.

TREASURER:

I am not a good shot and I wouldn’t trust my aim.

TRIOLI:

That could bring about very interesting results. Mr Costello good to have you on the programme.

TREASURER:

Good to be here. Thanks very much Virginia.