TRANSCRIPT

THE HON PETER COSTELLO MP
Treasurer

Interview with Steve Price, 2UE
Tuesday, 15 April 2003
7.30 am

 

SUBJECTS: Labor Party; Tax; Property Prices; Stamp Duty; Drought; HIH Royal

Commission; Gallipoli; Leadership

(Introduction regarding opinion polls)

PRICE:

We are headed of course next month to another Budget. On the line is the Treasurer,

the man who will put together his eighth Budget. Good morning.

TREASURER:

Good morning Steve.

PRICE:

You must feel pretty confident given those figures?

TREASURER:

I think the problem with Labor is it is not just a question of leadership it

is policies, Steve. And with Mr Crean, he has never been prepared to stake a

position on policy. We saw that when we were doing tax reform. He opposed all

of the tax reform and then when they got to the election they decided to keep

98 per cent of the GST, I think it was, after opposing it for three years. You

have seen it in relation to Budget measures, he votes against all of the Budget

measures and then claims he wants to have balanced Budgets. And you can’t fool

the public for a long period of time.

And if you have got no policies, and I guess the most recent example was over

Iraq, then the public sooner or later wakes up to it.

PRICE:

But are we the ultimate losers in that? Because without a strong Opposition,

obviously the Government is not pushed as hard as it possibly could be. You

need a strong Opposition I think to have good Government don’t you?

TREASURER:

Well I think you need some kind of coherent policy. Let us take economic policy,

Labor has made a habit of voting against all Budget measures, and then it says,

oh, we are in favour of balanced Budgets. It is absolutely incoherent. Now if

you had a Labor Party that was prepared to vote for Budget measures then it

could say that it was interested in economic policy and we could have a decent

argument about economic policy. But whilst it has this mindless opposition to

defeat at all costs everything the Government is trying to do, but then try

to claim credit for the benefits, you are not going to get a good economic debate

in this country.

PRICE:

We pay too much tax.

TREASURER:

Well, Steve, we pay less tax as a consequence of the tax reforms which we

introduced in 2000 and the Government’s view is that consistent with providing

good social services which is what we want to do, we always want to keep taxes

down. Yes of course we do.

PRICE:

We pay too much income tax and there is quite a debate going on now isn’t there

about the number of levies and other taxes, hidden taxes, that we pay. Is there

no room given, I know Iraq has complicated the situation, but was there room

before that for us to have some genuine tax relief particularly for those on

middle incomes?

TREASURER:

Well, let me say we pay less tax as a consequence, income tax as a consequence

of the reforms we put in place in 2000 when 80 per cent of Australians were

put on to a 30 per cent maximum tax rate. We wanted to take it further as you

know. We wanted to increase the higher thresholds but again it was voted down

by the Labor Party in the Senate. So, those tax reforms reduced the income tax

take as a consequence. And now as I said earlier, consistent with good social

service, consistent with meeting our defence commitments, consistent with running

an economic policy which will keep interest rates down, we always want to have

the lowest taxes possible and that is why we have got to keep our expenditures

in check and again I say to the Labor Party, if the Labor Party wants decent

economic debate in this country it could pass last year’s Budget measures.

PRICE

But what…?

TREASURER:

Which still aren’t passed by the way.

PRICE:

But what do you say to the voters who say we want tax relief?

TREASURER:

Oh well I say…

PRICE:

…forget about the Labor Party?

TREASURER:

…well, no you can’t Steve. You see, because they are still voting down last

year’s Budget measures in the Senate. You can’t. You see, you say they have

no public support. But they still have enough support in the Senate to try and

frustrate good economic policy. That is my point. And my point is this, that

if Crean wants to become respectable again, he has got to give up this policy

of opposition for the sake of opposition.

PRICE:

We will talk to you about him in a moment. I mean it is doubtful now that he

will even survive. There was speculation at the weekend that the property boom,

particularly on the east coast, might be over. Do you get any sense of that?

TREASURER:

I get a feeling that the increase in prices is slowing, yes I do. I think

that prices are probably stabilising. And I don’t think that is a bad thing,

incidentally. We had very large price rises through the course of the last several

years and sooner or later prices have got to stabilise and I think there is

evidence of that happening, yes.

PRICE:

We have had State Governments, particularly here in New South Wales, cashing

in on stamp duty from the sales of property. Now, do you think they are making

the best use of that increased tax revenue that they really came as a bonus

to them?

TREASURER:

Oh, it came as an absolute bonus to them. When you have properties rising,

I think in Sydney in a year something like all of 20 or 30 per cent…

PRICE:

We had a knockdown house in Bronte the other day sold for over $4 million.

TREASURER:

Well, in a year this is, I am talking average prices going up something like

20 to 30 per cent, that is across the whole of Sydney, the fact of the matter

is that they just get a huge stamp duty windfall. And that is what they have

been doing. And now sure they have been profiting. Steve, when the housing sector

had a downturn in early 2000, the Federal Government in order to stimulate it,

announced that it would increase the First Home Buyers’ bonus from $7,000 to

$14,000…

PRICE:

And it worked.

TREASURER:

And it worked. And we said to the States at the same time, why don’t you forego

stamp duty? We are stimulating the market, it would be an unfair bonus if you

kept all of your stamp duty. Why don’t you help the homebuyers at the time by

foregoing stamp duty?

PRICE:

A lot of us thought that when you introduced the GST that a lot of those taxes,

those State taxes, would go. Now because of the distribution of GST money to

the States, it hasn’t happened.

TREASURER:

Well the ones that went immediately Steve, bed tax, stamp duty on shares,

the financial institutions duty which was the tax when you put money into your

bank accounts…

PRICE:

Yes. A rather ridiculous tax.

TREASURER:

Yes. The next one to go is the bank accounts debits tax. That is the tax, the

State tax you pay when you take money out of your bank account. And in fact

New South Wales is already moving on that front. And we will get that out, we

will get all the States to abolish that I hope 2004-2005.

PRICE:

But you haven’t got Bracks or Carr putting their hand up saying you can have,

we won’t levy stamp duty?

TREASURER:

Yes, well that is the next move. We start moving down then into stamp duties

on mortgages and leases, and that kind of thing. But it is a question of keeping

the pressure up on the States because, as you say, the States get all of the

GST revenue, in return, we are going to keep asking them to reduce and eliminate

those taxes.

PRICE:

The situation with the drought, good news finally, I spoke to some farmers

in the north-west this morning, they had had 2 inches of rain over the past

24 hours.

TREASURER:

Yes.

PRICE:

The drought has obviously had an impact, has it not, on the drafting of this

Budget?

TREASURER:

Oh sure. This has been the worst drought in a century. And as you know Steve,

every farmer in New South Wales, subject to an assets test, is now eligible

for income support, and they need it too.

PRICE:

Which were dollars you hadn’t factored in?

TREASURER:

Well, hundreds of millions of dollars, but it is not just that expenditure

of course. It is the fact that because they are not getting the farm production

we are not earning the exports that we otherwise would have earned as a country.

So, we have been through a pretty rough 12 months – international down-turn,

high oil prices, war, and drought. And normally the Australian economy would

be in severe recession by now. The fact that it is still growing indicates how

resilient it has been.

PRICE:

HIH Royal Commission. When will that report be released?

TREASURER:

Well, Steve, I hope that we could release it before Easter.

PRICE:

So, in the next two days?

TREASURER:

Well, subject to anything my colleagues might have to say, yes, yes.

PRICE:

But that is the plan?

TREASURER:

Yes.

PRICE:

And so we would see it before Easter?

TREASURER:

Yes.

PRICE:

That’s a guarantee?

TREASURER:

Well, I said subject to anything my colleagues should have, I have got the

report now. I will be recommending to them to release it before Easter, yes.

PRICE:

Can I ask you, and no one can interview you these days, it appears, without

asking you about leadership. I mean I find it all very boring, really to be

honest, but do you think the Prime Minister will continue?

TREASURER:

Well, Steve, all I can say to you is that he has announced what he will do

later in the year and obviously…

PRICE:

July 26^th…

TREASURER:

…obviously we will all be interested in that announcement and I can’t add

anything to that. He has indicated what he intends to do.

PRICE:

You’re going to go to Gallipoli for ANZAC Day. Now, this ANZAC Day, look, I

think ANZAC Day is the most important day in our calender…

TREASURER:

Yes…

PRICE:

…but it is even more potent this year, isn’t it, given that we are serving

overseas…

TREASURER:

Yes.

PRICE:

…why have you chosen to do that and are you concerned about these problems

with security there?

TREASURER:

Well, I should say that the Department of Foreign Affairs has issued travel

information in relation to Gallipoli, and anyone that is thinking of going should

read that carefully from the point of view of their own safety, as I have. And

it indicates certain steps that you should take in relation to safety. But having

said that, Gallipoli is a sacred place for Australians. It is the place where

Australian troops first went into battle. It was the definitive moment in combat

for our country which had formed some fourteen, fifteen years before. And as

a result of that ANZAC Day is the important day of our calendar. And I just

think it is a wonderful opportunity and a privilege for me to be able to go

there.

PRICE:

How did that trip come about?

TREASURER:

Well, it is customary for somebody on the Government to be at Gallipoli. But

from a personnal point of view I have never been before, but I just thought

at a time when Australian troops are in combat in Iraq, which is not far from

Gallipoli, actually. As you know, Iraq borders Turkey, Gallipoli is on the west

side of Turkey and on the southern side is Iraq. So young Australians again

in battle in that part of the world. I just thought it was a wonderful privilege

and opportunity to be there at Gallipoli on ANZAC Day.

PRICE:

It would be a very moving time to be there I’d imagine. Have you read the Les

Carlyon book on Gallipoli?

TREASURER:

Fabulous book, one of the best books I have ever read, and when he talks about

walking across the battlefield and describes it. And the part that I really

like is when he talks about some of the young characters that landed that day

and what they did, and how they stormed the heights, they scaled the heights

which we never saw again during the whole of that campaign. Just a beautiful

book I reckon.

PRICE:

And I would be prepared to bet that I could tip where you have been for about

the last fourteen or fifteen ANZAC Days?

TREASURER:

I have been to every one of those games, in fact, this will be the first one

that I have missed. The only, that’s the only negative about going to Galipolli,

I am taking a bit of flak over that Steve.

PRICE:

Just finally, as I leave you, do you think that Simon Crean will survive and

do you think it is a possibility that Labor might be tempted to bring back your

old adversary, Kim Beazley?

TREASURER:

Well, obviously they are working on all of that kind of thing. And I do not

want to advise them on what to do, Steve, because I don’t have their best interests

at heart.

PRICE:

Very good answer. Good on you. Okay.

TREASURER:

Thanks very much.