Melbourne Convention Centre: Budget, Republic, Interest Rates

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Address to the Financial Planning Association Annual Convention Centre
November 11, 1999

Melbourne Convention Centre: Budget, Republic, Interest Rates

Transcript No. 99/80

The Hon Peter Costello MP

Doorstop Interview

Melbourne Convention Centre
11.45 am
Friday, 5 November 1999

SUBJECT: Budget, Republic, Interest Rates


Mr Costello, the Budget forecast, the revisions are to be released this

month, can you give us a more definite timeframe, a date in November?


Well, well release it as soon as its ready. We hope that well be able

to release the Mid-Year Review in mid-November, but at the very latest a

bit after that. Were working on them at the moment and when its ready

well have it all there for you.


Are we going to see our annual growth this year revised upwards?


Well, we put out a forecast of around about 3 per cent in the 1999/2000

Budget, which is a bit of a slowing on last year, but still by world standards,

quite strong. Were looking at that growth forecast and it may be that we

can revise, its more likely to be revised up than down, if it is revised,

but well see by the time we put out the forecast.


With just 24 hours to go, how are you feeling about the vote tomorrow?


Look, I think its a wonderful opportunity tomorrow for us to set the future

course for Australia. I think that in their hearts and in their heads, Australians

feel republican. Our Constitution is a constitution which provides Australia

as a Constitutional Monarchy and its served us well over the past. But

I dont think its the modern symbol of Australia and I dont think its

the symbol for the next century. We have an opportunity at the Referendum

tomorrow to make sure that our Constitution reflects whats in our hearts

and in our heads. And I think that in our hearts and in our heads we feel

republican. And with a Head of State performing the duties that are currently

performed by the Governor-General, that is a modern symbol for Australia,

a President, I think will have more enduring symbols for the next century

of Federation.


If were denied that symbolic change, how much of an embarrassment will

it be firstly to Australia, and secondly to our Prime Minister?


Well, I think if on Sunday, Australia is still a Constitutional Monarchy,

many people will feel that its been an opportunity missed. And as we go

forward our hearts and our heads will be telling us were republican and

our Constitution will be telling us were monarchists. And I think the Constitution

will start bruising the reality. It will be telling us something we dont

feel. And I think that will give us some difficulties. It will be hard to

explain it to ourselves as to why that happened. I dont think theres any

reason why people should feel threatened by the change. In fact, I think

a Yes vote will mean Australia going on in a much more normal way after

Saturday than a No vote because a No vote will be said by some to mean,

we feel monarchist. It will be said by others to say, no, no, no, we feel

radically republican. And I think youre going to get a very large argument

about what it actually means and what it actually achieves. So, Id like

to see the Constitution reflect what I think has happened in our hearts

and our heads. And I think thats that we now think of ourselves more in

republican terms then in terms of monarchy.


What does your politicians gut feeling tell you about the result? Do you

think its going to succeed?


Look, my guts tell me no more than the polls. I look at the polls, I think

theyre the best indicators. And you would have to say, in the polls there

is obviously a lot of people that are still worried about change. And to

those people Id say, this is safe, its secure, life will go on very much

as it has, but well have a modern symbol at the head of our nation and

one that well feel much more comfortable with. We dont feel comfortable

anymore when Australia is represented on the international stage with the

Queen representing us. We know that, because if we did feel comfortable

about that wed have the Queen at the Olympics in the year 2000. We know

thats not right, so we have the opportunity to change our Constitution.

To make the Constitution reflect the way in which we really feel.


Treasurer, do you believe the potential inflationary impact of the GST contributed

to the RBAs decision to raise rates on Wednesday?


Well, of course that was not a real or imagined reason for the Boards decision.

The Board made very clear what its decision was based on. Principally based

on the fact that the international economy is much stronger then the last

movement in interest rates when we reduced rates. Now weve been through

the biggest financial and economic crisis of our time in 1997, 1998, 1999

and our whole region was in recession and we needed an accommodative monetary

policy. And what the Reserve said is, as the world economy picks up, it

wants to move further back to neutral. Thats not actually a bad thing for

Australia. That the world is moving back and the world is going to start

adding to our growth rather than taking away, as has been the case over

the last two years.


Do you think given the profits that the banks announced over the last couple

of days theres an argument that they should try to hold any interest rates



Well, there is no grounds whatsoever for any bank to move its interest rates,

its lending rates, more than 25 points, more than 0.25 per cent. I noticed

this morning the Commonwealth Bank moved its rates by 0.25 per cent. There

is no ground for any other bank to do any more than that. Now there is also

opportunities, of course, for banks that want to get customers to move by

less. Im not against that. Its the competitive bank that is going to get

the customers here. But if there is a bank that says, were going to use

a 0.25 per cent movement in official rates to increase our lending rates

more, it is using that as a cover. Theres no grounds to do so and Id say

to consumers shop around and get a competitive deal.


Can you do anything to stop them though?


Ill be watching them very, very carefully. Thanks.