Ministerial Council meeting,  Beer,  Budget surplus

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Labor’s Banking policy
March 27, 2001
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Labor’s Banking policy
March 27, 2001
Dollar,  Interest Rates,  Backbenchers
March 31, 2001

Ministerial Council meeting,  Beer,  Budget surplus

Transcript No. 2001/028



Hon. Peter Costello MP



Friday, 30 March 2001

9.00 am

SUBJECTS: Ministerial Council meeting, Beer, Budget surplus


Well good morning. Today we’re having the second meeting of the Commonwealth State

Financial Council which is to discuss relations between the Commonwealth and the States

and today’s meeting will decide on the allocation of GST revenue between the States.

Every last dollar of GST is paid to State Governments and the GST which is paid to the

State Governments now funds every teacher in every classroom in every school in every

State. It now funds policemen on the beat in all of the State capitals and we’ve got

five Labor States here in Canberra today all demanding their share of GST. The only thing

you’re not hearing today in Canberra is any State Labor Treasurer calling for

rollback. Rollback is the word which is not on the lips of any State Government. It just

shows you how out of touch Beazley and Crean are. Beazley and Crean are running around

about rollback – not one State Labor Government is interested in that because they know

rollback means you either take teachers out of classrooms, policemen off the beat or you

put up income taxes.


Do the so called donor States have a point when they say that Queensland is receiving

too much money under the current allocations?


Well the current allocations of the GST revenue are done by an independent umpire

– the Commonwealth Grants Commission. It’s always been done that way. And since

the beginning of Federation there have always been cross transfers from the larger States

to the smaller States. But if any of the State Treasurers, if all of the State Treasurers

want to agree on a new formula that’ll be put in place. The Commonwealth will just

pay out according to the formula agreed by the States. But if the States can’t agree,

we’ll pay out on the independent umpire’s decision.


Do you think that…?


The important thing is what do we pay out? We pay to the States the revenue of the GST.

What’s happening here today is Labor States descending on Canberra to demand their

share of GST. Not one of them is talking about rollback. Not one of them. It’s a

complete repudiation of the Beazley- Crean line. They’re out talking about rollback,

the Labor Treasurers are rolling up to take their share of GST revenue. It now funds every

teacher in every classroom in every State, it now funds the policemen on the beat and if

you want rollback take teachers out of the classroom, take policemen off the beat but

don’t go on with this nonsense about rollback.


Are you enjoying this, enjoying this sort of apparent bickering amongst the Labor



Oh well look, the good thing about it is we have reformed Commonwealth financial State

relations. We have put in place a situation which gives the new certainty to both

Commonwealth and State arrangements and what you’re seeing is that the States that

know a thing or two about economic management won’t have a bar of the Beazley and

they won’t have a bar of the Crean performance.


Treasurer will the Budget surplus be put under further pressure by any deal to reduce

the excise on beer?


Of course it will. Let’s, let’s make this point that the Labor Party is

voting against measures which are designed to keep the Budget strong. It’s their

policy to try and drive the Budget into deficit. Let’s make no mistake about this,

the Labor Party votes against measures which the Government had in it’s tax package,

which it took to the election, which it now has collected, if it votes down that

legislation it is trying to drive a hole in the Commonwealth accounts. The Labor Party is

trying to drive the Budget into deficit. That’s been their tactic all along.


(inaudible) drive it into deficit?


Now, where they get support from the Democrats that takes a toll in relation to the

financial accounts.


Will this drive it into deficit?


Look, if the Labor Party had its way, Australia would still be in deficit by $10

billion. They never accepted the fact that the Budget should be put into balance. They

fought us on every measure to do it and ever since they’ve been fighting every

measure to keep it there. Now we have to make sure that we can outflank them to keep good

economic policy. But what you’re seeing here is an episode where the Senate which is

now, has a majority of Labor and Democrats is doing what it can to put pressure on the

Budget. It’s a tactic to try and put pressure on the Budget, to try and drive up

interest rates, to try and get the situation back to the way the Labor Party likes it

– big deficit, big interest rates.


Is there enough pressure to put the Budget in deficit?


We are always fighting for good economic policy. And we always try and outflank the

Labor Party. But you got to understand this, their strategy is to try and vote to put the

Budget into deficit, to drive up interest rates, to talk down the economy.


But can you rule out going into deficit?


The good thing from our point of view is that we consistently outflank them.


Can you rule out going into deficit over this beer deal?


Well we’ve made it entirely clear in relation to the accounts that we’ve

tried to build a strong surplus and notwithstanding the sabotage of the Labor Party and

the Democrats I think we can continue to maintain that good strong economic policy.

That’s my intention.


And (inaudible) the surplus?


And that’s my intention to do that yes it is.


Can you maintain the surplus?


And it would be made much easier, and I said we built a strong position to withstand

the attacks of the Labor Party and keep the Budget in balance. And I think we can do that.

But I make this point. We could do it much easier if the Labor Party were not engaged in a

campaign of sabotage. People have got to understand this. The Government can only maintain

an economic policy if it can get its legislation through the Parliament. You’ve got a

sabotaging Senate it puts that at risk. Now I think we’ve got the accounts into such

a position that we can withstand those assaults. But we have a deliberate campaign of

sabotaging against that. Thanks very much.