Oil Prices; Mitsubishi; Labor’€™s Tax confusion – Doorstop Interview, Perth

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May 18, 2004

Oil Prices; Mitsubishi; Labor’€™s Tax confusion – Doorstop Interview, Perth



Doorstop Interview

Sheraton Hotel, Perth

Monday, 17 May 2004

2.20 pm

SUBJECTS: Oil Prices; Mitsubishi; Labor’s Tax confusion


Mr Costello, are you concerned about the impact of higher oil prices on your



Well, higher oil prices are reflected at the bowser and as you have seen petrol

at the bowser has gone above $1 a litre, that will be tough on consumers, there

is no doubt about that and many people will feel that in their pockets, but

the important thing to know is that this is nothing to do with Australia. This

is the world oil price, the world oil prices are at record levels, or equal

record levels with the price it was during the first Gulf War and it is a consequence

of international developments. We in Australia as you know, cut our petrol excise

some three years ago and the petrol excise has not risen since, in fact if we

had been indexing petrol excise it would be 5 cents a litre higher today than

it actually is, so unfortunately we will just have to ride out the world international

oil market prices.


How much of a concern then is it that it could eat into your surplus without

any possible role on behalf of you?


Well, it won’t affect bottom lines. The world oil price is one of several

variables that we feed into out forecasts for growth. As it stands, the important

thing is what happens over the course of the year and it is far too early to

try and make a prediction now as to what the oil price will be in June of next



You have mentioned petrol excise, can you do anything? Is there anything the

Government can do to hold down the price of fuel?


The Government has no control over the world oil price. The world oil price

is set by international supply and international demand, and at the moment one

of the reasons why it is so high is because of the instability in Iraq. The

last time you saw prices at this level was during the first Gulf War and until

those international factors work out we will be affected by it here in Australia,

but it has got nothing to do with a government policy or a tax or anything else,

nothing has changed in relation to taxation arrangements except that we cut

the excise 3 years ago and it hasn’t risen since, this is an international



Are you concerned about any impact on inflation that the high oil price might



Well, oil prices will affect petrol prices and that feeds into the consumer

price index but the consumer price index is very subdued at the moment and as

I said, when you are framing budgets you are not looking at so much what the

oil price is now, you are looking at what the oil price will be at 30 June 2005,

and anyone who thinks they can tell you what the oil price will be on 30 June

2005 knows so much they ought to become an international commodities trader.


Are you concerned about the number of job losses in Adelaide due to Mitsubishi’s



Well, I think we would all like to see a profitable, stable Mitsubishi Australia

and the Government has assisted Mitsubishi Australia on numbers of occasions.

The issue at the moment has got nothing to do with Mitsubishi Australia, it

is the Mitsubishi Corporation of Japan, and in particular whether or not the

owners of the Mitsubishi Corporation of Japan, Ford Chrysler, are able to pay

extra capital or find somebody else who will pay extra capital, so this is a

matter which is now much bigger than Australia and the future will be worked

out I expect in Tokyo.


What is your response to the criticism of tax cuts, I hear Labor saying they

could be a lot broader and a lot fairer, what is your reaction?


Well, the Labor Party is now in a state of total confusion. On the one hand

they say they will pass the Government’s tax cuts, and then they have

an Assistant Treasurer who today says if Labor gets elected they might take

them back again. You had Mr Latham saying he wanted tax cuts for everybody and

Mr Crean saying it couldn’t be done, and the trouble with the Labor Party

now I think is they have made so many promises to so many people that their

heads are spinning and there is only one way Mr Latham can clarify this, he

says he is for tax cuts, tell us what they are, tell us the rate, tell us the

threshold, tell us how much they will cost, tell us where you will get the money

from. But until he does that, then he is just wildly making promise and counter

promise and frankly he has no credibility.


Well corporate Australia is not happy either, they say they are paying for

the tax cuts.


Well, corporate Australia is more profitable than it has ever been, the profit

share to the Australian economy is the highest level ever and that is because

we have run a strong economy and I think it is a good thing actually that companies

can become profitable because when they become profitable they can employ more

people and in addition to that the company tax revenues are strong, but lets

bear this in mind, this Government cut the corporate tax rate from 36 per cent

to 30 per cent.


Do you think that Labor needs to offer a guarantee to the Australian people

about its intentions regarding the tax cuts and other benefits that you have

included in your Budget?


Labor needs a policy. Mark Latham has been running around promising everything

to everybody, waffle, motherhood statements, but he won’t give any detail

and he won’t tell you what his policy is, that is because he doesn’t

have one. So, until Labor does the work, and until Labor announces a policy,

you can’t take it seriously and that is why they are in near total confusion



What does it say about the relationship between Mark and his Ministers?


Total, you now have a party, a Labor Party which is in total confusion. The

policy doesn’t just vary from day to day, it varies from hour to hour.

Now, this morning their policy was to enact the Government’s tax cuts

and take them back after the election. Several hours on it has varied again.

You have got the Latham Tuesday policy and the Crean Wednesday policy, sometimes

you have the Latham Wednesday policy and the Latham Wednesday afternoon policy.

I might be the only person in Australia that tries to follow all of these twists

and turns, it is breathtaking, my mind is spinning, but however fast it is spinning

trying to keep up with Mr Latham, it is not spinning as fast as his mind in

making all of these claims and counter-claims, and the only way he is going

to be able to do anything about it is announce the rates, the thresholds, how

much they will cost, where you will get the money from and until that time you

can hardly take him seriously. Thanks.