TRANSCRIPT
THE HON PETER COSTELLO MP

Treasurer

Interview with Steve Price

2UE

Thursday, 25 November 2004
4.20 pm

SUBJECTS: Productivity Commission Report into Ageing, James Hardie,

Michael Long

JOURNALIST:

The Treasurer Peter Costello is just back from a meeting of the G20 economic

ministers in Berlin, he is on the line from, I don’t know where, Canberra

or Melbourne, afternoon Treasurer.

TREASURER:

Sydney actually Steve…

JOURNALIST:

Sydney.

TREASURER:

…it is good to be with you.

JOURNALIST:

It is very nice to have you with us. I am a baby boomer and you are not,

I can’t get used to the fact that you are younger than I am.

TREASURER:

Well, look in the mirror.

JOURNALIST:

Yes exactly, thank you very much. What do you think? Is there going to

be a black hole or is it going to be a golden boom?

TREASURER:

We have got some difficult cost pressures coming up because the number

of people of workforce age up to 65 is going to be more or less constant

and the number of people past workforce age is going to grow. So, you are

going to have more people in retirement compared to the number of people

in the workforce. That is the first point. The second point is that as you

get older you tend to draw down more heavily on healthcare and pharmaceuticals.

Just to give you one of the findings of this report, men over 65 use pharmaceuticals

at 18 times the level of men in their twenties.

JOURNALIST:

Wow.

TREASURER:

So, as our population ages the draw down on healthcare and on pharmaceuticals

is going to increase. Now, we are talking about what is going to happen

in 40 years time so there is a long lead time.

JOURNALIST:

Is it possible to project out that far?

TREASURER:

Yes, we know what the population will be Steve because it is already set

in stone. This is the consequence of changes in birth rates which occurred

in the 1970s and as life expectancy now at 70 or 80 years, it is the changes

that occurred 30 years ago that are going to determine where we are in 40

years’ time.

JOURNALIST:

I guess that is the other imponderable that medical research will continue

apace and we can’t really accurately predict how much longer people

are going to live for. I mean we will all live longer than our fathers lived

before us, who lived longer than their grandfathers fathers before them.

TREASURER:

Absolutely. When the aged pension was introduced back in the 1920s and

you get the aged pension at 65 for men, life expectancy was 67 so the aged

pension was thought to guarantee you an income for two years. Life expectancy

now is about 85 so that is 20 years in retirement. Kids that are being born

today are going to live into their nineties and with the advance in medical

technology, I think in 40 years time you are quite right, life expectancy

could be much longer than we now know. You see…

JOURNALIST:

So do we need a re-think do we on the pension age?

TREASURER:

…well, what I would like to do is get people to work to pension age

which is…

JOURNALIST:

Because is seems a bit silly doesn’t it Treasurer, to have the pension

age of women at 60?

TREASURER:

…well, the thing is that many people don’t even work until

pension age now. You can get your superannuation at 55, people were encouraged

for a while to retire at 55. My message is we should encourage people to

stay in the workforce until 65. That, with medical advances, with people

in much better health and with most people living into their eighties, if

you retire at 55, that is 30 years in retirement.

JOURNALIST:

I have just got a feeling that many, many people were working past that

age and I guess I get that from my own parents experience where my father

is 74 and still working so he has gone way beyond it so…

TREASURER:

Well if he can do that well and good, but a very large proportion of Australians,

particularly men, are retiring at 55. Now, if you are going to keep kids

in school until their late teens, by 55 you have been in the workforce for

35 years, you might live another 30 years and 35 years in the workforce

is not going to be enough to support 30 years of retirement.

JOURNALIST:

If I get to 55 my youngest daughter will be 11. I better not be retiring,

who is going to pay the school fees?

TREASURER:

You got a late start in life Steve, you should have got on with things

at an earlier age.

JOURNALIST:

Thank you. What were they telling you in Berlin about the world economy?

TREASURER:

Well, there are two problems that the world outlook is facing at the moment.

The first as we know is oil prices which are affecting all the economies

through the world and we are feeling it at the bowser. But we have been

protected a little bit more recently by the second problem, our currency

has gone up and that has actually insulated the price of fuel a bit in Australia

but the American dollar is diving, well is falling, I should say, against

other currencies. And this is making adjustment much more difficult so,

these are two very large issues which will affect the global economy. Having

said that, the world economy is growing but if it weren’t for those

two factors it could be growing stronger.

JOURNALIST:

Can I just ask you off the economy, the James Hardie debacle, it seems

to go from bad to worse. We have got Premier Carr here today saying look,

this company does have to fact up to its responsibilities, we have got a

suggestion that this arm that was paying out the compensation may have to

go into the receivership, is it not time for the federal Government to take

carriage of this?

TREASURER:

Well James Hardie has to acknowledge its responsibility and it has to put

aside adequate amounts of money to compensate the victims. There are no

ifs, there are no buts, James Hardie has to accept its responsibility and

I think the directors of the company have got to understand that point and

they have got to set aside the money to do it and that is a message that

I am giving them very, very strongly. Now, in all of that there will be

a lot of legal manoeuvring but frankly I would say to the company forget

the legal issues, forget the restructuring issues, just get on and fix it

and make sure that there is enough money for the victims because otherwise

the company’s position will be very, very much worse.

JOURNALIST:

Canberra is keeping a very close watch on this?

TREASURER:

Absolutely and we have also funded the corporate regulator, ASIC, to investigate

whether or not there have been any breaches of the law and if there has

been anybody associated with the company that has breached the law, then

they can expect proceedings to be taken against them.

JOURNALIST:

One of your favourite Australians, Michael Long, is walking to Canberra

to talk to the Prime Minister. Would you introduce him given how much pleasure

he has given you over the years?

TREASURER:

Yes I would be happy to do that if that, if I were asked to be of assistance…

JOURNALIST:

I should explain Michael Long is an Essendon footballer and the Treasurer

is a very strong Essendon supporter.

TREASURER:

…it might take him a while to get there though he has got blisters,

I think he is near Seamore at the moment, quite a way to go.

JOURNALIST:

He has got a long way to go. It was nice to talk to you.

TREASURER:

Good to be with you Steve, thanks very much.

JOURNALIST:

Thanks for your time.