TRANSCRIPT
THE HON PETER COSTELLO MP

Treasurer
Doorstop Interview

Department of the Treasury

Thursday, 6 May 2004
12.00 noon

SUBJECTS: Retail trade, economy, Budget

TREASURER:

Well, today’s retail trade figures showed that retail trade increased

by 0.7 per cent for the month and 8.4 per cent through the year which are strong

figures. If you look through the monthly to the quarterly volume figures, you

will see that volumes rose by 0.4 per cent for the quarter giving an annual

rate of 7.7 per cent. Now, that annual rate is a very strong rate, but the March

quarter shows that there has been some moderating and that is consistent with

what we think, that retail trade and consumption will moderate somewhat through

the year, and that as the world economy picks up, Australia’s composition

of growth will change somewhat from domestic sources of growth to a bit more

of a pull from international growth.

Having said that, the consumer in Australia still appears to be confident,

levels of confidence amongst consumers are high, that is supported by low interest

rates and unemployment which is at 23 year lows. The important thing with economic

management now is to keep the confidence in the Australian economy in a difficult

world environment with rising interest rates, and to make sure that we don’t

lose sight of the importance of economic management which we will be doing in

this Budget.

JOURNALIST:

Do you think that it would be a good thing Treasurer if Australia’s growth

switched tracks to a more international focus?

TREASURER:

I think it would help us if we were to get more of a lift from the external

side of the economy, and I think we may well see that in the course of the next

year because the United States has been in recession, its economy is starting

to recover, Japan has been in recession more or less for ten years and it may

be starting to recover, so we may get a little more help from the rest of the

world than we have had over the last two or three years. Over the last two or

three years, Australia had to do it itself, with domestic sources of growth

whilst most of the rest of the world was going through a recession one way or

another.

JOURNALIST:

Will this be your most generous Budget of your career?

TREASURER:

This Budget will continue a tradition of sensible economic management. You

don’t want to think that we are home, that there are no further risks.

Global interest rates are going to rise over the next year, it looks as if we

could have threat from drought again, there are some places where the drought

has not yet broken, and we have got to manage the switch from the domestic economy,

hopefully to growth coming from outside. So, it is a difficult time and it will

require quite a lot of management.

JOURNALIST:

Latham is already claiming that the Budget won’t be able to be believed,

they are campaigning already on it.

TREASURER:

Well, Mr Crean does not have a clue what is in the Budget but he is already

against it. Well, that figures. Mr Crean would be the most negative person in

Australian politics, and just when you thought the Labor Party had got rid of

him, he jumps out of the cupboard again. Keep your eye on him.

JOURNALIST:

Will the Budget deliver reform on some fronts?

TREASURER:

Yes.

JOURNALIST:

In view of the concerns that you have outlined about the future and the fact

that rising interest rates are probably the biggest fear of Australian consumers

and home buyers, wouldn’t it be wiser to keep a larger rather than smaller

surplus and to resist the temptation to pare down that surplus because of the

imminent election?

TREASURER:

Well, I think it would be prudent to keep the Budget in surplus, I think that

is very important, and that is why we will be keeping it in surplus. There aren’t

that many countries around the world that will have surplus Budgets in the forthcoming

year. The Americans won’t, the French and the German’s won’t,

the British won’t, the Japanese won’t. So, that is why I think it

is important to keep the Budget in surplus and our responsible economic decision

making will continue.

JOURNALIST:

Much of the Budget has already been announced or leaked or speculated about,

will there be any surprises on Tuesday night?

TREASURER:

You will have to come along and see.

JOURNALIST:

Will it be worth turning up?

TREASURER:

If I told you now, then you wouldn’t even turn up, would you? You are

complaining on the one hand that there aren’t any surprises and then you

are asking me to detail what those surprises are if there are any. I mean, you

are a searching mob, you lot.

JOURNALIST:

Treasurer, given that retail spending does remain strong, consumer confidence

as you said remains strong, is there a case for tax cuts?

TREASURER:

Look, the principle that we have is this, after we fund Australia’s defence

and security and invest in Australia’s health and education and social

system, if we can keep the Budget in surplus, then taxpayers should be entitled

to a return. That is what we did last year…

JOURNALIST:

But is that fiscally responsible?

TREASURER:

…now, doing all of that is going to be tough, but that is why we are

working on it.

JOURNALIST:

Do you still regard the top threshold as a major priority?

TREASURER:

Well, I have said what I have said.

JOURNALIST:

Mr Latham is meeting the ACTU and associated union leaders in Sydney today

to discuss among other things the balance between work and family, the ACTU

says new research shows that the Howard Government has short-changed low and

middle income earners and that more needs to be done. Will their fears allayed

by Tuesday’s Budget?

TREASURER:

Well, the ACTU is a constituent part of the Labor Party and as you would expect

will be campaigning for the Labor Party in the next election as it has in every

election since Federation, so I wouldn’t take the ACTU as some independent

authority on anything.

JOURNALIST:

Treasurer, was yesterday’s minimum wage decision extravagant or excessive

as some business groups claimed? Was it too much?

TREASURER:

Well, the Government case was $10, I think, we think that would have been more

consistent with getting better job opportunities for low income earners for

people that are out of work and to the extent that it was in excess of that,

it will make it harder for people to get jobs, yes it will.

JOURNALIST:

Treasurer, this is your ninth Budget, are you feeling weary and how many more

do you think you have in you?

TREASURER:

I am feeling absolutely energised by the task that is in front of us, and I

can assure you that we will be sitting down and we will be doing what is best

for Australia, that is what we are going to be doing. Last question.

JOURNALIST:

Will this Budget be any different to your last eight, and if so, how would

you characterise it?

TREASURER:

It will be quite different. It will be the ninth, rather than, one, two, three,

four, five, six, seven and eight.

JOURNALIST:

Is this your last visit to Treasury before the Budget?

TREASURER:

No it is not. No, I will be locked up here for the rest of the week and much

of the weekend as well. Thank you.