Interview with Fran Kelly

Radio National

Thursday, 16 February 2006
7.35 am

SUBJECTS: RU486, economy, tax, AWB

KELLY:

Peter Costello, welcome to Breakfast.

TREASURER:

Good morning Fran, good to be with you.

KELLY:

Treasurer, your speech in the debate yesterday – the RU486 debate –

caused a strong reaction, many praising you for your candidness, why did you

decide to speak so openly about such a private moment in the Parliament yesterday?

TREASURER:

Well this is a conscience vote. There are no Party positions so every person

has the responsibility to carefully consider the issue and I think outline why

they come to the conclusion that they do. There are strong feelings either way

on this, whatever position you take you will alienate some people, I have had

a lot of representations not only from my own electorate but much wider both

for and against, and I thought I owed all of those people an explanation. Now,

not all of them will agree with me but I hope that they will think that I have

thought about this carefully and conscientiously and my views are sincerely

held.

KELLY:

This Private Members Bill will remove the veto power from your colleague and

dear friend, Tony Abbott as you described him in the Parliament yesterday. Tony

Abbott, the Health Minister clearly sees this decision as an affront to his

authority, does this demonstrate how confused this debate has become and how

personal and emotive? I mean, Tony Abbott equated abortion with murder in the

Parliament yesterday, are things getting out of hand here?

TREASURER:

Actually I think the whole debate has been a very mature debate and I think

it has been interesting because people have taken sincere positions but can

I say on the position of the Health Minister, this is in no way a rebuff to

Tony, I made that point in my speech yesterday. No more a rebuff than the decision

to let the Reserve Bank set interest rates was a rebuff to me as Treasurer.

Parliament puts in place procedures. If those procedures work and bring advantage

then that is a good decision. If they don’t, Parliament can always change

them, can take them away and if it were shown that leaving this decision to

the TGA led to bad decision making, then the Parliament could intervene and

I don’t see this as a question of giving away parliamentary sovereignty

but a determination of parliamentary sovereignty.

KELLY:

Well the Health Minister sees, he seems to see his faith as being under attack

here and he told the Parliament last night that religious faith is not some

contaminant to be driven out of our public lives. Again, is he being too sensitive

here, I mean you are also a man with strong faith, do you feel like that is

how it is regarded in public life, as a negative?

TREASURER:

Well I agree with Tony, religious faith shouldn’t be driven out of public

life and…

KELLY:

But do you think that there is a push to do that or pressure on that?

TREASURER:

…no I don’t, no I don’t. Look, I have very deep religious

faith, not everybody agrees with me, you can’t expect that in a country

of 20 million people but I try and conscientiously exercise it. I am sure that

Tony does the same. People of goodwill will differ, this is the point. There

is no monopoly here on wisdom or conscience, people of good faith will differ

and people of good faith are to be welcomed in public life and I would just

reiterate that I believe that religious faith brings you know, a great addition

to public life but at the end of the day, what are we? 150 representatives of

the Australian people representing diverse areas, diverse views, diverse backgrounds

and we all have to exercise our conscience and the result that will come out

will be representative of the Australian people. That is how democracy works,

you may not like it, there is just no better system, that is the problem.

KELLY:

Treasurer, perhaps inevitably your contribution has already been seen in certainly

a political light but even the prism of leadership. One commentator has written

that you are positioning yourself here as the new leader to update and rejuvenate

an ageing government. Is that overly cynical or is that a reasonable interpretation?

TREASURER:

No, no, look, this is a conscience vote. There are no Party positions, there

are no fixed Party directives. This is one of those occasions in the Parliament

where everybody exercises their conscience. The reason I spoke in the debate

is I have to vote. My constituents are entitled to know what I think, they put

representations to me, they want me to consider them, they want to know what

my views are and so I spoke in the debate yesterday in good conscience along

with all of my colleagues and that is the way it should be understood.

KELLY:

It is 17 to 8 on Breakfast, Peter Costello let’s move to the economy

now, you have been warning in recent days and weeks of the dangers of making

economic decisions in good times based on the assumption that they will go on

indefinitely. Isn’t the truth of it that the good times have been here

for a while now, we have had something close to 14 years of growth and we are

headed for a surplus we are told in excess of $15 billion. What are you so nervous

about?

TREASURER:

Well the point that I have been making Fran, is that the terms of trade have

moved very decisively in Australia’s way and principally because mineral

prices are so high and they are at all-time record highs. And it is just a flip

side on what you are seeing on the oil price by the way, the oil prices are

at an all-time high so other energy prices are also at all time highs and commodity

prices such as iron ore are at all-time highs. This won’t last forever,

it never does and what will happen is that demand will either turn down or more

likely around the world supply will turn up, prices will normalise and you don’t

want to kid yourself that all time record prices will last forever – they

won’t – and we have to take that into account when we are making

our decisions. We are in a temporary boom. Most booms in Australia have in the

past led to busts – we don’t want that – we want to make a

decision which will keep the Australian economy continuing to grow.

KELLY:

We might be in a temporary boom but that has given us a massive surplus, $15

billion plus people are tipping for the surplus, no wonder people are talking

tax cuts. Is it fair for Australians to see this surplus and to want some of

it back? And it is always what you have promised, the dividend for the shareholder,

in this case the Australian taxpayer.

TREASURER:

Sure and this is the principle that I have laid down and I have followed in

the last three Budgets. If we can balance our Budget, if we can fund the growing

demands in health and security and if at the end of all of that you can relieve

some of the tax burden, that is what we will do, that is what we have done,

we have already got a legislated tax cut which will becoming into effect on

1 July, that is the way we will approach it this year. But to say that on a

temporary boom we can take decisions which will apply for five or ten years

that will take permanent dividends out of temporary profits would be a mistake.

KELLY:

But what are you frightened of, what are you frightened of in terms of handing

out some tax cuts now with the dividend of this temporary boom as you call it.

Are you worried about pressure on inflation and on interest rates?

TREASURER:

Well I am not frightened of cutting taxes because last year I cut them over

four years by $22 billion. I am hardly frightened of cutting taxes. Let’s

not forget the last tax cut in Australia was the 1^st of July last

year and the next one will be the 1^st of July this year. Let me ask

you this question Fran, other than the Federal Government what other government

in Australia is cutting taxes at the moment? There are a few that are increasing

them.

KELLY:

Isn’t that the point though Treasurer, the Reserve Bank said this week

that your last round of tax cuts which were quite extensive, weren’t inflationary

because people didn’t spend them on consumables, they serviced their debt.

Isn’t there every reason to think that the same rule would apply so you

could comfortably give more tax cuts with this surplus and without putting too

much pressure?

TREASURER:

Well the last round of tax cuts were received well but go back to the Budget

Fran, there was a lot of economic commentary that we were irresponsible in cutting

those taxes, in fact the Labor Party voted against them because they said they

would force up interest rates. Now, they didn’t. But any decisions that

we take in the future have to be carefully balanced along side all of our objectives

which are to build savings, to keep inflation low, to keep interest rates low,

to prepare for the ageing of the population and you know, these are all tricky

variables Fran, it takes a bit of work to put all of this together and we try

and do it in a responsible way.

KELLY:

Treasurer, if I can move to another issue now, the AWB scandal – let’s

call it that – do you still want to see the single desk policy reviewed

as you suggested recently?

TREASURER:

Well we have got this Cole Commission which is going to make findings in relation

to AWB. It hasn’t made its findings yet. When the findings are made obviously

people have to look at the future of AWB and that is the reality. Nobody down

at the AWB has yet had a finding made against them but it is conceivable that

they will Fran, it is very conceivable that they will and in those circumstances

obviously people will have to look at AWB.

KELLY:

And the single desk policy.

TREASURER:

Well AWB is the holder of the single desk right. Now, people will have to look

at AWB but nobody is foreshadowing anything at the moment, the policy is to

keep the single desk and the policy is to keep it in the hands of AWB but obviously

when the findings of the Cole Royal Commission are made we will have to consider

those findings.

KELLY:

Well the AWB is clearly resisting having its veto and its monopoly removed

and it insisted on being part of this AWB delegation. As Treasurer of this country

Peter Costello, are you appalled at the thought that some of our farmers have

inadvertently, were funding Saddam Hussein’s regime, probably his purchase

of weapons at the same time that Australian soldiers were heading into Iraq

to destroy that very regime?

TREASURER:

Well I don’t hold this against the farmers, but if it transpires that

people who worked for and were directors of a private company were engaged in

funding, knowingly funding the regime of Saddam Hussein that is a disgrace,

it is an absolute disgrace. It was banned by the UN, we went to war to get rid

of this regime and if there were company executives or company directors who

were operating a company for a profit, that were paying kickbacks to that regime,

it is a disgrace and what’s more it could well be illegal and if it is

illegal then they will be charged and prosecuted. You know, here we were in

Australia in good faith getting rid of a tyrannical regime and if it should

transpire that fellow Australians were paying money, knowingly paying money

to that regime, yes it is a disgrace. But it is not the farmers, the farmers

weren’t doing it, all the farmers were doing was selling their grain to

a company, it is the company that is under investigation here.

KELLY:

Alright, Peter Costello thank you very much for joining us on Breakfast this

morning.

TREASURER:

Thank you very much Fran.