Transcript No. 99/15

Hon Peter Costello MP

Doorstop Interview – Parliament House

Friday, 16 March 1999

2.30 pm

E&EO

SUBJECTS: Senate obstruction, tax reform, stockmarket

TREASURER:

Well I can’t help but notice that in a speech today, Mr Beazley posed nearly

20 questions without any answers. But finished up by saying that what Australia needs is

to curtail the powers of the Senate to block major legislation and Budgets. Let me make

this point. You don’t have to change the Senate’s powers to cease using the Senate to

block major legislation and Budgets. Kim Beazley this afternoon could have ended Senate

obstructionism. One word to the Labor Party would have done it. One word, to say to the

Labor Party, cease the obstructionism, cease trying to defeat major legislation and pass

Budgets.

Now the Labor party in the last three years, spent three years trying to block the

Government’s Budgets. And now the new look Kim Beazley says what’s most required in

Australia is to curtail the opportunity to do what he has been doing for three years and

intends to keep on doing for the next three years. One word could have stopped Senate

obstructionism. One word from Kim Beazley to the Labor Party to pass the Government’s

tax package and to wheedle around and pretend that he’s interested in ending Senate

obstructionism when he is master-minding it, is the kind of breathtaking audacity you very

rarely see in modern politics. Now if he’s serious, if he is in the slightest bit serious

about embracing opportunities for the future and ending Senate obstructionism, he would

announce now that Labor will pass tax reform, Labor will acknowledge the outcome of the

last election.

Treasurer, do you accept that the Constitution allows the Senate to exercise these

powers and the only real answer is to change the powers.

No. The real answer is to vote for the tax package. You don’t have to change

the powers. There’s a lot of people in Australia say, how is it that the fate of a

Government’s legislative program rests on Senator Harradine. Let me tell you how it

is. It’s because Kim Beazley uses every single vote he has to vote against tax

reform. If Beazley wasn’t blocking then Senator Harradine wouldn’t be the

crucial vote. You don’t have to reform the Constitution. One word would have done it.

Senator Coonan and others support the concept of Senate reform, don’t you?

Well Senator Coonan isn’t blocking, using the Senate for obstruction. I mean

Senator Coonan is saying, if you can’t make Beazley responsible, you may have to

reform the Senate. But what’s Beazley’s argument? I can’t make myself

responsible so you have to reform to prevent me doing what I’m currently doing. I

mean what’s his argument here? Mr Beazley says he’s against Senate

obstructionism when he is running Senate obstructionism. He is running it. One word this

afternoon could have ended it. All he had to do was stand at the podium and say I am

against Senate obstruction, Labor will pass tax reform. One word could have ended the

whole thing, but because he has no ability to lead, he says “save me from

myself”. Beazley; “save me from myself” he says, “don’t let me do

what I’m doing”.

Mr Costello, do you agree with Mr Reith that this is a question that should be put

on the agenda for a third term, reform of the Senate?

Well, if Labor is going to continue to engage in Senate obstructionism, then I

think the Senate will have to be reformed. Yes I do.

And it should be a third term issue?

Well, look if it could be done I would prefer to do it tomorrow.

But you can’t do it tomorrow, so for the third term?

Well let’s make it a first, second, third, fourth, fifth term objective.

And in what way, what way?

But, the Senate obstructionism could be ended today. Let me make this point. You

wouldn’t need to reform the Senate if Mr Beazley truly means that he’s against

the Senate blocking Budgets and defeating major legislation, he gives one word and that

ends. And that would be the end of the need for Senate reform.

Well if you can’t reform Mr Beazley, how would you tackle Senate reform?

Well I think reforming Mr Beazley’s probably no less complicated than

reforming the Constitution.

So how would you tackle the Constitution?

Let’s start off with the easy ones first.

Senate reform doesn’t imply disagreeing with the Government though, Mr

Costello surely?

No, but you see, what does Mr Beazley say Senate reform involves? He says Senate

reform involves dealing with the Senate’s power to block Government legislation and

particularly Budgets. Let me make a couple of points here. The last three years Mr

Beazley’s been trying to block the Government’s Budgets with varying measures of

success. I am, as we speak working on this year’s Budget and for this year’s

Budget we have to put revenues and expenditures in for 1999-2000, 2000-2001, 2001-2002.

The revenues and the expenditures are based on the tax laws which will apply. Now, now to

say that he will block tax changes which involve billions of dollars, is effectively to

say that he’s blocking Budgets.

Mr Costello do you now see the 1975 example set by your own party as unfortunate?

Well the 1975 example bears no relation to what is happening now.

Well it was Senate obstruction.

No, no. Can I tell you in 1974 as I recall, Gough Whitlam did not go with a

specific tax policy and ask for a referendum on that tax policy. Nor did the opposition go

into that election debating that tax policy. I mean this was a unique election in 1996, we

went specifically on this issue, it dominated the campaign. Everybody in Australia knows

it dominated the campaign, it was the Liberal Party’s campaign, it was the Labor

Party’s campaign and we put it out before an election for one reason, one reason

only. That we wanted to be able to say if the people voted for it, then the Senate should

take notice of the vote. It was, and I think Mr Beazley used this word himself, it was a

referendum. Now we went through that, and you now have a situation where all the

Government seeks to do is implement its policy. And the person who is using Senate

obstructionism against it comes out today to rail against Senate obstructionism. You know,

can you believe the breathtaking audacity – windy rhetoric, with a long speech on

windy rhetoric about how he’s going to lead, and he begins showing his leadership

with his first failure.

Are you committing the Coalition to in future not using its numbers in the Senate

to not block a potential Labor Government’s mandate or Budget.

Well, why do we move onto the next Government. I mean, we’ve got an issue

right here right now. I mean, let’s think about what is happening in our country in

March of 1999. What is happening in March of 1999, is that you have a Government which was

elected, what five months ago, which has in the Parliament, legislation to enact its

policy down to every T and every I, which is being stopped by a man who now says he wants

to end Senate obstructionism. Can you believe it? Can you believe it?

If you want to fix it and fix it for ever, don’t you change the Constitution?

Well, let’s, I want to fix the tax system for ever, right. So let’s start

with fixing the tax system, which we can do today. I’m making this point. We

don’t need a Constitutional change. Constitutional changes take a long time as you

see with the Republic, hang on, as you see with the Republic, Constitutional changes take

an awful long time. Now the enactment of legislation can be done much more quickly if Mr

Beazley is genuinely against Senate obstructionism.

Mr Costello, why should a Senate support your tax package when it was revealed last

Friday by one of the members of the taskforce that they were unaware of the agreement

between the Prime Minister and Senator Harradine on families, and in particular the common

youth allowance.

Well I think the Prime Minister has answered that question. He is apparently

unaware of such an agreement too. And I think he said that in the Parliament.

The agreement was public. It was made in March last year.

Hang on, I think, as I understand it the Prime Minister has been asked this

question in the Parliament and you ought to go back and have a look at what the Prime

Minister said.

But I think the Prime Minister who presumably was a party to this, is entitled to his

view. And I think his view is that there was no such agreement entered into…….

What do you think of Mr …….

…..I am pretty sure he said that in the Parliament.

What do you think of Mr Beazley’s other suggestion today, the work bonus?

Well, you know, you should give people incentives to go and get jobs. And what that

involves is increasing the disincentives, or getting rid of the disincentives, increasing

the margin between welfare and work. What’s the most practical runner in such an

objective -Bills which are now before the Parliament, to reduce the tax on wages, which is

what the Coalition has promised and to reduce the way in which increases in income take

away your welfare benefits. We have a proposal in the Parliament now which will change the

taper rate, so that instead of losing fifty cents of your welfare benefit for every dollar

you earn you only lose thirty cents, right. Now, in relation to family allowances, this is

the biggest change in the taper test yet. Now, you can runaround as Mr Beazley does and

says, oh I’m in favour of increasing the incentives to work, I’m just going to

vote against practical proposals which are currently in the Parliament. I mean you can run

around, he might be able to say to people, well look, I’m half serious, he might be

able to say I’m half-serious. But if he were really interested in dealing with this

problem – we leave aside the fact that he would then have had thirteen years in Government

to have dealt with it and done nothing – surely you would be voting for something that was

currently in the Parliament. It’s an extraordinary proposition isn’t it, to come

out and say, whilst you are in the middle of defeating practical legislative proposals to

deal with all these issues, to say you are in favour of them you are just voting against

all the practical ways of accomplishing them.

Treasurer, on the stockmarket at the moment we are approaching breaking through

that three thousand point level. What do you think of the current level of the

stockmarket, and do you think it’s fair given Australia’s economic fundamentals?

Well, I think the economic fundamentals in Australia are good. We’ve got

growth up around four to five per cent, which is probably the highest in the developed

world. It certainly stands as a beacon in this particular region. We have a Budget which

is in surplus, we have a debt reduction program, we have a proposal to reform

Australia’s tax laws, we have unemployment the lowest it has been for ten years,

it’s not to say that everything is perfect, but we have to keep working. We’ve

made some great strides. Now, the Australian stockmarket, which I think has closed at

record levels in the last couple of days, has been reflecting many of those fundamentals.

And the good thing about it is, that if you look back over the last year, the rise has

been much more measured than say the Dow Jones. And because it has been more measured, I

think it has been more influenced by the fundamentals.

Now, I think that people realise that stockmarkets go up and down, but over the long

term they should reflect underlying fundamentals. And, if over the long term you keep

interest rates low and you have a healthy economic climate, over the long term you will

see that reflected in the stockmarket. Now I don’t mean from day to day. It can move

from day to day and it can move from week to week. But when I say over the long term, I

mean over a period of years. And over a period of years if you keep fundamentals right you

should see that kind of movement in the stockmarkets. Okay, thanks.