Senate, Telstra, Great Barrier Reef, James Hardie, tax deductibility, aged pension, housing affordability, religion, Scoresby, Roads of National Importance – Interview with Jon Faine, ABC 3LO

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Senate, Telstra, Great Barrier Reef, James Hardie, tax deductibility, aged pension, housing affordability, religion, Scoresby, Roads of National Importance – Interview with Jon Faine, ABC 3LO



Interview with Jon Faine


Friday, 29 October 2004
8.30 am


SUBJECTS: Senate, Telstra, Great Barrier Reef, James Hardie, tax

deductibility, aged pension, housing affordability, religion, Scoresby, Roads

of National Importance


Peter Costello good morning to you.


Good to be with you Jon.


Acting Prime Minister, sounds pretty good, doesn’t it?


Well it is something that I do from time to time when John Howard and John

Anderson are on leave, so it’s just filling in for them while they are

having a well earned break.


Thank you for agreeing to come in. Ron Boswell, the Leader of the National

Party, on yesterday’s announcement of the outcome of the Senate race in

Queensland that has delivered complete control of the Senate to your side of

politics, said it is good to have the balance of power. It struck me as a very

odd comment, I thought that the National Party was in a Coalition with the Liberal

Party and we have…


We have…


…on your side rather than as a third party independent (inaudible).


It is funny how these things get reported. Reading the newspapers or listening

to the media you would think that one Queensland National had single handedly

won control of the Senate. The reality is that you have got about 34 Liberals

I think, and about four Nationals, something like that, so that anyone of those

people could say that it was their election that led to the majority, it is

never one person. And of course in Queensland the fact that the Liberals won

three, which they have never done before and the Nationals won one, meant that

we got a majority of Senators from that State. But everyone of those, the three

and the one, go to make up the majority.


But you are avoiding the issue, the thinking being portrayed by Ron Boswell’s

comment is that they are not beholden to a Coalition agreement with your party,

instead they are now thinking of themselves as outside of the Liberal-National

Coalition and able to exert influence the way the Democrats used to, the way

the Greens aspire to.


Well I don’t think it would be right to draw that conclusion because

the National Party is in Coalition with the Liberal Party.


No, they hold the balance of power according to Ron Boswell. You can’t

if you are in a Coalition.


We were jointly sworn in as part of the Coalition Government earlier this week…


And you think Ron…


…in the one Cabinet with Ministers. Look, it is a Coalition Government,

it has been for the last eight and a half years, it will continue. You have

just had this result in Queensland which is a great result, let’s make

no bones about it, it is a great result, four of the six from the Coalition

partners. And I think Ron, like all politicians is making the most of the moment

in the sun.


But what we are seeing here Peter Costello is that he is already seeking to

exert some leverage over your next term agenda.


Well the National Party as a Coalition Party has always been influential in

the Government.


How influential is it going to be the question this time around. Will they

support your policies on completing the sale of Telstra? Number one first and



It is not a question of Liberal policies and National policies, it is a question

of Coalition policies. And the Coalition policy is that Telstra should be in

the hands of Australian investors. That it is important to have adequate and

good services in the bush and that we will ensure that both of those objectives

are met.


What do adequate and good services mean when it boils down to it?


Well we had a report from a fellow called Dick Estens who went out and had

a look and gave us the benchmarks that we have to meet and we will meet those

benchmarks and that way we will be able to accomplish both objectives. We will

be able to have good services in the bush and we will be able to resolve the

ownership of Telstra. But the problem with the ownership of Telstra, let me

just say this, every time a question comes before the Cabinet of regulating

telecommunications, the Cabinet, Jon, has a massive conflict of interest because

the Government has majority ownership of the monopoly supplier and as the majority

owner of a monopoly supplier the temptation is always to do everything you can

to entrench your monopoly and increase your value. The Cabinet is also the regulator

which is supposed to be writing rules to allow new entrants. I have sat through

these Cabinet meetings where we have been faced with massive conflicts of interests

because we are the majority owner of a the monopolist and the regulator which

is setting the rules for the monopolies and the new entrant and you have got

to resolve that problem.


You are also the vendor of an asset.




When is it worth selling Telstra? Is it worth selling it if it is under $5?


Well I don’t think it is worth selling shares until you get a good value.


Do you get good value under $5?


We have previously said that we think there is a value which we put in our

Budget papers which was about $5. Now, I have also made this point entirely

clear. There are two separate issues here, one is passing legislation which

will allow further shares to be offered to Australians, the other is the timing.

And you certainly wouldn’t do that except at a time which would get full

taxpayer value.


Are you playing a second guessing game then with the people who are screen

jockeys in New York, Singapore and Sydney principally, some left in Melbourne

these days, and they are trying to second guess the Government, they are going

to keep the price down until it suits them and then it might just magically

make it to the trigger point. What do you reckon?


You have got to be very aware of what people might do in the market, but I

can assure you of this, that we will be getting full value for the Australian

taxpayer in the event that that legislation passes. I have made that clear for



Meg Lees was dangling bait on AM this morning inviting you to negotiate

with the current Senate rather than waiting until the next lot are sworn in.

Are you going to take the bait?


Well it is a fair point that the new Senate doesn’t come into effect

until 1 July of next year. The Parliament is going back in November, there is

no point just sitting around and saying we won’t be doing anything until

July of next year. We are a Government, we are expected to govern. We have got

a legislative programme, we are expected to try and pass that legislation into

law. In the current Senate there will be a lot of negotiation with the minor

parties to try and get some of that legislation through. We would even negotiate,

by the way, with the Labor Party. I saw that Mr Latham has started junking some

of his policies, he is talking now about becoming a constructive opposition.

If the Labor Party wants to negotiate about good legislation, we would negotiate

with them too.


Who would you get a better deal out of? The Democrats, the Labor Party or the

National Party? The National Party might strike a tougher deal.


Well in the new Senate you have got the Coalition, you have got some Democrats,

people like Andrew Murray, you may have Family First and of course you have

got the Labor Party. If the Labor Party supports national interest legislation

then it goes through the Senate. Our position when we were in opposition in

the 80s was; good legislation, good decisions – we support it. And that is actually

the best way to get good legislation through the Senate. This only comes about

if Labor keeps obstructing and at that point you have various negotiating partners.


Nineteen minutes to nine, Peter Costello, Acting Prime Minister, is my guest

in the studio this morning and he will take your calls, 9414 1774. Still talking

Telstra, last question before we move to some other things, if you sell Telstra,

if you get to the trigger point, if you get it through with whichever Senators

supporting it in the Senate, what do you want to do with the money? Do you retire

debt or create infrastructure?


Well I have always said that if the Government has an asset and it sells the

asset and spends the money that is bad because at the end of the day you have

sold your asset and the money is gone. If you are going to sell an asset you

have either got to build another asset or as we have been doing, pay off your

debts. But anybody who thinks that it would be a good idea to sell an asset

which has been built up over years and just spend the money, that is like selling

the family silver, we are not in that business. And I announced during the election

campaign that we would start building other financial assets to fund the Government’s

superannuation bill. Now the Australian Government has a very large superannuation

bill, a debt, $80 billion, of money that has accrued to public servants which

has to be paid as part of their retirement incomes and it is about time that

we start putting some money away to help fund that.


So you want to use the proceeds of Telstra to meet the unfunded superannuation

of debt of the Government…


One of the ways in which we would…


…(inaudible) your first priority?


…would build a financial asset. Well, that is the one that I announced

during the election campaign and I think it is a very, very important one.


Alright, a couple of other quick things. The Fishing Party in Queensland, which

the Nationals say helped them win that final seat, claimed 28,000 first votes

on a campaign to take away the exemptions to fishing in 1/3 of the Great Barrier

Reef. Are you tempted?


No, we have announced protection of the Reef and as part of that there are

areas where fishing is not allowed and other areas where licenses have been

brought back and we are paying compensation to those fishermen. Now, you can

always argue at the margin as to where the zones should be, but the deal is

a deal that we have entered into to protect that wonderful asset. We won’t

be re-opening the deal as a whole.


Even with 28,000 protest votes?


No, we have announced our position in relation to protecting the Reef.


Alright, industrial relations, some 41 separate occasions the Senate have refused

to pass your industrial relations laws. Is that going to be the first one put

back to a Senate that you have control of?


It may even be put back before July. We have put it up 41 times so we may even

have a go before July, and I will tell you why. The Labor Party now says it

wants to get economically responsible. They acknowledge they lost the election

on economic management and they want to prove they have changed. What better

way of proving they have changed than to pass a bill which they have defeated

41 times already, so we may even put that up before July.


What better way to try and drive a wedge between those in the Labor Party who

want to shift to the middle ground and the trade union base?


Well they tell us they are going to change, they tell us they are going to

get economically responsible, let’s see if they are. Here is a big test.

You have rejected this 41 times, what about showing that the leopard can change

its spots. You see Jon, it is not just enough to say ‘Oh, we will be economically

responsible,’ you have got to demonstrate that with some change. And how

can they demonstrate it? Well they could have demonstrated it by junking Medicare

Gold which they haven’t done. They could have done it by changing their

view on industrial relations. Well let’s see if the Labor Party is interested

in being economically responsible.


You will have a ball with that, that is wedge politics.


(inaudible). Well it is a promise that we made to the small business community

for eight and a half years which we are trying to legislate which we have been

defeated in doing and we are now facing an opposition which says, we have changed.

So this could all be fixed before Christmas.


Put it to the test. A quick thing, Bob Carr says that the New South Wales Parliament

will look if necessary to compel James Hardie to meet the unfunded liabilities

of the compensation fund, do you support him in that?


Well I think James Hardie should meet its liabilities in full, absolutely.


And (inaudible) the New South Wales Government pass laws to make it happen?


Well it is a matter for the New South Wales Government. But I would say this

to James Hardie Jon, they ought to meet those liabilities and I think when they

think about it, the sooner the better, and they would be far cleverer to meet

it before any legislation is passed. Now if I listen to James Hardie, they keep

saying they are prepared to meet these liabilities in full and then they get

drowned in the technical detail. I am not quite sure what the sticking points

are but I would say to James Hardie, fix the sticking points and compensate

in full. It is in the interests of the victims, let’s make that point,

but I would also say to James Hardie, it is in the interest of James Hardie

and its shareholders not to dilly-dally here.


And are you going to pass laws to change the plans for tax deductibility that

were successfully upheld by a convicted drug dealer the other day which the

Tax Office say they are powerless to do anything about?


Well the Tax Office did their best, they appealed from the Federal Court to

the full Federal Court to the High Court. The High Court refused them special

leave, said that this drug dealer could claim as a deduction some money that

was stolen from him. Well if that is the state of the law as interpreted by

the High Court I don’t think it is very good and I will seek to introduce

legislation to change that law.


It is going to be difficult because at the moment if you claim a deduction

you can also pay tax on the income, you can’t have it both ways so you

are going to have to artfully weave.


It will be very technical, and then you run into all of these problems about

retrospectivity which is why if the courts had come to that conclusion it could

have been fixed much easier, but the courts have not come to that conclusion.

We have to accept the decision of the courts …


And legislate around it …


We will have to try and think up legislation and do the best that we can, (inaudible)


Pop the headphones on Peter Costello, we have lots of people with questions

for you, and Nick from Croydon is first up. Good morning to you Nick.


Oh good morning Jon, Mr Costello.


Hello Nick.


You just said that you wanted to make sure that Telstra goes into Australian

hands, and you also said that the Labor Party needs to demonstrate what they

say with actions. How are you going to demonstrate with actions the fact that

if you sell Telstra, there is a possibility of it going to non-Australian hands?


Oh no we have a law that restricts foreign ownership in Telstra, and that law

will be left in place. And it means that the Telstra will always be in majority

Australian ownership as it is currently. That is that the current shares are

restricted as to the amount that can be held by foreigners, and the current

shares have majority Australian ownership, and when we sell the shares in Telstra,

we will maintain majority Australian ownership.


Quickly Nick.


Well I wish I could believe that because it does not have to be fifty-one per

cent majority, all you have to do is buy forty-nine per cent, and you have no

say in that.


Oh no, we can restrict the number of shares that can be owned by foreigners,

and we have. We have got that law in place which already applies to current

Telstra shares which are in the market.


Good on you Nick. Bill in Ferntree Gully, good morning Bill.


The means test for the pension, I think it should be scrapped because people

that pay a high income deserve some benefit from all their taxes, and I also

believe it is pushing up the price of houses because people are trying to find

investments instead of just living on the pension, and they are buying investment

properties which is pushing up the price of houses.


So housing affordability is your concern? (inaudible) new entrants into the



And also the people who pay taxes, I think that they deserve the benefit of

the taxes. You are taking the benefit from the people that pay the most tax.


Well, there is a means test, I guess you are talking about the age pension

here, Bill. There is a means test on the age pension. If your income is above

certain limits you can not get the age pension. If the value of your assets

is above certain limits you also can not get the age pension. The reason that

is put in place is that it focuses the aged pension on the more needy in the

community. The only thing I would say to you Bill, is if you made that age pension

universal, if you said everybody could have it regardless of their income, and

regardless of their assets, you would be paying a lot more in age pensions,

and your taxes would be a lot higher than they are at the moment.


Well there is nothing much you can do about housing affordability while you

have negative gearing though can you, because that is what drives the price

at the moment.


No I do not believe that …


You don’t …


No I don’t Jon. I think the reason why prices are high at the moment

is that interest rates are low, that is the most important reason, and employment

is strong. So people have jobs, and they are able to buy houses and service

their mortgages.


Well but they are not just buying one house to live in, they are buying houses

as investments because interest rates are low, because they have got reasonably

stable jobs in good economic times. So they are using negative gearing to provide

for their future, and that is what is driving the price up. So in a way you

and I are agreeing, I am just putting the emphasis on the negative gearing.


Well, some people buy investment properties, that is quite right. I do not

actually think that is a bad thing Jon because when people buy investment properties,

they rent them out, and that means there is a stock for people who can not afford

their own homes, but want to rent.


But it drives the price up.


I will make this point, that if people were not buying investment properties

and renting them out, rents would be much, much higher than they are, and we

know in our community it is the poor that tend to rent more than the rich, and

you would be driving up rents on the poorer section of the community.


Bill thanks for raising it. In Richmond, morning Nigel.


Oh good morning. Firstly I would like to congratulate Mr Costello on the re-election

of the Howard Government.


Thanks Nigel.


I have always been a long-term Party supporter since the eviction of Gough

Whitlam in ‘75, and I am increasingly becoming concerned about the religious

factors involved in both the National Party and the Liberal Party these days,

and I have noticed that since the election quite a few social commentators like

Andrew Bolt, Babette Francis and I think it was in the paper yesterday, they

are starting to make comments about, you know, the move towards perhaps anti-abortion

legislation, perhaps greater emphasis on censorship and things like that during

this term of the Government. So, as an atheist Liberal, which is an unusual

combination, I am increasingly concerned about the influence of the religious

right which is in both Parties.


Well, there has been a lot of focus in this election Nigel, on the issue of

religion and faith. I guess partly because you had the new Party Family First

running, which looks as if it may win a Senate seat. I have had contact all

my life with the Church and people of Christian faith, and other faiths indeed,

and there is no doubt in my mind that there is a growing interest in the non-mainstream

churches, if I can put that way, outside the Catholic Church and the Anglican

Church, and the organised Churches. They are growing, they are vibrant, they

have got a lot of followers, and it is only fair that they seek and obtain political

representation like anybody else. But I think (and this is the way I look at

it) I think this is the way the Government looks at it, the Government is elected

has to represent all Australians. We have to make sure that we have a strong

moral fibre to our nation, but we have to also preserve liberty and freedom

for the practice and conduct of all religions. That is the way we look at it.


Are you actively courting the religious vote?


When you say courting, I have been to numbers of these churches. It was very

well published that we went to …


You went to Hillside …


… Hillsong in Sydney


… that was almost read as an endorsement of them …


Well there were twenty thousand people there. It was a cross between a church

service and a rock concert. I enjoyed it very much. I thought the people were

very sincere and enthusiastic, and I thought had a lot in common with the views

of most of us Jon.


So you agree with Nigel, that you think religion will play a greater role in

Australian politics from here on?


I do not know that it will play a greater role, but my impression is this,

Jon, here is my anecdotal impression, that probably overall the number of religious

believers is declining, but amongst those who still adhere to strong faith,

the fervor is growing. And amongst those people their faith is very, very important

to them, and they see it working out in public questions, and therefore it will

be an important influence in Australian life.


So instead of the old style churches taking a back seat, you are going to get

some of these new style religious groups trying to take a front seat.


I think that is probably right. I think it is a good way of putting it, but

you see it is not as if religion has never played a part in Australian politics.




We go back to when we were young, the argument about State aid for independent

schools, the influence of B A Santamaria and Daniel Mannix, and the Catholic

Church on the Labor Party, and subsequently the DLP. Religion has always played

a part in Australian political life. The point that I am trying to make here

is that the religious faith seems to have moved more out of the organised churches

to these new enthusiastic charismatic or Pentecostal churches, and so it is

not that the influence of religion is new, it is those that are religiously

engaged are perhaps different to those that were religiously engaged thirty

or forty years ago.


And of course the Howard Government has played its part in making sure that

it happens by providing a lot of Government funding to religious based schools

that some of those new churches have created from scratch.




You have helped them along, haven’t you?


In this sense: – that when we came to office, we said those that were setting

up new schools with religious base or faith base would qualify for Commonwealth

Government funding.


And that has been the fastest growing sector in the education industry.


Absolutely. Yes, and before we came to office there was a ban on Commonwealth

funding for new schools. We removed that ban, and the fastest growing school

area are the low fee systemic schools, some Anglican schools, some Catholic

schools, and what you would call from the charismatic or Pentecostal or Assembly

of God churches, they are setting up schools too. I think it is actually a good

thing. I think parents should have choice.


Nigel, thanks for the question. Very interesting conversation. Pat from Seaford,

good morning.


Good morning Jon and Peter. Peter where were you six years ago when Jeff Kennett

was tolling roads? We didn’t hear anything from you, and I understand

it is a State issue, but you were very much to the fore this year.


Absolutely and I will tell you why, because the Scoresby Freeway is not just

a State road. It is a Road of National Importance to be funded fifty, fifty

by the Commonwealth and the State, and there is a signed agreement between the

Commonwealth Government and the State Government to build the freeway without

tolls. So we actually have a written agreement with Victoria for no tolls on

the Scoresby Freeway. Now unfortunately …


That is ancient history now …


Well, what do you mean it is ancient history …


Well it has been replaced by a signed agreement between the State Government

and a consortium to build a toll road …


Well let us be more clear. It was unilaterally breached, and ripped up by the

Victorian Government.


But we now have the bizarre situation in Victoria were a Labor Government’s

in bed with industry to build a toll road, and the Liberal Opposition are saying

they want to tear it up and dud the private sector in order to build a road

out of taxpayers funds.


We have a agreements …




No, no. We have agreements with the Victoria Government to build Roads of National

Importance all over Victoria. Take Calder freeway, Calder highway, for example.


Do you support …


No, no let me ask you this question. Do you think the Bracks Government would

be entitled to rip up that agreement and put a toll on the Calder Highway?


Clearly not.


Clearly not. The Scoresby Freeway is in precisely the same example. We have

got the Hume Freeway, which is a national road. Would you put tolls on that?


Clearly not, but having the debate moved on a little bit, do you support Robert

Doyle’s policy …


Look the Pakenham Bypass is another Road of National Importance. Do you think

Mr Bracks would be entitled to rip up our agreement and put a toll on the Pakenham

Bypass? See once he has done this Jon, once he has put a toll on one Road of

National Importance, where is it going to stop?


Do you support Robert Doyle’s policy to renegotiate the contracts if

he is elected …


I support Robert Doyle entirely in his efforts to have a freeway built without

tolls. Entirely.


Well that is not quite the answer we were looking for. Peter Costello, thank

you for joining us this morning, and I might say a very relaxed and different

Peter Costello to the one that we have seen in the past, and this may well usher

in what perestroika, glasnost and the Peter Costello social reform agenda we

have been waiting for years to see.


No, I just think it is your caring and nurturing nature that brings the best

out of me Jon.


Hardly. Thank you for your time. Peter Costello, Acting Prime Minister.