Interview with Louise Yaxley

ABC AM Programme

Tuesday, 24 January 2006

8.10 am

SUBJECTS:

Senator Julian McGauran, superannuation tax, savings

YAXLEY:

Mr Costello, did you encourage Julian McGauran to defect from the National Party?

TREASURER:

No, this is a decision that was made by Senator McGauran. He has been a Senator for probably over a decade, he is perfectly capable of making his own decisions, this is a decision that he has made for the reasons that he has made, the has applied to join the Liberal Party, that will be dealt with in accordance with the rules and procedures of the Victorian Liberal Party and it will be decided by the members in Victoria.

YAXLEY:

As he left the National Party, he in effect damned it as no longer relevant, do you agree with him about that?

TREASURER:

No I don’t. I think the National Party is very relevant, it is a valued Coalition partner for the Liberal Party, it is together with the Liberal Party it makes up the Federal Government and I believe it has a strong role as a Coalition partner. But in politics people make their decisions and their choices, this is a decision that has been made by Senator McGauran. The most important thing I think is that as a sitting Senator he continue to vote with the Government, whether he votes with the Government with a National Party hat on or a Liberal Party hat on, the most important thing is he continues to vote for the Government.

YAXLEY:

Would you discourage him from making this move given that it seems to be threatening coalition harmony?

TREASURER:

Well as I said, he has been a Senator for over a decade, he is capable of making his own decisions and he has made it. He having made that decision then from my point of view and I think from the Government’s point of view it is important that we ensure the continued stability of the Government and its representation in the Senate. As valued Coalition partners we stand together for good government, we need the votes of Nationals and Liberals in the Senate to secure legislation and we need to work together.

YAXLEY:

The Queensland Nationals President Bruce Scott and Federal MP, has called on you to encourage the state Liberals not to accept his application to join the Party saying that would be the best way to protect Coalition harmony.

TREASURER:

Well I don’t think it would be in anyone’s interests in Senator McGauran were in neither the National Party nor the Liberal Party. The important thing is that he is in one or the other, he has applied to join the Liberal Party, it is a matter for the members of the Victorian Liberal Party. But I think the one thing that would not be in anybody’s interests is if he was sitting in the Senate and a member of neither Party.

YAXLEY:

Do you know if he called you on Sunday before he called his leader, Mark Vaile?

TREASURER:

No I don’t believe he did, because when he called me he told me had spoken to Mark Vaile.

YAXLEY:

Do you think he has acted honourably?

TREASURER:

I think that he somebody who has given this a lot of thought, over the course of more than a decade in politics he has voted for legislation which has been supported by the Liberal and National Parties, he intends to do that, whether he does that with his National Party hat on or his Liberal Party hat on, the important thing is that he continues to support the Government.

YAXLEY:

And Mr Costello, Senator Nick Minchin has called for the scrapping of the super contribution tax. Do you agree with him?

TREASURER:

Well I don’t think he has actually. When you look very carefully at the point that Senator Minchin was making, he was making the point that we don’t want to overheat the economy and that is a very, very important point in the current circumstances and he was saying that one way of ensuring that you don’t overheat the economy in encouraging savings. He didn’t call for the scrapping of the contributions tax and I think there was some over-excited reportage of that yesterday and he issued a clarifying statement as a consequence.

YAXLEY:

Is it affordable to look at doing that in this Budget?

TREASURER:

Well as we come up to this Budget and this is the normal way in politics half of the population would like major taxes to be abolished and half of the population would like increased spending on health and education. We have incompatible demands and we always have to balance them in a Budget. But the one thing this Budget will do is it will ensure that Australia continues to grow and it will be poised so as not to put pressure on inflation. If we put pressure on inflation, if interest rates go up as a consequence, it will be no consolation to anybody that they have had a tax cut here or increased spending there.

YAXLEY:

Senator Minchin’s argument has been that cutting the super contribution tax in the more responsible way to give a tax cut because it doesn’t create interest rate pressure in the same was as income tax cuts.

TREASURER:

Well people can argue all of these things but let me tell you that the most responsible thing to do if you want to keep inflation down and not put pressure on interest rates is to balance the Budget and to add to savings through a Budget surplus. Let me make this point: that the way in which we are building savings in this country at the moment is by having the Government save and if the Government gets out of the business of saving at a time when individuals are borrowing and businesses are borrowing then you won’t have any of the components of saving going on in our economy and that will not be good for national saving.

YAXLEY:

Peter Costello thank you very much for your time.