TRANSCRIPT

THE HON PETER COSTELLO MP
Treasurer

Doorstop Interview

70 Phillip Street, Sydney

Wednesday, 25 August 2004
12 noon

SUBJECTS: Skilled vacancies; construction data, Simon Crean, Labor’s

interest rates, immigration, Republic

TREASURER:

Let me say something first of all today about skilled vacancies, today’s skilled vacancies increased by another 0.6 per cent in August and are 7 per cent above the levels of a year ago. And in particular trade vacancies increased again in the month of August and are 17.6 per cent higher than they were a year ago. So we are now seeing really good job opportunities open up for people with skills and in particular with people who have skills in trade, where we may even be at a situation where we could be facing shortages in the future.

Let me also comment very briefly on today’s construction figures. Construction work done for the June Quarter fell by 0.7 per cent lead by a decline in relation to engineering work, that is a bit surprising really, because there are a number of very large projects which are on course in Australia. Engineering work was down, building work was up, but the figures overall from the June Quarter of 03 to the June Quarter of 04 are up 7.8 per cent, so longer term it looks like there is still some steady increase going on.

The third thing I want to say is yesterday we had the most extraordinary speech on economic policy from Simon Crean who wants to run economic policy in Australia if Labor is elected. It was confused, muddled-headed, written with clichs, but it had one extraordinary gem in it which I think the Australian press so far has missed. Mr Crean said yesterday, ‘our commitments’, that is Labor’s commitments, ‘on service, tax, families and superannuation are fully costed and funded.’ So what Mr Crean revealed for the first time is Labor’s tax policy has now been costed. What the public of Australia wants to know is what is its cost, and under that policy how much of a tax cut does each and every Australian get and out of that cost what other services are going to be cut in order to pay for it. Now, Mr Latham promised in Budget week, that he would release his tax policy in Budget week in May. Mr Crean has disclosed that policy is now fully costed and the people of Australia are entitled to see it. Where is it? How much does it cost? Who gets what and what other services will be cut in order to pay for it? Labor has to release some policy. Elections are about policies and the people of Australia are entitled to know what this policy is, how much it costs, who stands to win and who stands to lose under the Latham/Crean tax policy.

JOURNALIST:

Mr Costello, would you match any cuts there are to taxation for those earning above $52,000 as Labor has promised?

TREASURER:

Well Labor is, Labor is very strange, they disclosed yesterday they now have a tax policy, one problem, no one knows what it is. Normally when you have a tax policy you tell people so you can actually analyse it, so I am as bemused and puzzled by this as every other Australian would be, what is this policy? You ask me what I think about it, I don’t even know what it is, nobody knows what it is. It is very hard to actually comment on a policy that hasn’t been released yet. But there was one really worrying thing in that announcement that Labor made yesterday, Mr Crean complained that the Budget which we brought down was middle class welfare. Now I can only assume that if he has dismissed tax cuts and family assistance as middle class welfare, he is against it. So every Australian that got an increase in their Family Tax Benefit, and there were 2.2 million families who got an additional $600 per child ought to know this, Labor thinks you are not entitled to it. Labor thinks that is middle class welfare.

JOURNALIST:

Mr Costello, we have new research from ASFA today saying that it is becoming increasingly difficult for Australians to save for their retirement or early retirement, do you think that is fair enough?

TREASURER:

Well the Government has put in place in this most recent Budget, measures to help people who are saving for retirement. What did we do? We announced a co-contributions scheme, which for people earning under $58,000 per year, if you put $1 into superannuation, the Government will make a contribution of $1.50. That is the most generous co-contributions scheme that has ever existed in Australia. For those that are above $58,000 and on higher incomes, we announced a proposal to reduce the superannuation surcharge, again reducing taxes. And I notice that our freedom of choice changes which we have recently, just recently got through the Senate have led to at least one superannuation provider announcing that it will cut its fees. Now I hope freedom of choice will drive fee reductions across a whole lot of superannuation funds, that would give people a better deal too.

JOURNALIST:

Are you worried about the large falls in the Australian dollar over the last couple of days?

TREASURER:

We don’t target a particular level in relation to the Australian dollar, but I will observe this, that the dollar in I think 2000, was below 50 cents US, today it above 70 cents. So we have got used to flexibility in relation to the exchange rate and I think what is actually driving the exchange rate as against the US dollar is as much a US dollar story as it is an A dollar story.

JOURNALIST:

On the Free Trade Agreement, there was a full page ad in today’s Australian, by farmers from Western and South Australia expressing fears about the impact of the Free Trade Agreement on jobs, have you got a response to that?

TREASURER:

Well I think the Free Trade Agreement will be overwhelmingly positive for farmers, that is we will get additional access for dairy and for beef into the US market. Our exporters are the people that need freer trade so that they can get their products into global markets, and I don’t think our farmers have anything to fear about the Free Trade Agreement. Some would have preferred that it went even further and we weren’t able to get everything that we would have wanted for the Australian agricultural sector, but to the extent that we are able to get breakthroughs, this is very positive for Australia’s farmers.

JOURNALIST:

Mr Costello, the Government has been accused of putting too much pressure on the Reserve Bank to keep rates down, would it be fair to say that the Government is bullying the bank?

TREASURER:

No of course not, that is a ridiculous proposition and I don’t know who would have said such a thing anyway.

JOURNALIST:

The interpretation is that Mr Macfarlane has said interest rates won’t rise until the election, would you guarantee that rates won’t rise after the election?

TREASURER:

I don’t think Mr Macfarlane has said one that rates will rise or two, said when they will rise, or three, tied any movements in monetary policy to election timing. Now I read people in financial markets who from time to time say the Reserve Bank is going to do this or that before or after an election which I mostly take as self-interested commentary. But to pick up on their self-interested commentary and then to say it is fact, requires a huge leap of faith. Now, can I make this point, the Government put in place the arrangements which gave the bank its independence, that was an agreement I took out with Mr Ian Macfarlane when I, the Government appointed him and we renewed it and the bank is entirely independent. That doesn’t stop the Government from giving commentary on economic issues, of course it does, in fact in the agreement we expressly reserved the right to comment on monetary policy and interest rate policy. But at the end of the day, the bank is independent, it has a target which we have agreed and monetary policy is directed towards that target. We have been very transparent about that.

JOURNALIST:

Would you expect interest rates to rise after the election?

TREASURER:

I never comment on the future movement of interest rates, one because I might move markets in respect of that and two, because I think there is a lot of economic policy which has a long way to run.

JOURNALIST:

Do you think your recent agreements on immigration and the Republic have undermined the Prime Minister at all?

TREASURER:

Of course not.

JOURNALIST:

Your interview on ABC Radio a few days ago where you reiterated your position on children in detention and the Republic, could that, were you making a bid for the top job by doing that?

TREASURER:

Well my views on the Republic are pretty well known. When did we have the referendum, it was 1999, I think, I was one of the most active participants in it. So those views have been on the record for at least five years, and every time I am asked a question and have been asked a question over the last five years the answer has always been the same, so I don’t think anyone would have been surprised, you have only got to ask me to find my view, it has been on the record for five years, if not more.

JOURNALIST:

How different could we say your social agenda is to that of John Howard’s?

TREASURER:

Well look, when I am asked my views on issues, I give them and they have been pretty consistent actually and you have only got to ask to know them and as somebody who was very active during that referendum you wouldn’t have been surprised to hear me reiterate my views, I haven’t changed them. People are entitled to change their views, as it turns out I haven’t changed mine on that subject in the last five years.

JOURNALIST:

Mr Costello you have said in the past that you wanted to speak on a wider range of issues outside your brief, yet you are under criticism at the moment for virtually disappearing.

TREASURER:

Well it is a funny thing isn’t it, when you do comment on social policy, one journalist takes the opportunity to say, you are disagreeing with the Prime Minister. When you agree with policy and don’t speak on those issues, another takes the opportunity to say you are disappearing, so you have got me fellas, you have got me both ways, you have got me whether I do or whether I don’t comment, you know, well done. Thanks very much.