TRANSCRIPT OF
THE HON PETER COSTELLO MP
Treasurer

Question & Answers

Friday, 12 September 2003

1.25 pm

SUBJECTS: Succession, Double Dissolution, Senate Obstructionism, Middle

East, Terrorism, First Home Owners Scheme, Ansett Levy, Senate Reform

MC:

Have you had any more discussions with the Prime Minister since his public

announcement that he is staying on in the job regarding you moving into

the job, and if you are not Prime Minister within four years or so, will

you quit?

TREASURER:

Thanks for the welcome. Obviously the Prime Minister and I have discussed

the issue of succession and I have already had as much to say about that

as I intend to say about that. There is no new news on that front. The

second part of your question is an interesting one. Football coaches

always say, we will take it one week at a time, and I think that is good

advice, because if you start playing the next game before you finish

this one, you can sometimes get yourself into trouble. I tend to take

it one year at a time, bravely one election at a time, and I won’t make

any prognostications. Other than that, I am fully focused on the job

and intend to do the best job that I possibly can. Thank you very much.

MC:

Spencer Jolly from Channel 9.

JOURNALIST:

Treasurer, given your frustration at the Senate blocking the reforms

which you have outlined here today, and with Labor struggling to make

a mark, and the economy bubbling along, the Government is well placed

for a double dissolution election before the year is out?

TREASURER:

Is that a question or an observation, Spencer?

JOURNALIST:

Yes or No.

TREASURER:

There are a couple of things that never change about Queensland, the

weather is always good and Spencer Jolly is always here, and his questions

are always very tricky. Look, I think when I talk about these long-term

reforms, that they are, this is the way I put them, they are not necessarily

in the interests of the government of the day. I am putting these forward

in the national interest for 2042. That is what I am doing. And I think

a reasonable Opposition would say to itself, well gee, we may be in government

at some time between now and 2042, and if we are, wouldn’t it be nice

to be able to take advantage of these reforms? These are reforms that

are not going to swing the monetary cycle necessarily tomorrow, but we

all know they have got to be done, this is the funny thing. Co-payments,

PBS, this was started by the Labor Party, and we warmly endorsed it and

it ought to be continued in a by partisan way. Disability support pension,

the Labor Party have claimed that that has got to be done, I just think

they got themselves into a mind set of opposition for oppositionisms

sake, and what I am saying, is that is not what the Senate was there

for and I call on them to change the mindset. That would free the blockages,

but if the mindset won’t change, let’s look at the institution itself,

because I don’t think it was set up with this kind of thing in mind by

the founding fathers. So, Spencer, in answer to your question, we would

like to get these bills through, yes, of course we would like to get

them through, your’re asking me as to the tactics as to how we might

get them through, and I am not telegraphing anything today, I am just

arguing for what I consider to be a very strong case.

MC:

Paul Osborne from AAP.

JOURNALIST:

Over here. Treasurer you are heading to the Middle East next week, what

sort of gesture do you think is needed to bring peace about in the Middle

East, from both the Palestinians and the Israelis? I was talking to the

Bishop of Canberra a couple of weeks ago, and he was suggesting that

maybe the Israeli President needs to spend a week in the house of the

Palestinian President or something like that as a symbolic gesture. What

do you think really needs to be done there?

TREASURER:

Well, the first thing is that the terrorism has to stop. If you, imagine

you were living in a society where a bomb goes off at bus stops or cafes,

not because the people in the cafe or at the bus stop had taken any part

in military activity, they are just civilians that happened to be there.

Imagine you were living in a society like that, it would be so hard to

remain focused and positive and run your country. It is almost impossible

to develop trust where there is terrorism. Terrorism has to stop, and

all people of goodwill should be asked to prevail on those that are organising

this and stop it, and the security services of the Palestinian authority

should be directed towards this task. And I think once the terrorism

stops then sure, you can enter into negotiations, I don’t know how they

would be conducted, they might be conducted under the auspices of the

so called Quartet, certainly the Americans will have a very big hand

in it. But, you have got to move through the terrorism in order to get

there, and I think all people of goodwill should be urging those in the

Middle East to do everything they can, everything they absolutely can

to end terrorism, because I can’t see any other outcome other than that

continued acts of terrorism in response will take the situation into

a downward spiral. So, that would be my outlook on the issue, obviously

I will be talking to people while I am over there, and engaging in discussion

with them on some of these issues.

MC:

Louise Willis from ABC Radio.

JOURNALIST:

Treasurer, in light of your trip to the Middle East next week, and your

strong interest in the situation there, can I ask for your views on the

decision overnight by the Israeli Security Cabinet, in principle, to

expel Yasser Arafat, and what such a move would mean for the peace process,

help or hinder, also, it is unusual I guess, for the Treasurer to be

speaking out on foreign affairs issues and making this trip overseas,

as well as your Prime Ministerial ambitions, do you have foreign affairs

ambitions as well?

TREASURER:

Gee, I am going to be a busy guy, aren’t I? Well, I am en-route next

week to the IMF meeting in Dubai, which is an important meeting which,

the annual meeting of the International Monetary Fund, which I attend

every year, and I am taking the opportunity to visit the Middle East

where I haven’t been for quite some time, notwithstanding the fact that

I have received numbers of invitations to do so. I hope that it will

be possible to meet with people on both sides, although obviously it

is a difficult situation there at the moment, I was going to meet the

Prime Minister of the Palestinian authority, Abu Mazen, but you saw the

developments this week, and a new Prime Minister has been named, but

not yet confirmed, Abu Ala. We would hope that the Prime Minister could

be given enough authority to enter into meaningful discussions in relation

to progressing the peace agenda. And we would hope that Yasser Arafat

would allow his new designate sufficient authority to do that. I think

that would be the most positive thing that could happen on the Palestinian

side at the moment, and that the Prime Minister, together with other

interested authorities are able to clamp down on some of the militants

and some of the terrorism in the way that I have just spoken about earlier.

And it is our hope that the opportunities which seem to have opened up

could none the less continue. This is a very difficult situation, it

is a problem that has been with us for a long time, but from the Australian

Government point of view, we would urge that kind of direction.

MC:

Chris O’Brien from ABC Radio.

JOURNALIST:

Treasurer, the Federal Opposition and the Victorian Government today

have both expressed anger at reports in the Melbourne press that 73 people

who have got the first home owners grant went onto buy houses worth $1

million, and the question is, is it fair for millionaires to have access

to that grant? Should it be means tested?

TREASURER:

Well, look, when this was put in place, this was put in place as a response

to the introduction of GST on housing. The argument being, at that time,

that if GST came on housing, everybody would be paying tax on housing

and therefore should have a first home owners grant to cash it back.

Now, I can assure you of this, the GST, if someone were buying a new

home on $1 million, would be very, very substantially more than $7,000.

It would be 1/11 of $1 million, if someone can work that out for me now,

I will tell you what the figure is. Somewhere between $90,000 and $100,000,

I would think. So, if they were buying a new house on finished real estate

and that were the value of the building, because there is no GST on land,

but if that were the value of the building, of course they would be paying

very much more than that, very much more than the grant that they were

getting. The other thing of course is, once you introduce a means test,

whilst they are good in theory, they can have a lot of difficulty in

practice, means test the property or means test the income? It is conceivable,

for example, you could get very wealthy people buying cheaper houses.

So should you means test the income, or should you means test the property?

That is another point that hasn’t been entered into. So we thought that

the simplest way of doing it was just to say, if you had had a house

before you wouldn’t qualify, and if you hadn’t you would get it. I think,

whilst I obviously understand the political point that is being made,

I think keeping it simple and keeping the transactional costs down, it

has probably given the taxpayer a good deal. Complicating it, and introducing

new layers of administration would make it a more expensive scheme to

run. And that is why it was introduced in the way that it is, and that

is why it is operating in the way that it is.

MC:

Denis Atkins from the Courier Mail.

JOURNALIST:

Treasurer, late last year in response to the, well, late last year you

gave a speech to the Australian Asia Society and in that you talked about

the need for countries like Australia, in response to terrorism like

the Bali bombing, the need to engage more with Asia. Last week you were

in Phuket and you met with APEC Finance Ministers. Can you tell us what

they were saying to you about the West’s response to terrorism in Southeast

Asia and do you think Australia can do more and, if so, what is it?

TREASURER:

Well, I thought it was very supportive, Denis. I met with Indonesian

counterparts. The Indonesians were very appreciative of the work that

we did helping with the investigation in Bali and also the Marriott hotel

in Jakarta. I met with all of my ASEAN counterparts, who all expressed

a horror of terror. And some of the countries in ASEAN are more acquainted

with that than we are. The Philippines, for example, has been fighting

a terrorist organisation probably for thirty or forty years. Singapore

has been very active in relation to this. Thailand cooperated in the

arrest of Hambali quite shortly before we arrived in Phuket. So, so I

think there is a lot of goodwill and there is a lot of support amongst

the ASEAN countries. At the meeting, we discussed measures to strengthen

against money laundering and the financing of terrorism. It is another

area where Australia has a very sophisticated system and we are able

to help some of our neighbours in relation to that. And we discussed

other general matters that could be done.

But let me return to the theme of what I said at that Asia Society. Terrorism

in Bali was an awful thing. It was one of the, probably the greatest,

civilian tragedy that our country has suffered. What should our response

be? Not to pull apart from Asia, but to draw closer. If you thought that

by pulling apart from Asia we could protect ourselves from terrorism,

Bali said we could not. Bali proved that Asia’s security was our security.

Some people, like, you know, sometimes when you, when you are listening

to the radio, it is almost as if people think Bali is an Australian territory.

Bali is Indonesia. Bali is Indonesia. And what did we learn with the

Bali bombing? That security in Indonesia is security for Australians.

And we cannot say that terrorism is a problem for Indonesia and it is

none of our business and draw apart. We have to draw closer and assist,

in Indonesia, the fight against terrorism because, it is not just their

country and their countrymen at stake, but ours, too. Go back to the

World Trade Centre. Australians were killed by terrorists in

the World Trade Centre. This is why this is a global effort. Your citizens

are going to be all around the world. They might be working in a World

Trade Centre, they might be working in Bali, they might be holidaying

in Phuket. And if terrorism strikes, they do not say, oh, any Australians

in there? Let’s pull back. This is why it is a global effort. Every country

in the world that wants to protect its citizens is going to have to join

this fight against terrorism. And the point that I made at that speech,

was, we will have to draw closer. We will have to assist more. It will

be in forensics, cooperation in law enforcement, intelligence, assistance

in relation to financial transactions and tracing the flow of funds by

terrorists. All of those areas. We are doing it to help our neighbours,

but we are also doing it for our own citizens and our own country.

And, of course, the other thing, is, that the more people you can track

down overseas in Southeast Asia, the less people you will have to track

down here. This is important for our region and our world, and the Australian

Government will be at the forefront of it, I can assure you of that.

MC:

A couple more. Jo-Anne Youngelson from ABC TV.

JOURNALIST:

Thanks. Mr Costello, can you update us on what’s happening with the Ansett

ticket levy? What do you think of suggestions that the Government is

double dipping? And should some of the money raised by given to the employees

who are yet to receive their full entitlements?

TREASURER:

Well, the Ansett ticket levy has been suspended.

JOURNALIST:

Well, what’s happening with the Federal ticket tax then?

TREASURER:

Well, it is not being collected.

JOURNALIST:

So the 350 million, $355 million loan to Ansett – is that correct? There

was a $355 million (inaudible)?

TREASURER:

I cannot tell you the amounts. But what happened was that employees who

had not been paid their entitlements – which was holiday leave, long

service leave, from memory eight weeks of redundancy pay and other entitlements

– we said we would implement a ticket levy to raise sufficient funds

to cover those entitlements. We came to the view, from memory in June,

that we had enough money to cover those entitlements and suspended the

levy. So it is not being collected. The financial advice to us was that

there was enough that had been collected at that stage. Now, in relation

to the administration of Ansett, there are still competing claims by

other creditors. Until you know what the other creditors have to be paid

out, you cannot have a final determination. But we are not collecting

it and we will meet all of those entitlements. And we also said that,

if it appeared at the end of the day that we had collected more than

was required for those entitlements, then the money would be directed

to either the tourist industry or the aviation industry. But I want to

tell you this: that the Government, the Commonwealth Government, is not,

is not taking anything out of this. The money will either be received

by the Ansett employees or, if there is a surplus, will be distributed

to the aviation, aviation industry or to the tourist industry.

JOURNALIST:

Just to follow that up, though. When will the workers actually see their

money? Is it weeks away, months away?

TREASURER:

Well, they have all been paid those entitlements, as I understand it.

JOURNALIST:

There’s no outstanding (inaudible)?

TREASURER:

No. We guaranteed long service leave, holiday pay, all other entitlements

and eight weeks of redundancy pay. That was the minimum entitlement.

There are some employees who claim they are entitled to more than eight

weeks of redundancy. Now, the Commonwealth Government did not say it

would pick up more than eight weeks of redundancy. That was the minimum.

Whatever the minimum entitlement was. I am pretty sure it was eight weeks.

It could have been six. No, I think it was eight. But there were some

people that said, well I should get forty or fifty weeks of redundancy.

The Commonwealth never said it would pick up the full entitlement. It

said it would pick up the safety net entitlement. And those people that

want to come back into the airline for above minimum entitlements will

be standing as creditors. But those minimum entitlements are the entitlements

which the Commonwealth is paying out of, has paid, out of the proceeds

of the levy.

MC:

Final question. Louise Willis again.

JOURNALIST:

Mr Costello, just to return you to your thoughts on Senate reform. As

part of those reforms, are you in favour of fixed and/or four year terms?

TREASURER:

Well, I do not think, I do not think this necessitates a change to either

fixed or four year terms. I have views on those as well which I am happy

to go into. But I think, I do not think this is necessarily connected.

I think we could actually do this with the current situation. Now, you

know how hard it is to change the Constitution of Australia. You have

got to have a referendum. It has got to be passed by a majority of voters

in a majority of States. History tells us that it is very hard to get

a positive outcome for a referendum. I have been on a few losing referendum

sides myself. And so I think that when you do go to the public, it is

best to go with a proposal which is as simple and as moderate as possible.

So, this is simple and moderate. We could add, we could add some bells

and whistles – four year terms and fixed terms. But my political judgement

says to me, keep it as simple as possible, you will maximise the chances

of having it accepted. So that is why I am not going into the deluxe

model, I am just giving you the standard Commodore model on this Constitutional

reform, or the standard Fairlane model or the standard Camry model. Whatever

it is – the standard model, the simple model, the one without deluxe

premium add-ons, the one that even I can understand. And if we keep it

simple, you never know, you have always got a chance of passing these

things. And I would like to see it go through because I think it would

be good for Australia. That is what we are here for – what is good for

long-term policy in Australia. Let us set our country up for the kind

of opportunities that it really deserves. Thank you very much.