Interview with Neil Mitchell

3AW

Wednesday, 22 August 2007

8.35am

SUBJECTS: Surplus, State Government services, Haneef, petrol, Essendon

MITCHELL:

Peter Costello good morning. 

TREASURER:

Good morning Neil. 

MITCHELL:

Huge surplus, did you go out and celebrate at a strip club yesterday?

TREASURER:

No, no, surprisingly.  I went home to my wife. 

MITCHELL:

Have you ever been to one?

TREASURER:

No. 

MITCHELL:

Why not?

TREASURER:

Well look, you know, I think they are pretty rough places.  Here in Melbourne as we know, some pretty bad things have happened outside those strip clubs.  And I think the people of Melbourne would feel with the death of that solicitor recently, it put the spotlight on some of the things that are going on inside of those clubs.

MITCHELL:

Okay.  The serious point – $17.3 billion – why and is it really your job to build massive surpluses?

TREASURER:

Why?  The answer is because spending was less than we anticipated because we have got more people into work.  If we get more people into work you pay less in unemployment benefits.  Revenues were stronger because companies have been more profitable.  In fact, the profits of Australian companies are at all time records.  So, not only did we balance our budget, but we had some left over.  We have now repaid Labor’s $96 billion debt so that the Commonwealth Government doesn’t owe any debt and we will now be in a position to fund all outstanding liabilities.

MITCHELL:

But you have got the money through taxation and that is, you are saying company tax taxes, superannuation tax.

TREASURER:

To a lesser degree.  Mostly company tax but there was also more for superannuation because confidence, capital gains on shares held by superannuation funds were stronger. 

MITCHELL:

But what is the point in having $17.3 billion when our transport system doesn’t work, our roads are dodgy and the hospitals are clogged.  What is the point in all of that money sitting in government coffers – State or Federal – when we, who put it there are not benefiting from it?

TREASURER:

Well let me tell you what the Commonwealth Government is going to do – the Australian Government.  I can’t take responsibility for the Victorian Government as you know. 

MITCHELL:

Although you are funding it.

TREASURER:

Oh yes, well that is right.  Don’t forget that they get $40 billion from GST, these State governments, that is collectively between all of the States.  But what are we going to do?  Right, okay, well we have now repaid Labor’s debt – that $96 billion – we have now established our Future Fund which will meet future superannuation liabilities.  As to the remainder, we are going to put $6 billion into higher education which is our Higher Education Endowment Fund.  And that leaves $2½ billion which we are going to put into a Health and Medical Investment Fund.  And what that Fund will do is it will generate income which will be used by state-of-the-art technological equipment. 

MITCHELL:

Where?

TREASURER:

Well it will be on a competitive basis.  Hospitals will be able to put in applications for grants.

MITCHELL:

So State funded hospitals…

TREASURER:

Yes.

MITCHELL:

…will say they have got a big pot of money, I will go to them and ask you for a…

TREASURER:

Yes.

MITCHELL:

…new ward or something?

TREASURER:

It could be a ward or it could be a high tech machine.  For example we have been putting MRI machines in hospitals but there is another generation beyond that which is now coming which these hospitals will want to buy and they might go to this Fund and say we need X million dollars to bring this on-line.  It will be an expert committee.  The expert committee will assess the bids from hospitals all over Australia and it will start funding. 

MITCHELL:

Okay.  Get back to the point.  Will it help roads?  Will it help transport?

TREASURER:

Well the Commonwealth Government has its own road funding programme which is already funded out of the Budget.  The Commonwealth Government funds national highway and we fund major economic infrastructure.  For example, the Commonwealth Government is duplicating the Calder Freeway to Bendigo – well parts – in conjunction with the State.  We are building the Deer Park by-pass – the road that goes Ballarat.  The Commonwealth Government did that extension off the Ringroad onto the Hume Highway.  The Commonwealth Government doesn’t build local roads.  It doesn’t build Bridge Road or Dandenong Road, but what it does build, is it does build interstate highway and roads of major economic importance.

MITCHELL:

Do you see any point though?  People are living in circumstances that are less than desirable but you are saying I have got all of this money, we are going to spend it somewhere.  What point is you having all of that money?

TREASURER:

Well we are going to…

MITCHELL:

I had a bloke yesterday, 18 months he had to wait to get a prostate appointment in hospital. 

TREASURER:

Yes.

MITCHELL:

(inaudible) sick.  18 months. 

TREASURER:

Yes.

MITCHELL:

That is not working, the system is not working. 

TREASURER:

Well I think a lot of people say the system is not working.  The system is – as you know – the system is that State Governments run public hospitals.  There are a lot of people who would say the system is not working.  And you and I know the Australian Government doesn’t run the public hospitals.

MITCHELL:

So are you giving them enough money and they are wasting it?

TREASURER:

Well the State Governments are getting more money than ever before in Australian history out of the GST.  Now, I must say this, people are frustrated by State services.  Everywhere you go, every state you go, you get asked this very same question.  And all I can say is well, State Governments are responsible, you have got to hold them responsible at State elections.  Now, we will do what we can.  We will invest in education, we will invest in health.  We have now got rid of all of Labor’s debt which takes pressure off interest rates.  But we can’t run State Governments nor do we intend to try and take them over. 

MITCHELL:

Do you intend to operate if re-elected at this level of service?  Do you intend, do you aim for a $15 – $17 billion surplus every year?

TREASURER:

Certainly aiming for a surplus which is greater than 1 per cent of GDP.  Our GDP is a bit over $1 trillion so that is certainly surpluses over $10 billion. 

MITCHELL:

Okay.  Over $10 billion.  Is that necessary?

TREASURER:

Yes.

MITCHELL:

It might be to get the share price up.  You are not private enterprise.

TREASURER:

No, but we have to keep pressure off interest rates.  If the Commonwealth Government was not running a surplus, if we were not adding to savings, if the Commonwealth Government was in deficit, if we were borrowing savings that would put pressure on interest rates.  That is why I run surpluses to make sure that the Commonwealth Government does its bit to keep pressure off interest rates. 

MITCHELL:

Will you announce tax cuts before the election?

TREASURER:

I am not going into the policies we will announce before the election but I will say this.  We announced tax cuts which took effect on 1 July so, you know, we just had a round of tax cuts including – don’t forget – the abolition of all taxes on superannuation payments, of lump sums and pensions which took effect on 1 July.  So, very substantive tax cuts came into effect on 1 July.  And we have actually legislated a second round of those tax cuts to take effect on 1 July next year in 2008. 

MITCHELL:

So is there a possibility that more tax cuts could be announced?

TREASURER:

Well, as I said, we have already legislated the second round so there is quite a lot of tax relief that has been given and is in the pipeline. 

MITCHELL:

Is there room in the surplus for further tax relief?

TREASURER:

Well we have to be very careful that we don’t pressure on interest rates which is why we run surpluses and why we invest.  Because while we are investing – we are not spending all of this money – we are actually investing it, and it is the earnings from the investment that will go to higher education and it is the earnings from investment that will go into health and medical facilities. 

MITCHELL:

I have this impression of a big pot of money, still even with what you have outlined and that you are able to get around the country during the election campaign and say, there you are, there is $100 million there or there is $20 million there for specific projects.  Will that happen?

TREASURER:

Well the Commonwealth Government does have specific projects which it has already factored into its Budget to help rural and regional communities.  That is already there.  But I think the reality is we have run a tight ship over a long period of time and we will continue to do it.  We will respond to needs, but overall we run a tight ship.

MITCHELL:

You respond to needs but overall you run a tight ship.  What does that mean?

TREASURER:

It means that for example, we have a large road building programme called Auslink.  This will be allocated to various road building projects and the Victorian Government itself was demanding that we allocate money to roads here in Victoria.  Now, we will respond to legitimate needs.  Of course we will.  That is part of our, but we will make sure that the overall Budget will be in surplus and keep pressure off interest rates. 

MITCHELL:

Pork-barrelling, would you deny there will be any pork-barrelling?

TREASURER:

Yes.

MITCHELL:

You will stand by that though the election campaign?

TREASURER:

Yes, we will respond to legitimate needs as you would expect a government to do.  But…

MITCHELL:

Will marginal seats have a louder voice, perhaps?

TREASURER:

No, but it will be done with an overall economic framework which is very responsible.  And can I say this.  We talk in this country about budget surpluses.  How big should a budget surplus be?  You know, America doesn’t talk like that.  Britain doesn’t talk like that and Japan doesn’t talk like that.  If you want to compare Australia, we are a standout leader in this area. 

MITCHELL:

Dental health, do you think, will you be putting money into dental health?

TREASURER:

Well we did announce in the Budget a new initiative in dental health which is for people who have chronic conditions and the taxpayer will provide for those people with check-ups and treatment.

MITCHELL:

Will you bring it under Medicare?

TREASURER:

No, the dental scheme has never been under Medicare. 

MITCHELL:

I thought you might be bringing it under Medicare?

TREASURER:

Well it has never been under Medicare and it has always been a responsibility of the States. 

MITCHELL:

That is the past, would you look at putting it under Medicare in the future?

TREASURER:

Well that is the past and that is the present.  And I…

MITCHELL:

(inaudible). 

TREASURER:

…think it is like that for good reasons. 

MITCHELL:

Okay.  So the future is likely to remain that way?

TREASURER:

I think it is like that for good reasons. 

MITCHELL:

The Treasurer is with me, we will take a quick break, come back with some other issues.  No pork-barrelling from the marginal seats.  There is no point in saying: ‘look Pete, what I need, is you have got all of that money, come on.’ 

TREASURER:

Well we have put into the Budget already programmes which are helping rural and regional areas.  Programmes that help with drought, programmes that help with roads.  But these are responding to legitimate needs. 

MITCHELL:

A break.  More from the Treasurer in a moment. 

[AD BREAK]

MITCHELL:

The Treasurer is with me.  I am sorry we won’t have time for calls.  Dr Mohammed Haneef and the court decision yesterday.  Do you know why Kevin Andrews is still suspicious of Dr Haneef?

TREASURER:

Because he has been shown material which he believes means that he as the Immigration Minister should step in in the public interest. 

MITCHELL:

He says he has still got information, new information that we are unaware of.  Do you know what the information is?

TREASURER:

I know some of it. 

MITCHELL:

Does it concern you?

TREASURER:

Yes, I think it is material that a responsible Minister would view very seriously. 

MITCHELL:

You don’t believe Haneef should come back into this country? 

TREASURER:

I don’t know how much I can say because this is before the courts.  What I will say is this.  That…

MITCHELL:

But surely a Judge is beyond influence.

TREASURER:

We have got to be careful here, Neil.  We don’t want to get together, you and I, down at Pentridge or wherever a bit later on.  The matter is before the courts.  The Judge has made his decision.  The Minister will appeal and let’s see what the court does on the appeal. 

MITCHELL:

Well the Minister is saying he doesn’t think Haneef should come back into the country.  Do you agree with him?

TREASURER:

I agree with the Minister. 

MITCHELL:

The Federal Police were a bit messy on this, and they have been advising the Minister all along and now we have got the Court saying: ‘hang on, that is wrong.’

TREASURER:

Well that is why we have courts.  The courts are a check and a balance in a democratic society.  They are allowed to go in and allowed to check these things.  But in a court system as you know, it is not until the final court has ruled that you have got the final decision, I think this has got a long way to go. 

MITCHELL:

John Howard is under criticism today for meeting the Exclusive Brethren.  Have you met them?

TREASURER:

Yes.

MITCHELL:

Is it unfair to be critical of a meeting with them?

TREASURER:

There is nothing wrong with meeting the Exclusive Brethren.  They are Australian citizens just like anybody else.  They seek meetings with their Members of Parliament from time to time.  Over the years I have had many meetings with the Exclusive Brethren just as I have with people from other churches.  This is no crime.  In fact the crime would be if a Member of Parliament refused to meet somebody on the basis of their religious convictions.  I don’t know why the newspapers get so worked up about it.  These are people who are constituents, Australian citizens, they follow their own religious beliefs and they have got every right to do so. 

MITCHELL:

Just thinking back to the surplus, (inaudible) these petrol prices? 

TREASURER:

Well Neil, you know the petrol price is now at a 20 month low…

MITCHELL:

Yeah, no thanks to you. 

TREASURER:

Yes, I agree with that.  I would agree with that.  It is lower because world oil prices have come down.  Yes, I agree with that.  And as long as you say when it goes up, it went up no thanks to me…

MITCHELL:

(inaudible) going to do something. 

TREASURER:

And we have an inquiry going on at the moment with the ACCC which is trying to get to the bottom of whether the current retailing arrangements are giving customers the most competitive prices.  And let’s see what comes out of it.  It is going to be very interesting, that inquiry.  And they have the opportunity to get all of the motoring groups, the RACV can go in and give evidence under cross-examination.  If they have any evidence of cartel activity, now is the time to go into the witness box and give it to us. 

MITCHELL:

Do you think it could lead to lower petrol prices?

TREASURER:

I think if it can discover that there has been any anti-competitive conduct it will lead to prosecutions and if we get those people out of the market that would improve the market.  But whether it will lead to that or not, is a matter we have to see. 

MITCHELL:

That evidence today or yesterday is a bit worrying, isn’t it?  That the link between higher grocery prices and lower petrol prices.  We are all paying one way or the other. 

TREASURER:

Well, you know, I mean, I am in two minds about that evidence.  On one level what the evidence was telling you was that this arrangement is getting petrol prices lower than they would otherwise be.  If you are a petrol consumer you would have actually liked that evidence.  And I would have thought if you were a consumer there was a message in there which I am sure the witness was trying to get across.  That if you bought your groceries, well, I won’t go into it, but the point that I think he was trying to make was that you were getting lower prices in petrol even though you might have been getting higher prices somewhere else. 

MITCHELL:

Now, off-the-record, you got dudded recently on off-the-record comments.  Would you ever trust a journalist again?

TREASURER:

Well there are some senior journalists who I would continue to talk to but…

MITCHELL:

Does it change the rules?

TREASURER:

I think it will change the rules, yes, very much so.

MITCHELL:

In what way?

TREASURER:

Oh well…

MITCHELL:

It sounds “in” but it isn’t, it affects the information people get.

TREASURER:

Well, you and I have had meals on many an occasion.  Have we ever talked about them to cameras?  No.  That is the way you have meals.  But if you are going to have a meal with a journalist in the future and it is going to be put up on national television, frankly I would rather not have the meal, wouldn’t you?  It is a big price to pay for steak and chips. 

MITCHELL:

Has it caused any tensions with the Prime Minister?

TREASURER:

No.

MITCHELL:

That’s surprising, isn’t it?

TREASURER:

Not in the slightest. 

MITCHELL:

Why?

TREASURER:

Well I think he has a pretty firm view about the conduct involved. 

MITCHELL:

What the breaching of confidence? 

TREASURER:

Well you see, I really don’t want to go into it.  I don’t want to go over it.

MITCHELL:

Are you going to win?

TREASURER:

The election will be tight. 

MITCHELL:

Yes, but are you going to win.

TREASURER:

And it, you would have to say at the moment Labor thinks it is a shoe-in and Kevin Rudd is already talking as if he has won it.  But the siren hasn’t sounded and I don’t even think the real action has begun yet.  I think the election could go either way but you would have to say Kevin Rudd, he looks like Geelong.  He is sitting on top of the ladder and he is three games clear.  And…

MITCHELL:

Are you going to do a Sheeds if you don’t win and leave?

TREASURER:

I think both parts of that question are wrong, aren’t they?  I don’t think Sheeds is leaving and…

MITCHELL:

If you don’t win…

TREASURER:

Look, I am running for the election, I am running for election for three years.

MITCHELL:

Okay, so you are committing to three years regardless?

TREASURER:

Sure.  I am running for re-election and I am running as a Member of Parliament, yes, I am running to be a Member of Parliament for three years and I am running hopefully to be in government.  Of course. 

MITCHELL:

Will you be Opposition Leader if not?

TREASURER:

I am running to be in government. 

MITCHELL:

Drugs in the AFL, you have had a strong view on this of late.  Just with interest the way they are going after Jason Ackermanis for things he said, while Ben Cousins walks around effectively unpunished by the AFL.  What is your view of what has happened?

TREASURER:

Give credit where it is due.  The AFL does do more extensive testing than other sports.  That is, they don’t just test on match day, they might test during the week too.  So I would give them a big credit for that.  The weakness of the AFL’s drug code is when the test comes back negative, they don’t do anything with it.  If you are going to test and you get a negative response, that is that somebody has been on drugs, you have got to do something about it.

MITCHELL:

Positive, and negative and positive. 

TREASURER:

Oh okay, sorry, I had it the wrong way.  If it comes back that he has been positive on drugs or negative against the player, when it comes back and it shows the player has taken drugs they don’t do anything about it.  Credit for doing the testing, but when you do the testing and it shows that somebody has been taking drugs, you have got to do something about it.  They ignore it the first time, they ignore it the second time and then it is only on the third occasion that they have said they are going to do something about it.  Now, this has been a problem in the AFL.  We know that drugs have been a problem in the AFL.  The AFL has now said that it is going to review its code at the end of the season.  That is a welcome move and if the AFL moves to a system more like say, the Rugby League, I think that would be a big improvement. 

MITCHELL:

Okay, Kevin Sheedy, will you go to his farewell Melbourne game or his Perth game? 

TREASURER:

Oh yes, well I will be there on Sunday which is his farewell…

MITCHELL:

And James Hird.

TREASURER:

…and James Hird.  Look, they have been great servants for the Essendon Football Club.  There is no doubt about it.  Sheedy will go down in legend as possibly the greatest AFL coach. 

MITCHELL:

Barrass. 

TREASURER:

Who?

MITCHELL:

Barrass. 

TREASURER:

Sheedy will go down in history as possibly the greatest AFL coach and possibly only rivalled by well may be Jock McHale or Norm Smith. 

MITCHELL:

What is wrong with Barrass?

TREASURER:

And James Hird has been just a great, absolute legend for the Essendon Football Club and they will be sorry to see him go but it could be a great night. 

MITCHELL:

Barrass didn’t even make the top three.  We had better do calls on this.  We will a little later. 

TREASURER:

Well you know, Sheedy has done 27 years.  How many did Barrass do?

MITCHELL:

Oh, he put all of the clubs together, he did lots.  How many premierships has Sheeds got?

TREASURER:

Four. 

MITCHELL:

How many has Barrass got? 

TREASURER:

Well he would have had more as a player than as a coach, wouldn’t he?

MITCHELL:

Well (inaudible).  Anyway, look, should he go to Melbourne?

TREASURER:

Sheeds?  I think Melbourne would do well with Sheedy, yes I do.  You know, I think, look he is a great character, he would bring a lot of followers back to the games and he would be a great promotion for the Melbourne Football Club.

MITCHELL:

  So Sheeds is one of the greatest coaches ever.  James Hird one of the greatest players, yes? 

TREASURER:

And you are one of the greatest radio commentators ever.  Is that what I was supposed to say? 

MITCHELL:

No, no, are you going to stay as Number 1 Member when they go, or are you out?

TREASURER:

Well it is a year by year proposition. 

MITCHELL:

A bit like a few other things.  Thank you very much for coming in.  We have cleared up the matter of the strip club.  Have you ever been so drunk you can’t remember what happened? 

TREASURER:

Look, I am not going to go there.  The trouble is Kevin Rudd does certain things and all of a sudden all of us are under cross-examination.  You know, as far as I am concerned, it is a matter for Mr Rudd and I am not going to go there. 

MITCHELL:

It doesn’t really matter.

TREASURER:

It is a matter for him. 

MITCHELL:

Thank you very much for coming in. 

TREASURER:

Thanks Neil.