Interview with Georgie Gardner & Karl Stefanovic

8.10 am

SUBJECTS: Tax cuts, Election ‘07

GARDNER:

Good morning to you. 

TREASURER:

Good morning, good to be with you.

STEFANOVIC:

That is a big smile, Treasurer.

TREASURER:

Thanks Karl, it is good to be with you and of course the policy that we announced yesterday is a very important policy for Australia’s future and for our economic growth.  It will also help people with cost of living pressures, but it will encourage more people into the workforce and that will build our economy stronger.  So it is a very important reform. 

GARDNER:

Well there is no doubt people love a tax cut.  Is it though, the $34 billion king-hit on Kevin Rudd that you need?  Does this policy put you back in the hunt?

TREASURER:

Well it is an important policy for Australia’s future.  What it does is it says over a staged process, that low income earners won’t pay any tax until they go above $16,000 of earnings.  It says over a staged process that people who are working part-time, won’t have a higher tax rate than 15 per cent and that is particularly important for married women who are re-entering the workforce and it brings the top tax rate down to 42 cents with the goal of 40 cents so that you won’t pay – nobody will pay any more than 40 cents in the dollar in income tax.  So this is a very big plan. I think if the Opposition is interested in good tax policy they will endorse it.  Kevin Rudd has said ‘me too’ on most of the Government’s economic policies and I think it is time he said ‘me too’ on this one as well.  And the longer he leaves it, the longer it becomes apparent that although Mr Howard and I have a plan, Kevin Rudd doesn’t seem to have thought of one.  And he needs to think of a plan because this is the most important area of economic policy and without a tax plan, he obviously isn’t ready to manage the economy. 

STEFANOVIC:

The major concern here Treasurer, is that this is going to only provide more heat to an already fairly heated economy.  Are you concerned or do you think that these tax cuts will only add to the inflationary pressure and in turn the pressure on interest rates.  If interest rates go up, surely these tax cuts will be eaten up.

TREASURER:

No, well of course the plan takes effect on 1 July of next year and it takes effect in three stages over three years.  And it has been deliberately staggered so that it doesn’t put undue heat in the economy and of course won’t put any heat in the economy until July of next year.  And in addition to that it has been carefully staged so that the Budget will remain in surplus.  One of the best surplus Budgets in the world, much higher than America or Britain or Japan or France or Germany or any of those countries.  So it is totally costed, totally planned.  Ambitious?  Yes.  Will it help families?  Yes, of course it will, but most importantly it will build Australia’s economy and that is why we are doing it.

GARDNER:

It would appear the Government is rolling in money, Mr Costello, why didn’t you move to ease tax rates earlier and others of course would argue that this money should be spent on hospitals, on our schools?

TREASURER:

Well the important thing about these income tax reforms is that they return money to families, that’s why we are cutting income taxes, particularly to help them with cost of living pressures.  That is very important for families and it is very important for the economy, but by building a stronger economy of course we can also afford better investment in services.  That is what we are doing.  We are doing more investment in roads and rail.  We are doing more investments in education as I announced in the Budget.  More investments in all of the key areas, but you can only invest in good social services if you have a strong economy and a competitive tax system is absolutely critical to building a strong economy.

STEFANOVIC:

You’re asking voters to vote for the Howard/Costello partnership, what will Prime Minister Peter Costello bring to the table?

TREASURER:

Well, we are running for re-election on November the 24th as a team.  It is an experienced team.  I’ve been managing managing Australia’s trillion dollar economy over the last years and I want to continue to do it.  People know that what I stand for are balanced budgets, elimination of debt, more jobs, competitive tax.  All of the things that are necessary to build a future Australia.  They are the things I believe in.  That is what I have devoted my adult life to doing.  We now have 2.2 million more Australians in work than before, when I became Treasurer, and I want to see them keep their jobs.  My job is to make sure Australians keep their jobs.  That is my job. And there are 2.2 million more Australians in work than before when I became Treasurer.

STEFANOVIC:

Did you like the sound of that, Prime Minister Peter Costello?

TREASURER:

Well, over the years Karl a lot of people have said a lot of names.

STEFANOVIC:

Have you said it to yourself recently?

TREASURER:

No, no.  A lot of people have called me a lot of names, Karl, I am used to them all.

GARDNER:

The thing is though, should the Government retain power, Mr Costello, the Prime Minister has said that he will pass on the baton well into the next term.  Are you demanding a date?  I mean surely you want to have some idea as to when you’d take over the top job?

TREASURER:

Oh, no this is something that will happen in due course sometime before the election after the next one.  So I don’t worry about the election after the next one, I am worried about the next one which is in six weeks’ time.

STEFANOVIC:

A few months ago on this program you denied ever saying “Howard can’t win, I can but he can’t”.  Now that you are running together, can you win?

TREASURER:

Oh, yes, we can win.  As a team we can win.  And I think as a pair of experienced hands who know how to manage the economy – you’ve seen this with our tax plan, this is a very ambitious tax plan.  People will say, well there are some guys who have some experience.  They have a plan and they know how to manage a trillion dollar economy and what are they comparing it with?  No plan, no experience, no management.  And I think that as people think about that they realise their jobs, their houses, their businesses all depend on this election.  I think that they will look at the Opposition in a much more critical vein.

STEFANOVIC:

Treasurer, just finally and quickly before we move on, we’ve got James Blunt coming up of course, do you have any more major announcements, any more rabbits that you can pull out of the hat?

TREASURER:

Well, there will be further announcements as the campaign goes on but this is the major economic announcement.  This is the major announcement which will build Australia’s strong economy.  It is the only plan going and it is the most ambitious and exciting one.

STEFANOVIC:

Treasurer, thanks for your time today.  Appreciate it.

TREASURER:

Thanks, Karl.