TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Interview with Paul Murray

6PR

Wednesday, 1 October 2003

10.30am

SUBJECTS: Tax Cuts, GST, Health Funding, Ministerial Appointments

MURRAY:

Good morning Peter.

TREASURER:

Good morning Paul, how are you?

MURRAY:

Yeah, well thanks Peter. Peter you appear from media reports this morning

to be under some significant backbench pressure to give these pre-election

tax cuts. Would you do that?

TREASURER:

Well, what we announced yesterday was the outcome for the last financial

year, that’s the year ending on 30 June 2003. In the current year, which

started on the 1^st of July 2003, we have cut tax, we cut tax

by $2 billion starting from 1 July, so the tax cut is already in place.

Now, the press are all talking today about what will you do next year,

that’s the year starting 1 July 2004, and Paul of course, what we do

next year, we will announce at the time of next year’s budget. But what

I want to say is we have already cut taxes, and income rates have been

reduced as from 1 July this year.

MURRAY:

Peter the point I am trying to get to here is that when you negotiated

with the States this year on the health agreement, it is pretty clear

from the financial position that you disclosed yesterday that you really

did have the money to accede to the States’ requests to get more money

into our hospital system, but you chose not to. Many Australians today

are questioning that decision.

TREASURER:

Well, what we did with the States is, we increased expenditure on health

under those agreements by 17 per cent…

MURRAY:

But they say you cut it, but anyway let’s…

TREASURER:

Well hang on Paul, there is no argument about this. We increased it by

17 per cent. Now, their argument was, maybe you should increase it by

18 per cent, or 19 per cent, or whatever they say, but…

MURRAY:

…but they say it doesn’t match the increase in the costs that they

are facing in hospitals…

TREASURER:

…there…

MURRAY:

…with the health system.

TREASURER:

…there is no argument about this. Health spending was increased by

17 per cent over 5 years. Now, you can always say, well look, we should

increase it by more, and you can have that argument. But that is a very

large increase in health spending, and I have always said, and this is

what I said at the time of the last Budget, that I think it is important

that we as a Government meet decent expenditures in relation to pensions

and health. We fund the troops in the field, we have got troops in the

field in Iraq, East Timor, the Solomon Islands. We lower our debt, and

as you said we have now lowered our debt, and if at the end of the day

we can balance our Budget, we try and return to taxpayers – and that’s

what we did in this year’s budget – we cut taxes and if we had the opportunity

in future budgets, we would do the same.

MURRAY:

Peter, we, in that surplus, I mean it was brought about because your

average Australian paid $5 billion more in income tax than the year before,

a lot of that is due to bracket creep, company profits contributed an

extra $2.1 billion more than you were expecting. Shouldn’t we as Australians

have the right to expect you as our government to spend the money where

we want it spent? On health?

TREASURER:

Well, you know, I have always believed, by the way, if you want people

to spend it where they want it spent, it is best to return it to them,

and they can chose where to spend it.

MURRAY:

Yeah but I don’t have the ability, if you give me back 10 bucks next

year out of my tax, I don’t have the ability to make our hospital system

better.

TREASURER:

Well, well, look, if you had a tax cut, and you would have had a tax

cut this year probably of about $300 or $400 a year, you decide where

you spend it. But, can I go back to the point you were asking me, company

tax was $2 billion stronger this year, yes it was. Why was it stronger?

Because companies were profitable. Now, I think most people will say

this is a good thing, if you can run a strong economy, if your companies

can make profits, and you tax them at 30 per cent on their profits then

you can get additional revenue which you can use for all sorts of purposes

and we have. It is actually a good thing that companies are profitable

and that they’re paying a larger proportion of revenue. That is actually

a good thing, and I think we would welcome that as a good outcome.

MURRAY:

Sometimes we out here in the provinces think that the people in Canberra

are very divorced from the problems that we face. The problems in Western

Australia with health come down pretty much to a problem with hospitals,

that’s where the people feel it the most. Although there are other arguments

about suburban GPs and bulk billing, etc. The debate today that I read

in all the national newspapers is that you might actually do something

about Medicare with the extra money that you are going to have, but you

will be looking again at the GPs issue. The problem that we see it here,

the hard edged political problem is, that the hospitals funding pretty

much comes from the amount of money that you are prepared to give to

the States right? And we see that there is a need for extra funding there,

and even though you have got it, you are not letting go of it.

TREASURER:

No. You know, in this financial year, the West Australian Government

will received $3008 millions of dollars. Think of a million, they will

receive $3008 millions of dollars in GST. Now bear this in mind, every

last dollar of GST revenue is given to the State Governments. So, that

is what they will get, that $3008 millions of dollars, that’s from GST

revenue. In addition to that, the Commonwealth has agreed to health funding

for hospitals, but you are entitled to ask the State Government to account

for that $3008 millions of dollars. Some of that will go into their health

system. In addition to that there is Commonwealth agreements in relation

to health, but Paul…

MURRAY:

You tell us about that GST funding as if it is new money or something

Peter, it just replaced other funding that we used to get from the Federal

Government under the previous tax arrangements.

TREASURER:

Well, hang on, the State Governments never had access to a revenue base,

until we introduced the GST. And every year that increased, and every

year they get the full amount from it. And in Western Australia’s case

it is $3008 millions of dollars. Now, they will put some of that to,

the State Government will put some of that to hospitals, some of that

will go to roads, and the Commonwealth will in addition to that, fund,

fund the hospitals as you have said, with a 17 per cent increase. Now,

when you are looking at these things nationally Paul, this is what we

do, in addition to funding State Governments there are other obligations

that we have got. We have got to support our troops in the field. The

West Australian Government doesn’t pay for the salaries of our troops

in Iraq or East Timor…

MURRAY:

You ran a war in Iraq…

TREASURER:

…or the Solomon Islands.

MURRAY:

…in the last financial year and can out of it with a massive surplus.

TREASURER:

And we have to fund all of those military commitments, we have to fund

the drought assistance for our farmers who have been through the worst

drought in a hundred years. We have all sorts of obligations, and what

we are also trying to do, is we are trying to balance our Budget and

re-pay Labor’s debt. I mean, I think the best news to come out of this

is, that you know, Labor ran debt up to $96 billion, we have now reduced

it by $66 billion. We haven’t completely eliminated it…

MURRAY:

Yes a spectacular performance…

TREASURER:

…we have put Australia into a strong position. Now, our economy in

Australia is still growing. The US has been in a recession, Japan has

been in a recession, Europe has been in a recession. You know, the world

out there Paul is in a pretty sick and sorry state, and there is a lot

of people don’t realise that Australia is one-off against what is happening

in the rest of the world. But, you know, can I just say, this doesn’t

come through luck, it doesn’t come through a fluke, it comes through

strong economic management. That is what we are trying to do here, to

keep people in jobs.

MURRAY:

Yep, the problem that I have got with it, is it appears that the Federal

Liberal Government is battling against State Labor Governments on some

sort of ideological war over how we pay for the health system, and in

the end there are people in emergency rooms in hospitals in Western Australia

who are paying the price of this political fight.

TREASURER:

Well let me go through it. The 17 per cent increase in health funding,

three thousand millions of dollars in GST revenue, and you know the Federal

Government introduced a 30 per cent rebate for anybody who takes out

private health insurance. That didn’t exist before we introduced it.

Now, the Labor Party is running around saying they want to abolish this

rebate to certain people, what do you think that is going to do? We are

trying to encourage people to take out private health insurance with

a 30 per cent rebate, we have a 17 per cent increase in relation to health

funding, and every last dollar of GST is going to these State Governments.

It is not a bad deal. In fact I have often said this Paul, you know,

the State Governments get a monthly cheque from GST revenue. All they

have to do is bank it, that’s all they have got to do, every month, just

bank it…

MURRAY:

Spend it.

TREASURER:

…and spend it. They don’t have to raise it, they don’t have to administer

it, they didn’t have to run an election on it. All they have got to do

is sit back, open the letter once a month, and bank the cheque.

MURRAY:

OK Peter, well it sounds like tax cuts and no more money on hospitals

to me.

TREASURER:

Well, a 17 per cent increase, generous GST funding, 30 per cent private

health insurance rebate – if we can keep the Australian economy growing,

if we can keep Australia in the black and fund our troops, sure we would

like to have lower taxes, and I have been saying for the last 24 hours,

we don’t want the taxes to be any higher than they need to be in this

country, and if we can actually reduce the tax burden, if we are in a

position in future years to do that, of course we would like to do it.

MURRAY:

OK Peter, just finally, Julie Bishop in the Federal Ministry at long

last.

TREASURER:

Julie is a great performer, and her promotion was thoroughly deserved,

and I think she is going to make a great contribution.

Can I also say, Ian Campbell, whose been my Parliamentary Secretary,

a WA Senator, also a very strong performer and a great bloke, and you

know, some great talent coming out of the West there, Paul. Maybe there

will be some great talent in some of the footy clubs next year too.

MURRAY:

That’s enough out of that, well I don’t know, your Bombers didn’t do

that well.

TREASURER:

The Bombers weren’t too good. We have got to do something to clamp down

on these Queensland interlopers, and get that AFL Cup back to us.

MURRAY:

I tell you what a (inaudible) is looking pretty good to me. Thanks Peter.

TREASURER:

Thank very much Paul.