Terrorist attacks, interest rate cuts, surplus, employment, leadership

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Terrorist attacks, interest rate cuts, surplus, employment, leadership






ABC Radio – AM with Mark Willacy

Thursday, 4 October 2001



SUBJECT: Terrorist attacks, interest rate cuts, surplus, employment, leadership


Mr Costello, why shouldn’t the US, as Laurie Brereton suggests, release publicly

some of the evidence it says it has against Osama bin Laden?


Well, if the United States can do that, if it is not classified material,

or it doesn’t compromise investigations, no doubt it would. But it is a matter

for the United States isn’t it, of course, if it believes it would compromise

sources, it could be sources in the field, it would be a very silly thing to

do. But, I think it is best, the decision is best left to the US Government.

I am not sure that Mr Brereton knows more about it than they do.


On the rate cut, is it true the banks received a call from Treasury on behalf

of your office only minutes after yesterday’s rate cut, and they were asked

when they were passing on the reduction, and for a copy of their media release

to prove it?


Yes, actually they were rung by my office, not rung by the Treasury. My office

rang each of the banks and asked the banks when they would be passing on this

rate cut. Now, that is because when rates are cut, it is not for the benefit

of the banks. It is done for the benefit of borrowers. And we have been insistent

that the banks pass on the rate cuts, and they pass them on quickly, so, my

office rang the banks, asked when they were passing it on. I think Westpac was

the first, indicated that it would be cutting mortgage rates, and within the

hour, I think, each of the big four banks had agreed to pass it on in full.

And that is only proper, that is what we would expect them to do.


What about the National Australia Bank, though, it is taking twelve days to

pass on the rate cut, whereas last year’s rate rises were passed on in five

days. Are you seeking a further explanation from Australia’s biggest bank on



Well, I think that the banks should pass them on as quickly as possible. I

note that the National Australia Bank has been the slowest. I think consumers

deserve to know that. If you are a consumer who has a mortgage with the National

Australia Bank, the fact is that your bank has been the slowest in passing on

the interest rate cut. And, I think new borrowers will take these sorts of things

into account. If you have competition, we have got to make sure that competition

works for the benefit of borrowers. And anybody who is out there at an auction

on the weekend and will be looking for a mortgage, they can take into account

which banks move the fastest, and which give the best service.


Well, on the economy generally, Labor’s Treasury spokesman, Simon Crean, says

the economy has been mugged by the GST, growth has been halved to 1.4 per cent,

that you have blown the surplus trying to woo voters. Basically, he is saying,

there is no room for extra spending when the economy needs it most, and that

is in the face of global, economic uncertainty.


Well, Mr Crean, of course, says a lot of contradictory things. That was one

of his claims yesterday – there is no room for extra spending because the Government

has engaged in extra spending. That was what he said yesterday.


He has got a point, hasn’t he, that there is (inaudible). . .


What, he is calling for extra spending, what, he is calling for extra spending

and complaining that there has been extra spending?


But what about. . .


I don’t think he does have a point. Can I say, I make two points, in relation

to budgets. We have now delivered four consecutive surplus Budgets and paid

off $60 billion of Labor’s debt. And when we were driving the Budget into surplus,

Mr Crean and Mr Beazley opposed us every step of the way. If they’d have had

their way, we wouldn’t have been able to pay off $60 billion worth of Labor’s

debt, and where would we be today? So, I don’t think Labor has terribly strong

credentials in relation to budgets. And. . .


What about (inaudible). . . respected modeler Econtech, which you have used

in the past, is forecasting a surplus of just half a billion dollars next financial

year. That is less than half your prediction. Will the cupboard really be that

bare for which ever side wins the election?


Well, we are actually forecasting a very small surplus ourselves in the current

year, and in the following year, actually. And that is because we engaged in

cutting taxes, principally cutting income taxes, but on 1 July we cut company

taxes again, and we abolished Financial Institutions Duty, and, as you know,

we abolished indexation of excise.


So Econtech is on the money?


Well, as you look back, with the world going into a weakening environment,

the cutting of income taxes in particular, which has kept retail spending up,

and, as the world goes into a difficult international environment, the cutting

of company taxes, were very good decisions. That’s precisely what you would

have wanted to be doing in a situation like this. Now, we are moving into a

situation where the United States has stopped growing and is probably contracting.

Where Japan is in recession again, where Europe has stopped growing, effectively,

and the Australian economy has been growing in the first half of this year at

about 3 per cent. One of the strongest growing economies in the world, being

held up by good retail figures and domestic constructions.

So,. . .


What about jobs, though Treasurer, what about jobs. Labor says 90,000 full

time jobs have been lost since the introduction of the GST?


Well, since the Government was elected, over 800,000 new jobs have been created.

When this Government was elected the unemployment rate was, what, 8.5 per cent,

and today it is below 7. So, I think on the jobs front, the evidence is there.

We are going into a difficult world environment, but the Australian economy

is showing solid growth, which few other countries in the world are showing.

And the good thing is, with the low interest rates, and the First Home Owners

Scheme, domestic construction is starting to gather, and will probably only

be coming into the figures in the next quarter, well, in this December Quarter,

with the job creation that you normally get out of the building cycle. So, that

is something still to come on stream, and it will be something, I think, that

will be welcomed.


With uncertain times ahead, economically, Kim Beazley is challenging the Prime

Minister to commit to staying a full term should he win the next election. That’s

a fair ask, isn’t it? Shouldn’t voters have a right to know what Mr Howard’s

plans are if he wins the next election?


I think Mr Howard has made it entirely clear that he intends to lead Australia,

whilst he is elected to do so, and whilst he is enjoying the job, and being

fit. And I can assure you he is pretty fit. . .


So should he stay?


I’d like to give Mr Beazley a challenge. . .


Should he stay the full term if re-elected, though?


My challenge to Mr Beazley is to give an undertaking that he wouldn’t serve

the next three years, because I don’t think Australia could afford it.


Would you like the Prime Minister to stay the full term then, if re-elected,

if he is the best leader?


Look, Mr Howard is somebody who has shown remarkable strength in leadership,

and I think his credentials are there. He is running for election in the next

two months, and I think we should focus on this election and the leadership

qualities. I thought it was a strange thing for Mr Beazley to do, to be frank.

He ought to, if he really believes he has got better leadership skills, put

them up against Mr Howard. I think the voters will be able to make their own

decision on that.


Mr Costello, thanks for joining us.


Thanks very much Mark.