Interview with Mike Carlton & Peter FitzSimons

2UE

Tuesday, 27 June 2006

8.10 am

SUBJECTS: The Bulletin list, World Cup, James Hardie, Federal-State relations, water security, fertility rates, republic, Aborigines

CARLTON:

[The Bulletin 100 Most Influential Australians lunch] It was a good speech from the Treasurer, it was a thoughtful speech looking to the future, outlining five challenges for our future generations of Australia. Now that sounds like a boring old cliché, it does a bit but it wasn’t. I would be the first to say if it was boring but it was a fascinating speech, it was just the opposite and the Treasurer joins us now. Good morning.

TREASURER:

Good morning, good to be with you Mike.

CARLTON:

First of all, did you watch the football last night, the soccer?

TREASURER:

Yes.

CARLTON:

And?

TREASURER:

We was robbed.

CARLTON:

Well, from a Treasurer who knows how to rob people…

TREASURER:

Well look, I don’t know that much about soccer or football, but when I saw Guus Hiddink say it wasn’t a free kick, I was totally convinced he was right…

FITZSIMONS:

Well he is totally impartial of course.

TREASURER:

Totally impartial. But as I understand it, if you trip someone it is a free kick but the Australian guy went down and the Italian guy tried to jump him. I didn’t think it was a trip at all.

CARLTON:

It looked like a dive to me, it was a big dive.

TREASURER:

Yes.

CARLTON:

What did you make of the whole soccer thing, I mean you are an AFL fan, you are a Melbourne man, are you surprised or intrigued by the way it seems to have brought Australians together?

TREASURER:

It has been fabulous. I am surprised, the young people in particular who have been going out on the streets and watching the live telecasts, I was staying near Circular Quay last night and there were a lot of kids down there, I can you tell you, a lot of noise.

FITZSIMONS:

Were you kept awake at 2 o’clock in the morning?

TREASURER:

Yes. But it was a great event and I think it says something about young people, they are very international in their outlook, they like global sporting events and this is as big as you get, probably even bigger than the Olympics, wouldn’t you think?

CARLTON:

Come damn close, yes. Down to business, firstly if we could, James Hardie and this asbestos compensation fund. The Tax Man, the ATO says they have got to pay their taxes, the unions and State Government and companies are saying, no, not fair. Is that the final word on it, they have got to pay the tax?

TREASURER:

There are two rulings. One ruling has been given already and there is another one still to come so we will wait to see what the second ruling is. But Mike, the thing to remember here is there have been other companies that had asbestos claims – BHP, CSR – they have paid them, they did the right thing. James Hardie did the wrong thing. It tried to cheat the victims and then moved assets out of the country. They wouldn’t be in this situation if they hadn’t have moved assets out of the country. Having moved assets out of the country they have now got themselves in a terrible tax situation which they are trying to extricate themselves from…

CARLTON:

They have got a huge capital gains tax…

TREASURER:

They have got a capital gains tax bill because they moved assets out and they tried to lock these claims up in non-operating companies. You see, if the claims had been against operating companies, they would have a flow of income and they could deduct the payments but because they took them out, they put themselves in a situation where they didn’t have they flow of income. Now, this is a company that was too clever by half.

FITZSIMONS:

Was it not the Government’s role to tackle what was left of that company before it left our shores?

TREASURER:

Well the funny thing is at the time they claimed that they were doing it for business reasons, I don’t think they were honest…

CARLTON:

They said so in the Supreme Court, didn’t they?

TREASURER:

…they gave all sorts of assurances and frankly it has been a shameful record from Hardies, the victims are the people who have been the most affected and Hardies has got itself into these terrible tax problems and the point I keep on making is Hardies has to pay the victims.

FITZSIMONS:

And will you legislate to that effect if the ATO ruling goes against them?

TREASURER:

Well, we will see what the ATO ruling is, I think Hardies ought to be able to take the same advantages that any other company should take but gee, for a company that tried to cheat the victims, get out of the country to give them a special tax privilege, I don’t think many Australians will think that is the kind of reward that Hardie ought to be getting.

CARLTON:

Are they still trying to cheat the victims with this elaborate structure they have set up for repaying compensation, possibly just another trick in the book?

TREASURER:

Well you see, if they hadn’t have done all of that, if they had just kept their business going and paid the claims and there were two other companies that did it – BHP and CSR – they wouldn’t be in this trouble. They were too clever by half and I think the Directors of the company have got to have a cold hard look at the situation here.

FITZSIMONS:

But isn’t that, if they have to pay tax as you say they should, isn’t that going to limit the payout to the victims, it will lessen their benefits?

TREASURER:

Not necessarily because you see, Hardies is a multi-billion company. Hardies has still got a business and Hardies can pay the victims. What Hardies wants to do is it wants to move as much of the cost as it can off onto the tax system.

CARLTON:

The tax payer.

TREASURER:

The tax payer, yes.

FITZSIMONS:

And you are not going to let them.

TREASURER:

And you know, well that is fair enough if you are a director and if you are in the management I can see your intention there but they wouldn’t have got in to this situation if they hadn’t tried to be too clever by half.

CARLTON:

Alright, so no special legislation, so nothing, Hardies is going to have to abide by the ATO rulings?

TREASURER:

Well we will see what the next ruling is. We did introduce a law a few years ago that Hardies might be able to take advantage of and that is the question that is before the Tax Office at the moment.

CARLTON:

Okay. Can we move onto that speech yesterday? And I think we should explain to our listeners it was a lunch you know, one of those glamour affairs where The Bulletin magazine put up a list of 100 influential Australians and the one named the most influential was Rupert Murdoch. The Treasurer was the guest speaker and towards the end of his speech he tossed up five ideas which might, how would you put it, you know, that might inspire the next generation of Australians.

TREASURER:

Yes well I asked the question, if you missed out on today’s list, The 100 Most Influential Australians, but you want to get on the list in 2106 in 100 years time, what area could you make your mark in? So, Mike if you want to be on the list in 2106 I had a few suggestions.

FITZSIMONS:

Number one was solving federalism; number two was solving the water problem; the third was the person who arrests Australia’s fertility decline; four was putting us on the road to the Republic; and the fifth was solving our indigenous relations. Now for you, should you take the wheels of the tiller or take the tiller in the next six months or a year let’s just say, will you immediately set us on the course for the republic? You could be, in 100 years from now you could be top of that list because you put us on the road to the republic.

TREASURER:

I think in 2106 we will be a republic because I think in our minds and our imaginations we are already there, but…

CARLTON:

But the Prime Minister is not there.

TREASURER:

…well I think Australia is there in our mind and in our imagination we are already there. We think like that and the question is how do you produce a legal and constitutional model which will win the acceptance of the Australian people?

FITZSIMONS:

Mr Costello, what you did yesterday was you basically said this is my vision of where we want to head, you are a man who would be Prime Minister, when you get control – should that come in the next year before the next federal election or after – will you immediately set about doing that?

TREASURER:

I think it is a question of one, producing something that the Australian people are happy with, and secondly winning public support and I don’t think the Australian public wants to be rushed but I will make this confident prediction, by 2106…

FITZSIMONS:

We would want to be.

CARLTON:

We won’t be here to…

TREASURER:

…you will see it.

CARLTON:

Let’s start at point one and we will go through them if you like. You say basically state-federal relations now are a mess and you made the point and I have heard you say it before that the GST in many ways was a failure.

TREASURER:

Well the GST was a success, what was a failure was that giving the revenue to the States was designed to give the States what we call a growth revenue. A revenue that would grow as the economy grows so they get more and more every year. And my great hope in doing that was that with this increasing revenue which they could plan long-term on, that they would be able to operate more like independent governments and take responsibilities in particular areas and you wouldn’t have this overlap. And I don’t think that has been a success. I think the States have taken the growth revenue but the rhetoric hasn’t changed. Whenever there is a problem, you know, they always want to blame Canberra, they always want to…

CARLTON:

Vice-versa, Canberra always blames them too, and I think voters are sick of that.

TREASURER:

I think voters are absolutely sick of it and my great idea was to get them on a secure financial footing. As I said that hasn’t worked as I intended. Now there are only two ways to take federalism. You can either take it back and give state governments more sovereignty and accountability or you can take it forward in the direction that it has been moving and I said state governments become more like divisional branches of head office.

CARLTON:

And that is counter to years of Liberal Party policy, it has always been state rights…

TREASURER:

Absolutely, that is counter to traditional Liberal Party policy.

FITZSIMONS:

So you would like to water down the powers of the States, see them become, as you said, sort of branches of head office?

TREASURER:

Well divisional service deliverers is the way it has been moving and I think that is probably not capable of being arrested. I had a go and I failed.

FITZSIMONS:

The second point is to solve our water problem.

TREASURER:

I think Australia, if we want to be the strong country with a strong defence force in a difficult region which plays a significant role in world affairs we will have to deal with population and we would like a growing population and increasing water resources is a big part of that and on the driest continent on earth if we want to maintain our agriculture and our standard of living we have got to solve the water problem. It may be capable of being solved by scientific means…

CARLTON:

But either way we have got to conserve it and price it properly so we don’t waste it.

TREASURER:

Build proper storage, conserve it, price it and ultimately produce more of it.

FITZSIMONS:

Alright, well that covers the third point because that will get the population (inaudible).

CARLTON:

Which is your idea, one for mum, one for dad and one for the country. Three kids, what have you done towards it?

TREASURER:

Three, I have done my one for the country, what about you?

CARLTON:

Well…

FITZSIMONS:

Not yet.

CARLTON:

…still a few years to go.

TREASURER:

It is never too late.

FITZSIMONS:

The other one is, the fifth one that you named…

TREASURER:

Can I just make a point about that, that is partly to have a big population but it is also to have a balanced population. If we don’t lift our fertility rates we will have a preponderance of old people being supported on a narrow base of working people and that will be a big problem for us in 30 years time.

FITZSIMONS:

One of the most intractable problems we have had in this country is indigenous relations. What fresh ideas can you bring to the table?

TREASURER:

Well I said yesterday we have got to lift Aboriginal living standards from the margin to the mainstream. Now, I can’t say to you today that there is one policy fix here. As I said yesterday, many people of goodwill have tried…

CARLTON:

The quote here is there is no area where we have had more ideological experimentation and more failure and that goes for all sides of politics…

TREASURER:

All sides of politics. We have had ideological, you know first of all we had assimilation, then we had self-government, then we had self-determination, you know, now we are back, then we had reconciliation, now we are back to practical reconciliation. We have been through many ideological phases.

FITZSIMONS:

You say we had reconciliation, although your Prime Minister never embraced that model.

TREASURER:

Well I think that the reconciliation, the real crux of it was to bring people together and I think all Australians of goodwill have embraced that but the thing is at the end of all of that and at the end of about $3 billion which is what we will spend every year on Aboriginal affairs – $3 billion – there is no shortage of money, life expectancy is still terrible, infant mortality is terrible, education is terrible…

FITZSIMONS:

Well it is getting worse. We are getting crime, we are getting children sexually abused…

TREASURER:

We have now got incest in some of these communities, we have got crimes against the person and there has been a lot of goodwill and a lot of money but no really shining success stories. I actually think Noel Pearson is making much more sense on these issues than most Aboriginal leaders. Today he is talking about the need to tie welfare to school attendance, he says that welfare far from helping in many cases destroyed many of these communities.

FITZSIMONS:

On a wider subject, you mentioned your predecessor as Treasurer yesterday Paul Keating, now you actually didn’t mention him by name. Do you have a sneaking admiration, I know you have had your personal things in Parliament but a sneaking admiration for what he accomplished as Treasurer and have you looked at the way he moved from being Treasurer to Prime Minister?

TREASURER:

Look, I think, no I haven’t looked at that. Look, I think and I have always said this, I think he did some good things. I think floating the currency was a good decision and reducing tariffs was a good decision and that opened up the economy and I have always given him credit for that. I think he did some bad things. We didn’t have to have a recession. You know, he claimed ‘this is the recession we had to have.’ He put 11 per cent of people out of work and he destroyed the Budget position and I had to come in and I had to deal with those. So, I would give him credit where credit is due and he had failures where we shouldn’t have had failures in my view but that is the verdict of history, isn’t it?

FITZSIMONS:

He became Prime Minister by pursuing crazy brave politics, ‘Make me Prime Minister or I will torch the joint.’ And they did.

CARLTON:

You have not been tempted down that road?

TREASURER:

No streak of arson in me.

FITZSIMONS:

That is what he did, that is what he did, he said, ‘Make me Prime Minister or I will tear the whole building down.’

TREASURER:

Well yes, and he got himself re-elected by opposing the GST which I don’t approve of at all. That is what had to be done for Australia. As I said earlier, maybe the allocation of the revenue to state governments wasn’t the right thing but the introduction of a broad based consumption tax was the right thing for Australia.

CARLTON:

This speech you made yesterday, it looks like a job application for the Lodge, or even dare we say Kirribilli House.

TREASURER:

I thought it was a job application to get on The Bulletin’s list in 2106.

CARLTON:

Are you content now to let Mr Howard choose the time of his own departure?

TREASURER:

Look, nobody has worked closer with John Howard than me, I have been his Deputy, well I was even Deputy before he became leader but I have been his Deputy for the whole period that he has been leader and Prime Minister and I think the Government has very, very considerable achievements.

CARLTON:

Yes but you must be sick of it, you want the job.

TREASURER:

Well, I am very focussed on what I am doing at the moment and let the future take care of itself.

FITZSIMONS:

But you wouldn’t be worthy of the job unless you were dead hungry for it right now.

TREASURER:

I am dead hungry to serve the Australian people in the role that I currently have which is an important one, Peter.

CARLTON:

Right, we are not going to get any further, are we?

FITZSIMONS:

Are you enjoying the whole thing?

TREASURER:

Look, it is a great responsibility but it is one that I take up every day to the best of my ability.

CARLTON:

So is John Howard the best man to lead the Coalition and the Government to the next election?

TREASURER:

Well he has my full support…

CARLTON:

Oh dear, that is a worry.

FITZSIMONS:

You mentioned your 11-year-old boy yesterday, there must come times when you are flying away and you look at your 11-year-old and say I am jack of this, I am sick of flying away from the family.

TREASURER:

Sure and that is because my 11-year-old is now a 19-year-old so for many of those years I have been away. It is hard on the family but it is also a great privilege to be in a position of trust.

CARLTON:

Good to talk to you. Thanks for coming in.

TREASURER:

Thanks Mike, thanks Peter.

CARLTON:

Are you back to Melbourne today, Canberra?

TREASURER:

Don’t know, I will have to ask my staff where we finish up today.

CARLTON:

Good to talk to you.

TREASURER:

Thank you.