Visit to Townsville, roads, fuel, welfare, OECD, zone allowances

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November 21, 2000
Floods, fuel, Woolworths chief, entity taxation, defence spending, reconciliation
November 23, 2000

Visit to Townsville, roads, fuel, welfare, OECD, zone allowances

Transcript No. 2000/107





Press Conference

Wednesday, 22 November 2000


11.30 am

SUBJECTS: Visit to Townsville, roads, fuel, welfare, OECD, zone allowances


The first two are regional Queenslanders, Treasurer. I guess, why are you here? Why are

you out and about talking to the people?


Well, Peter Lindsay’s been putting the needs and the concerns of this area to us

for a long period of time and wanted me to come up and to visit, to look at some of the

projects that he’s been pushing. And he’s been pushing them very actively in

Canberra, I can assure you of that. Doing a fabulous job down there. So we’re meeting

with some of the business people here, talking about some of the introduction of the new

taxation system, some of the announcements that the Commonwealth has recently made in

relation to road proposals, which I think would aid the area considerably, and ensuring

that we hear the concerns that this area has and the direction they want to see Federal

policy go.


How much money is going to be actually put into roads, Treasurer?


Well, we’ve indicated that we think it’s a priority to rebuild regional and

rural roads, and we are going to put a very sizeable sum in.


Is it going to be close to the billion dollars that was flagged by the Prime Minister?


Over a period of years it is going to be a very substantial sum. I expect that the

actual amounts will be announced on the weekend. Cabinet discussed this yesterday, but

it’s a one-off opportunity to re-build local roads in rural and regional Australia.

We’ve not seen anything like it. This is going to be something that’s sort of

once in a decade, once in a two or three decade opportunity, to rebuild those roads. And I

think it’ll be very important for the infrastructure and economics of regional



Queensland will benefit?


Queensland will be a big winner … [inaudible] … the proposal to rebuild those

regional and rural roads. There will also be, I should say, a capacity for those that are

living in metropolitan areas to also enjoy an upgrading of their infrastructure. But the

way in which these things work out, it will be rural and regional Australia in particular

that will benefit.


Do you hope that will placate the anger over the fuel?


Well, I hope what it will do, is, it will give us the opportunity to rebuild the

infrastructure. The problem with fuel prices, which are too high – fuel prices are

too high in Australia because the world price of oil is too high, and the key variables

that are influencing fuel prices in Australia is number one, the oil price and number two,

the exchange rate. Anyone who comes up with plan which they say will take those prices

off, and the plan doesn’t involve getting the world oil price down, they’re not

being entirely honest. It’s the world oil price that has to come down before

Australian motorists can get relief from high petrol prices. Now, we in this country, we

work in all of the international fora. When I was at the APEC Finance Ministers’

Meeting, we took a very strong line on this. When the Prime Minister was at the Leaders

Meeting. We raised it again at the IMF. We’re raising it on the diplomatic front with

the nations of OPEC. And until you can get the world oil price down, you’re not going

to get the kind of relief, the substantial relief, that we want to see for Australian



What about the National Party leader in Queensland warning yesterday that petrol prices

could cost the Federal Government the next election? What do you have to say about that?


Well, look, it wouldn’t be a normal day if somebody didn’t have an idea of

some kind or another, and obviously we take all these ideas on board. But we’ve

looked very carefully at petrol. You’ve seen the US dollar price of a barrel of oil,

go from about $10 to $33 in the last 18 months. You’ve also seen substantial movement

on the Australian exchange rate. That’s what governs the price of petrol. The last

indexation, everybody’s talking about indexation – the last indexation was 0.6 of a

cent. It’s not the 0.6 of a cent people are worried about, it’s the 10 cents,

the 12 cents, it’s the 14 cents, that comes from world oil prices. And if you

want to do something meaningful about petrol, we’ve got to attack the real problem,

which is the world oil price.


So, Mr Lindsay about 12 months ago said a freeze on fuel excise would be a good idea.


Well, he, Peter, put some proposals to me, which he’s perfectly entitled to do and

right in doing. He represents his electorate, I can assure you. And can I make this point:

You should know that he does it very actively. I don’t think anybody in Canberra is

in any doubt, whilst this electorate is represented by Peter, what this electorate feels.

And I pay tribute to him. I’ve been in the Parliament long enough to have seen a

number of Federal Members from this area, and I can tell you this: the best one is Peter.


That’s sort of like an election kind of statement.


Well, I like to view it as a factual statement, myself.


So you haven’t come into Peter’s electorate today to put a freeze on fuel

excise because he called for that 12 months ago?


The way in which fuel is excised in Australia is under an Act of Parliament which was

put in place I think in 1983 – 17 years ago – by the Labor Party. And that

legislation just guarantees the way in which indexation operates. The one thing our

Government did, as you know, is we cut the excise on diesel for heavy transport by 24

cents a litre on 1 July. And that gave a lot of relief to people who are transporting

long distances on heavy transport. So that’s one of the things we could do. But the

way in which the indexation actually works in relation to petrol has been set in

legislation since 1983.


Mr Costello, the perception out there, though, and the anger in the community which you

may have heard, is that the excise indexation is costing motorists money and quite

significant amounts of money out of their pocket. Is the Government prepared to lose seats

over this issue, over a couple [inaudible]?


The excise indexation was 0.6 of a cent.


I understand but the perception [inaudible]


Well, that’s the point. If perception is that rises of 10, 11, 12 cents, which

we’ve seen, has something to do with indexation, that’s not the right

perception, is it? That’s why I think it’s important that we always go over the

facts. The indexation factor was 0.6 of a cent. People aren’t complaining about 0.6

of a cent. People are complaining, rightly complaining in my view, about 10, 11, 12, more

cents, a litre and the 10, 11, 12, more cents a litre is a consequence of a rise in the

oil price which goes to make petrol, which has nearly tripled. And anybody who tells you

that you can solve petrol prices by dealing with indexation, is not giving the facts. The

facts are that if you want to do something about petrol prices, and we do, gee we do, of

course we do, it’s the oil prices – the thing that actually governs it

– that you have to deal with.


What about this roads stance, though, making better roads [inaudible] especially the

bush, here, because the roads are pretty ordinary.


We’re building better roads. That’s a consequence, really, of good economic

management. Can I make this point: If we were still running a budget in deficit, of

$10,000 million per annum – which is what we were running before the Coalition was

elected, before I became Treasurer – if every year we had to pay the interest bill on

another $80 billion worth of Commonwealth debt, which we did, you just couldn’t

afford to build roads. The reason the roads weren’t built under Labor was that their

economic management was such that it couldn’t be afforded. Now, as you improve your

economic management, get your budget into surplus, you pay down your debt, one of the

consequences is that people can share in benefits of good economic management. In this

case, one of the benefits of good economic management will be improved roads. That’s

the kind of improvement you see from economic management. But it starts from the

management. If you don’t get the management right, you can’t do these things.


Whispers in the bush this week are a way to, because this is probably one of the most

marginal seats in Australia, you haven’t been here before. Is this [inaudible]


No, I’ve been here before.


To Townsville?


Yes I have.


As Treasurer?


Yes. I’ve been here before as Treasurer. But that’s neither here nor there. I

try and come to north Queensland as much as I can, just as I try to go to northern

New South Wales as much as I can, just as I try and go to all parts of Australia

as much as I can. Your question is, is it part of an election push? It’s part of one,

backing up good policy, two, making sure that we’re in touch with the needs and the

aspirations of the locals and, three, it’s a consequence of supporting my friend and

colleague, Peter Lindsay, who’s been after me to come here probably on a yearly

basis, on an annual basis.


Will welfare groups expect to get something out of the Government before Christmas or

is it with road announcements and other announcements, is there likely to be a welfare

announcement? Support pack?


Well, we’ve got on the table what’s called the McClure report for reforming

welfare and the Government is dealing with that. That’s a longer term proposal. I

think we said re-designing the welfare system could take quite a long period of time.

Look, we’ve just redesigned the tax system. The argument about redesiging the tax

system started I think, in 1974 and it’s finally been accomplished in the year 2000.

And it hasn’t been fully finished yet. So, once we’ve finished reforming the tax

system, we move on to the welfare system and that will be a longer term project. But

we’ll announce that [inaudible].


Are you happy with the OECD’s report on [inaudible]?


The OECD reported that it expected the Australian economy to grow at about 4.2 per

cent, from memory, this year and about 3- for the next couple of years. Faster than the

United States, faster than any of the G7 countries – France, Germany, Japan. It

reported that it expected our inflation to be low and for unemployment to fall. And

that’s the kind of economic management that we want to keep occurring in Australia.

Since our Government was elected, there have been 800,000 new jobs. It doesn’t mean

you can stop and give up the game. You want to create more jobs, give young Australians

the opportunity to find work. If we keep good economic management, we can do it.


Will the Government be offering zone allowance tax breaks for people in remote areas in

the lead-up to the next election?


Well, for obvious reasons I’m not going to detail what our election policy would

be now, so, I wouldn’t take that as a yes or a no. Obviously, if we announce an

election policy, we’ll announce it during the election. I don’t think

there’ll be an election before Christmas. I think I can tell you, you can all relax.

I don’t think there’ll be an election before Christmas.

Thanks very much.