The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
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Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 24/03/1999

Transcript No. 99/20
Treasurer
Hon Peter Costello MP

Interview with Jon Faine 3LO

Wednesday, 24 March 1999

8:30am

E&EO

SUBJECTS: Preamble, economic growth, media ownership, poverty traps, tax reform, Bob Hogg

FAINE:

The Federal Treasurer and Member of Parliament for the seat of Higgins Peter Costello joins us in our Canberra studios. Good morning to you Mr Costello.

TREASURER:

Good morning Jon, how are you?

FAINE:

I’m exceptionally well. This morning we’ve had the chance to read in our newspapers the full text of the preamble that Cabinet agreed to as put to them by the Prime Minister yesterday. The response has been outstandingly one way and it’s condemning it out and out. How do you feel this morning about the response?

TREASURER:

Well I think that this is something that people should approach in an open mind. We’re certainly not afraid of people discussing it openly. Our party has a free and open position in relation to the preamble and I just say to people, well, have a look at it, mull it around, think about it. And I think we are very open to discussion on this.

FAINE:

It doesn’t sound like a stern defense of it to me. Paul Kelly, one of our most senior journalists in The Australian today says politics doesn’t get much funnier, the whole debate is starting to resemble a farce, any intelligent constitutional monarchist should stand up now and scream stop, what’s going on here, this is bad logic, bad law, bad politics but it’s even worse because Howard’s preamble is an utter shambles. It’s a Constitution we’re talking about here he says, not a song or a poem. Does the Cabinet know the difference, apparently not.

TREASURER:

Well see Jon, I don’t know if you want to turn it into a partisan issue or not. But I don’t see it that way you see. I think…

FAINE:

Well it shouldn’t be.

TREASURER:

Well that’s my view. There it is, it’s out there, people can have a look at it, people will have a free vote on it, those that don’t like it will vote against it, those that vote for it will vote for it. I think it’s a good statement of many of the values of Australia and it goes along many of the issues that were raised at the Constitutional Convention. But it’s a free vote. You know those that don’t like it can vote against it.

FAINE:

(inaudible)….mateship in the preamble to the Constitution?

TREASURER:

Well it’s one of those Australian words and. ..

FAINE:

What like meat pies, Holden cars, football.

TREASURER:

Yes. And it’s one of the values that’s been an enduring value over the life of the Federation and it makes the Australian preamble different to other preambles. Other preambles that, you know, start with distinctive national views. But, as I say, I don’t see the Constitutional debate, either this or the Republic incidentally, as partisan debates. I think they’re open debates and people are entitled to take open views on them. If you like them you’ll vote for them, if you don’t you’ll vote against it.

FAINE:

Where does the process take us from here then? We have a chance to have some input to it?

TREASURER:

Well it goes into the Parliament now and will have to be enacted through the Parliament because you’ve got to first enact something through the Parliament before you can put it to a referendum. And…

FAINE:

And this is the version that will be enacted?

TREASURER:

Well this is the version that the Government is supporting. Yes.

FAINE:

Judging by the initial response, it’s going to sink like a stone.

TREASURER:

Oh people say, say this about a lot of , look people are saying at the moment the Republic referendum will sink like a stone, aren’t they? But I think on that issue and on this issue there’s a long way to go, there’s a lot of views that’ll have to be taken, a lot of people will think about it. At the end of the day, you may even take the view that if you don’t agree a hundred percent with the preamble, but you agree with it eighty percent or ninety percent, a preamble that has most of the things you believe in is better than no preamble at all. When you get to a Constitutional referendum you always have to make this decision. You can say no, I don’t agree with everything so I won’t have it or yes, it’s a useful step forward and although I would have written it differently it’s still worth supporting. And that’s the debate that will go on, I think.

FAINE:

Wouldn’t you have preferred to have come up with something that would have been approved of by the majority of Australians, that would have swept people off their feet, that would have had people saying at last here’s an expression of our aspirations as a nation, here’s something that brings us together that we can wholeheartedly endorse and support. Instead what you’ve got here is something that’s having fun poked at it from every direction.

TREASURER:

No. Because you see there are 18 million people in Australia and I don’t think you’ll ever write a preamble that satisfies 18 million people.

FAINE:

Oh I don’t know Judith Durham and the Seekers have come up with better things than this.

TREASURER:

Well you know, Jon, that just shows our age doesn’t it, because I’m sure if you went back and spoke to an 18 year-old, they wouldn’t think that much of Judith Durham and the Seekers. You see it’s a big country, it’s a diverse country, people of different backgrounds, ages, country, city. You’ll never get a preamble that will satisfy 18 million people. I’m not at all surprised that there are some people that disagree with it. But at the end of the day, this will become the preamble to the Constitution if the majority of people in a majority of States support it. And you don’t have to get an 18 million – nil support for a preamble to get it into the Constitution. Now if you and I were to sit down and to write something, we might start off with the same ideas, but invariably we would put it into different words.

FAINE:

Yep.

TREASURER:

Should we then say because our words are different we don’t agree on the ideas? I don’t think so.

FAINE:

No, but you try and come up with something we both are happy with.

TREASURER:

Well, yes we would. And we would do the best we can, but as we all know in life you’ve got to compromise on these sorts of things, don’t you? And it’s the same on the Republic incidentally, I mean, a lot of people that support a Republic, that have totally different views and divided views. Do people say, oh well, therefore you shouldn’t go ahead and put a referendum on a republic? No, you put it out to the people and if a majority of people in a majority of States agree with it, it comes into the Constitution.

FAINE:

Alright, are you going to sell this preamble? You’re happy to go round selling it as the best we can do?

TREASURER:

Well, you know, I’m happy to say that as far as I’m concerned it covers a lot of important values, I think it makes a contribution and you know I’m happy to be part of the debate.

FAINE:

Alright. You’re much more successful at the moment in managing the economy. In fact yesterday you announced that Treasury forecasts showed the economy was actually growing faster than Treasury forecasts had expected, despite the so-called Asian crisis, we’re going gangbusters.

TREASURER:

Yes. Well during the course of last year there were a lot of commentators that were saying that we were overly optimistic, that we were forecasting too high growth at 3 percent, that we were misreading the Asian financial downturn. The truth is that if we were misreading things we were on the low side. And Australia will grow faster than 3 percent in 1998-99, the financial year. And the Australian growth in 1998 was the best in the world. Not only was it the best in Asia, where outside of China every country is in recession, it is better than Europe and France and England and even America. It’s better than the industrialised world. Now, there are a lot of people saying why is it that in the Asian financial crisis it was Australia that outperformed the pack? And that is as a result of policy, and if we hadn’t have had a Budget in surplus, if we hadn’t have had a monetary policy keeping inflation low, if we hadn’t have had low interest rates, if we hadn’t have engaged in competition and labour market reforms, we’d have been in much more trouble. But, the great thing is, we’ve come through the first two years of the Asian financial downturn. We’re in pretty good shape, unemployment is in fact lower now than it has been at any time in the last decade.

FAINE:

You’d like it to go down quicker though, wouldn’t you?

TREASURER:

Oh, well, ofcourse.

FAINE:

I mean it’s only just going down slowly.

TREASURER:

Well unemployment at 7.4 percent, which it is in Australia, is the lowest it’s been this decade. It’s the lowest since the Keating recession. Now, do we say, oh well, we should stop now: no. We’ve got to keep on working to get it down. But to have come through a regional recession: Japan in recession, Hong Kong in recession, Singapore in recession, New Zealand in recession, Malaysia in recession, Australia growing the fastest in the developed world and unemployment falling. It’s been a terrific year. Now that doesn’t mean we stop, we’ve got to keep going. But I think and I said this in the Parliament yesterday, 1999, the latter part of 1999, things will slow, you can’t keep that phenomenal growth rate up regardless of the world. But then I expect growth will start picking up again in the year 2000.

FAINE:

Is it fair to ask if we’re growing at nearly 4 percent why unemployment isn’t coming down even more quickly? And the answer may well be that there are the same, almost the same number of people in the workforce working harder and harder. The job or the work available is not being shared around to create more jobs.

TREASURER:

I agree with your proposition that there is evidence that people in the workforce are working longer and longer hours. I don’t think that that is causing less employment by the way. I think that some of the things that are causing less employment is we’ve still got a too structured and inflexible labour market, industrial relations and we’ve also got to start changing some of our welfare systems which is penalising people who go into jobs. And of course that’s a big part of our current tax reform package.

FAINE:

Which indeed is something we’ll talk about in just a moment. But first, before then, yesterday James Packer at the relaunch of The Bulletin magazine said that he thought that cross media and foreign-ownership restrictions needed to be lifted in the national interest. The Packer empire is shifting ground. In the past they always thought that media in Australia should be owned by Australians.

TREASURER:

Yes, it’s an interesting shift, you’re quite right.

FAINE:

Do you welcome it?

TREASURER:

Well that’s their view, I note it. I don’t welcome it. I note it. It doesn’t mean that the Government policy on these issues has changed. The government policy has been to limit foreign ownership in newspapers and in televisions. Our policy hasn’t shifted. If we were to shift that policy we’d need to be convinced there were good reasons for it.

FAINE:

One of the major organisations who could convince you has publicly stated that it’s changed its mind.

TREASURER:

Who’s that?

FAINE:

The Packers.

TREASURER:

Oh well, well, I don’t regard them as a major organisation that could convince us. They are a commercial player that would like rules changed for their commercial interests. Now, what motivates us is not their commercial interest. What motivates us is what’s in the national interest. And we’ve always thought in the national interest that we should have media Australian-owned, and we’d need to think of some good reason to change that. Now one of, one of the reasons that people often say is look you might just run out of people who can own it in Australia, and it’s better to have a foreign-owned newspaper than no newspaper at all. That’s one reason that you might look at it. Somebody might say that if you took restrictions off you could get far better products. But we’ve never been convinced of that and we’d have to see some dramatic reason to change our mind.

FAINE:

All right, and two quick things, Peter Costello to finish off, I understand you have to go shortly. You must be framing the parameters for the next Federal Budget at the moment. I have a letter here from one of our listeners saying next time you’re talking to the Treasurer ask him about poverty traps for pensioners. She says: "Here’s my cash flow," and she runs through her weekly budget and how she copes on her limited income. And she says : "My pension allows me only to earn the staggering sum of $50 a week without being penalised". Surely it’s about time the Government lifted that threshold to avoid the poverty trap."

TREASURER:

I agree with her. I think it’s important to lift the income thresholds, and even more important to change the taper rates. The taper rate is for every extra dollar that pensioner earns they lose 50 cents in pension…

FAINE:

And it makes it hardly worth doing.

TREASURER:

…and it makes it hardly worth doing. So our policy is to lift the income test and to reduce the taper. We’ve actually got legislation to that effect as part of our tax package which Labor in the Senate is blocking at the moment. But if we can clear the Senate logjams we have legislation to address that very problem for that pensioner at the moment.

FAINE:

You can do it in the meantime though, in the next Budget, GST or not.

TREASURER:

No, to do it we have to get legislation through the Senate. We’ve got the legislation. I mean, even if I announce it in the Budget I have to get the legislation through the Senate. I’ve already announced that policy, I’ve prepared the legislation, it’s part of the tax package…

FAINE:

Yep.

TREASURER:

And what we’re waiting on is Labor obstructionism in the Senate.

FAINE:

All right, and finally, some GST modelling that was presented to the Senate Inquiry on the GST yesterday, done by Monash University’s Centre of Policy Studies by Professor Peter Dixon, says that the GST will introduce significant job losses in agriculture and mining, while it will mean that there are more jobs in construction and the automotive industry.

TREASURER:

Yes, well the Dixon modelling says that tax reform will create, I think, 30,000 new jobs. Now, you can then sit down and say, oh well, you know there’s one less here or one more there.

FAINE:

But if the bush is doing it hard already?

TREASURER:

Well hang on, you’d be a mug wouldn’t you, to say we won’t introduce tax reform which will create 30,000 new jobs for Australians because it might create more in one area than another. I mean, if we sit back and don’t do it, what are we condemning ourselves to – 30,000 less jobs? And I must say that I think this argument, which is running on and on and on, is another example of the nitpicking argument. Here we are, we’ve got the biggest tax reform in Australian history. If you run around long enough, you can always find a reason for somebody somewhere that you’ve never thought of who may not be as better off as somebody else.

FAINE:

Yep.

TREASURER:

But the one thing we know about this, is the country overall is better off, on every single analysis. Now if we don’t do it, if obstructionism works Australia will be the poorer. Now you’ve got The Age there this morning. Mr Bob Hogg, the former ALP National Secretary says to Mr Beazley, "Support the GST." He says Beazley needs to do two things. "First, he should declare support for the Government’s GST, providing legislative measures are introduced to give on-going compensation."

Jon, whilst Mr Beazley has locked himself into total negativism, total obstruction, Australia will suffer. You’ve even got Bob Hogg who used to be his campaign manager, telling him to cease the obstructionism. I think the people of Australia are entitled to say we elected a Parliament, the Parliament should get on and do what we elected it to do. Let’s reform the tax system and let’s get on with the job.

FAINE:

Peter Costello, thank you for your time this morning.

TREASURER:

Thanks Jon.

FAINE:

The Federal Treasurer and Member for Higgins in suburban Melbourne, Peter Costello.