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

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 04/08/99

Transcript No. 99/56

TRANSCRIPT

of

THE HON PETER COSTELLO MP

Treasurer

Interview with Jon Faine, 3LO

Wednesday, 4 August 1999

8.30 am

 

SUBJECT: The Republic, tax reform, gambling, Liberal preselections

JOURNALIST:

Peter Costello is the Federal Treasurer and the Member of Federal Parliament for the seat of Higgins in eastern suburban Melbourne. Peter Costello, good morning.

TREASURER:

Good morning Jon.

JOURNALIST:

Everybody’s talking about the republic and the republic referendum. Tim Fischer is expected to say at a National Press Club luncheon today that he recommends a ‘Yes’ on the November 6 referendum. Where does Peter Costello stand?

TREASURER:

Well, I made a speech at the Constitutional Convention, I’ve made some comments since saying that I think Australia will become a republic. I think if you look at it on a time frame, and I’ve said this to many of my friends who are constitutional monarchists, that Australia over the whole course of this century has been gradually lessening the relationship with Britain; in my own lifetime changed the national anthem, abolished appeals to the Privy Council, and I think will eventually one day become a Republic. And I just don’t think that the symbolism of the monarchy is something that’s going to carry Australia through the 21st Century. And so I have said that I think it’s important that we consider the issues carefully, but on the big question as to whether Australia should or will become a republic I think we will.

JOURNALIST:

But on November 6th a question, and in a moment I will ask you what sort of a question should be put, but a question will be put on November 6th. Should Australians seize that opportunity, regardless of what’s in the question?

TREASURER:

Well Jon, I actually argued for a different model at the Constitutional Convention, but I think it would be churlish of me to say that because there wasn’t a majority support for my model I’ll be voting ‘No’. In fact I will be supporting the current referendum proposal, because I think this is something that we in Australia have to deal with. We have to face up. Now there will be some people voting ‘No’ in the referendum because they’re Constitutional Monarchists, and some voting ‘No’ in the referendum, so they say, because they’re radical Republicans. Some say if you vote ‘No’ you’ll get a Monarchy and some say if you vote ‘No’ you’ll get a radical Republic. Now they can’t both be right, can they? And if the "No" vote were to get up, what they are foreshadowing is that the two poles will then turn on each other. The moderate in-between position having been defeated, they are foreshadowing a second vote where the two poles will turn on each other. Now I don’t think that would be a good thing for Australia, and certainly is not my own view. I would rather support a moderate, decent proposal which has the best of our current situation whilst renewing the symbolism for the future rather than have the moderate centre defeated in the referendum and the two poles fight it out between themselves, neither of the alternatives of which I would personally find appealing.

JOURNALIST:

So Peter Costello recommends that conservative and pragmatic Republicans come together to vote ‘Yes’ on November the 6th.

TREASURER:

I think what you can say about this model is, one , it preserves the best of the Westminster system, and radical republicans would, in my view, abolish the current Westminster parliamentary system as we know it, with a popularly elected political president. So I like it from that point of view. Secondly, I think it enables us to keep what is best of the past whilst renewing the symbolism of the future. And what concerns me is the two poles, both saying ‘No’, with the possibility of turning on each other. I think probably both using each other; the Constitutional Monarchists using the radical Republicans to defeat a moderate proposal, the radical Republicans using the Constitutional Monarchists to defeat a moderate proposal, the two poles defeating the centre and then slugging it out in a much more divisive debate with no moderate or conservative position in the middle. That’s what really concerns me.

JOURNALIST:

It was odd enough to see Peter Reith, John Howard and Phil Cleary all on the same side. But what is even odder perhaps is seeing Moira Raynor, Jeff Kennett and Peter Costello now all coming together to recommend a ‘Yes’ vote on November 6th.

TREASURER:

Well, regardless of who comes from where, and I don’t think you can decide these things on Mr X, Mrs Y or Androgynous thing Z – I’m not saying any of those people are any of those things…

JOURNALIST:

Just as well…

TREASURER:

…I think the important thing is to look at the issues. Now it sounds nice to say: ‘ Oh well, all you’ve got to do to defeat the moderate Republic and you’ll get a radical one’, but there are thousands of unanswered questions about that. You can always knock down something that is, and if you ever got around to the stage of drafting a Constitutional amendment for a directly-elected president, you would find a thousand more questions than you’ve got about this model.

JOURNALIST:

The other issue of course is what question will be put on November the 6th that you recommend a ‘Yes’ vote for. The Committee chaired by Bob Charles that’s reported to the Parliament, and whose report is covered by Parliamentary privilege, it’s said are going to say to us – and we have to put it in those terms because we’re not supposed to breach Parliamentary privilege here – the question should be as simple as this: "Do you support Australia becoming a republic with the Queen and Governor General being replaced by an Australian President?" Do you think that’s the sort of question, those are the words that should be put on November 6th?

TREASURER:

I think that’s a pretty fair rendition of it. Look, it’s up to the committee, we’ve got an all-party committee, they’ve been asked for their advice. I don’t know whether they’ve recommended that or not…

JOURNALIST:

It’s widely leaked.

TREASURER:

Let’s take it that they have, right, because I think they’re all still saying it’s a secret. It just happens to be on the front page of the newspaper but it’s secret, but let’s suppose they have, that seems like a pretty fair question to me. I would actually put the question differently myself. The thing about Constitutional referendums, you can have a thousand views.

JOURNALIST:

Everyone has their own.

TREASURER:

And this is why I don’t agree with this belief, by the way, that until you get in a Constitutional amendment every last concept of your own you should vote ‘No’. If that had been the view, let me say, if that had been the view at the beginning of Federation I don’t think we would have had Federation, nor incidentally would I have voted for the current Constitution. There are parts of the current Constitution I don’t agree with. But I take the view that Australia as a nation was right to Federate. We shouldn’t have put off Federation for decades and decades until every last person got every last view. And I take the same view in relation to the current referendum. It was not my Number One proposal, but to stand back and say until I am satisfied in every detail, I think would be churlish. I think that this will happen in Australia. I think that those people who want to see it with goodwill whilst preserving the best of the current situation will support this proposal, and those people that are voting ‘No’ for completely contradictory reasons are really just shaping up for another fight down the track which will be much more difficult than the current question.

JOURNALIST:

If you support the simplified question that it seems is going to emerge from the all-party committee, if you support that question that puts you at odds with your own Prime Minister, with John Howard.

TREASURER:

Well I’m not entirely sure what the Prime Minister, whether the Prime Minister’s been consulted on this committee question, I’m not entirely sure what the process will be for the consultation. But as I understand it the committee was set up, the committee has come up with that question, it seems a fair question to me. The other question that’s also in the paper has been put up, that has certain merits. I would in fact have my own question, but I would be happy to go with the all-party committee. I’m not entirely sure at the end of the day that the referendum is going to turn on the wording of the question. I think at the end of the day referendums turn on the general political situation, but if you ask me whether it’s a fair question I think it sounds a fair question to me.

JOURNALIST:

One last question on the republic, an increasing number of your ministerial colleagues seem to be recommending a ‘No’ vote. Are you going to lead the charge for the government on the ‘Yes’ vote? Will you actively campaign?

TREASURER:

I don’t constitute myself a leader on this issue. It’s not something that I’ve started, nor do I have any portfolio responsibility. What I am going to do is I am going to state my view. What I am going to lead on, is, I am going to lead on tax reform. I am the Treasurer of Australia, we have an historic moment to reform our tax system, it is my responsibility to lead. I’ve started this and I intend to finish it. That’s something I am going to lead. This is another political issue which I am going to speak on, but I don’t constitute myself a particular leader on.

 

 

JOURNALIST:

Tax reform has preoccupied you and quite properly. We heard on AM from Ian Donges who is the head of the National Farmers’ Federation, saying now is not the time to add business tax reform, The Ralph Report, on top of the GST. Enough. We are having trouble coping with the GST reforms as it is. What’s your response to that?

TREASURER:

Well it’s a huge reform agenda, and I know only too well because you know I am having to cope with this. We’ve got on 1 July 2000 a new system of indirect tax coming in, GST, abolition of wholesale sales tax . . .

FAINE:

Just take your elbow off the button there Peter, thank you. Keep going.

TREASURER:

On 1 July 2000, just in case I wiped myself out . . .

FAINE:

You did.

TREASURER:

. . . we’ve got the GST coming in and the abolition of wholesale sales tax, the abolition of some stamp duties on share transactions leading into the abolition of financial institutions duty – that’s a big thing. On 1 July 2000 we’ve got massive income tax cuts coming in. We’ve got a new system of Commonwealth-State relations, we’ve got new family allowances. We also have coming in, the Pay As You Go system of company tax, which will be a change for business. They will start paying quarterly under a Pay As You Go system which will also work off the GST. On 1 July we’ve also got entity taxation coming in, this is already what’s been announced. Now, the Ralph Review is talking about other things like capital gains tax, talking about the way in which businesses treat profits, talking about rates of company tax. There are some of those things that can come in, I think, without much dislocation. And I don’t think they will add to the complexity. There may be some other things that would add to complexity that can be staggered. And if they can be staggered well, we’ll look at that. But there are some things that can come in without too much additional problem. And we’ve got to keep moving Jon. Look, this is a once in a century chance to reform the taxation system. It’s 1999, we keep moving, we do it now, somebody can sit back and say, well, we don’t have to do it for another 50 or another 100 years. But I just don’t want to lose the momentum at the moment whilst we’ve got it.

FAINE:

But people are quite right to say, you’ve just rattled off a formidable list . . .

TREASURER:

Oh sure.

FAINE:

. . . of things that are changing. And in a world that is changing people say, there’s just so much that we can take. You can overstay your welcome with the business community, with the farmers. The Prime Minister in New York was saying to foreign investors in New York, look, we’ll drop company tax if we possibly can to help you. And then the farmers come out and say, hang on, what are you doing anything to help them for when you’re not doing that much to help us. You’ve got a formidable array of interests to play off . . .

TREASURER:

Sure, that’s right. And can I talk about farmers in particular. I’ve been Treasurer now for about four years. I don’t think we’ve introduced a measure yet which has made the business or the tax climate for farmers worse. In fact, quite the contrary. We’ve introduced farm management deposits and we’ve helped them with land care rebates and I can assure you in the business taxation area, the farmers, the agricultural producers of Australia have a special ear in the Government and they will be well treated because they deserve to be well treated. There’s no doubt about that. But let’s come back to the other point. There is a formidable, a formidable reform agenda, you’re absolutely right, completely agree with you. But let’s suppose we were to drop rates on various kinds of taxes. Would that increase complexity? Not necessarily, all you’d do is you’d assess your tax in the same way but pay less of it. Now, I don’t think anyone would say to me, oh Treasurer, Treasurer, you know, put off a tax cut, it’s all too complicated, we’d rather pay a bit more tax for the next year or two. I think they’d most likely say, give that to us now, we’re quite happy to take that complexity.

FAINE:

But that tax cut would come along with other equalling measures which would make up for that lost revenue. And what they’re saying is, we want the tax cut but we don’t want some of the other measures, the other compensatory measures, because you’ve said that the Ralph Report will be revenue neutral.

TREASURER:

Sure and I understand that in respect of some of the items. But in respect of some of the other items, some of these high-falutin’ minimisation opportunities which could be closed down, and not the kind of thing the guy in the suburban street is going to worry about. They’re the kind of thing that people with massive resources worry about and if we increase the complexity for them because we’re making them pay more tax, well, I’ll live with that.

FAINE:

Alright, what else is in the Ralph Review, will you tell us, are you going to simplify capital gains tax?

TREASURER:

Well, we asked John Ralph to look at business taxation which is rates, deductions, capital gains taxes, he’s looked at foreign investment, inward investment, withholding taxes and those sorts of things . . .

FAINE:

Are you simplifying capital gains tax?

TREASURER:

I asked him to look at capital gains tax and I said the reason was, we should look at simplifying and reducing. I put three proposals to him and said, have a look at these three and come back with any better ones. So, I imagine he’s done all of that.

FAINE:

And fringe benefits tax changes? Car manufactures, already, are saying, they’re terrified that if you muck around too much with fringe benefits tax changes you’ll wipe out company fleets.

TREASURER:

Sure, everything leads to everything else and that’s why in relation to tax you’ve got to do it as a whole. It’s another reason for doing it as a whole, Jon, because for many people there might be a downside here and an upside there. If you separate the two they don’t get the balanced improvement, it’s another reason why you’ve got to move forward in packages.

FAINE:

Alright, a couple of other things that are on the agenda, Peter Costello, gambling. A couple of weeks ago the Productivity Commission report was released on gambling. You said at the time you were very happy with the report. A quick response from Victorian Premier, Jeff Kennett, was a bit of a U-turn on the State Government’s policy on gambling. He conceded that there needed to be limits on ads and that the cap on the number of pokies would not be reviewed. Are you satisfied with the Victorian State Government’s response?

TREASURER:

Well, I support those announcements. I think they’re great announcements. When I set up the inquiry with the Productivity Commission, I didn’t have a clue what it would report. I knew there was community concern about gambling and as a Treasurer I was beginning to worry about the effect of gambling on the social and economic health of society. When it came back, and the finding that I found the most extraordinary, almost frightening finding, was the finding that we had more than 20 per cent of the world’s gaming machines in this one country. I was staggered by that. I didn’t know that it had penetrated to that extent and frankly it shocked me. And I think it probably shocked a lot of other people. And if this is going to lead to bringing the problem out into the open, restricting the proliferation, then I think it’s been a major step forward. A wonderful step forward to have brought it out into the open.

FAINE:

Alright, this week on the programme we’ve heard about some tensions within various branches of the Liberal Party. Of course the preselection down at Brighton, which Louise Asher won, saw some uncomfortable moments within the Liberal Party and now again out in Doncaster – Victor Perton was speaking to us on the programme on Monday. Are things difficult within the Liberal Party at the moment? Are there factions developing?

TREASURER:

Well, in relation to preselections there have been some issues that should not have occurred in relation to both those preselections. But is it a new thing? Well, I think nearly every preselection generates its own emotional heat and light. It’s always happened, I don’t think this is a new thing. Now, that is not to excuse it and incidents should not have occurred in either of those areas, or indeed some which are now proceeding, there are other incidents which are occurring.

FAINE:

The so-called Greek branch stacking?

TREASURER:

Well . . .

FAINE:

The Premier’s adviser Nick Kotsiris has been mentioned.

TREASURER:

In other preselections which are now proceeding there are also incidents which should not occur. Now, I think it’s much better if everybody sort of concentrates on the policy issues and the credentials. The one thing you can say is, that these things are open contests, that’s one of the things about the Liberal Party and I think our processes are designed to try and get the best candidates at the end of the day. I hope it does.

FAINE:

Well it’s a different method to that used recently by both the National Party and the Liberal Party in Victoria. The Premier is said to be trying to get Billy Brownless from the Geelong Football Club to sign up for the Libs and of course Paul Couch has been signed up by the Nationals – another Geelong footballing hero. You’re a mad keen Essendon supporter, have you had a look through the list?

TREASURER:

Well, I think this impasse could be broken with say, James Hird, who could get the consent of all the forces in the Victorian Coalition. You know, one Geelong player, another Geelong player, let’s try and get a circuit breaker and go one better.

FAINE:

I s’pose the Speaker would say, I demand that the Member be Hird.

TREASURER:

Yes, yes, it’s, your spelling is right to the point there Jon.

FAINE:

Peter Costello, good to talk to you.

TREASURER:

Thanks.

FAINE:

Thank you for your time today. The Federal Treasurer and Member for the seat of Higgins in the Federal Parliament, Peter Costello.