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

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript No. 2001/005

Hon. Peter Costello MP
Treasurer

SKY NEWS
Interview with John Gatfield

Tuesday, 6 February, 2001 

SUBJECTS: BAS, PETROL PRICES, INTEREST RATES, BUDGET

GATFIELD:

Well, Parliament resumes in Canberra today for the 2001 sitting year. And joining me now from Canberra is Treasurer, Peter Costello.

Mr Costello, good morning.

TREASURER:

Good morning John.

GATFIELD:

Well, yesterday the Prime Minister indicated that there would be some changes to the Business Activity Statement. Have you had a chance to think of what those changes are going to be?

TREASURER:

I think there is a number of areas that, with the experience of the first quarter and the second quarter, with more than a million returns from each, and really the terrific compliance from the small business community to whom I pay tribute because it has been an exceptional effort on those returns, we can now proceed to simplify for further quarters because we have passed through the transitional phase. And there was a lot of things that were in there just for transitional reasons, as you moved from an old system to a new system. For example, there was, on the Business Activity Statement, the opportunity to claim back Wholesale Sales Tax credits. Wholesale Sales tax credits should now have been claimed so you can take that off the form. There are other reconciliations on the form which most businesses dont need in relation to luxury car tax or wine equalisation tax. So, now that we have that experience and the magnificent compliance, of which I pay credit, we can actually simplify further returns, which we intend to do.

GATFIELD:

And the question of reporting annually rather than quarterly, is that on the cards?

TREASURER:

Well, youll always have quarterly payments. You have to have quarterly payments to actually make sure that people manage the cash flow in relation to that properly. There are other areas outside the GST where were also looking at simplification, particularly on the Pay As You Go System, and I think there are other areas where we can do simplification. Where we can we will.

GATFIELD:

The question of petrol prices is going to be very much the news today because Kim Beazley, of course, plans to introduce his Private Members Bill to reverse last weeks excise increase. That has been called, of course, by your side of politics as nothing more than a stunt. But there is a genuine purpose behind this, isnt there?

TREASURER:

No, I dont think there is, because if there was a genuine purpose Mr Beazley would be introducing such a bill as the first act of his Government if he were elected. But when you say to Mr Beazley, well, when, or if you got elected when you came to the Parliament would you actually move to reverse this indexation, after a lot of waffle, the answer is no.

So, Mr Beazley has this view. He says it should be reversed by a Coalition government, but kept by a Labor Government. Its an absolute stunt.

GATFIELD:

I dont need to tell you of course, that petrol prices is a burning issue right around the country and it may well be an electoral issue this year for you.

Is it time that we had some sort of inquiry into whats going on? I dont know, not necessarily a Royal Commission, but some sort of inquiry that really exposed exactly how petrol prices fluctuate? Because Im sure youre as puzzled as anybody by the way they go up and down.

TREASURER:

Its a very complicated area. I think in the last 10 years there have been over 20 inquiries into petrol, but we know this key determinant; one, the petrol price rises and falls on the world oil price and it was very high in November/ December, it came back a bit in January, its crept up again as the world oil price has crept up again and the most important thing, if you want low petrol prices, not just in Australia but in every country of the world, is the oil price. We know that.

The second thing we know is competition, that if the petrol stations all put their prices up on Fridays, as they tend to do, the price can move 8 or 9 or 10 cents. But of there is an independent, or somebody that wont move on a Friday, that keeps all of the petrol prices in the area, down. So, we know the two key determinants; the oil price, over which we have not much control, but competition which I think has to be heightened, really are the two key determining factors in how that petrol price moves.

GATFIELD:

This week of course, we get unemployment figures. Are you confident that you are going to meet, what I suppose was a target of getting unemployment down to about 6.25 per cent, or has that growth now started to stagnate?

TREASURER:

Well, whats happened in the last couple of months is it looks like the United States economy has slowed considerably and people are now saying, well thats going to effect Australia, and it will. Theres no doubt about that. But weve been through tough times before. We went through the Asian financial crisis, where every single country in this region, apart from China, went into recession; Japan, Malaysia, Indonesia, Hong Kong, Singapore, New Zealand, all went into recession. Weve been through tough times before. This will make things harder in Australia, but it means that we need good management and its the good management that were going to focus on, John.

GATFIELD:

Which is going to lead to another Budget surplus this year.

TREASURER:

Well, we inherited a Budget which was $10 billion in deficit. We put it into surplus, weve kept it in surplus throughout the Asian Financial crisis. Its been one of the reasons why our economy continued to grow and I can tell you we aim to keep the good economic management in place.

GATFIELD:

And so, in an election year with that Budget surplus, can you rule out further tax cuts?

TREASURER:

Oh, look Im not ruling anything in or anything out. Well go into a Budget round, probably in a couple of weeks. I have already started, we did some last year, but well go into full time Budget round in a couple of weeks. Well work all through February, March, April and May, almost continuously on that Budget...

GATFIELD:

So, is it fair to say you are leaving open the prospect of further tax cuts...

TREASURER:

...and in our Budget well bring down what the financial position is and well look at what can be afforded and what cant. And before I do that round I dont rule anything in, I dont rule anything out. You have probably heard me say this before John, youll have to wait until the Budget to see what we actually do or what we dont do.

GATFIELD:

Just as well have to wait until tomorrow morning to find out whether the Reserve Bank has cut interest rates?

TREASURER:

Well, the Reserve Bank, as you know, this is a mechanism that I have put in place when I became Treasurer, that the Reserve Bank would make decisions and announcements. But it would target policy at our inflation rate. And the target that we had was 2 to 3 per cent in underlying terms. We are now at the bottom of that target. Inflation is very low in Australia. So when the Bank meets it will be looking at the inflation rate. It will make the decision and it will make the announcement but it will be doing that consistent with good economic management.

GATFIELD:

Peter Costello thank you very much indeed for you time this morning.

TREASURER:

Thanks John.