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. 2001/009

Hon. Peter Costello MP
Treasurer

Interview with Alan Jones, 2UE
Tuesday, 13 February 2001
7.14am

SUBJECTS: Election Results, One Nation, roads funding, taxing trusts, Woodside, tax refunds

JONES:

Fourteen after seven and the Federal Treasurer, Peter Costello, is right opposite me. Good morning

TREASURER:

Good morning, Alan.

JONES:

Thank you for coming in. West Australia, a big, a bad result for the Liberal Party.

TREASURER:

I think it was a bad result for Western Australia, too. It put out of office a good Government, the Court Government had done well I think, over two terms. It’s always hard to win a third term, Alan, and now you have got Mr Gallop elected. Not really because Mr Gallop had any great policies...

JONES:

But you people are running for a third term?

TREASURER:

...but, we are, and I have always said this, running for a third term is hard. We run into this election as the underdog. Kim Beazley would consider himself favourite to win the Federal election. He is just out there with no policies and he hopes to be able to slip into office, and you have got to say that he has a good chance of doing so, unless we make it clear that the policies, or the lack of policies, or the know-nothingness of his prescriptions were going to make Australia a worse place off.

JONES:

Just take Queensland, though, how can you explain to an intelligent, would-be Liberal voter, in a state where the Labor Party had been found guilty of rorting, the Liberal Party are asking their supporters to put that party ahead of Pauline Hanson in preferences. How can you persuade an intelligent person that that is a sensible, political thing to do?

TREASURER:

Well, the first thing to say about Queensland is, we ask them to vote one Liberal, and as it turns out in Queensland you do not have to preference.

JONES:

It is optional preferential system...

TREASURER:

It’s a different voting system...

JONES:

The Leader up there, and indeed, your Leader in Western Australia, told people over there to put Pauline Hanson last. Now, if you are fair dinkum about winning, that just seems a suicide mission?

TREASURER:

If you are fair dinkum about winning, the first thing you do is you promote your own policies. That is the point I am making. We ask people to put us One. That is the most important thing in an election, right?

JONES:

But after that you put the enemy last and the only person that can stop you winning Government is Mr Beazley, so wouldn’t he go last?

TREASURER:

Well, actually...

JONES:

...Mr Beazley would put you last.

TREASURER:

...what Western Australia actually proved is that One Nation can stop us winning elections. It can.

JONES:

Only because you alienate them.

TREASURER:

Well, the truth of the matter is, Alan, that the people who voted for One Nation in Western Australia delivered the Labor Party into Government and the people that would vote One Nation federally, if they do that, will deliver the Labor Party into Government. Our message to people is, that at the end of the day you are going to have either a Liberal Government or a Labor Government and if you vote for One Nation, unfortunately what that means by taking votes away from, if you happen to be a Liberal from the Liberal Party or if you happen to be a Nat from the National Party, what that means is that Labor wins elections.

JONES:

Doesn’t answer my question. Why if the Labor Party are your political opponents, would you put them ahead of One Nation Party? Why in Queensland, as a Liberal, would you vote for the Labor Government, found guilty of rorting, ahead of Pauline Hanson’s party?

TREASURER:

Well, we wouldn’t. We would vote number one for the Liberal Party.

JONES:

The Liberals in Queensland have said they’ll put Pauline Hanson last.

TREASURER:

The Liberals have also said in Queensland, because of the way in which the One Nation political party has sought to use intolerance as part of its armoury, that that has no place in proper, government debates about these things, and they have made a stand against that kind of intolerance.

JONES:

But, one in ten people who support Pauline Hanson are supporting her because of the intolerance of the major political parties towards their concerns.

TREASURER:

Well, I don’t accept that for a moment, Alan.

JONES:

That’s what they say

TREASURER:

Well, that’s what they say, I don’t think they are right.

JONES:

Well, you’ve got to get them over to your side.

TREASURER:

Of course we do. But, there is no intolerance from the Liberal Party or the National Party to people in country Australia.

JONES:

But a dairy farmer wouldn’t vote for the Liberal Party?

TREASURER:

Well, let me go through a few things. The first thing I would say is, because of our economic management, instead of paying 22 per cent on their interest rates they are now on home mortgage rates of 7.5, you can get business interest rates which, you know, are 11 or 12 per cent. It is one of the best things you could ever do for people in rural Australia.

Secondly, if you asked them about some of the prices, some of those prices are as competitive now as they have been for a long time. Beef prices, for example. The wool price seems to be picking up, thirdly...

JONES:

You can’t take credit for that, though.

TREASURER:

Well, I think you can take credit for the management in relation to the stockpile.

JONES:

Are you concerned...

TREASURER:

One of the things that has always been said to me in Australia is that you would help our exporters by taking taxes off exports, and we have taken all taxes off exports. The biggest beneficiary of taking taxes off exports is rural, country, Australia. Before we came to office we used to take about $4 billion of tax out of exports and today we have taken it all off.

JONES:

Are they also beneficiaries because you let in Californian grapes, and New Zealand apples, and Thai chicken meat, and pork and God knows what from overseas, when we can produce all of that stuff ourselves.

TREASURER:

Well, I don’t think Californian grapes have been let into Australia because...

JONES:

Well, we’re hoping that they won’t be because they have got diseases.

TREASURER:

That’s right, because there is a disease and if there is a disease on Californian table grapes, they won’t be let into Australia. But, let me come back to the point about what the Government has done for those in rural and regional Australia.

Lower interest rates, we have taken taxes off exports, including reduce the tax on transport to and from rural areas ... 24 cents a litre less tax on heavy transport to and from rural areas, today. If we had not have put in tax reform, every item of good that came out of rural Australia or went into rural Australia would be taxed 24 cents a litre extra.

We were fought all the way in relation...

JONES:

Let’s accept that then is there a problem that those benefits are not being sold by their representatives, namely the National Party. Now the National Party seems to have a dwindling support base. Are they not properly representing what you’re talking about to their constituency?

TREASURER:

Well Alan it’s not just the National Party that represents rural Australia, it’s also the Liberal Party. I should make that point. It is the Liberal Party that represents I think probably more seats in rural Australia ...

JONES:

Do you reckon you’re getting your message across?

TREASURER:

Well look we have to always...

JONES:

You’ve just given away massive tax cuts do you think people have forgotten that.

TREASURER:

We have to always repeat and improve on our message. Look, I said to you the other day, that, you said what about all these extra taxes. Do you know the government is taking $6 billion less in taxes than it would have if it hadn’t put in place its package. Why? Because we cut income taxes. Largest income tax cut in Australian history. Two, we cut capital gains tax. Do you know we have cut capital gains tax. Why do I say this? Because a lot of people say, when are you going to get around to cutting capital gains tax. We cut capital gains tax. Today an individual need pay only capital gains tax on 50 per cent of the gain rather than 100 per cent of the gain. And when you go to sell something, maybe you go to sell a farm, maybe you go to sell a share, maybe you go to sell a tractor whatever it is, the fact of the matter is as a result of tax change we have cut capital gains tax in half. Now, there are a lot of people who say the tax system is so confusing and you do have to repeat these messages, but they are messages which are of direct benefit to rural and regional Australia.

JONES:

Under the Land Transport Development Act the Transport Minister is meant to report to the Parliament annually on the use of the excise and the progress that’s being made on road development in this country. That hasn’t happened. Surely to goodness, someone’s at fault here in not understanding the use to which this money should be put which has reactivated the whole question about excises, whether you’ve been ripping people off and every person who’s got a whinge now wants to say, oh well, if there’s $2.9 billion that hasn’t been spent, I’ve got a road here that you should be doing something about. Surely it’s a regrettable omission at best.

TREASURER:

The handling of the matter is a regrettable omission.

JONES:

Did you know about this before the announcement last week?

TREASURER:

I did not know about the Auditor-General’s report, nor did I know about the particular matter that he complains about.

JONES:

John Anderson seems to be saying yesterday that you and John Fahey knew.

TREASURER:

John Anderson does not say that I knew. And I didn’t. But if I can move on and say, what this is essentially about, is accounting procedures. As I now understand it, I went right through it over the weekend. This is the situation. Money goes into consolidated revenue, right, and is paid out to roads. What the Auditor-General says, is strictly speaking, money should have gone into consolidated revenue, then into a reserve account and then be paid out to roads, right.

JONES:

Not quite.

TREASURER:

Well he’s saying, the fact of the matter is, the fact of the matter is that we spent more money on roads than the money that was supposed to go into the special account.

JONES:

He’s saying...

TREASURER:

Nobody was short changed a dollar. In fact we paid more.

JONES:

He’s saying $9 billion over the last 6 years has gone into the Reserve, the road reserve, and only $6 billion has been spent, and he has said basically that has happened previously as well, we know that that petrol excise was put on by Labor governments when they wanted money to spend on education and every other thing to sort of win votes. We know that but that’s no excuse for Vaile and Anderson continuing that process.

TREASURER:

He says that you should have taken the money from Consolidated Revenue put it into the Reserve and then paid it out for roads. We put it into the Consolidated Revenue and paid it out for roads. We paid more out for roads than ever was supposed to go into that Reserve, and the fact of the matter is, that we spent billions more than that 4.95 cents a litre.

JONES:

Well I just want to leave it there. He is saying that 9 billion over 6 years was gathered in excise and only $6 billion was spent. Come to the BAS...

TREASURER:

Well I’d just say he accepts that apart from the accounting procedures, we spent more on roads, than money that was designated for the reserve. The bottom line is we spend not a dollar less. We spent more.

JONES:

Is that auditor capable of appearing in the public place and being questioned?

TREASURER:

Probably.

JONES:

So your government wouldn’t have a problem if we talked to him about that? 

TREASURER:

No.

JONES:

The BAS. You talked about yesterday about urgent simplification. Last week you said to me that you might not be able to canvass some of these things. Can I just ask you a couple of simple questions, which comes up in the correspondence though. I should say to my listeners I am going to give the Treasurer this morning, several letters that have been deliberately written to me by people who have said that this is an exercise in whingeing that they don’t have a problem with all of this. And indeed some of the language of that correspondence is quite significant where people actually make the very clear point that their whole process is better as a result of having been forced to relook at their accounting procedures and change the systems. But in terms of an instalment statement, an IAS. I said to you last week we don’t need that. I mean it’s non wage income it’s every quarter it’s too difficult. When are you going to be able to say to people what the status of that is in the future.

TREASURER:

We’re going to be able after consultation this week to make a substantive announcement thereafter, hopefully by the week after. Can I say on an, IAS you can go annual, if you happen to be a retiree. You’re not in the GST system, you’re just somebody who has income from shares or maybe rents or something like interest from bank accounts, you can do an annual statement. It looks as if people weren’t alerted sufficiently to take that option and I am now saying to those people that we can give them the right to exercise that option again, and go annual.

JONES:

Annually. And what about a BAS, is there any likelihood where you’ll have one annual BAS but then quarterly estimates and then people will have to present an audited statement to determine who owed whom what.

TREASURER:

In relation to the BAS the Cabinet yesterday had a long discussion about this. We have got a very good, substantial package of measures. Before we announce them we are going to run them past the business organisations just to make sure that they are happy with them and representatives of accounting professions, and after we have done that we will be making an announcement.

JONES:

And in that case, will you have time for them to take root to neutralise some of the concerns that are being expressed out there. I mean it’s a long process isn’t it to put these new things into place.

TREASURER:

Oh yes. Look there are always teething problems. You have got to put them into place. You have got to reprint some of your instructions and your forms, you’ve got to get your letters out to people, but those things that can be done immediately will be done immediately.

JONES:

You’ve got farmers hanging loose wanting to know what you’re going to do about family trusts. Are you going to tax family trusts?

TREASURER:

Well, family trusts are taxed the question is the way in which it’s taxed.

JONES:

The way in which it’s taxed.

TREASURER:

And now...

JONES:

They would currently say they weren’t taxed.

TREASURER:

No, no I think ...

JONES:

The money is taxed after it’s been distributed. They’re saying you’re going to tax the trust and tax the distribution which is a double tax.

TREASURER:

No, I think they would say, that their income through the trust is taxed, that’s their main point. That it’s already taxed, why change it? Now the question, is I think we all agree, that if you get income through a trust it’s got to be taxed the question is the way in which you do that. We’ve been engaging in consultation in relation to that as well.

JONES:

And will they be, will you be changing the rules in relation to family trusts. I mean you’ve got farmers and small businesses, your constituency, they’re upset about it.

TREASURER:

Well we’ve got to make sure that it’s a sensible arrangement. After doing all of the consultation ...

JONES:

You did a deal with Meg Lees about this didn’t you, this was the reason she supported the GST.

TREASURER:

No, not quite.

JONES:

Nearly.

TREASURER:

No no, this was all part of our package. This was a package which was designed to reduce company tax.

JONES:

Not really, not really. I mean if you wanted to reduce tax there’s more sophisticated ways of doing it than trusts. I mean, will you if assets are transferred ...

TREASURER:

You asked me how this issue came up, this issue came up because we had a review of business taxation lead by the senior Australian businessman, John Ralph. John Ralph said here is a whole package. He said as part of it reduce company tax, we’ve reduced company tax, cut capital gains tax and fix up these other areas.

JONES:

Alright well let me ask you one simple question. If farmers transfer assets between generations currently not taxed. Will that be taxed?

TREASURER:

No.

JONES:

Foreign Investment Review Board in relation to the problem in Western Australia. The British Dutch, Royal Dutch Shell, Woodside Energy, is Woodside Energy sufficiently important in the national interest for you to exercise your powers that you do have to prevent that takeover in the national interest?

TREASURER:

Woodside is an important Australian company. We have a procedure whereby these matters are considered by Foreign Investment Review Board.

JONES:

Sure.

TREASURER:

It makes a recommendation to the Treasurer. The fact of the matter is, as a matter of law I can’t ...

JONES:

No I’m just saying under the Foreign Acquisitions and Takeovers Act you do have power don’t you to act to any decision that might be contrary to the national interest.

TREASURER:

Yes, yes, yes we do and we have to exercise that in accordance with the law and the courts say you’re not allowed to make pre-emptive statements or prejudicial statements so I’ve got to obey the law but I can assure these things are looked at very carefully.

JONES:

And thank you for the correspondence we referred to you last week you’ve got some good results for a couple of listeners.

TREASURER:

Well I just wanted to say you referred two cases to me and I won’t use the names obviously. Somebody who had not received a refund from the ATO since October.

JONES:

And they got that.

TREASURER:

Well she was contacted by the ATO. The reason that she didn’t get the refund, is that the wrong bank account details had been given to the ATO, once the right ones were given it was paid.

JONES:

And the other was a substantial amount wrong.

TREASURER:

The other was a substantial amount - a refund which was outstanding on GST but there were further matters in relation to Pay As You Go as a result of the correspondence, she was contacted by the ATO, who gave her advice on the outstanding returns and I understand the money is to be paid into her account today, on Tuesday the 13 of February.

JONES:

And if I don’t shut you up I’ll be in all sorts of trouble because our news has already begun. But thank you for your time Treasurer.

TREASURER:

Thank you very much Alan.

JONES:

Peter Costello.