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. 2001/013

Hon. Peter Costello MP
Treasurer

Interview with Jon Faine, 3LO
Tuesday, 20 February 2001
8.35am

SUBJECTS: Image consultant, Queensland Election, Budget, fuel, BAS, States GST revenue, leadership

FAINE:

Peter Costello is the Federal Treasurer and the member for Higgins and the most senior Victorian Liberal in the Government. Good morning to you Peter Costello.

TREASURER:

Good morning Jon, great to be with you.

FAINE:

Why don’t cannibals eat clowns?

TREASURER:

I suspect you’re about to tell me. You tell me.

FAINE:

Because they taste funny.

TREASURER:

Clowns taste different to other people do they? Do you watch that programme the Vicar of Dibley, and you see them having that joke at the end of the program.

FAINE:

I don’t know the program.

TREASURER:

You should watch it. The jokes all have to be explained at the end of the programme, so you’ll have to explain that to me.

FAINE:

Do I get $45,000 for telling you a joke and making you smile. There’s a suggestion raised yesterday in Senate Estimates that you hired a consultant for $45,000 to teach you to smile instead of smirk.

TREASURER:

Absolutely false. Not a skerrick of truth.

FAINE:

So I don’t get my $45,000?

TREASURER:

There’s this Labor Senator called John Faulkner, who runs around trying to get these stories into the newspapers, and when he does, you know, he finds some junior reporter to publish a story, he gets into the Senate Estimates Committee and says, I’ve seen this statement in the paper - which he’s planted - and I’d like to ask you about it. That’s just all part of the dirty tricks machine.

FAINE:

The fact that it’s republished everywhere from The Financial Review to the major papers and elsewhere suggests though that there’s a readiness for people to accept that this could be the sort of thing that goes on behind the scenes. I mean do you need an image consultant?

TREASURER:

No I don’t have one and I wouldn’t pay for one and certainly I wouldn’t use taxpayers money. No, actually it is quite interesting because the Labor dirty tricks unit put this to the Nine News last year and Nine - it’s quite a reputable bureau - you know, enquired and said it was false. They then put it to the Murdoch Press and managed to get it up in The Sunday Telegraph in Sydney and then this Faulkner asked in the Senate and managed to get it into some of the Fairfax Press today. You know, the Labor Party has a dirty tricks machine, they plant stories and then try and amplify them. If I were Senator Faulkner, I don’t think I would consider taking taxpayers’ salary to engage in that kind of thing.

FAINE:

Your take then on the outcome of the Queensland election? What went wrong from your party’s point of view?

TREASURER:

Well look, obviously it was a big defeat for both the Liberal and National parties in Queensland. It was a great victory for Premier Peter Beattie. I think there are a lot of lessons to come out. One is, where you have a divided Opposition, it’s very hard to present yourself as an alternative government. And even though the Queensland Labor party had been beset with scandal, Beattie managed to portray the idea that he would form a more stable government than the Coalition partners. I think that was a very big part of his victory. Obviously the One Nation factor was a big distraction during the campaign…

FAINE:

What is the ‘One Nation factor’ as you see it?

TREASURER:

Well, in the Queensland campaign, the One Nation factor was how the Liberal and National parties would deal with One Nation. Remember Rob Borbidge said that they would preference last and then some parts of his party refused to follow his direction. That was a very big factor in the campaign.

FAINE:

So you think the ‘One Nation’ factor, in inverted commas, is to do with the way they used preference deals to split the Liberal/National Party coalition? Or do you concede that the One Nation factor, in inverted commas, is some grassroots reaction against the pace of economic change.

TREASURER:

I think there are a lot of factors behind One Nation. I could go into those in detail, which I’m happy to do. All I’m saying is in the campaign, the way in which the issue was dealt with, worked against the Liberal and National Parties. That’s the only observation I’m making on the Queensland campaign. But I’m quite happy to go into some of the reasons why I think people vote One Nation. I think that there are a whole lot of different strands. I think there are some people who feel left behind. I think there are some people in that category.

FAINE:

Which people?

TREASURER:

Lots of people. People who feel that maybe there are others in the community that are increasing their earnings faster or getting better services. And they feel that they are left behind. I think there is also a harder and sharper element to it. I think that there are some people who are still worked up about the Government’s decision on guns - which I think was absolutely right to get guns out of the community. And there is no doubt that there is an element behind One Nation that never accepted that decision and Pauline Hanson herself has said that she wants to bring semi-automatic guns back into the community. And so I think there are many and different reasons. I don’t think you can say that there is one single one, but at the end of the day I’ll say this, I don’t think One Nation has an answer to any of the problems that are in the Australian society at the moment.

FAINE:

In analysing what happened in Queensland and what went wrong from your Party’s point of view, you’ve said nothing about petrol, you’ve said nothing about the Business Activity Statement, you’ve said nothing about concerns over the future of Telstra, in particular, for people in the bush. You’ve said nothing about all of those big ticket items which everybody else says were influential in Queensland.

TREASURER:

Well, everybody else I think who was in Queensland and examining the Queensland campaign would say that the most important determinant of the issues in the Queensland State election were the Queensland issues. Now, having said that, that is the most important determinant, Rob Borbidge would say that, Peter Beattie would say that, David Watson would say that. You could then say, well, if we want to extrapolate out of that, let’s look at some of the other issues. But these things vary, you’ve got to be on the ground and follow them. They vary very carefully, according to the way in which the political argument is conducted.

FAINE:

So you’re saying that Federal issues played no role in the outcome in Queensland?

TREASURER:

No, I’m saying you can look at the issues in Queensland and extrapolate out and say what are federal implications. I’m very happy to do that, but I am saying that in a contest between Peter Beattie for Premier, and Rob Borbidge for Premier, the most important determinant is the position of Beattie and Borbidge. Not the position of Howard or Beazley. Look, John Howard wasn’t on the ballot paper, Kim Beazley wasn’t on the ballot paper, Peter Beattie was and Rob Borbidge was. That is the key determinant.

FAINE:

Media Monitor, Rehame, the company that keeps track of what’s going on, on talkback radio and all the rest around the country, did a log yesterday of what people were saying on Queensland talkback radio. Now, you can dismiss talkback for whatever you like, but it is certainly one measure of what’s going down in the community at the moment. 167 calls logged yesterday morning across Queensland radio stations, ABC and commercial talkback calls, 167 calls, one of them agreed with you and 166 of them - out of 167 said they were influenced to vote the way they did because of concerns about petrol prices, the GST, dairy deregulation and the future of Telstra.

TREASURER:

Jon, yesterday the election was over. Actually I much prefer the analysis that was being done before the election. The election was over yesterday. You’ve got to look at what Rehame were doing and what the talkbacks were saying before polling day. Once polling day is over, the result is out. And you know how the press works, everyone says now lets look at federal implications. As I said, I’m very happy to draw out lessons, but the point I make in relation to Queensland, is that John Howard wasn’t running on the ballot paper in Queensland...

FAINE:

No.

TREASURER:

…and those people that say, for a bloke who wasn’t even on the ballot paper, right, somehow was the key determinant of an election, are overlooking what actually happened. What actually happened was, you were voting for Beattie or Borbidge or Watson or in some cases Country City Alliance or in some cases One Nation.

FAINE:

Those people who support the Liberal Party traditionally, and the business community as well as many in the Liberal Party will be looking to you for some leadership surely, saying look Peter Costello, can you try and persuade John Howard that you’re heading in the wrong direction, that there are major policy u-turns that are needed on the BAS and GST, on fuel, on Telstra. You Peter Costello, who for so long has taken much of the policy running, can try and drag us out of the mire. Show us some leadership.

TREASURER:

Well, when you say the wrong policy direction, let me tell you the policy direction, the overall policy direction that we are heading to. It is this. A growing economy, with more jobs, lower interest rates and improving living standards. That is the direction we are heading. And just let me go through how we meet that direction - 800,000 new jobs since we were elected, a mortgage interest rate which today is 7.5 per cent instead of 10.5 per cent, which is giving $3000 a year, to the average home buyer, improving living standards with the largest income tax cuts in Australian history and low inflation. Now, along the way, Jon, you have to make sure that you make good decisions which send you to that goal. But I want to make this point today. The idea that says, oh, let’s go for a Labor prescription, let’s drive the Budget into deficit, jack up interest rates, foreclose homes and put people out of work, is not going to make anybody better.

FAINE:

You have got a $16 billion surplus, you can spend money on enormous, an enormous range of projects without going into deficit.

TREASURER:

When you say a $16 billion surplus, you know, and I see some of this put in the paper, what they have done is, they have added up four years on constant projections, assuming no change in the economy and assuming no decisions between now and the next four years. That is what that figure is. That is a figure that is, if you made no decisions over the next four years, and there was no change in the economy, and you added up all of those projections, that is the kind of figure. Now, I have always made the point. That as you take decisions you will change around, and we do change around those bottom lines. Let me give you one example, one big example, the figures that you talk about do not include, for example, $1.6 billion of extra spending on roads.

FAINE:

The Prime Minister pulled an extra $30 million out of his back pocket yesterday in Darwin to revive, the otherwise, collapsed railroad to the Northern Territory. You can pork-barrel for all you are worth between now and the Federal election.

TREASURER:

Well, I suppose anybody could pork-barrel, but we don’t. What we do is we take…

FAINE:

Well, what else was that in Darwin yesterday?

TREASURER:

Well, we take decisions which are consistent with Australia’s overall economic interests. We keep the Budget in surplus. When I became Treasurer of Australia, you know what Beazley was running - $10 billion of deficit and that is why you had interest rates at 10.5 per cent. What we do is we keep the Australian Budget in surplus and we have reduced income taxes. Now, consistent with that, we have got to make sure the spending that we do, is well targetted.

Now, let me go to the Darwin to Alice Springs Railroad, what the Prime Minister said was, if the private investors pull out and you can not find another private investor…

 

FAINE:

Here is $30 million.

TREASURER:

…over, I think, 4 years, over, I think it was 4 years, I think that is what he is talking about - a project, which from memory is worth several hundreds of millions, possibly even a billion…

FAINE:

But if the private sector, you have always said if the private sector are not interested, why should the Government put taxpayers’ money in, and here you are doing it?

TREASURER:

Quite right, and that is why, that is why the bulk of the project is to be built by the private sector and it is why the Prime Minister also said they had better go and find every private sector proposer that they can get into it. But at the end of the day…

FAINE:

(inaudible)…let’s go to some specific…(inaudible)…before time runs out, any back-down on fuel excise?

TREASURER:

Look, the fuel excise is indexed under legislation which has been in place since 1983, put in place by the Labor Party and which the Labor Party intends to keep and that is also our policy. Can I say in relation to petrol prices, we think petrol prices are far too high, and the most important way that you can get the petrol price down, is the world oil price. Every morning on your radio programmes, they give out the world oil price. When you hear it is at $30 it means that the price is going to be around current prices. Two years ago it was at $12. Our best chance is to get that price back.

FAINE:

But, you won’t interfere in the current arrangements in order to bring the price of fuel down by the amount that is within your control?

TREASURER:

Well, Jon, the reason the fuel price has gone up, is the world oil price. You want to bring the petrol price down, you have to get the world oil price down, that is the key determinant in all of this.

FAINE:

An annual Business Activity Statement being widely mooted, after your consultations with economic, accounting and business groups the other day?

TREASURER:

We put a number of proposals to the accounting groups and small business groups, which gained a very positive reception. Now, we have to frame that in the technical terms, when you are dealing with tax it has got to be done in technical terms, and we hope to announce that soon. And I think it will be very warmly received by the small business community, because we can now simplify the Business Activity Statement.

FAINE:

Why did it take the Western Australian and Queensland election results to force you to do what everyone had asked you, and even told you to do, in the time, in the 8 months since the GST was introduced. From day one, people said, this system is too complex, too time consuming and detracting from, what otherwise, might be the benefits of tax reform. For 8 months, you said no, no, no…

TREASURER:

No, Jon, once we had the first experience, the first quarterly return, which came in, I think, in November, we took the experience of that and we started working on refinements. Now, there are a lot of people that still say today, and, you know, I am getting letters all the time, we find the system suits us, don’t change it. So, for those people we have to continue the certainty of arrangements. There is another group of people that say, we found it too time consuming, change it. We have some very positive proposals for them. We have road tested them now, we have used the experience of two quarters, and now I think we can improve things quite substantially.

FAINE:

The Ralph Report said you should start taxing family trusts more vigorously. Are we going to see a back-down there so as not to offend, in particular, farmers?

TREASURER:

No, this is one of those issues where, the technical application of tax is very complicated, very complicated indeed. We put some proposals out, we have taken submissions, the submissions show that there are some very large technical issues which will have to be re-mapped, which we will take that feedback on board and accordingly take into account the feedback that we have got.

FAINE:

The Victorian State Treasurer, John Brumby, says that the Victorian tax payer is being dudded to the tune of $847 million by adjustments from the Commonwealth Grants Commission, that are working against our interests and based on historically inappropriate formulas, and he says, you, as a Victorian, should look for the interests of Victorians and we should stop subsidising better off states, like Queensland and the A.C.T.

TREASURER:

Well, can I just spend the time to go through this, just give me your time Jon, I know you are, sort of, pressed for time, but I think it is important that we go through this.

What happens with Commonwealth revenue, and it has happened since Federation, is that a large proportion of the Commonwealth revenue is re-paid to the States. In particular, Jon, all GST is paid to the States. You will not hear Mr Brumby saying this, incidentally, Mr Brumby sits back and takes all GST revenue, along with his other State colleagues. They might go out, incidentally, they might say, oh you know, terrible, terrible, terrible GST, but if you ever tried to hold a dollar of GST revenue back, Mr Brumby would be the first person breathing down your neck.

FAINE:

But that is years of, of procedures still to go through until 2008.

TREASURER:

No, no, no. Mr Brumby is getting the GST cheques as we speak. He has been getting them since 1 July of this year. He has been getting them since 1 July of this year - there is no 2008 - he has been getting them, along with all of his State colleagues, since 1 July of this year.

Now, how does the Commonwealth work out the formula of distributing the money back? Right. People that are collecting GST send it to Canberra and then Canberra sends it to the States. How do you work out how big Victoria’s cheque is as composed to New South Wales’ cheque, as composed to Queensland cheque? The way you do it, is, you have an independent umpire, and it is called the Commonwealth Grants Commission.

FAINE:

Yep.

TREASURER:

Right? And the Commonwealth Grants Commission takes submissions from all of the States and sets down a formula. All the Commonwealth does, is, it writes out the cheque in accordance with the formula. Now, Mr Brumby knows that. Mr Brumby thinks the Commonwealth Grants Commission, an independent umpire, has the wrong formula, he has the right to put in his submission and convince them to change it.

But, to run around and to say, somehow it is the Commonwealth Government, he knows it is false, and it is a rather cynical exercise to try and confuse the situation, if I may say so.

FAINE:

Alright, and in a moment we will be speaking to Tony (inaudible), from the Institute of Engineers, about the tunnel, last question, Peter Costello, for you because I am told you have got a 9 o’clock meeting elsewhere and you have got to go - there are those in the Liberal Party who have always said Peter Costello is our best chance for Prime Minister. I met a senior business figure on the weekend, who said John Howard shows no leadership.

The best chance the Liberal Party has of winning the next federal election is to install Peter Costello, as Prime Minister, before you go to the polls.

TREASURER:

Well, Jon, my attitude is, I am the Treasurer, I am working day and night to produce good economic outcomes for Australia and I am thoroughly supporting John Howard. No question about it.

FAINE:

No attempt? No…

TREASURER:

No question about it…

FAINE:

…no working the numbers?

TREASURER:

No question about it. The only numbers I work are Budget numbers, and I am trying to keep them in the black.

FAINE:

You have always thought since you were a student that it was your destiny to become Prime Minister, rather than Leader of the Opposition?

TREASURER:

Well, I don’t know about that. I am now quite a long serving Treasurer, I am now working on my sixth Budget and I can tell you, it takes me night and day to work on that. The only other thing I have time for is my family, my constituents and my football club, so that is a pretty full, full life Jon.

FAINE:

Peter Costello, thank you for your time this morning.

TREASURER:

Thank you.