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 09/03/01

Transcript No. 2001/021

Transcript
of
Hon. Peter Costello MP
Treasurer

Doorstop Interview
Rosary School, Prospect, Adelaide
Friday, 9 March 2001
11.30 am

SUBJECTS: First Home Owners Grant, Business Confidence, Leadership

JOURNALIST:

Mr Costello, can you tell us what’s happened in the last 24 hours, 48 hours that’s changed your mind so far as the building industry is concerned to prompt this latest grant given the signs have been there for three months at least?

TREASURER:

The Government had in place, since 1 July last year, a grant of $7,000 to people who’d never owned a home before, you could get a grant of $7,000 and buy either an established or a new house. What the Government has announced now is that if you want to enter into a contract for the construction of a new house and you do so between now and the end of the year, that the grant will be $14,000, it is a doubling. And the idea of that is to bring forward construction in relation to the new home sector and to give that bit of added stimulus in addition to the interest rate cuts of earlier on in the week. So, that is going to be good for first homebuyers and good for the construction industry.

JOURNALIST:

I’m aware of what you’ve done. I’m just wondering why you’ve done it now, and not three months ago when the signs were first (inaudible)?

TREASURER:

We introduced for the first time ever $7,000, so I think it’s a fair point to say, we did for the first time ever introduce a $7,000 grant and if the Government hadn’t reformed the tax system on 1 July there wouldn’t have been a $7,000 grant. Now, we are going to keep the $7,000 grant and we are going to double for new homes, but not for all time, only for people who enter into a contract between now and the end of the year. So, if you’ve not owned a home before, if you want to enter into a construction contract from now until the end of the year you have a $14,000 grant opportunity which is good for people who can take it up and great for the construction industry.

JOURNALIST:

The HIA says that you based, that you grossly underestimated the cost of the GST, that it was based on flawed numbers. Are you going to revise that sort of, the numbers that you used?

TREASURER:

No. The changes that we put in place was always a grant for first homeowners. And you’ve got to bear in mind before we put a $7,000 grant in place there was nothing. There was actually nothing that was available for first homebuyers. Now, that $7,000 stays and it is there both for new or existing houses. What we do is in order to help with construction, for those people who are entering contracts now, they can get up to $14,000, but it won’t be available for all time. I stress, this is a time limited measure designed over the next six months to help the building industry.

JOURNALIST:

You’ve made that clear, but do you agree that you grossly underestimated the cost of the GST? That the HIA are saying that you based that on flawed numbers, (inaudible)?

TREASURER:

No. The take up under the first homeowners scheme was actually greater than we expected, that is more people actually took it up. What appears now is that people were taking it up more in relation to existing stock than in relation to new stock. Now that we’ve got a measure to help with new stock, I think that will be good for new stock as well.

JOURNALIST:

How is the Government able to afford this given that when the petrol about-face was announced you said that it would mean we now had to face a really tight budget. How much tighter does the budget have to be because of this decision?

TREASURER:

Because this is a limited time period, it only applies costs in relation to this financial year and in relation to next financial year. So it is a limited measure of great benefit to first homebuyers. But the cost is limited by reason of the fact that it only applies to contracts between now and the end of the year.

And I stress that again so that everybody is aware, it’s only going to, if you enter into a contract between now and the end of the year, it’s not ongoing forever like the $7,000 grant. But it will be good for first homebuyers and it will be good for the construction industry.

JOURNALIST:

But surely you can see why the Opposition is calling this panic policy when literally overnight you take action to double something in spite of the fact you’ve known about it several months. (inaudible)?

TREASURER:

Let me say in relation to the Opposition. The Opposition never ever supported a $7,000 grant. They never had one. The $7,000 grant was not something that the Labor Party had in place. The Opposition did not have a $7,000 grant, nor incidentally did I ever hear the Opposition saying that you should ramp it up in relation to new home construction. This is another example where the Government has identified a problem, when you identify a problem you move to fix it. I can understand the Opposition feels flat-footed, but I don’t think that’s a reason why it should be criticising the Government.

JOURNALIST:

What they’re saying is that this is policy on the run. That you were warned about this in October and the building industry says blind Freddie could see (inaudible) coming?

TREASURER:

But this is building on a measure which we put in place in July of last year.

JOURNALIST:

A bit too late. (Inaudible)

TREASURER:

No, no, no. We put it in place in July of last year, and for the first time ever. No other Government of recent times - if you went right back into the 70’s or the 80’s you might find it - but in recent times no other Government had put in place a first homeowners scheme. A lot of people have benefited from that and a lot of people will benefit from this. It is good news for homebuyers. I can understand why the Labor Party might feel like opposing it, because it is going to be good for homebuyers and good for construction. But, we’re not going to sit by and stop helping homebuyers just because the Labor Party opposes the measures that we put in place. I mean, they can complain, but we are about actually helping first homebuyers and helping the construction industry.

JOURNALIST:

Do you accept that these figures show that it was ineffective in helping the building industry?

TREASURER:

No, there was a transitional effect in relation to the building industry, a point that we always made and a point that we were determined to address by bringing in a first homeowners scheme, which had not been there previously. Nobody else introduced a first homeowners scheme, this Government did. And now the Government decides over the next period to increase it.

I would have thought that that would be welcomed by homebuyers, and it will be welcomed by the construction industry and, I think, from the Government’s point of view when we identify needs we deal with them. Now, people who want to make political points will try and put a negative construction on that, but I think overwhelmingly it is a very positive development. And I must say….

JOURNALIST:

The new CBA survey out today which says business confidence has further weakened. Are you concerned about this? And do you see it going down beyond this quarter?

TREASURER:

Business confidence?

JOURNALIST:

Yes.

TREASURER:

Look, there are a lot of measures of business confidence and they move around from day to day and I don’t give a daily commentary on business indicators because everyone has a different survey and they move from day to day. But I make this point, that the positive measures which the Government is putting in place will contribute to business confidence. Interest rate reductions, this week we had another interest rate cut which will save somebody on a $100,000 mortgage $20 a month. Today we announce a package which improves benefits for the construction industry, lower interest rates and improved benefits for the construction industry will be good for the construction industry, lower interest rates will be good for homebuyers. And these are measures, I think, which will improve business confidence.

JOURNALIST:

The Prime Minister last night refused to rule out standing down as leader. It doesn’t send a good message during an election year, does it?

TREASURER:

Well, I didn’t interpret his comments that way, honestly.

JOURNALIST:

Today he said he was the best person to lead the Party to the next election. Do you agree with that?

TREASURER:

I fully support the Prime Minister and his leadership and I fully support the Party’s efforts, both in the Ryan by-election and in the next election. And nobody works harder for the Liberal Party and in supporting the Prime Minister in those electoral efforts than I do, I can assure you of that.

JOURNALIST:

Do you rule out a possible challenge after the Ryan if it is a bad election result?

TREASURER:

I’m not for a moment speculating on the Ryan by-election. I’m saying that we are working hard to win the Ryan by-election, and I’m working hard as Treasurer in support of the Prime Minister under his leadership in both the Ryan by-election and into the Federal election to go on and campaign as hard as we possibly can with the object of winning both.

JOURNALIST:

But many people might say that you are not ruling out a challenge by saying that.

TREASURER:

Well, there is no challenge. There is no challenge. There is no vacancy in the job, and I am not seeking that job. I am seeking to be the Treasurer and to support the Prime Minister. I don’t think I can be clearer than that.

JOURNALIST:

But you can rule out a challenge after the by-election?

TREASURER:

Well, there is no challenge. I’ve ruled it out. There is no challenge and I am fully supporting the Prime Minister in his efforts and I am not speculating on a loss in the Ryan by-election because I am working hard to win it.

JOURNALIST:

So there will be no challenge (inaudible)?

TREASURER:

There is no challenge. The Prime Minister has my absolute full support. I am working totally as hard as I can, night and day in support of him as his Treasurer both to win the Ryan bi-election and in the Federal election.

JOURNALIST:

Some of the school children said that you would make a good Prime Minister?

TREASURER:

That’s enough questions. Thanks, goodbye.