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 10/04/01

Transcript No. 2001/032

Transcript
of
Hon Peter Costello MP
Treasurer

DOORSTOP
Wodonga
Tuesday, 10 April 2001
10.25am

SUBJECTS: Labor Leadership, Superannuation, Rollback, Sophie Panopoulos

TREASURER:

Let's do the locals first anyway. You start.

JOURNALIST:

Well I was just wondering the latest poll is showing a slide in Labor support. Are you expecting them to go to the minor parties or maybe some to Liberals?

TREASURER:

Look it's going to be a very tight electoral contest between now and the end of the year. You'd have to say that Beazley regards himself as the favourite. And he's got a plan to try and coast into government. But I think the more people start looking at him, the more they're going to ask what does he stand for and does he have the toughness required to run a country. Now you had an example of this yesterday. One of his own front bench comes out and basically describes him (inaudible) votes the next election. A faded old idealist. Mr Beazley has no capacity to discipline his own front bench. He says he doesn’t agree with it. He says he'll have a word to her but he's not quite sure when he's going to see her. If you're running a government and one of your key supporters, in this case Cheryl Kernot, doesn’t think that you're worthy of the vote for the top job, what does that say about your qualifications? And what does it say if you can’t even call her in and exercise discipline. It says that really he knows and we know that he doesn’t have the metal in his spine. And I think that's going to become more and more clear as the course of this year wears on.

JOURNALIST:

I won't ask if you're a boring old suit, but the jobs and housing, job vacancies and housing…

TREASURER:

A faded old idealist.

JOURNALIST:

Oh is that what it was?

TREASURER:

Yeah I think so.

JOURNALIST:

I thought it was a boring old suit. But anyway…

TREASURER:

I thought it was the nicest thing that Cheryl Kernot's ever said about me.

JOURNALIST:

The housing approvals are down and job vacancies are down. Is that a concern for you?

TREASURER:

Oh look there's been a definite downturn in Australia's housing construction industry. There are two factors that are behind that. One is that the cycle was coming to an end in any event and the second is that there was a massive pull-forward as a result of people trying to beat the new tax system. When you had a pull-forward to record levels in the first half of 2000 you were going to have a fall-off and you had a fall-off a very substantial fall-off in the second half of 2000 continuing into the early months of this year. But two things that the Government's done, I think will restore a lot of confidence. The first is the First Home Owners Scheme and the second is the fact that interest rates are now as low as they've been probably since the 1970s. That will start feeding back into housing construction. I think there'll be a slight pick up in the current quarter and I think that there'll be a lot of strength returning to that sector in the next quarter.

JOURNALIST:

Will the Budget make or break the election result?

TREASURER:

Oh look, when people are looking at the outcome for an election, they put everything together. They put together the quality of the leadership, the strength of its decision making, the Budget priorities that it sets, their overall economic management and it'll be the whole of those things that the electorate weighs at the time of the election.

JOURNALIST:

Mr Costello a higher rate of tax is kicking in soon for people who are retrenched on their payouts. Is there any chance of this being reviewed in light of the good economic circumstances and other pressures?

TREASURER:

What higher rate of tax is that?

JOURNALIST:

On retrenchment payments, superannuation and retrenchment?

TREASURER:

I'd have to look at the details. I'm not sure of any new higher rate of tax that's kicking in. I'm not sure that there's any new, well not that I'm aware of?

JOURNALIST:

Well previously announced but…

TREASURER:

You've caught me on that one. But if you point me to the measure I'm happy to give you a response.

JOURNALIST:

Mr Costello you've been critical of Labor on it's superannuation policy but the Government has been pretty silent on what it has in mind. You've nominated superannuation as the next big reform agenda. Why can’t you just bring forward and start an enquiry now? Why wait until after the election?

TREASURER:

Well I said that superannuation was complex and complicated and needed simplification. And I said that once the tax reforms had been bedded down that that would be an ideal area for economic reform. Tax reform has not yet been completed. I think we've still got something like four Bills in the Parliament for legislation before 1 July on things like the debt/equity border, simplified taxation system, unified capital allowances and all of these things we're consulting on and we've got to make sure that we bed them down. Now I think the important thing, and I said this at the time of the last Budget, to bed down tax reform and then it would be of enormous benefit to simplify superannuation.

What I did not say incidentally, never have, that what should be done is that you should force up the cost of superannuation by 6 per cent for every employee. Now Mr Crean as you know has failed to make a major speech on the economy in the last 5 years. He did his first interview with Paul Kelly last week and what was the big announcement, well this was one of the big announcements. You wait until we start investigating the others. He says that the superannuation guarantee I believe it has to be taken above 9 per cent. Now Mr Beazley went out yesterday, he said nobody in my Party has said that. Hang on, his Deputy Leader has said it. His Deputy Leader said it in quotes on Saturday. Now what his Deputy Leader said is what has always been the policy of the ACTU and he knows, he was it's President. And three of it's Presidents will be in the next Parliament. Now Mr Beazley is trying to back and fill and say that night is not night, it was somehow day. He said it. And this idea of the superannuation enquiry is just a cover to announce the increase if they get elected after the election rather than have it as an issue before the election.

JOURNALIST:

How can you criticise Labor for increasing the surcharge when you actually did that in the last two terms of office. You increased it to 9 per cent and also how can you criticise them for putting off until after the election when that's what (inaudible).

TREASURER:

The increase to 9 per cent was a legislated increase. It was a legislated increase. The decision we made was that there would be no legislation to increase it above 9 per cent. The 9 per cent was legislated. But the Labor Party has a deliberate policy of increasing it above the 9 per cent we now know to 15 per cent. I say to all of the small business employers in Australia - what these people are talking about is an increase of your liability of 6 per cent on the wages of every single employee and the reason why Mr Beazley was backing and filling yesterday is he knows it will send small businesses to the wall. He knows it will put people out of work and he wants to announce it after the election not before.

And I make this second point why does the ACTU want to increase it to 15 per cent. Because the ACTU through many of those retirement funds wants to get its hands on more money to invest. That's the second part of this. It's not just an increase in the 15 per cent but you've got to look very carefully at who wants to get their hands on the money. And there are a lot of union funds which the ACTU would be only too happy to have 15 per cent of wages flowing in to. Now Crean is a President of the ACTU. Ferguson is a President of the ACTU. George is a President of the ACTU. The ACTU policy is 15 per cent. Crean says it on Saturday. I'll put my money on the ACTU running the ALP any day of the week. And this idea that oh well it was our policy and yes Simon did announce it but no we're only going to have an inquiry is boiling down to this one simple proposition. We don’t want anybody to know about it before the election. We want to hit them between the eyes after the election.

JOURNALIST:

Well Mr Costello, will you spell out your plans for an overhaul of superannuation before the election and the timetable and the method by which you would tackle it?

TREASURER:

I'll spell out our position on this today. There'll be no increase. There'll be no increase in the compulsory legislated 9 per cent that employers have to pay. That's always been our policy. We don’t need a review to consider increasing it. We will not be increasing it. And the Labor Party will.

JOURNALIST:

But you said it deserves a look.

TREASURER:

And what's more we don’t take our orders from the ACTU. And if it's the ACTU policy, it's much more likely that we wouldn’t be doing it for that reason than we would.

JOURNALIST:

But what's your wider superannuation policy, you've said it needs a look, it should be a priority after tax reform is bedded down. What's the timetable? What directions are you thinking of?

TREASURER:

The only thing I think that should be done in relation to superannuation is that it should be simplified. Not that more money should be taken out of employers. This is the critical difference between the Government and the ACTU/ALP Opposition. The difference between the Government, the Coalition Government and the ACTU/ALP Opposition is that the ACTU/ALP Opposition want to take more money out of employers at the cost of jobs so they've got the money to invest. We don’t and that's the big difference.

JOURNALIST:

…Natasha Stott Despoja early this morning. But are you concerned about the sort of support that she seems to already be attracting, the Democrats are attracting and the Liberal Party's ability to attract the younger vote, the youth vote at the next election.

TREASURER:

Oh look we all have to work hard to attract votes at the next election whether it be young people or older people. The only point I made about the new leader of the Democrats is that politics is a much more substantive business than just having one-liners. She is talking now about rollback of GST. I think on the first day it was inbound tourism, then it was books, now it's public transport. Now politics is a substantive business, if that's what she believes she's got to do two things. One cost it and two, announce which other taxes she's going to put up in it's place. And that's the critical thing here. If you're going to be in the substantive business of politics you can't just tell people what they want to hear. You've got to actually engage in what can be accomplished.

Now I think that the interesting development is this. Natasha Stott Despoja obviously has a huge agenda for rollback. That means that Mr Beazley who's been fighting GST for 5 years has got to at least have as great, probably greater, you would have to say wouldn’t you that Beazley's agenda would have to be greater than the Democrats. And the great thing for Mr Beazley is he's now guaranteed a vote in the Senate for every item of rollback that he wants. So he can now come out and he can name every one of those items of rollback and cost them and most importantly tell us the taxes that he's going to put up to pay for them.

You know the funny thing is, this is the thing that amazes me, for 5 years Beazley has been unable to name an item of rollback. Natasha Stott Despoja became Democrat leader on the weekend and within two days she can name at least 5 areas. So if she can name 5 areas why can’t Mr Beazley name 50 or 500 or 5,000. Why can't he? The truth of the matter is that he is running scared of his own policy. The thing that amazes me about rollback is he's running scared of his own policy. Rollback is his policy. Instead of getting out there and saying what a great policy it is and here it is and winning votes on it. He runs scared of his own policy.

Now I think Natasha Stott Despoja has really belled the cat on Mr Beazley. She became Leader of the Democrats on Saturday, she's got five substantive areas of rollback. He presumably has 50 or 500 or 5,000. Let's hear what they are. Let's cost them and let's know what taxes are going to go up. And the good thing for Mr Beazley's point of view is that he can now be assured of a Senate majority for every item of rollback that he wants. So lets hear what it is.

JOURNALIST:

So do you disagree with Cheryl Kernot's assessment then that she poses a threat to the major parties? The new Democrats Leader?

TREASURER:

Cheryl Kernot is no longer a Democrat. She is a Labor frontbencher who is dedicated to getting the Labor Party in government and yet she comes out on the weekend and says that the leader of another party, Natasha Stott Despoja is a much more acceptable face than Kim Beazley the man she wants to make Prime Minister. It is one of the most extraordinary statements that you've heard in Australian politics. If Cheryl Kernot really believes that Stott Despoja is a better leader than the man she wants to make Prime Minister she ought to be urging a vote for the Democrats rather than Labor. And if she thinks it's better to vote Democrat than Labor she should no longer be on Kim Beazley's front bench. Looking at this saga unfold it's like an episode from the Marx Brothers. Nobody's quite sure in that Party who's supporting who anymore and if Mr Beazley can't sort it out then I think he's got some major problems.

JOURNALIST:

We've had yourself and Mr Howard down in recent times in Indi. You're obviously concerned about the seat?

TREASURER:

The seat of Indi is going to be a hard fought contest. In the past it's been held by the National Party and by the Labor Party and by the Liberal Party and we don’t take it for granted. We’ve got a great candidate Sophie Panopoulos who's working hard, she's got an electoral office here in Wodonga. She's got electoral offices also in Benalla and we're going down to campaign in Wangaratta and we're not going to leave any stone unturned.

JOURNALIST:

Is it going to be a key seat in the Federal Election?

TREASURER:

I think it'll be a key seat in the Federal election. Yes I do. And that's why I'm pleased to have a candidate of Sophie's calibre here working for us. Thanks.