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 22/05/01

Transcript No. 2001/065

TRANSCRIPT
of
THE HON PETER COSTELLO MP
Treasurer

Nine Network - Interview with Laurie Oakes

Tuesday, 22 May 2001

9.00pm

 

SUBJECTS: Budget, Self-Funded Retirees, Pensioners, Motor Cars, Welfare, Rollback

OAKES:

Treasurer, welcome to the programme.

TREASURER:

Thanks Laurie.

OAKES:

Is it fair enough to say this Budget is aimed at winning back traditional Liberal supporters that you had alienated?

 

 

 

TREASURER:

It is a Budget which is economically responsible, which continues prudent management, and it allows us to share some of the benefits of good economic policy. We have paid down $60 billion worth of Labor debt. We dont have to spend as much in interest as we used to, we are able to distribute some of that benefit to pensioners, and some to self-funded retirees, and some to business with tax cuts.

OAKES:

And it is the self-funded retirees particularly, that Shane Stone, in his memo, said were traditional Liberal supporters that the Government had alienated. Was that your thinking in the frame of this Budget?

TREASURER:

Well, when, before, under the Labor Party, Laurie, you used to pay tax at $5400 if you were a self-funded retiree. Some years ago we increased that to $11,000, but tonight we take it to $20,000, so that a self-funded retiree or a pensioner with additional income, doesnt have to pay tax until they go above $20,000, or if they are a couple above $32,000. So, that is an enormous tax cut and its back-dated, its back-dated to 1 July of last year, so, as soon as you put in your tax return you will be able to get the money back.

OAKES:

Well, the self-funded retirees do okay, but the ordinary pensioner doesnt do nearly as well - $300 one-off - it disappears with the election, basically, its an election bonus. Is that fair?

TREASURER:

If you are an ordinary pensioner and have additional income you get the benefit of those increases in tax-free threshold

OAKES:

But if you dont have additional income

TREASURER:

If you have no additional income then you will get a one-off payment, a non-taxable payment, $300, Im not sure this has ever been done before, $300 to a pensioner, or a part pensioner. There is 2.2 million of those people and if the legislation goes through the Parliament by Thursday it will be paid next month.

OAKES:

But they see this as compensation for the GST, that they, and you get it for one year, and the GST goes on forever.

 

 

 

TREASURER:

The compensation for the GST was the pension increase on 1 July last year and the pension is 2 per cent higher in real terms, and will always be. Thats the compensation for the GST.

OAKES:

But the pensioner groups still say that wasnt enough to compensate.

TREASURER:

Well, Laurie, you know, ever since the pension was introduced people have always been saying it should be higher, and I dont begrudge anybody that. But because the economy was stronger in the last year, and the Budget position was better, the economy could afford it, the Budget could pay for it, and were now making it to people who deserve it, and you can always say, oh well, only $300, but this is $300 that I am not aware has been paid before by way of a bonus to pensioners.

OAKES:

Now, part of your aim, I think you said earlier, was to stimulate the economy with this $300, the other measure that is stimulatory is the tax cuts for cars bought by businesses. Did you have advice that without that stimulus the economy would go further into a hole?

TREASURER:

No, the economy has been weaker this year than it was last year and so it can afford some stimulus, and we have got the stimulus of tax cuts.

OAKES:

Afford it or need it?

TREASURER:

Well, whichever way you put it, it would benefit from it. So, we have got tax cuts, we have got the pensioner bonus, we have got the bring forward of reductions in taxes on cars - that will be very good for the motor car industry by the way - and we then expect that growth will strengthen through the course of next year, so the economy will benefit from it, the Budget can afford it and the people deserve it.

OAKES:

Well, you said on Sunday that this Budget would lay down some markers for a third term agenda for the Coalition. What were they?

TREASURER:

Welfare reform, this is the biggest reform and overhaul of Australias welfare system that we have ever had, and what we are trying to do here, Laurie, is we are saying the Government will invest more money but it will ask more of people in return. If you are receiving an unemployment benefit it will ask for Work For The Dole. That is, put back into the community. If youre a single parent on a parenting payment it will ask you to try and think about the possibility of getting back into the work force once your kids get to high school and its much more of a mutual obligation. The community invests more but it asks more, and it is a reform, really, over 10 years. The other big reforms here of course are Defence. A 10 year programme on Defence. There is also the re-investment in the 5 year Natural Heritage Trust to 2006 - 2007, and we continue the abolition of indirect taxes which will make Australia, I hope, a business centre into the next decade.

OAKES:

Now, you concluded your Budget speech with a quote from the first Treasurer 100 years ago, but what is the forward looking vision here, I mean is there one?

TREASURER:

The forward looking vision here is having now worked to reform the tax system we take on welfare, we re-build our defences, we invest in our human capital, and we re-build Australias environmental resources, probably one of our greatest challenges for the next four or five decades.

OAKES:

The figures in this Budget were interesting, a surplus of $1.5 billion, growth picking up in the next financial year, to what, three and one quarter per cent. Are you confident about those figures?

TREASURER:

I think so. As you know we have had an incredible bring forward of housing construction before GST, consequently it fell away because it had been brought forward

OAKES:

And contributed to the slump

TREASURER:

and now it is coming back. The First Home Owners Scheme up to $14,000 for a new home, lower interest rates, its coming back. Its going to support growth, our exports are booming and so we have got exports contributing to growth and I think we have got pretty good prospects in 2001-2002.

OAKES:

Now, can you guarantee that the figures in this Budget will still be current in November?

TREASURER:

Well, barring international catastrophe, these are the best figures that could be put together.

OAKES:

But they are different to the figures from the figures that you issued 6 months ago?

 

 

 

TREASURER:

Well, I think in relation to Budget outcomes, I think each year we have come in better than I forecast. Even this year, 2000- 2001, we are going to come in, you know there was a lot of talk this time last year, people said, oh its all spectrum sales, spectrum sales didnt do as well but we came in stronger than we were expecting.

OAKES:

The reason I ask the question is that Labor says they cant rely on these figures still being current so they have got to wait until the election before they give us their costings. Now, there is some validity there isnt there.

TREASURER:

No.

OAKES:

Why not?

TREASURER:

Labor cant give you a policy because it hasnt written one yet. Thats its problem.

OAKES:

Well, they have issued fifty-one policies, the problem is there is no dollars attached to them, and they say the reason for that is they have got to wait for the Budget honesty figures (inaudible) of the election campaign.

TREASURER:

No, Labor cant give you a policy on tax because it hasnt written one. The Labor Party can fund the abolition of GST. This is a very important point, you can abolish GST tomorrow.

OAKES:

That, of course, is not their policy.

TREASURER:

Well, who knows what their policy is?

OAKES:

But they have said (inaudible)..

TREASURER:

All you have got to do is re-introduce Wholesale Sales Tax, re-impose Financial Institutions Duty, double Capital Gains Tax, increase company tax, and increase income tax. It is because they are not prepared to do any of those things that they have stymied themselves on their own policy. Have you ever seen a group of people run away from their own policy to the extent that the Labor Party does? If Labor was proud of its policy to abolish GST dont you think it would be out there talking about it.

OAKES:

But, its policy is not to abolish the GST, isnt that the point?

TREASURER:

Well, who knows what its policy is. It opposed the introduction of the GST so I assume its against it. Its a fair assumption, isnt it?

OAKES:

Well, its against but says it cant be changed.

TREASURER:

Well, of course it can be changed. Laurie, its a one line Bill. The Bill is, the GST Act is repealed. Of course it can be changed, I mean lets not fall for that one. They are ashamed of actually putting it out, thats the problem.

OAKES:

Ill put that to Simon Crean. Mr Costello we thank you.

TREASURER:

Thank you.