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 23/05/01

Transcript No. 2001/069

TRANSCRIPT
of
THE HON PETER COSTELLO MP
Treasurer

Treasurer
Interview with Ross Stevenson – Radio 3AW
Wednesday, 23 May 2001
8.05am

SUBJECTS: Budget

STEVENSON:

Seven after 8.00, and the Federal Treasurer, Peter Costello, joins us on the line from Canberra. Good morning Treasurer.

TREASURER:

Hello Ross, how are you?

STEVENSON:

Very well, thank you. You will be glad to know that the Age has an article entitled, Moolah Ruse, the Herald-Sun has a cartoon entitled Moolah Rouge, and the Australian has a cartoon featuring you as a high kicking can-can dancer.

TREASURER:

I think I should be Kidman at least don’t you?

STEVENSON:

You’re not bad for a (inaudible). 

TREASURER:

Have you seen my legs?

STEVENSON:

(inaudible).

TREASURER:

I don’t think you’d want to.

STEVENSON:

Can we start this interview, it goes like this, I’m going to ask you why most people would regard this as a critical election-winning Budget? You’re going to sound mortally wounded but what are the people going to think?

TREASURER:

Well, I think, if you are a self- funded retiree you’ll think it is about time I had my tax cut, and a tax-free threshold of $20,000 for a single is a good thing. If you are a pensioner you will say that as the economy has strengthened the Government’s decided to pay a dividend to pensioners, that’s a good thing. And if you are in business you’ll say cuts in company tax and on vehicles will be good for the economy. And I hope that is the way they will look at it.

STEVENSON:

Does the about time factor coming into this though, if you are giving something to people who already think they are entitled to it. Do they actually give you their gratitude?

TREASURER:

Oh well, you are not in the gratitude business. In my experience people always have legitimate demands and the Government can’t satisfy them all. So what you’ve got to do is you’ve got to try and determine the priority areas, and the priority areas that we’ve determined in this Budget are older Australians, health care for families, rebuilding our environment and cutting tax for business. They’re the priorities that we’ve set.

STEVENSON:

Let’s go into one specific matter in this Budget, Mr Treasurer. What is your moral and philosophical basis for giving pensioners, age pensioners, a one-off handout of $300?

TREASURER:

Well, the Budget came in stronger last year than was expected and so the Budget could afford it.

STEVENSON:

Was there more dough from the GST than you expected?

TREASURER:

Actually more revenues from company tax and individuals as we pulled people in from the black economy, yes. So the Budget was stronger. It will be good for the economy because I think they’re likely to inject the money back into the economy and they deserved it. So, if it is good for the economy, the Budget can afford it and they deserve it, everything comes together and it is worth doing.

STEVENSON:

You say that you’ve aimed this relief completely at older Australians. I don’t think you appreciate how old, the AAP reports this morning that Peter Costello says the Budget is responsible and designed to make Australia stronger in the next century.

TREASURER:

Well, how long have you got to go before you qualify for all of these things, Ross?

STEVENSON:

Aahh.

TREASURER:

Two or three years wouldn’t it?

STEVENSON:

About twelve years.

TREASURER:

Oh, sorry.

STEVENSON:

The same as you.

TREASURER:

Somebody said to me last night, I was talking at a function last night, and a lady came up to me and said, oh Mr Costello I can’t wait to get old.

STEVENSON:

You made the payments to self-funded retirees and pensioners, are they the result of you having made an earlier blue on the figures?

TREASURER:

No, because earlier we increased the pension, as you know, and we kept it in front of the cost of living, so we’ve had it in front of the cost of living all through the year. We got the opportunity to do this because we had a stronger Budget. It will be good for the economy because I think the economy can do with a bit of stimulation at the moment. A pensioner might be able to buy something that they wouldn’t otherwise buy, they might buy a present for their grandchild or something like that. And they deserve it. So when the three of them come together it is just one of those conjunctions that mean it can be done. We are very pleased to do it. It is the same with Prisoners of War, people will say, well gee how long after the Second World War are you paying compensation to the prisoners of war of the Japanese, and the answer is, it is about 55 years and it is a long time. But we can afford to do it, it had to be done, it was right to do it, so we were able to do it this year.

STEVENSON:

What do you say to Alan Kohler who writes for the Australian Financial Review, and he says you funded all of this on the basis in the last two years you’ve gone from a surplus of $13.5 billion to a deficit next year of $800 million. In other words, you are robbing the bank, you haven’t got the income to cover it?

TREASURER:

What we are doing is we are cutting taxes. Where you’ve got your Budget in order, and you’ve paid down debt, we’ve now repaid $60 billion worth of Labor’s debt, then you should be cutting taxes, yes. I make no apology for that. We cut taxes by $12 billion on 1 July last year. What’s Alan saying, we should have higher income taxes. We cut them by $12 billion on 1 July because we could do it and keep the Budget in the black. And if Alan wants to say that he thinks income taxes should go back to where they were so that average earners are paying 43 cents in the dollar rather than 30 cents, he ought to be writing that in the Financial Review.

STEVENSON:

(Inaudible) by Jeff Kennett's experience, and that you’ve said yourself, I’ll be buggered if I’m going to go find myself kicked out of office not having spent all that dough I had.

TREASURER:

Oh, well, it is not a question of spending dough. My view is this, look, if you’ve got the Budget in balance, you balance your books, right, you’ve paid down your debt, then the people ought to pay lower taxes. That is my philosophy. It’s like Ross, you know, if you are not spending all of your salary, if you’ve got your mortgage under control you might be able to go and buy something. I think if you’ve got your mortgage under control, if your books are balanced you should be cutting income taxes. We cut them by $12 billion. So what’s Alan Kohler going to say, it was a bad decision, does he want higher income taxes in Australia? I think we should have lower income taxes in Australia.

STEVENSON:

Peter, I want you to put your hand on your heart now and (inaudible) on a stack of bibles, and tell me this, when you sit down with your blank sheet of paper to write the Budget speech is the first thing in your mind election?

TREASURER:

No.

STEVENSON:

I can’t see (inaudible). Is there any money left for the election?

TREASURER:

The first thing in my mind is, you know, how we are going to sort of start and finish in 4,000 words.

STEVENSON:

(inaudible). Anything left to spend?

TREASURER:

The Budget is still in surplus and if we strengthen the economy it can stay there. And we will continue to retire debt and….

STEVENSON:

(Inaudible) promises of $1.5 billion when you are stalking the hustings in November or December, whenever it is?

TREASURER:

Oh well, when we stalk the hustings we’ll be talking about where we were, where we’ve come from, where we want to go, and we’ll be saying to Australia that good economic management brings benefits and you’ve seen some of the benefits last night.

STEVENSON:

Would it make more sense, if you are down to your last $1.5 billion, or if you believe Alan Kohler you are actually $800 million in the red, would it make more sense to actually go to an election in July? I ask this of you, you know, as a politician? I’m not asking you to tell me when the election is. Would it make more sense given that you’ve just flashed the dosh, go to an election now while it is fresh in everyone’s mind?

TREASURER:

Well, look, I don’t call the elections, the Prime Minister does, so I never really turn my mind to it because I’ll probably find out when the election is being called 24 hours before.

STEVENSON:

And we’re going to believe that. Peter we had a call from a lady called Lyn earlier this morning who wanted to ask you a question about superannuation. We promised we would pass it on. May we simply play her call to you?

TREASURER:

Sure.

CALLER:

Peter Costello, I would like to know if you have changed the rule about superannuation, about people having to use their superannuation after they’ve been retrenched and they can’t get other work and they’ve got to use it before they get any unemployment benefits. I want to know if that has been changed?

TREASURER:

Yes, that was changed last night. Superannuation benefits are not taken into account if you are over 55. You can go on income support without them being counted, previously they were counted, you had to run them down before you could go on income support. We changed that last night. We changed that to help mature persons who were over 55 and out of work.

STEVENSON:

Thanks for that. Sixteen after eight, tell us we’ve had some news this morning, just a phone in about a printing company in Melbourne which we were told has closed down this morning and 150 employees to be made redundant, their job losses were announced yesterday in Melbourne (inaudible). As well as job losses Wangaratta or Shepparton, I think, Electron the computer people at Wangaratta and 200 people out of work from Impulse Airlines. Then anecdotally you’ve got to be careful not to turn anecdote into absolute truth, do you see, are there any tom toms beating about job losses?

TREASURER:

Look, unemployment, we think, will remain where it is over the course of the next year, it is around about 7 per cent, we would like it to be lower of course, but it is still much lower than when the Government came to office. It is still lower than it has been for most of the 1990s, you’ll remember that unemployment was at 11 per cent during recession. And, look, you do have to be careful that….

STEVENSON:

From your guru, the Treasury, are there any tom toms to get individual (inaudible) going from people saying, listen we just think unemployment wouldn’t slightly (inaudible)?

TREASURER:

Well, unemployment has been falling for five years.

STEVENSON:

What are you telling me it can’t keep falling forever? 

TREASURER:

No. There have been 820,000 new jobs created in the last five years. We think that the unemployment rate will stay about where it is for a year and then start falling again. In other words we’ve come through five years of falling unemployment, the position because the economy is today not growing at 4 per cent as it was last year, it will stay at about where it is and as the economy picks up towards the end of this year, unemployment will start falling again.

STEVENSON:

The old two quarters of negative growth, we’ve had one, have you got any insight into what the second quarter is likely to show? Of course if it shows, if this next quarter is in negative growth, the ‘R’ word is going to be slammed on the front page of the newspapers isn’t it?

TREASURER:

Oh, I’m sure they will. But retail trade was pretty good in the March quarter, you’re getting the housing industry starting now to come back with the First Home Owners Scheme, and lower interest rates, we’ll be getting the figures next month. But I think you can say as of May leading into June activity is picking up and we expect it to pick up over the course of the rest of this year.

STEVENSON:

Just a minor matter Mr Treasurer, a lot of people are ringing in asking whether or not this $300 handout goes only to age pensioners or to disability pensioners and other pensioners as well?

TREASURER:

All pensioners that are of age pension age, which is over 65 for men and I think it is 61 for women. So if you are on a service pension, for example, and you are over 65 you would get it. If you are not over 65, it is a bonus for older Australians.

STEVENSON:

The question from one of our callers earlier this morning saying, I’m a 54-year-old on a disabled pension, he won’t get the $300. He wants to know, why don’t I get it given that I’ve suffered as much from being on a fixed pension as someone of an older age?

TREASURER:

Well, disability pensions have been increased, they were increased on 1 July of last year by 4 per cent. I think also disability pensions are not taxed and other pensions are. So, this is a benefit which is for persons on any pension if they are over the age pension age. And an increase in their tax-free threshold because they are subject to tax, and an increase in their Medicare levy so that they don’t pay Medicare either.

STEVENSON:

We have to let you go because you have promises earlier made, pulling rabbits out of a hat, did you manage to get a (inaudible) at the Colonial on Saturday night?

TREASURER:

Well, I’m sitting around sort of wondering whether it will go direct telecast, if it will go direct telecast I sort of might sit up in bed and watch it from home. What do you think?

STEVENSON:

Yes, I’d say as an Essendon supporter you will avoid going.

Thanks for your time.

TREASURER:

It is a great pleasure.