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 29/06/01

Transcript No. 2001/085

TRANSCRIPT
of
HON PETER COSTELLO
Treasurer

Interview on The Today Show
with Tracey Grimshaw

Friday, 29 June 2001

SUBJECTS: GST, Rollback, US economy, interest rates, banks


GRIMSHAW:

Well, it is unlikely there would have been a single day during the past 12 months when the Federal Treasurer, Peter Costello, hasnt been confronted by three letters - GST. With the financial year coming to a close tomorrow, it is time for business people to take stock of the controversial tax, and to talk more about that were from, joined from Parliament House in Canberra by Peter Costello.

Treasurer good morning.

TREASURER:

Thanks Tracey

GRIMSHAW:

Coming up to the first anniversary of the GST, will you be happy to put this year behind you?

TREASURER:

I think the first year as you move to the new system is going to be the hardest, and from here on, we can continue to deliver further benefits like, the first anniversary on Sunday, we cut company tax further, we abolish Financial Institutions Duty, we abolish some stamp duties on shares. So you are now progressively seeing other taxes abolished which is going to make things particularly better for business and also for people who are saving with bank accounts over the coming year.

GRIMSHAW:

You said yesterday that nobody in Australia today says we should abolish the GST, but I bet thered be plenty of small business people whod want to challenge you on that?

TREASURER:

Well, there is no political party that is promising to do it, Tracey. The Labor Party, as you know, said that they were against GST and now they say if they are elected they are going to keep it, and then they said they were going to roll it back and still cant announce any of their details. And in fact, there was a poll today that said 84 per cent of Australians dont believe them about Rollback. So, there is no political party that has any interest at all in changing the situation and that is because nobody would ever go back to the old tax system, Wholesale Sales Tax system, and nobody would ever went to put up income taxes and company taxes which would be necessary if you did go back to the old system.

GRIMSHAW:

Okay, but accounting group CPA Australia surveyed 300 small businesses who said, 59 per cent of them believe the GST has had a negative impact on their cash flow and 58 per cent expect that to continue. Does that view out there among small businesses concern you?

TREASURER:

Well, the first thing Id like to say, is, it has been a huge year of adjustment and I pay tribute to the small business sector of Australia which overwhelmingly has coped with the introduction of the new system, and that has been a big change for them and we recognise the fact that it has been a change. And thats why we say that the best thing you can do is to leave it unchanged. If anybody is going to go round in the future and try and take things out or put things in, all they are going to do is to complicate things. That is what Rollback is complication. The best thing you can do now that business has made the transition is to keep things with certainty so that they can get on with their business.

GRIMSHAW:

Alright, well let's talk more broadly about the economy. To what extent should we be bracing ourselves for a further slow-down in the US economy?

TREASURER:

The US economy has slowed very dramatically through the course of this year and the Federal Reserve has cut interest rates in America by 2.75 per cent which is very aggressive, very quick. You have seen the US economy slow in terms of investment, you have seen its stock markets come off. We dont know what the June quarter is going to be, but the March quarter was weak, and the US economy is very sluggish at the moment. Now the Japanese economy is probably in recession and most of Asia is, or a good deal of Asia, is also in recession. So there are pretty uncertain times in the world economy out there at the moment and that will effect Australia - it has been effecting Australia. It means that we have got to be very vigilant on economic policy.

GRIMSHAW:

Retailers are reporting a slump in sales, they are bringing their sales, their mid-year sales forward. Would you not in that climate, and given the US economy, the background of the US economy, would you not like to see the Australian Reserve cut our interest rates even as insurance?

TREASURER:

Well I cant comment on the future movement of interest rates. I can observe that they are historically low. The mortgage interest rate is 6.8 per cent and the second thing I think that has helped in relation to retail is the cuts in income taxes. You will see in America they are now talking about cutting income taxes to cope with their situation. The good thing was in Australia we cut income taxes back on 1 July of last year for all taxpayers and for self-funded retirees further income tax to come, income tax cuts to come, from 1 July this year.

GRIMSHAW:

Alright, just one final question. Where do you stand on CBA Chief, David Murrays comments to the Press Club this week, that the bank may have to effectively jettison its low yield customers if it is further regulated?

TREASURER:

I dont think any bank should be jettisoning its low income customers. Low income customers are entitled to banking services. It is a point I have made to all of the banking chiefs, including Mr Murray, and well make sure that the banks know that and that the banks continue to offer those kinds of services.

GRIMSHAW:

Alright, well leave it there. Thanks for your time.

TREASURER:

Thanks Tracey.