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 26/09/2001

TRANSCRIPT
of
HON PETER COSTELLO MP
Treasurer

Interview with Neil Mitchell, 3AW

Wednesday, 26 September 2001
8.45 am

 

SUBJECT: Election, Victorian economy, Unions, ANZUS, Tax cuts, Daimaru - Coles Myer

MITCHELL:

Mr Peter Costello, good morning.

TREASURER:

Good morning Neil.

MITCHELL:

There is a bit of a whisper you were meeting with the Prime Minister today? When is the election going to be?

TREASURER:

I have just come from a meeting now, but, we didn't get around to that. I said to him I haven't got time finish the conversation, John, I have got Neil Mitchell on the phone.

MITCHELL:

And what did he say? Go and do it.

TREASURER:

He said, he is more important than I am, and he is quite right, he is quite right.

MITCHELL:

What about the election, when do you think it will be? Did you discuss it with him?

TREASURER:

Look, obviously we discuss timing all the time, Neil, it's, we, I think at the end of this week we have now run three years, so the Parliament has run its full term, so, we have got to have an election shortly. It can be in November or December, and either way it will be outside the three years, one of the longest Parliaments that we have ever had in Canberra.

MITCHELL:

Is a decision made yet?

TREASURER:

No.

MITCHELL:

Is CHOGM going ahead?

TREASURER:

At this stage it is, yes. CHOGM should go ahead, if things remain as they are. If there is an outbreak of hostilities in Afghanistan, or, if there are foreign leaders, that decide for one reason or another they can't come, or if the Secretary-General changes his mind, then you would have to take that into account. But none of those things have happened.

MITCHELL:

Onto the economy, is it, are you able to tell us what you discussed with the Prime Minister? Is it to do with the economy?

TREASURER:

Oh, we, this morning you mean? Well, yeah, we had a bit of a chat about the economy. I'm going to be releasing the Budget Outcome for the year just finished, 30 June 2001. Today we had a bit of a discussion about that, and, well, we just had a bit of a discussion about the issues of the day as we do every morning.

MITCHELL:

And perhaps the election?

TREASURER:

And then I was giving a tip in the Grand Final, too.

MITCHELL:

Okay, Victoria. Eight thousand jobs gone in a fortnight, what can Victoria, you remember those early '90's when Victoria was a basket case, a rust bucket? We're nowhere near that of course, but what does Victoria need to do to stop the drift? To stop the possibility of falling in to that rust bucket?

TREASURER:

I agree with you, I don't think it's as bad as it was under the Cain and Kirner days, but I do think there is a sense of drift in Victoria, there is a sense that you have this new Government for two years that, it has been taking things quietly. I guess that was okay in the first year, people waiting for a bit of direction and decision, and . . .

MITCHELL:

Well, what should it be?

TREASURER:

I think they have got to look more carefully at some of their their tax positions. I think help in relation to things like payroll tax would be one of the things they could look at. The good thing they have got going, we have got going for us in Victoria, now, is we have actually got some migration into Victoria, and that is obviously a good thing. The house building industry is a good thing. That has been supported by low interest rates, and the Commonwealth Government First Home Owners Scheme, but, I think they were, if I were them, and I have got enough problems of my own, so I won't set about solving their problems, I would start looking at some of the taxes on business.

MITCHELL:

On payroll tax?

TREASURER:

I think some of those things ought to be on their agenda.

MITCHELL:

Other taxes, banking taxes?

TREASURER:

Well, we've, you know how we pay the GST to State Governments, and this year we have paid them GST to abolish Financial Institutions Duties, and as the GST revenues grow, they will be able to abolish other stamp duties. So, I think we have got a good program in relation to that but I think, I think, looking at things like payroll tax. The second area I would say, and I think this is a big issue in Victoria, there is a perception that since the Bracks Government came to office the union militancy has grown. You have the run through incident out at Skilled Engineering, remember when the union officials ran through and destroyed property. You have had delays on many of the building projects, and I think if the Government could give a clear indication that it is prepared to take on the unions and stand up to them, that would also pick up.

MITCHELL:

Okay, well, that is two things, payroll tax and Union militancy, anything else?

TREASURER:

Oh well, if they could fix those, then I think they will make a good start.

MITCHELL:

Okay, what can you do to help? You are Federal Treasurer, you are Victorian based, what would you do to help?

TREASURER:

We will continue to run a low interest rate regime which has been very important for the home building industry which is, which is coming on stream, and has much more growth left in it in Victoria. We are running our First Home Owners Scheme, where you can get $14,000 for the building of a new home.

MITCHELL:

Are you going to extend that?

TREASURER:

Well, I would say to people this, if you want to be guaranteed of getting your $14,000, you have got to make your application by December.

MITCHELL:

Okay.

TREASURER:

And that is the one way of being absolutely sure, that you get the full $14,000 for your first home.

MITCHELL:

Is it correct that the pressure now on the Federal Budget means that the tax, taxation cuts, could be in jeopardy?

TREASURER:

Look, this, year, this financial year, which is 2001-2002, will be a tight year, with unanticipated expenditures in a couple of extra areas. The first is in relation to illegal immigrants.

MITCHELL:

Yep.

TREASURER:

The stand that we have taken there. The patrolling of Australian northern waters. The second, of course, is, we have activated the ANZUS Alliance, which means an attack on the United States is considered an attack on Australia, and we will jointly defend our interests. And we have not received a request, yet, for military contribution to any fight against terrorism in Afghanistan, but if we should, that would obviously put another pressure on the Budget.

MITCHELL:

Okay, so what does mean to tax cuts? (inaudible)

TREASURER:

Well . . .

MITCHELL:

. . . what does it mean to the way we live our lives?

TREASURER:

What it means in this financial year 2001-2002, it will be a very tight position, and there is no room for additional spending in that financial year. We also, of course Neil, as you know, have guaranteed to underwrite the entitlements, unpaid wages and holiday leave and long-service leave for Ansett workers, that could in addition be a new expenditure up to $400 million. So I can say to you in the current financial year, there is no room for additional expenditure, certainly no room for new initiatives, because we've got to fund those initiatives. The defence of Australia against terrorism abroad, against illegal immigrants at home, are our first priority.

MITCHELL:

Does that mean that if there is no room for additional expenditure there is no room for any offer on new tax cuts?

TREASURER:

Well, it is the same thing. You can't, cutting a tax is the same thing as a new expenditure and in the 2001-2002 financial year there would be no room for tax reductions.

MITCHELL:

Will there be, well apart from no new spending, will it be so tight that you'll have to look at cutting spending?

TREASURER:

Not in the current financial year. We brought down a budget which was in surplus for the fifth time and we left ourselves a bit of room.

We didn't anticipate obviously what is going to happen in relation to the war against terrorism, we didn't anticipate what has developed in relation to illegals, but we left ourselves the room for some of these contingencies, so we'll be able to fund those contingencies.

MITCHELL:

Will the surplus still be delivered?

TREASURER:

Oh yes. We are budgeting for our fifth consecutive surplus. We didn't put the Budget into surplus to give it away that easily, we had to fight so hard. Today I'll be releasing the outcome from our fourth surplus which was the year ending 30 June 2001 and, you know, having taken a Budget which was hemorrhaging at $10 billion in deficit and driving it into surplus, I can tell you I want to keep it there.

MITCHELL:

What about Ansett? What is the Government going to do on Ansett? Are you going to offer a guarantee that gets Ansett flying again?

TREASURER:

Well, we've made it clear that we will be looking after the employees because we think the employees are number one here.

MITCHELL:

Yeah, but the administrator is saying that they could be flying again and the Government is going to guarantee tickets. Is that right?

TREASURER:

Can I just go through it step by step. One, employees. We have made it clear we will guarantee pay, pay in lieu of notice, holiday pay, sick leave, redundancy up to 8 weeks, that is $400 million.

But, and this is a very strong proviso, we are not going to let these directors off the hook. The thing that worries me in all of this, is, you've got to remember these companies were run by directors and by management who bear a very heavy responsibility. And, as far as this Government is concerned we are going to pursue the recovery of the monies that those directors owe.

MITCHELL:

Yes.

TREASURER:

Secondly, we have offered insurance to Ansett, indeed to all Australian airlines. After the World Trade Centre, international insurers withdrew insurance for airlines and we've stepped up to the plate with an underwriting up to $10 billion. Thirdly, we were discussing the wet leasing with Qantas, that seems to have fallen through. Fourthly, I read in the paper this morning that the administrator has got some new proposal, we don't know what it is.

MITCHELL:

What, you haven't seen it yet?

TREASURER:

No. I haven't. And the administrator, if he wants to pursue that proposal, should come to Canberra today and put it before the Government. I'm not going to rule anything out or anything in until we have actually seen the detail of that.

MITCHELL:

Well, you are open to ideas. He seems to be saying that it was there. So the Government's not aware of it?

TREASURER:

I think officials may have discussed it, Neil. But the decision is going to be made by senior Ministers, and the senior Ministers are not aware of the detail. I think the administer, if he is serious about getting the assistance of the Government, ought to hop on the first plane and come and present it to senior Ministers.

MITCHELL:

And just very quickly. The GST, Steve Bracks blames the GST for problems in retailing. Is there, in Victoria, any truth in that?

TREASURER:

Neil, it was one of the weakest most opportunistic statements. Honestly. All I can say is I hope he was caught unawares. Daimaru has not made a profit in the last ten years. So, how he can say the GST is responsible for Daimaru, it has not made a profit in any of its ten years of trading. In relation to Coles Myer, Coles Myer is having a management revamp, as they said, I'm not saying whether it is good or whether it is bad. But Coles Myer have had a lot of troubles, they've just changed their Chief Executive, as you know, and I think management realises the big ask in front of it.

And for Steve Bracks, to effectively come along and say, oh, this is not the responsibility of anybody who is actually running the company, oh no, no, no, no, I'll make a political point here, it is all the responsiblity of the Federal Government. Really, it is pretty irresponsible and pretty weak.

MITCHELL:

Thank you for your time. Bombers?

TREASURER:

Tough actually, Neil.

MITCHELL:

Okay. Now you squeezed me in between John Howard and who? Who is next? John Anderson? Peter Costello.