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 28/03/2003

TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Doorstop
Senate Alcove, Parliament House

Friday, 28 March 2003
3.15 pm

 

SUBJECTS: Ministerial Council, GST, ACCC, Graeme Samuel, Qantas, Superannuation tax, Gulf War

TREASURER:

Well, the fourth Ministerial Council on Commonwealth State Financial Relations has been held today and the Commonwealth and the States have agreed on the allocation of GST revenues. In the next financial year $31 billion in GST revenue will be distributed to the six States and the two Territories, and in addition to that $1 billion as Budget Balancing Assistance. Importantly for the first time there are a number of States that are now receiving GST windfall, the state of Queensland, the ACT, Northern Territory are all now receiving GST revenues in excess of what they would have been receiving under the old system and no longer require Budget Balancing Assistance. The GST revenues to the States are now fully funding their education systems and their law and order and policing, and as the Labor Treasurers noted, a number of them in the discussions, as being a very positive reform for Australia and part of the reason why the Australian economy has been able to stand up so well notwithstanding the difficult international situation. As well as that there were discussions on other matters of interest in financial relations, and the meeting was one of the most positive that we have had in recent years, no doubt part of that was because the GST, every last dollar of which goes to the States and Territories, is now providing a funding base for them to deliver their services.

JOURNALIST:

Treasurer, I know we have heard it all before but NSW and WA were complaining on the way in that they are carrying the rest of the country on their backs and that it is not a fair carve-up. Have they got anything to complain about?

TREASURER:

Well the way in which the system works is that all of the GST revenue goes to the States and the Territories. Some of the States argue that as between themselves some States are getting larger shares and others are getting smaller. But that is an argument between the States as to how to divide up as between themselves. There is no argument with the Commonwealth here. The Commonwealth is giving every single last dollar of GST revenue, $31 billion, to the States, now funding their schools and their teachers and their classrooms and their police. Every single last dollar of GST revenue is received by the states. They have arguments between themselves because some States say they should get more and others less, but if you listen to all of the States every one of them thinks that they should get more and all of the others should get less. They can't all be right.

JOURNALIST:

Are the States who have healthy growth being penalised though?

TREASURER:

No, the way in which it works is that there is an allocation as between the States to ensure that every one of them can deliver a certain standard of service. If you happen to have a State which has a wide dispersal of population, that is less population density, you tend to get equalised up and to receive more than if you have a smaller state with a concentrated population density. That's the way the system works.

JOURNALIST:

Was there any discussion about a new chairman for the ACCC?

TREASURER:

Well again the States themselves divided on that, for supporting Mr Samuel, who the Commonwealth also supports, and no other candidate has any significant support. So plainly Mr Samuel is the preferred candidate.

JOURNALIST:

So you will continue to push for Mr Samuel?

TREASURER:

Well he has the support of a majority of Governments.

JOURNALIST:

Will you nominate him yourself?

TREASURER:

Well, we will see how the discussions go, but the fact is he has a majority, the majority support, five governments support him, and of course including the Commonwealth which totally funds the ACCC.

JOURNALIST:

How do you actually break the deadlock though, its four versus four, so given the Commonwealth doesn't have a vote?

TREASURER:

Well the Commonwealth obviously, seeing as it is four versus four, I think that the Commonwealth will have to break the deadlock...

JOURNALIST:

How?

TREASURER:

...well the Commonwealth will support Mr Samuel.

JOURNALIST:

Treasurer, was the issue actually discussed at today's meeting?

TREASURER:

Only in those terms.

JOURNALIST:

So you will force the issue at COAG, is that how it will work?

TREASURER:

No, no, no, as far as we are concerned, not only does he have a majority support, there is no other candidate that has significant support. At the end of the day there is no other candidate.

JOURNALIST:

So it requires you now to formally nominate him and get the process going. When will you do that?

TREASURER:

Well we will do it when the timing is right.

JOURNALIST:

Will you meet the June 30 deadline when Mr Fels leaves the chair?

TREASURER:

Yes.

JOURNALIST:

Treasurer, Qantas has announced it is dropping huge (inaudible) flights, is it the first major domestic casualty of war?

TREASURER:

Look, casualties of war were the brave soldiers fighting in the war, and they are the people who our thoughts are with at the moment.

JOURNALIST:

Is it a sign of things to come if Qantas has had to take such drastic action?

TREASURER:

Look, the things that will affect Qantas' business are things that affect airlines around the world -September the 11th, Bali, heightened security. I guess the good thing we can say about Qantas is that it's probably the most, or at least one of the most profitable airlines in the world. But is it a good time for airlines? No it's not, and the biggest effect I think was September the 11th. September the 11th as we know didn't do much for the airline business.

JOURNALIST:

(inaudible)...oil company case mean that the critics are right that they were running publicity and harming companies good names before they had proper evidence?

TREASURER:

Look, I welcome the fact that they have made an announcement. I think they did everything they could to gather the evidence, but as you look back on it, the level of publicity that surrounded the announcement of the investigation seems to be out of proportion to the result which was achieved.

JOURNALIST:

(inaudible)...fix that?

TREASURER:

Well I don't know that we have got, I don't know that this is a problem of legislation, I think this has highlighted the issue of how regulators should deal with the press, and I think that the lesson here is that regulators should be perhaps understated in their dealings with the press.

JOURNALIST:

(inaudible)...saying that you are effectively getting rid of the executives tax break by reducing the 47 per cent to 38 per cent tax on lump sums super payouts, just wondering what your side of the story is and (inaudible) was introduced in Parliament?

TREASURER:

Well as per usual Mr McMullan is wrong.

JOURNALIST:

Why?

TREASURER:

Because there is tax on contributions, and when you take into account the tax on contributions as well as the tax on exit, the marginal rate is 48.5 per cent, again he hasn't done his homework. He left out of the equation the tax on contributions. So we took this as a policy to the election, its in our election policy, we were elected on it, that the rate should be 48.5, and the rate will be 48.5. Sorry, just another mistake by Mr McMullan.

JOURNALIST:

(inaudible)

TREASURER:

No, because he has left out the contributions. I don't think he understands, and if he had sought information, he would realise that the money is taxed at 15 per cent on the way in, so it is the tax on contributions plus the tax on exit, which you have to take into account which brings it to 48.5.

JOURNALIST:

Treasurer, the war is obviously having an effect on the global economy, are you confident the economy will recover and will it do so quickly?

TREASURER:

Look, it is a very difficult period for the world economy. The United States, the world's largest economy has been through a recession and is going, is now coming out of a recession but is growing slowly. Japan the world's second largest economy has been through a recession, Europe is flat, there is the uncertainty of war, and oil prices are high.

Now, the IMF will be updating its forecast for global growth, in the next month or so, I expect that it will be revising down world growth, because these are difficult issues and in Australia we have faced not only the international situation but we have had in addition to that simultaneously our worst drought in the century. But it is a tribute to the resilience of the Australian economy that we have continued to grow and I think that the Australian economy will continue to be resilient. Last question.

JOURNALIST:

Will you be going to Washington for the April meeting?

TREASURER:

Don't know. Probably not I would say.

JOURNALIST:

Can the Bombers get up?

TREASURER:

Every chance, every chance. Good luck to them. Thank you.