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 13/05/2003

TRANSCRIPT
THE HON PETER COSTELLO MP
Treasurer

Pre-recorded Interview with Laurie Oakes
Channel 9

Tuesday, 13 May 2003


SUBJECTS: Budget

OAKES:

Mr Costello thanks for your time.

TREASURER:

Thanks Laurie.

OAKES:


How did you keep the tax cuts secret?

TREASURER:

Well, we were obviously looking to keep our Budget in surplus to fund the war in Iraq and the drought, and because we have paid down so much Labor debt, we have now got a strong position in relation to debt. So, I thought it was fair that the taxpayers get a reduction in tax which we announced tonight.

OAKES:

Everything else leaked though, why not the tax cuts?

TREASURER:

Well, we, I think the proper place to make these announcements is in Parliament and if you can keep it to the Parliament I think that is very important, that is what I tried to do and we managed to be successful.

OAKES:


When did you decide on the tax cuts?

TREASURER:

Well, once the war in Iraq finished, and we became more confident that there was some
drought-breaking rain things began to look a little better than we had expected at the beginning of the year and we were then going to be in a surplus, so we will still pay back $2.2 billion of Labor debt this year, but the remaining $2.4 billion will go back to taxpayers.

OAKES:


It is hard to convince people now isn't it that you're not setting yourself up for an early election, a double dissolution election?

TREASURER:

Well, Laurie, we met our expenditures. Our expenditures were the war in Iraq, the drought, security, and we kept the Budget in surplus. Now, the question then became should be pay down more Labor debt, well, we have paid down about, overall, since we have been in Government about $63 billion of Labor debt. We could have paid down a bit more this year, but I thought it was right to give some return to the taxpayer and these are affordable tax cuts. There have been limits of responsibility and I think taxpayers will welcome them.

OAKES:


What happened to the old Peter Costello who liked big surpluses, have you gone soft...

TREASURER:

No...

OAKES:


...or are you just softening the image with a new role in mind?

TREASURER:

...no, we had to deliver big surpluses to re-pay debt. You run through a year, at the end of the year if you have got a surplus you can re-pay debt. We have now re-paid about $63 billion of debt and as a consequence of that our mortgage isn't as big, our interest rates aren't as big, so what should we do with the money? Well, my view is that after we have met our expenditures, return to the taxpayer, and that is the principle that (inaudible) establish.

OAKES:


Well, the Labor line tonight is that these are the smallest tax cuts in history. What is your response?

TREASURER:


Well, Laurie, the smallest tax cuts in history, are what you are seeing every State Labor Government do at the moment - increase taxes. I am amazed that the Federal Labor Party is criticising us for cutting taxes when every State Labor Government is increasing taxes.

OAKES:


They are not criticising you for cutting them, they are saying you should have cut them more.

TREASURER:


Well, well, I have not heard them criticise any of their State Labor colleagues for increasing taxes, that is the point I am making. Don't listen to what they say, look at what they do. Every Labor Government is increasing taxes. Now, we are not increasing taxes, in fact, we are reducing them. So, I don't think the Labor Party ought to be directing, the Federal Labor Party ought to be directing their criticism at us, I think they ought to be directing them at all of their State Labor Premiers.

OAKES:


The other thing Labor is saying is that they will vote for the tax cuts you'll be pleased to know, but they are going to oppose the central changes to Medicare and they are going to oppose central elements in the tertiary education changes. What's your comment?

TREASURER:

Well, it is a disappointment because Simon Crean's career, as you know, has been based on opportunism, opposing...

OAKES:


Well, I mean he is not a unique politician...

TREASURER:


...He is worse than we have seen before Laurie, you know that, opposing Iraq...

OAKES:


I've seen some pretty opportunistic politicians...

TREASURER:


Well, this is the best, opposing GST. And I hope that he'd try, with his leadership as it is, that he'd try and rise above it and support good policy. If he doesn't, obviously we will have to speak to the Democrats, and even the new party which is being founded by Meg Lees.

OAKES:


Well, that's a one person party. But I mean, it's fair enough, isn't it, for Labor and the minor parties to point out, or to argue, that Medicare will increase the price of going to a doctor and that the education changes will increase fees for a lot of students.

TREASURER:


I do not accept the changes to Medicare will increase fees, not for a moment. What we have done is we have pumped another $900 million into the system to help people who are in need with bulk billing. How does that increase fees?

OAKES:


Well, I'm not arguing...

TREASURER:


No, well, that is the argument that is put against us. You know, because you are pumping another $900 million in, fees will go up. No. We are pumping another $900 million in so that people, pensioners and the like, will be protected against fee increases. So I do not accept for a moment that somehow these changes are increasing Medicare.

OAKES:


But you do accept that some university fees will go up don't you?

TREASURER:


What we do accept is this, that in relation to the HECS contribution, that is the contribution that the student makes, that the university will be able to vary that fee up to a maximum of 30 per cent of what it currently is. So I do accept. That and some universities will do it and some won't. But the students will decide whether or not they get value. If they do want to pay that increased HECS charge, bear this in mind. They do not actually pay it. The Commonwealth pays it on their behalf and then it is recovered when they go into the workforce and they start earning above $30,000. So they do not actually pay it up front, they are on a scheme which allows their contribution to be paid and it is recovered as they go into the workforce.

OAKES:


Do you think this Budget will be popular?

TREASURER:


Well, I think that people will sit down and they will say it is responsible. It has got good reform in it, it has got higher education reform, it has got energy reform, it has got good reform in relation to international tax. It is responsible, it is balanced and it is alleviating the tax burden. So, I think it is a responsible Budget and I hope the public accepts it, yes.

OAKES:


And how would you sum it up, could you do it one word?

TREASURER:


It is responsible. It is fair and it is responsible.

OAKES:


Mr Costello, we thank you.

TREASURER:


Thanks very much.