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 10/05/2005

Interview with Paul Bongiorno
Channel 10

Tuesday, 10 May 2005
Pre-record

SUBJECTS: Budget

BONGIORNO:

Thanks for joining us, Treasurer.

TREASURER:

Thanks, Paul.

BONGIORNO:

Well even the old heads in the budget lock-up thought that this year you came up more with a job application than a budget.

TREASURER:

Well, look, I thought it was an opportunity to do, one, big welfare reform. Two, lay down a marker for the future with our Future Fund. And three, get our tax system more competitive. If that can come together, we’ll have a better economy, more people in work and better opportunities.

BONGIORNO:

They are across the board tax cuts, but the top end does very well, doesn’t it?

TREASURER:

Well, in percentage terms actually people on lower incomes do better, in percentage terms. But if you’re on a lower income, you’re not paying that much tax, so it’s hard to cut it by much. If you’re paying a lot of tax up at the other end, you can cut it by a bit more. But they are across the board. In percentage terms they are the highest for the lowest income earners and it makes Australia’s tax system much more competitive.

BONGIORNO:

When you introduced the Superannuation Surcharge in your first budget, you defended it, you described it as an equity measure. Now, that has been abolished completely.

TREASURER:

No, when the first budget that I brought in, was brought down, we’d been left with a $10 billion deficit. I said we had to balance our budget, and as a matter of equity, everybody had to do it and this was one of the measures that was designed to do it. Now we’ve balanced our budget, we’ve repaid nearly all of Labor’s debt, we don’t need it anymore.

BONGIORNO:

You are pumping $21.7 billion into the economy. That must put pressure on interest rates.

TREASURER:

I don’t think so, Paul. At the end of the tax cuts which we announced tonight, we’ve still got a budget surplus and it’s 1 per cent of GDP, about the same as it is this year.

BONGIORNO:

But it’s real money.

TREASURER:

It’s real money. No doubt about that, but it is a surplus budget and it means that we’re not actually loosening policy. What we’re doing is returning to taxpayers some of the benefits of strong economic growth.

BONGIORNO:

Well obviously you’ll be hoping the Reserve Bank sees it that way, but you’re forecasting inflation next year at 2.75 per cent, it’s up towards the top end. That’s a risk you’re taking, isn’t it?

TREASURER:

Well you’ve got to look through the inflation numbers particularly for things like petrol, we’ve always said that because that’s governed by overseas factors, the world price of oil. But the critical thing is to keep it around 2 to 3 per cent over the course of the cycle. I’m very confident that we’ll do that.

BONGIORNO:

Is this your final budget? It certainly as a swan song it would be a beauty.

TREASURER:

Well, Paul, it’s my task to run economic policy, to do what I can for the Australian public and I think when they look at this, they’ll think this is very much for the long term of Australia, for Australia’s future.

BONGIORNO:

Peter Costello, thank you.

TREASURER:

Great to be with you.