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 16/05/2005

Interview with John Miller and Ross Davie
4BC

Monday, 16 May 2005
7.35 am

SUBJECTS: Budget; GST; IR Reform; Schapelle Corby; Vivian Alvarez.

JOURNALIST:

And joining us live in the studio this morning, the Federal Treasurer, Mr Peter Costello. Mr Costello good morning.

TREASURER:

Good morning John. Good morning Ross.

JOURNALIST:

Good morning Mr Costello. On the night of the Budget, the Budget was described to me by a senior Canberra identity who shall remain nameless for obvious reasons as saying, unlike some past Budgets, particularly under Labor Governments, which were Robin Hood Budgets as in stealing from the rich and giving to the poor, this was a Sheriff of Nottingham Budget which stole from the poor and gave to the rich. Your reaction Sir?

TREASURER:

Well, you know, colourful phrase but not accurate. This is a Budget in which we reformed the welfare system, invested for the future with the Future Fund and gave tax relief to Australians. When you can bring all those things together it is hard to do but it is well worth doing. And as you know, particularly when we cut taxes, we cut them for all Australians including those at the lower end of the income scale. They have had their rates cut from 17 cents to 15 cents and those at the upper end who pay 47 cents, still pay 47 cents but they pay it only when they cross a higher threshold which will go up to about $125,000.

JOURNALIST:

Kim Beazley rearranged your tax package somewhat and took some of those tax cuts back off those higher income earners and redistributed them amongst the lower income earners. Isn’t that a fairer package?

TREASURER:

Well look, Kim Beazley got himself in awful trouble didn’t he. Because he said he was against tax cuts and he is going to vote against them and then when there was an outbreak on his backbench, saying how could we possibly be voting against tax cuts, he said, oh I have got this new idea. And you know in 24 hours a bloke who was against the tax cuts actually became in favour of tax cuts – just weren’t the ones that were announced in the Budget. Now of course it is a complete stunt because we have already moved the Bill to cut these taxes. He has no Bill. He has no chance of getting it through the Parliament. All he can do is oppose what the Government is doing, and it is a complete stunt. And I don’t think anybody in Australia who looks at these things carefully will have thought, oh this is a long thought out plan. If you go back and you see what he was saying before the Budget, he had been calling for a rearrangement of tax cuts? No. Did he say that on the night? No. Just a stunt to try and get him through his Budget reply I think on Thursday night.

JOURNALIST:

All right.

JOURNALIST:

You called it cobbled together after his Budget reply speech.

TREASURER:

Yes.

JOURNALIST:

Is that accurate?

TREASURER:

Oh yes because I am probably one of the few people that reads these things. I read it very carefully and it does not even have the full explanation as to how it is supposed to work. And luckily for Mr Beazley nobody has asked him yet.

JOURNALIST:

Well Laura Tingle in today’s edition of the Financial Review writes that the, and I will quote her here “The Howard Government’s Welfare to Work package of employment assistance and training was partially offset by a $500 million cut in spending on some of Australia’s most disadvantaged job seekers”.

TREASURER:

We have a thing called the Job Network which provides money to private businesses that are able to get people jobs. It has been very, very successful. This used to be done by the old CES. It is now done by private providers, Job Network, and there is a formula which provides the amount of money you get as a private operator if you can find someone a job. Now at a time when unemployment is low it has been easier for the Job Network providers to get people into work. And so the Government has had to very carefully look at all of the formula for remunerating these people, the formulas are reviewed every time the contract is renewed because people want us to get value for money. We are going to get value for money for the taxpayer. It is not a question of taking money out, it is a question of getting a formula which adequately rewards people in the private sector and gets the best value for taxpayers.

JOURNALIST:

But gee whiz, I mean, she is writing here that buried in the Budget papers is a $457.4 million cut in spending on the Job Network.

TREASURER:

This is a multi-billion dollar contract which is up for renewal and it will still pay out multi-billions of dollars. There is nothing buried about this. This is a question of getting value for taxpayers money. Why should the taxpayer pay a private provider a windfall to get someone in a job when that private provider is being adequately remunerated. The taxpayer will want to know they are getting value for money.

JOURNALIST:

Your Futures Fund, money that will go into an account which is untouchable, is locked up, except it will be invested obviously on the stock exchange, stock market. That almost smacks to me of the Government having so much money you didn’t know what to do with it so let’s put it into a fund for the future. Could you not have taken half of that and put that into health?

TREASURER:

Well, health spending in this Budget is the highest we have ever had in Australia and more than double what it was nine years ago. But it is important, I believe, to save for the future. This is not unknown. There is a thing called the Queensland Investment Corporation here in Queensland which does much the same thing on behalf of the Queensland Government. It has been operating for years and years and years. You would have heard of QIC? The Commonwealth Government’s never made provision for future liabilities. Our balance sheet as a consequence is not as strong as the Queensland Government’s. People will be surprised to hear that.

JOURNALIST:

Peter Beattie keeps telling us.

TREASURER:

People would be surprised to hear that as a consequence because we haven’t done this before our balance sheet is not as strong and what the Commonwealth Government is doing is it is catching up in areas where it hasn’t properly made provision for the future in this generation. Now, why do I do this? I do this because it is important for the young people. If we don’t catch up and start provisioning for some of these liabilities, the young of today, and gee they are going to have enough problems in 20 years time, are going to have a whole lot of accumulated debts rattling around their ears. So I want to do something for the young people of Australia. Give them a go. We already know with the ageing of the population, old fellas like you and me are going…

JOURNALIST:

Oh I am still 18. I live as if I am 110 but that is another story.

TREASURER:

It has been wicked and you have been punishing it for years. Old fellas like us are going to be in retirement in say 20 years time. The young people of today are going to have to support more people in retirement. That is going to be hard enough for them but it will be even harder if the people of today haven’t adequately managed their finances. This is a question of putting something aside for them.

JOURNALIST:

Who will manage this fund?

TREASURER:

It will have an independent board and a statute. As I say the Queensland Investment, the QIC does this and it has an independent board and people carefully manage the finances and hopefully on behalf of taxpayers get a good return.

JOURNALIST:

Infrastructure has become a bit of a buzz word I suppose in South East Queensland, certainly in recent months, and we have been carping about it and we have been taking heaps and heaps of calls about the fact that we don’t have sufficient – well water supply is a big issue, roads are a big issue – all of these things. Terry Mackenroth is complaining that there is nothing in the Budget for Queensland, I hesitate to use the word which has almost become a clich – infrastructure.

TREASURER:

Well honestly. Queensland gets more GST than any other state in Australia. And all Mr Mackenroth has to do is bank his cheque every month. You know, when I, he did nothing to introduce it, he does nothing to administer it. All he has got to do each month is bank his cheque. That is the biggest obligation that he has. Now when I go around other States by the way, I constantly get attacked as to why Queensland gets so much in GST. This State is rolling in GST. You know, we all know that. It is getting the biggest windfall of all the States. All the States are getting windfalls, but it is getting the biggest windfall.

JOURNALIST:

Mr Costello, for people who don’t understand why, why does Queensland get more?

TREASURER:

Well we have an independent umpire called the Grants Commission and the GST is about $35 billion and this Grants Commission is in charge of allocating it between the States. None of it comes to Canberra. So if one State gets more, another State gets less. It is, that is how it works. It does not go to Canberra. It is just allocating it between the States. The formula that they use takes into account numbers of factors including the States own financial capacity and one of the big factors that counts Queensland’s way is it is one of the most diversified States. In the other States a very large proportion of your population lives in your capital city. Whereas in Queensland you know with the Gold Coast and Brisbane and the Sunshine Coast and Rockhampton and Toowoomba and Townsville and Cairns it is a very decentralised population. And because it is a decentralised population the Grants Commission says well Queensland needs an extra loading and that is one of the things that counts in its favour. The consequence of all this, is that as between the States, Queensland gets a bigger windfall than any other State. And as I said, when I go, you will never get a complaint in Queensland about this formula by the way but if you go into New South Wales or Victoria…

JOURNALIST:

Bob Carr doesn’t like it much.

TREASURER:

No he doesn’t like it. He takes out ads against it and he says Queensland is getting money at the expense of New South Wales. And if you are a Queenslander you would be quite happy about that but in New South Wales they are not so happy, and Mr Mackenroth sits back there and receives his GST cheque and the biggest problem he has each day is which bank he will put it into. That is his biggest problem. And then he says he has not got money for infrastructure. Give me a break.

JOURNALIST:

All right. Okay. Now let’s move on to industrial relations. We are going to see that signed off according to press reports we’re reading in the next week or so and according to the, again I am quoting the Fin Review here “John Howard has taken personal control of industrial relations and has Federal Cabinet prepared to sign off on its long awaited blue print as early as next week”.

TREASURER:

Well Cabinet is not meeting this week, it will be meeting next week. We have had a couple of discussions already about industrial relations. As you know the composition of the Senate is changing on 1 July so we will have the opportunity to reform industrial relations in a way that we haven’t before. And I imagine that there will be further discussions between now and 1 July to try and get, and this ought to be the object, to try and get an industrial relations system which will be as competitive as possible, allow people based on higher productivity to get higher wages and drive Australia’s economic growth. That ought to be the object.

JOURNALIST:

All right. Can we get your thoughts on air, I realise you are very, very short of time. Just your thoughts on a couple of burning issues at the moment – the Schapelle Corby case. Do you think the Government should have been a little bit quicker in actually acknowledging that there may be a problem there with baggage handlers?

TREASURER:

Well I think there are two things here. One is, obviously we want to see Schapelle Corby get a fair trial and put her case in the best possible light. The second thing is you have got to remember this is not the Australian justice system this is the Indonesian justice system and you have got to remember that you can try and push people too far. You can imagine what would happen if a foreign country came in and told the Australian courts how to manage a trial. They might be very resistant to that. So you have got to be careful enough to recognise that this is a sovereign country with its own justice system but to also put the best possible case that can be put on behalf of Schapelle Corby.

JOURNALIST:

It has taken an awful long time for this to be acknowledged.

TREASURER:

Well bear this in the mind that we did facilitate a prisoner coming out of Victoria to go and give evidence in Bali and you know, that was a pretty big step. And the Government was willing and able to assist and the Government has always said that it will be willing and able to assist her to put the best case forward. But you have got to remember this. Bali is not Australia. There is some people that think that you know Australia somehow runs the Balinese system. It doesn’t. Bali is Indonesia. It is a sovereign country with its own justice system and just as the Australian courts wouldn’t be heavied by the Indonesian Government, you got to remember that Indonesian courts can’t be heavied by the Australian Government.

JOURNALIST:

All right. And finally Mrs Alvarez has spent the last four years in a convent in the Philippines her legal people advising her say that she has a case against the Federal Government and may sue for a couple of million dollars. Does she have a case?

TREASURER:

Well I don’t know whether she has got a case or not but obviously this is a situation where things haven’t worked according to the way they were intended. This shouldn’t happen. But you can’t actually say why this has occurred until you have had a full investigation which will be done but you know, I have heard a lot of talk as to how this actually happened. An investigation will get to the bottom of it, but it shouldn’t have happened. And…

JOURNALIST:

Well speaking of bottoms, once the investigation is done will a few of them be kicked?

TREASURER:

Well if somebody is found to have failed in their duty, yes. Yes. But it is too early to say that. I have heard different stories as to how this happened. You see sometimes people don’t identify themselves. It is not as if somebody walks in and says you know I am John Miller. Oh well send him to the Philippines. We know who he is.

JOURNALIST:

Could you do that?

TREASURER:

Well I don’t think your viewers would be too happy if I did would they?

JOURNALIST:

Oh I don’t know.

JOURNALIST:

Gee thanks mate.

TREASURER:

Might give Ross a go. People don’t always identify themselves in that way. And that is the problem. Mistaken identity can arise in different ways. But having said all that, no, it should not have happened. There is no two ways about it. If she was an Australian citizen it shouldn’t have happened.

JOURNALIST:

All right. And finally now because we do have to let you go, but, and I know, I think what the answer is going to be but I am going to put the question anyway, when are you going to be Prime Minister?

TREASURER:

I think you know what the answer is.

JOURNALIST:

Well no.

TREASURER:

Great to be with you anyway.

JOURNALIST:

All right Mr Costello.

TREASURER:

All right. Thanks very much.