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 17/06/2005

Interview with Nick Rheinberger
97.3 ABC Illawarra

Friday, 17 June 2005
8.45 am

 

SUBJECTS: Industrial relations, roads, GST, tax cuts

RHEINBERGER:

Mr Costello, good morning to you.

TREASURER:

Good morning, good to be with you Nick.

RHEINBERGER:

What do you expect to learn when you come to the Shoalhaven today?

TREASURER:

Well, during a visit with Jo Gash the local Member here today I’ll be going down to the Nowra Anglican College and speaking to some of the students and teachers. Also, the Bomaderry High School and I’ll also have the opportunity to speak to some of the local businesses at a lunch and talk about some business conditions, talk about some of the economic developments and talk about some of the tax cuts which are coming into play on the 1st of July.

RHEINBERGER:

Now I believe you are taking some questions from some of your school students. Are you expecting some hard questions down there?

TREASURER:

I am actually. I am doing question time with the school students and I am approaching it with a little bit of fear because the students generally are much more searching than the Canberra Press Gallery.

RHEINBERGER:

Really?

TREASURER:

So I have been swotting up all night actually.

RHEINBERGER:

Well now let’s talk about some of the issues down here. Recently one of the executives of Blue Scope has supported the retention of the New South Wales Industrial Relations Commission. Is this a bit of a blow for a move towards a Federal Commission?

TREASURER:

I don’t think so. Look different people will have different views on these things but the Government’s view is that if we had one industrial relations system you could get rid of a lot of complexity which is in the system. At the moment you have people hopping from state to federal jurisdictions, you have different overlapping awards, you have inconsistency, there is a lot of litigation in the system. We think one national system will be simpler and, particularly if it is based on allowing agreements, then we can get increases in output and increases in wages. That is the object of our industrial relations changes.

RHEINBERGER:

Well speaking of state and federal jurisdiction, one of the things that has bounced between the two is the Princess Highway. You would no doubt be aware of the amount of people moving down to the south coast, with the a seachange phenomenon, and the Princess Highway is suffering enormously and the NRMA suggest it is one of the worst major highways in Australia. Is it likely to become a road of national significance?

TREASURER:

Well the Commonwealth Government takes responsibility for national highways and that is our primary responsibility. We then have some Roads of National Importance projects but they are assessed basically on business cases. There is objective criteria that has to be assessed and each particular proposal is looked at under that so we will take responsibility for the national highway. We also help local councils with local roads under our Roads to Recovery Programme and we are also taking responsibility for the Black Spots Programme.

RHEINBERGER:

Is it in purely economic terms that you judge these roads of national significance?

TREASURER:

Oh yes, there is a formula that is applied and projects are eligible throughout Australia but I don’t think it is right that the Commonwealth Government take over responsibility for all roads because of course what we do is we give GST revenues to State Governments so that they can look after their responsibilities and they have got to be held accountable for that.

RHEINBERGER:

Well on GST revenues, New South Wales is saying that it can’t afford to fix roads like the Princess Highway because of a lack of revenue. Is the Commonwealth Grants Commission outdated, where a State like Queensland is booming and so much of the GST revenue paid by New South Wales taxpayers is going towards Queensland and funding their surplus?

TREASURER:

Well, can I say this, New South Wales has more GST revenue than it has ever had. And what is more, more revenue under this GST system than it would ever have received under the previous system. Let’s be absolutely clear about this, the money that is flowing from the GST into New South Wales coffers is greater than was expected and is producing a windfall. Now…

RHEINBERGER:

Yes but do we need to be subsidising Queensland to the tune of $800 million every year through the GST that flows to them through an outdated formula?

TREASURER:

Well no the point I am making is that New South Wales is receiving a windfall, it is receiving more money than it actually expected - in this financial year a $257 million windfall.

RHEINBERGER:

Well if New South Wales is receiving a windfall what can we call Queensland’s? It must be a bonanza!

TREASURER:

Well Queensland is receiving a windfall too. The New South Wales argument is…

RHEINBERGER:

I am talking about the proportions…

TREASURER:

No, no, no, this is the important point. If New South Wales’ argument is we have got more money than we have ever had before and Queensland has got more money than it has ever had before, now what it should be doing is it should be using some of that money not only to improve services but to cut other taxes. All that they are doing is getting more inventive with their excuses. This is a government which has introduced a vendor tax for heavens sake at a time when they are receiving huge stamp duty windfalls out of the property boom and as I said a windfall out of GST.

RHEINBERGER:

But the point being once upon a time States received money through the Grants Commission and now the GST has replaced some of those State taxes and Queensland was considered an area that needed help. Surely it doesn’t need help. We would probably agree that the Northern Territory and Tasmania possibly need a little bit of extra GST revenue but does Queensland need proportionally more than it gets because of New South Wales…

TREASURER:

Well let me say this, you can argue about this between the States until the cows come home. When we had a meeting in Canberra to discuss all of this New South Wales did not lodge a complaint about the formula. I was there, I chaired the meeting, I asked the New South Wales Treasurer on two occasions whether New South Wales had any complaints and he didn’t raise the issue. What happened after that was that when New South Wales came under criticism for not reducing taxes like the other States, they said ‘oh we are getting a windfall but our windfall isn’t big enough’ and they used that excuse. I wouldn’t let them off the hook here. The truth of the matter is that Victoria is what is called a donor State and Victoria has been able to cut its other indirect taxes. New South Wales can do the same but because of mismanagement it refuses to do so.

RHEINBERGER:

You are on ABC Illawarra with Nick Rheinberger on the morning show. My guest is the Federal Treasurer Peter Costello who will be visiting the Shoalhaven today. It is nine minutes to nine. Let’s move on to personal tax cuts. They are likely to come in now that the Democrats have supported it and the Greens. Anything you could have taken out of Labor’s proposed tax package whether that was symbolically awkward for you or not seeing as the Melbourne Institute has suggested that it is fairer and may get more Australians into work?

TREASURER:

Well look, the good news is that every Australian will be getting a tax cut – every Australian who pays tax, I should say, will be getting a tax cut - on the 1st of July and that is what we announced in the Budget. We were true to the Australian people, we will get that in place. The Labor Party tried to stop the tax cuts and their opposition was they didn’t think there should be any tax cuts on the 1st of July. I don’t think people realise that. The Labor Party said there shouldn’t be any tax cuts on the 1st of July but there will be and that is because the Australian Democrats have cleared the way and made Mr Beazley’s opposition irrelevant. So the good news is that what we announced in the Budget we will deliver. Every Australian who pays income tax will get a cut on the 1st of July.

RHEINBERGER:

Now we turn to Nowra where you are visiting today. You mentioned that you would like to have a chat about local businesses down there. We have had a couple of terrible closures proposed at the Dairy Farmers Co-op Factory down there and also the rubber factory. Will the Federal Government assist those local businesses who are going to suffer because of those job cuts?

TREASURER:

Well, these are private sector businesses and they have got to remain competitive. That is very important if we are going to keep the economy growing. The Federal Government has a scheme to make sure that everybody’s entitlements are protected and I believe that they will be in relation to this. But the best thing that the Federal Government can do to help businesses is to keep interest rates low, keep taxes down, improve industrial relations. We will continue to work in all of those areas.

RHEINBERGER:

Is there any move towards some sort of package to completely assure entitlements?

TREASURER:

Well we do have a scheme that where a company becomes insolvent and can’t pay the entitlements we do have a scheme to guarantee the entitlements up to a certain level but I don’t think that is going to apply here because the companies are able to meet all of their entitlements. That is good news that none of the employees will miss out. But if there are in other parts of Australia companies that can’t do that we do actually have a scheme that meets it.

RHEINBERGER:

All right Peter Costello thank you very much for joining us this morning and…

TREASURER:

It’s a pleasure to be with you Nick.

RHEINBERGER:

…good to see you down in the Shoalhaven at last.

TREASURER:

And it is good to see some greenery too - which is terrific - just as I have been driving in.

RHEINBERGER:

All right, Mr Costello thanks again.

TREASURER:

Thanks.