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 20/07/2005

Doorstop Interview
Hervey Bay Marina
Hervey Bay

Wednesday, 20 July 2005
2.30 pm

SUBJECTS: IR Reform, Ageing Population, PBS, Pharmaceuticals, Whales

JOURNALIST:

In the speech last night talking about IR, you were asking people not to question your motives, was that effectively an appeal for fair play in the debate?

TREASURER:

The point I was making last night is that when you are discussing industrial relations it is important to focus, I believe, on whether or not these changes will lead to a better economy, whether they will create more jobs and whether they will lead to higher wages. That is a matter for legitimate debate but the argument that this is being done for impure motives, that this is being done for any reason other than a genuine and earnest belief that it would be better for Australia is not right. This is not an argument about motives, this is an argument about practical outcomes. And the second point I was trying to make last night was that there is a lot of research that has been done around the world on industrial relations. The OECD has reported on it, the IMF has reported on it and you can benchmark countries around the world and see which industrial relations system will lead to more jobs and I’d point people at that international evidence. All of the evidence is that those countries that have more highly regulated labour markets tend to have higher unemployment and lower productivity.

JOURNALIST:

Kevin Andrews has been questioning the motives of the union leaders here arguing that they are just trying to protect their positions.

TREASURER:

I think that the ACTU campaign that somehow the Government is doing this because it doesn’t have the best interests at heart is wrong, dead wrong. As I said last night, why would a Government support a system if it didn’t believe it would lead to more jobs and higher wages? It is in the Government’s interests to have more jobs and higher wages and I will tell you why, because that is what is going to produce the revenues to base the social services, that is my whole point. This is an argument about outcomes and I think that all of the international evidence shows that a more flexible industrial relations system will produce better outcomes.

JOURNALIST:

Has the claim of impure motives had traction do you believe?

TREASURER:

Well whether it had traction or whether it has not, my point is that it is not the debate, that is not the debate. The debate here is not about people’s motives, the debate here is about what the outcomes will be. Can we get a better outcome in Australia that produces more jobs and higher wages, I think we can. The ACTU says we can’t. Now, I’ll stack up all international research on this particular issue.

JOURNALIST:

In your speech this morning were talking about how you believed Australia because of the Future Fund and the other measures you mentioned was better prepared than most other countries, I think any country for dealing with the ageing population. You outlined your reasons why, but do you have any evidence, from some sort of international research or agency which points out that Australia is better prepared than anybody else or is that just your gut feeling?

TREASURER:

I think the IMF has reported that Australia is leading the debate in this area in a number of its recent reports and although I don’t have the report here I believe the OECD has also reported it. But I can tell you why Australia is leading, one is because we produced an Intergenerational Report in 2002, nobody else has done that, we put the issue squarely on the agenda, we have reduced Commonwealth Government Debt to near-negligible levels which very few other western countries have done and we are now in the process of establishing a Future Fund that puts Australia at the head of the pack as far as the developed world is concerned.

JOURNALIST:

You have also welcomed Warren Truss to the Deputy Leaders’ club Mr Costello. What advice are you going to give Mr Truss on becoming an esteemed member of this club and is a smooth transition in leadership terms part of that advice that you would pass on?

TREASURER:

Well I wouldn’t advise the National Party on its leadership, of course not, besides anything else they are unlikely to listen to me. But Warren has got a very significant senior position as Deputy Leader of the National Party. It is a position of great trust and responsibility and if I can be of assistance to him, as somebody who has been around the block once or twice, I will do that.

JOURNALIST:

You spoke last night about your capacity to hang on in there as the Deputy. How much longer can you hang on in there as a Deputy?

TREASURER:

I’m a long distance runner Michael, not as good as some.

JOURNALIST:

And this is not a four minute mile?

TREASURER:

It is a long distance race.

JOURNALIST:

Treasurer, this morning in your speech you also talked about the future cost of the PBS, you outlined the first steps towards reining in the cost of the PBS, does that mean that people like your audience this morning, senior Australians, can expect on-going and progressive tightening of the conditions of the PBS?

TREASURER:

I think what we have got to do is we have got to bring to the chemist, which involves lots of subsidisation, the best treatments, which are the most effective. But we don’t want to pay any more than we have to. So if there is a generic pill then we ought to encourage the use of the generic rather than a brand. The PBS is not run for the benefit of pharmaceutical companies. It is run for the benefit of the patients. We have now got a co-payment in there but we have got to be rigorous about testing the new medicines, bringing to market generic brand alternatives, making sure that we don’t have unnecessary medications on that scheme. And the only point I will say is as I said this morning, I don’t think there is another pharmaceutical scheme in the world that gives access to state of the art pharmaceuticals like Australia’s and that means that the subsidies and the financing of this scheme has got to be very carefully thought of because if you don’t so that properly you will break it. If you break it won’t exist.

JOURNALIST:

Does that mean that further tightening has to be continually on the agenda?

TREASURER:

Well you see you have got to continually evaluate new treatments to see whether they are cost effective, whether they should be admitted, whether there are alternatives which are as effective that can be admitted. Now, that is all I am saying, it is technical work which is done by the PBAC and that has got to continue.

JOURNALIST:

Do you believe Australians can look forward to the day when they can buy prescription medicines through Woolworths or Coles Myer? Why are we protecting the chemist industry if you like against greater competition?

TREASURER:

Well it is not going to happen in the near future, and the reason that it is not going to happen is that the Government has an agreement with the Pharmacy Guild which is being negotiated, a term of which is that pharmaceutical scripts are dispensed by pharmacists and if that can be done inexpensively at the best cost to the consumer, that system will continue.

JOURNALIST:

Are you disappointed not to have seen a whale today?

TREASURER:

I would have liked to see a whale but you can’t have everything in life, can you? You can’t have beautiful sunshine and whales all on the same day.

JOURNALIST:

How important do you think this industry is to the local economy here, you have been to the waters where whales live allegedly and Japan has now been exposed as buying off the IWC. What action would you recommend to be taken against Japan?

TREASURER:

Look in the international sphere countries will try and gain influence in any way that they can and all that you can do in answer to that is argue the merits of the situation. Australia can’t engage in some kind of international option that outbid countries which have far bigger economies than ours. But what Australia can do is it can appeal to the small island nations on the merits of the situation, i.e. that the killing of whales is bad and for many of those countries preserving whales, and the tourist industry that comes with it is going to be a far better economic alternative. This is the point I would make. If you kill a whale and you sell it to me, it is gone forever, you preserve the whale for the purposes of tourism and you will have a sustainable industry for a much longer time. Now that is not just true for Australia, I think that would be true for a lot of Pacific Island nations as well. So our argument to them would be this. Not only is it right on the merit front but economically it is a better decision to have a whale population which can ground a tourism industry than to have one-off killing the whales for a restaurant industry.

JOURNALIST:

You claimed modest success this morning in arresting the decline in the fertility rate. One of the other strings to your bow was getting people to work longer, in terms of the message that people should work longer, do you have any evidence that that is more popular now and is turning things around?

TREASURER:

The flip side I think of living longer and having good health is that they are actually capable of staying in the workforce longer, that is the flip side. So what we have got to avoid is having the cost side without upside and so my message to people, particularly to 55 year olds is if you can stay in the workforce on to the retirement age of 65, another ten years, that is not only good for you because it is another ten years that you won’t be drawing down on your retirement savings, but it is good for the country. And as you know at the moment you can get your superannuation at 55, a lot of people retire at 55 or they used to, I think there is evidence that people are staying in the workforce after 55, a realisation that they are going to have to do that to stretch their retirement savings and that is my message to people. You can get your superannuation at 55 but to think about staying on to 65 at least, longer if you want to, but 65 is the retirement age, 55 is the preservation age and 65 is the retirement age in Australia. Thanks.