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 07/09/2005

Interview with Jim Middleton
ABC AM

Tuesday, 6 September 2005 (pre-record)
7.00 pm (Indonesia time)
Jakarta, Indonesia

SUBJECTS: Banda Aceh, Telstra

MIDDLETON:

Treasurer, you seem to have been inspired by what you saw in Aceh. What lessons did you learn there?

TREASURER:

Well, the devastation is just beyond anything we’ve probably seen in our lifetimes and the rebuilding is going to take a very long period of time. We’re going to rebuild schools and hospitals and eventually homes, and it can’t all be done immediately. We’ve got to be there for the long haul. And to go to a school today, as we did, where over 400 school students were killed from the one school, and to see the devastation, but to know that with Australian aid and the partnership between Australia and Indonesia we can rebuild that school and give the survivors a chance, shows you the importance of the relationship, I think, between Australia and Indonesia, and the need that they have for us to remain committed.

MIDDLETON:

Now you were there to see how Australia’s $1 billion aid programme is being administered, how it’s working on the ground. Are there things that you saw there today that make you think there need to be adjustments in the way in which we’ve managed that programme into the future?

TREASURER:

I think the projects we’re doing are good projects – building the schools, building the port, building the hospital. We’re also lucky that there are good non-government organisations that are there. And I think the important thing is going to be to direct our aid, to get good projects, lasting projects, to make sure that the money gets to those that really need it, and not to be pressured into making bad allocations. And although it’s frustrating that it’s taking time, I think what I saw today indicated we’re making progress.

MIDDLETON:

It’s obviously been one of the more uplifting experiences of your time as Treasurer. If you could look at the highlights of your time as Treasurer, what would you see them as having been?

TREASURER:

Well, here is a highlight, isn’t it? That Australia, because it has a strong economy, is able to reach out and help people in need. When the tsunami hit, why was Australia able to help? Because we have a strong economy. We have the resources, we have the people, we have the skills and the expertise and the money. And here is an example of where economic strength in Australia is now becoming a capacity to lend to other countries.

MIDDLETON:

Now, you said some time ago that you had a couple more budgets in you, and your supporters keep telling reporters like me, including me, that March-April next year is the outer limit of a period for a smooth transition from the Prime Minister to his successor. Does that mean that you won’t be presenting the next budget?

TREASURER:

Jim, it’s not my purpose to speculate on any of these things and I’m not going to add a fraction of speculation.

MIDDLETON:

Are you prepared to go to the backbench if necessary if there isn’t a smooth transition in good time before the next election?

TREASURER:

Jim, you know, you are entitled to ask these questions, and you do. But I’m not here to talk or speculate about any of those things, and I’m not going to. Not for a moment.

MIDDLETON:

Now if I could turn to the Government’s relationship with Telstra, which is obviously quite difficult at the moment. We’ve seen the Prime Minister describing the management of Telstra as a disgrace, and we’ve seen ASIC now undertaking an investigation into its performance. How much longer does Sol Trujillo, and also the chairman of Telstra, Don McGauchie, have in these circumstances? It can’t go on forever?

TREASURER:

Well, the situation is this: That the shareholders appoint the directors; the directors appoint the executives. So, the executives are appointed by the board of Telstra. The board is responsible for the overall management, and the board is responsible for disclosure under the law and under StockExchange requirements. If there’s a suggestion that hasn’t been done, the proper thing is for an investigation to be conducted. That’s what’s going on, and I wouldn’t speculate on what the outcome of that is going to be. The only point I’d make is this: That the directors are there to actually enhance the value for the shareholders. This is their responsibility. And the shareholders want to see the value of their investment preserved and increased. Whether you’re a private shareholder or whether you’re the Government, which is also a shareholder, you have a common outlook. And we would expect the Corporation to be run well and in the interests of shareholders.

MIDDLETON:

But it would be the argument, I think, of Mr Trujillo that it’s the actions of the major shareholder and the intentions of the major shareholder, the Government, that are actually inhibiting it from performing as well as it can for all shareholders.

TREASURER:

You see, as it turns out, the Government is not only a shareholder. It writes the regulation rules. And a government, when it writes regulation rules, is there for the community as a whole. I’ve always said this gives the Government a big conflict of interest. It’s the reason why you ought to resolve the shareholding. But the Government has to ensure when it’s writing regulatory rules that they’re competitive, that they’re fair to all competitors, and that they give good cost value to consumers. We have to do that. At the other end of the spectrum, the Government is also a shareholder and wants to see its shareholding value preserved. But we can’t overlook the public interest that we have as a government.

MIDDLETON:

Now, Mr Trujillo is appointed by the board but the board, including Mr McGauchie, is appointed by the Government. So doesn’t the Government bear some responsibility for the parlous situation we now see Telstra in?

TREASURER:

Well, the Government is …Yes, the Government is responsible for appointing directors, along with other shareholders.

MIDDLETON:

Do you think it’s conceivable that there will come a time when the Government will have to ask, as the major shareholder, to ask the board to rethink its strategy and, if not, for some of those members of the board to reconsider their future?

TREASURER:

No, I don’t think we’re at that stage. What we’re at, I believe …

MIDDLETON:

So you retain confidence in the board of Telstra?

TREASURER:

Well, I don’t … Look, I’m not for a moment casting any aspersions on the board. Not for a moment. But the only point I would make is: You want well qualified directors that appoint well qualified executives that enhance value. That’s the only point I’ll make in all of this.

MIDDLETON:

So what should Telstra be doing now? Pulling its head in and getting on with business the way you want it?

TREASURER:

No, let’s just hope that Telstra provides good services at low costs and enhances shareholder value.

MIDDLETON:

But for the moment it’s not, and this must be a disappointment to a government which is wanting to end that conflict of which you talked about before and get it off the Government’s books?

TREASURER:

Well, the only point I’d make is, and I’ve made this publicly: The Government’s not a distressed seller and the Government will want to maximise value on behalf of all shareholders, and it’ll choose its timing accordingly.

MIDDLETON:

Treasurer, thanks very much.

TREASURER:

Thanks very much, Jim.