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 07/11/2005

Doorstop Interview
Senate Courtyard, Parliament House
Canberra

Monday, 7 November 2005
12.15 pm

SUBJECTS: Future Fund, industrial relations, petrol prices, Victorian Liberals, welfare to work, Trade Practices legislation

TREASURER:

The Government is announcing today the appointment of Mr David Murray as the Chairman of the Board of Guardians of the Future Fund. Mr Murray, of course, has had a long and distinguished record as Chief Executive Office of the Commonwealth Bank, he has been enormously successful in relation to his management of that Bank. He brings a wealth of experience and financial understanding to this very significant role. This is something the Australian Government has never done before. We are going to begin funding future opportunities for future generations of Australians. We know that our population is going to age over the decades to come. We know that is going to put great strain on our health systems and our social security systems. What we want to do is we want to start funding for the future. We want to put together a fund which will ensure that we face up to the ageing demographic in as strong a position as we possibly can. One of the most important things of course will be to ensure that our Board of Guardians can make wise investments on behalf of the public and that the Board of Guardians protect this investment for the Australian people against future governments.

We will be announcing additional appointments to the Board of Guardians over the weeks ahead and we will be introducing legislation to establish this fund hopefully by the end of the month. But this will put Australia on a stronger financial footing than it has ever been before at a time when we need it more than ever as part of the disciplined fiscal and budgetary management this Government has put in place.

JOURNALIST:

When do you envisage the legislation will be passed? Will that be early next year?

TREASURER:

Well the legislation is being prepared and I hope it can be introduced in the next sitting which begins at the end of November if it is not contested in the Parliament it could even go through this year but if not early next year.

JOURNALIST:

Treasurer have you decided not to reappoint Frank Lowy to the Board of the RBA?

TREASURER:

When I have an announcement to make on the RBA Board I will make it.

JOURNALIST:

Have you got a short list you are looking at in case Frank Lowy isn’t going to do another term?

TREASURER:

Well when I have got an announcement to make on the Board I will make it.

JOURNALIST:

What do you say about Wayne Swan’s claims that there was some secret briefings on the effects of industrial relations that came out of an estimates committee last week?

TREASURER:

Well, you know, I was very surprised to read in Saturday’s Australian that there was some report that the Government wasn’t releasing, it was the first I knew about it, I didn’t know there was such a report and I think the Treasury put out a statement saying there wasn’t.

JOURNALIST:

What did…

TREASURER:

So that explained the whole thing.

JOURNALIST:

…what did your department modelling on…

TREASURER:

There was a non-release of a non-existent report I think that…

JOURNALIST:

There was some modelling…

TREASURER:

…hang on, hang on, hang on, I…

JOURNALIST:

What did they do and what does it tell you about the employment and the productivity effects of workplace relations reform?

TREASURER:

…well let me go back. There was a non-release of a non-report, okay. So, that…

JOURNALIST:

(inaudible).

TREASURER:

…hang on, I will get to you Jim. That solved Saturday’s mystery. Now, I think that the Treasury also issued a statement over the weekend saying that before there was any policy the Treasury had been doing indicative estimates for the purposes of Cabinet, that went to Cabinet. Now I am not entirely familiar with what the Treasury would have done because I didn’t commission it but I will (inaudible) my bottom dollar that it will show what every piece of research always does show, that the more flexible a labour market, the more jobs it creates.

JOURNALIST:

What is your reading of the Reserve Bank’s Quarterly Monetary Policy statement that came out this morning?

TREASURER:

Well, I think it indicates that inflation at the moment is contained in the Australian economy and notwithstanding near record oil prices, that oil prices have increased the price of petrol which has punished consumers and is bad for the economy but as of yet has not got a second round effect into the general economy. And we don’t want it to get that effect because if it were to get that effect then inflation would rise and if inflation rose that would be bad, even worse for the Australian economy.

JOURNALIST:

Are you worried that there could be second round effects from high petrol prices? What is your outlook for inflation?

TREASURER:

Well I have said before and I will say it again, we have to be vigilant. I made the point before and I will say it again that if businesses try to get price rises off the back of petrol increases then that would increase inflation. If unions sought wage increases to tie to CPI rather than productivity that would increase inflation, that would be bad for the Australian economy. We are all in this together and every Australian has an interest in keeping inflation low because if we don’t keep inflation low the Australian economy will suffer.

JOURNALIST:

Is there a real danger high fuel costs could force up interest rates?

TREASURER:

Well to date they haven’t but if you saw businesses which tried to get price rises, or unions which tried to get non-productivity based wage increases, that could have a bad effect and that is why I am saying we are all in this together. I have warned businesses, I have warned unions. To date we have been successful at containing inflation, notwithstanding near record oil prices, but we don’t want to get complacent about it.

JOURNALIST:

Do you think an interest rate rise would have economic consequences early to mid next year?

TREASURER:

Well I don’t want inflation to have a second round effect because that is in no Australian’s interest.

JOURNALIST:

Treasurer on the Future Fund, what proportion of that fund would you envisage would be invested in Australian companies?

TREASURER:

Not all of it but I would think the majority of it will be…

JOURNALIST:

(inaudible)?

TREASURER:

…yes, these are matters that we will be discussing obviously with the Guardians. You wouldn’t invest all of it in Australia because you have got to remember that this is an investment for the Australian people and it may well be that by spreading the risk you can get a better return and many superannuation funds do precisely that. But having said that, the Australian investment climate is very, very good, you can get broad exposure in Australia which is why I would think that the bulk of it - but we wouldn’t be stipulating that all of it - would be invested in Australia.

JOURNALIST:

Why are you calling the Board Guardians, why are you using this term Guardians which is an unusual sort of term to use for a Board?

TREASURER:

Because they are the Guardians of the public who will have to guard this investment over a long period of time and you know, it is conceivable that you could get a Labor Government in the future and they will have to guard the fund against a Labor Government’s attempt to try and get the money and waste it.

JOURNALIST:

How would they do that?

TREASURER:

By being very good directors and by standing up to a future government that may well try and raid the money for its own purposes.

JOURNALIST:

(inaudible) a future Labor Government, if it has a mandate it can do what it likes?

TREASURER:

Yes, but a strong independent Board is a very, very good defence mechanism against bad government.

JOURNALIST:

But what it to prevent a government saying well actually we will take this $140 billion and put it into marginal seats?

TREASURER:

Public pressure and strong Guardians.

JOURNALIST:

Treasurer…

TREASURER:

And that is why they are very important these people. They are very, very important because they have got to be strong and they have got to have a culture of independence and they have to defend the public and future generations and I want them to be…

JOURNALIST:

(inaudible).

TREASURER:

…oh legislation most certainly will support their independence.

JOURNALIST:

So will they be answerable to the Parliament rather than to you. Is that correct?

TREASURER:

Well you know, ultimately we all answer to the people of Australia but let me give you…

JOURNALIST:

So they will be answerable to you not to the Parliament?

TREASURER:

…let me give you an example. We have a Board on the Reserve Bank which has a strong culture of independence. And because it has a strong culture of independence with strong directors it makes independent decisions. Now, you know, if you want to go back to the constitutional situation I suppose a government could sack the Board of the Reserve Bank, I suppose it could. Do I think it will? No. Why? Because it has a culture of strong independence which we have now given it and respected for at least ten years. The Board of Guardians is a newer organisation but it will need to establish this strong culture of independence so that it too can make decisions in the best interest and any future government that wanted to try and manipulate things would feel public wrath in the same way I believe that any future government that tried to nobble the Reserve Bank would feel.

JOURNALIST:

The Reserve Bank doesn’t have hundreds of millions of dollars to hand out.

TREASURER:

You would be surprised Jim. Let me make another point, the Reserve Bank owns a printing press which prints money. It is called Note Printing Australia. It literally prints money. A good business to be in but we only give it to the Reserve Bank.

JOURNALIST:

Is Robert Doyle doing a good job as Leader of the Victorian Liberal Party?

TREASURER:

I believe …

JOURNALIST:

Are you concerned about attempts to destabilise his leadership?

TREASURER:

I believe he is doing a good job. I think that he has really invigorated the State Opposition. I believe that he has exposed numbers of failings by the Victorian Government. I believe that he is energetic on the policy front, and he has a good team around him.

JOURNALIST:

Will he lead the Victorian Liberals to the next election?

TREASURER:

I would think so, yes.

JOURNALIST:

You would think so?

TREASURER:

Well unfortunately I do not have a vote, but from what I hear, yes he will. Yes he will …

JOURNALIST:

(inaudible) with regard to the Opposition’s tactics in the Parliament on ….

TREASURER:

Sorry I am getting stereo. Can I finish your last question, and then …

JOURNALIST:

Do you support Mr Walker’s assessment of Ted Baillieu as a good future leader?

TREASURER:

When various comments were made about Mr Walker, I made a statement. I made this statement - Ron Walker is an outstanding Australian and an outstanding Victorian. He has probably done more for Victoria than practically anyone else who is a citizen of Victoria, and I count him as a friend, and I admire his work. Now, frankly the idea that he was endorsing people for Liberal Party leadership I think is not right. I think being the generous man that he is, when he was asked his view he gave generous assessments. But he always does, he is that kind of generous man. I wouldn’t take it any further than that. He has even been known to make generous assessments about me, which just proves how generous he is.

JOURNALIST:

With regard to the industrial relations debate in the Parliament, do you think that Labor’s tactics of I guess, getting, really fighting the issue hard, trying to get thrown out of Parliament, do you think that is doing their cause any good? Or, is it your assessment that (inaudible) winning the debate?

TREASURER:

Now this desire of Labor Party MP’s to get ejected from Parliament is not adding one (inaudible) to the policy discussion. I think the reason why they are doing it is that they know their pre-selections are coming up, that the unions control a lot of these pre-selections and they want to go into the pre-selections with a badge of honour, ‘we created more fuss on your behalf than any other candidate in this pre-selection; therefore let us go back to Canberra.’ I think there is a lot of that going on. But if you are not in the Parliament you are unlikely to be able to expose weaknesses in the legislation. Now, you are less likely to be able to expose weaknesses in the legislation if you are not in the Parliament, but in the case of some Labor Members it is quite possible that they are more productive outside the Parliament than in, but if I were them I would not let on to the public that that is the case.

JOURNALIST:

Treasurer, (inaudible) important to pass the legislative change on terrorism last week?

TREASURER:

So that the police agencies which are in possession of information are able to bring arrests for prosecutions where the evidence warrants it.

JOURNALIST:

But Parliament was back today, why couldn’t they wait till then?

TREASURER:

Well because the agencies that are involved should have the full power to investigate, and if necessary make an arrest and lead evidence, and the Government was determined to ensure that they did.

TREASURER:

Mr Costello, is the Government prepared to soften …

TREASURER:

Sorry, I will go one, two, and then we will finish.

JOURNALIST:

Treasurer, is the Government preparing to soften the impact of its Welfare to Work reforms?

TREASURER:

No, the Welfare to Work is designed to encourage as many people as possible to partake in the workforce.

JOURNALIST:

Will it be lifting the age threshold which they cut in for single parents?

TREASURER:

And, can I say that there are many single parents that work full-time. Probably hundreds of thousands. Many work part-time, and if we can encourage them to do so, we should.

JOURNALIST:

When are you going to bring back the competition legislation into the Senate?

TREASURER:

You mean the Trade Practices Amendment Bill. Well look if there is any sign of a change in the Senate which means that the Bill as a whole would be enacted, of course we will bring it back. But if the composition of the Senate is such that it will not enact that Bill as presented by the Government, we will not bring it back.

JOURNALIST:

So Barnaby is still offside?

TREASURER:

We are not going to legislate an unbalanced proposal. We will legislate a balanced proposal which was recommended by High Court Judge Sir Daryl Dawson, which has the support of all the State Governments, and I believe the Territory Governments, which has been through of House of Representatives, which was voted for by every Coalition Member in the House of Representatives, which took I think four years to put together, and which is carefully considered and balanced. Now that is good legislation, and if the Senate enacted it, it would improve the Trade Practices Act, but if the Senate will not enact it, and the Senate says it will only enact an unbalanced proposal without the remainder of the Bill then there is no point in putting it back to the Senate because the Government will not be enacting it.

Thank you very much.