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

Interview with David Speers
Agenda, Sky TV

Monday, 7 November 2005
4.30 pm

SUBJECTS: Future Fund, IR reform, welfare reform, republic

SPEERS:

Well, Treasurer, thanks for your time. The appointment of David Murray has so far been well received. Was he your first choice for this job?

TREASURER:

Yes. I think David Murray is somebody who has been very successful in his previous career. He has managed one of Australia’s most successful banks, he is well respected in the business community. This is a very key job this, this is going to be a fund which will help to defray the costs of the ageing population, help to begin funding Australia for 2020 and we need somebody with a great deal of expertise, who can manage this and advise the Government on direction. So it is a good appointment.

SPEERS:

You have been critical in the past of fat pay packets for executives in Australia. Would you like to see an example set with this position of Chairman of the Future Fund with perhaps a more moderate remuneration?

TREASURER:

Well, the Board, the Board of Guardians who are going to guard the Fund will have their remunerations set by the Remuneration Tribunal so that is a matter for an independent committee to fix.

SPEERS:

We are talking about David Murray though who has just walked away from the Commonwealth Bank with some $17 million handshake, more than $10 million in shares, what does someone like that deserve for this sort of job?

TREASURER:

I don’t know. I will ask the Remuneration Tribunal. But that was in his previous employment of course that wasn’t in his capacity as a government appointee, that was in his capacity as CEO of the Commonwealth Bank which is a privately owned bank.

SPEERS:

But does that irk you that sort of payout?

TREASURER:

Oh it is a matter for the Board and the shareholders. Let me make the point, that wasn’t taxpayers money that was money of the Commonwealth Bank and its shareholders.

SPEERS:

And as for the Future Fund, there are still some details we don’t know. Will it be able to invest in a company and a hold a majority stake in a company?

TREASURER:

No. The idea is that it won’t take control of companies it will be an investor in the way that superannuation funds are investors and it will have a wide portfolio. It will seek a good return but it will be a stable fund and the idea is that it will help fund Australia’s future, we are looking at 2020 now and making sure that we are ready to cope with the ageing of the population.

SPEERS:

But is Telstra an exception to that rule? Will it be able to hold a majority or indeed all of the Government’s stake in Telstra?

TREASURER:

Well, when the Government finally announces the proposal in relation to Telstra of course we will announce how that will be managed but that is really a one-off, that is a transitional thing for Telstra. This Fund in relation to investments generally will not be seeking to own or operate or control companies.

SPEERS:

Just on the IR reforms, Treasurer, we have seen, well it still seems they are quite unpopular in the community, do you think, obviously you support the reforms, but do you think there is a problem in the way its been sold by the Government?

TREASURER:

Well, the ACTU has run an advertising campaign trying to prey on people’s fears and they have done quite well in raising all sorts of bogeys and scares and they haven’t worried about facts in relation to their advertising. So, I pay tribute to them, they have run a scare campaign but when these reforms go through and people see that they are very consistent, it will help the economy to continue to grow and jobs to be created, people will realise that a lot of the scare was misplaced.

SPEERS:

What did you think of the Government’s advertising campaign?

TREASURER:

Well the Government was trying to counter a scare with facts and always more difficult to sell facts than it is to sell scare.

SPEERS:

Well one of the so-called facts that the Government ads say is that more jobs will be created and the economy will be stronger. What sort of research is there? Has your Department looked into this? Is there anything to back up that to show that it is a fact?

TREASURER:

Oh, absolutely. Every respected piece of research around the world will tell you that the more flexible the labour market the more jobs are created. Now, you know, whether it is the OECD or the IMF or the Reserve Bank, I don’t even think this proposition is contested apart from Australian Labor of course. You know, why is it for example, let me ask you this question, why is it that European economies like France and Germany have such high unemployment rates? And you are seeing some of the consequences of that at the moment, one of the reasons is they have much less flexible labour markets. Why does the United States and Britain do better? Because they have more flexible labour markets and I must say, I think every IMF meeting, every OECD meeting I have been to and I have been to a few of them, there has been a discussion on this point about the need to keep your labour market flexible if you want to create jobs.

SPEERS:

So that’s all based on international comparisons. What…

TREASURER:

But that’s the best way to do it.

SPEERS:

But what research has your Department…

TREASURER:

No, no, no, hang on, no, what is the best way, what is the best way to actually compare the benefits of labour market flexibility? It is to look at two societies one with one system and the other with another. This is precisely the way to actually benchmark these things and you can benchmark them against actual unemployment rates. This is being done all the time.

SPEERS:

But what research has your Department done?

TREASURER:

Well my Department would draw on the research of every international body. It doesn’t have to reinvent the wheel. I mean, the IMF has been saying this for 10 or 15 years, the OECD has been saying it for 10 or 15 years, the G-20 made this point in most of its meetings, the World Bank makes the point. I don’t actually think this is a contested proposition. I have never heard, I don’t think I have ever heard anybody contest the proposition.

SPEERS:

Well the other big reform Treasurer you have been involved in this year is the welfare to work overhaul you announced back in the Budget in May. Have you now been forced to water that down somewhat?

TREASURER:

No I don’t think so. The idea of improving the interaction between industrial relations and the welfare system is to encourage people who are currently on welfare to look for work. And we need to boost the labour supply in Australia and the extent to which we can do that is the extent to which we will have more people in work and less people on welfare which is good for them and it is good for society.

SPEERS:

So can you tell us whether single mums now won’t have to look for a job until their youngest child turns eight instead of six as you originally proposed?

TREASURER:

Well, the Government proposes to encourage single mothers and others to work. And we have a suite of measures which includes more childcare, more training, which will do that. Can I make this point, it is not unusual for single mothers to work. Many single mothers actually work full-time.

SPEERS:

But have you made that change…

TREASURER:

Many work part-time. This idea that a single mother can’t work, let me tell you, there would be hundreds of thousands of single mothers out there that would prove you to the contrary.

SPEERS:

But have you had to change those rules slightly because of backbench pressure?

TREASURER:

Oh well I’m not going into any of these matters, these are matters for the responsible Minister.

SPEERS:

Have you started work on next year’s Budget already?

TREASURER:

I think Departments have lodged submissions, yes.

SPEERS:

Will you be handing down that Budget?

TREASURER:

Well, I know you ask these tricky questions on a regular basis and the answer is always the same.

SPEERS:

Well it is not so much a tricky question as a practicality, we are less than six months out from the Budget and you can’t say whether you’re going to be handing it down.

TREASURER:

Oh can’t I? I have made this clear and I don’t propose to add anything to it.

SPEERS:

I guess on a related matter, you did say before the election that you wouldn’t challenge John Howard for the leadership. Can you still say that?

TREASURER:

I have made my position clear and I don’t propose to add anything to it.

SPEERS:

You certainly don’t. So you are not ruling out a challenge now.

TREASURER:

That would be quite dishonest of you to say that. I have made my position clear and I don’t propose to add anything to it.

SPEERS:

Well, what is that position?

TREASURER:

I have made it clear.

SPEERS:

Could you restate it for us?

TREASURER:

No I can’t because I have been through this a thousand and one times as you know and I have made it clear and I don’t propose to add to it.

SPEERS:

Can I ask you about just one final issue? The republic, there is a cross-Party backbench committee now trying to revive debate and looking at ways to revive debate on the republic. Do you think that is a good idea to revisit this issue now?

TREASURER:

Well I don’t think it will ever go away. I think it is part of the way Australians see themselves, I think it is a matter that is of legitimate interest, I think it will be discussed from time to time. We had a ballot, I thought the outcome of that ballot was clear. I said at the time that if that was defeated you wouldn’t expect another ballot within a decade, what was that, six years ago?

SPEERS:

Kim Beazley is now saying he will support a directly elected presidential model. Would you ever go from your preferred option to that option to get a republic up?

TREASURER:

No, I don’t think that would improve Australia’s constitutional arrangements. No, I don’t. I think it would be a very, very dangerous thing to do because then you would have a President who would have a direct mandate in excess of the Prime Minister. And the President would have a much bigger democratic endorsement and I don’t think that would improve Australia’s constitutional arrangements at all. I think you would then have the big risk of confrontation between your Prime Minister and your President with two alternative sources of power, one accounting to the Parliament and the other accounting to the people. And in areas of conflict I am not sure how you would work that out.

SPEERS:

Well Peter Costello we thank you for your time.

TREASURER:

Thank you.