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 17/11/2005

Interview with Peter Dick and Ross Davie
4BC

Thursday, 17 November 2005
8.15 am ( Brisbane time)

SUBJECTS: Industrial relations, Telstra, terrorism, Latham diaries

JOURNALIST:

Good morning Mr Costello.

TREASURER:

Good morning Ross, good morning Peter. Great to be with you.

JOURNALIST:

Yes indeed. Milk and one I think it is, isn't it?

TREASURER:

No, milk and none actually.

JOURNALIST:

Milk and none.

TREASURER:

Sipping on a coffee here.

JOURNALIST:

It is hard to sort of get straight into all the issues after the euphoria of last night. Did you get to see it? Or where were you?

TREASURER:

I was in the Breakfast Creek Hotel.

JOURNALIST:

Oh right.

TREASURER:

Somebody had said that this was the place to get the best steak in town

JOURNALIST:

Yes.

TREASURER:

so we went down there. There were TV screens everywhere. We started off eating and then gradually gravitated towards the screens and joined the general euphoria.

JOURNALIST:

And on a night like last night you weren't that bloody politician, good on you mate, good on ya.

TREASURER:

And then when the final winning goal was scored the whole place erupted with Aussie, Aussie, Aussie, Oi, Oi, Oi.

JOURNALIST:

Oi, Oi, Oi.

TREASURER:

It was a great place to celebrate it actually, really good, enjoyed it very much.

JOURNALIST:

How was the steak?

TREASURER:

Good. $23.50 I think.

JOURNALIST:

(laughs)

TREASURER:

That's right.

JOURNALIST:

That's right. All right okay onto serious issues I suppose. Where do we start? Boy oh boy, rallies

JOURNALIST:

How long have we got to talk about these IR laws?

JOURNALIST:

What a complex issue, I mean, we had tens of thousands of people turn out earlier in the week rallying. There seems to be almost hysteria about this. We have had calls, both sides of the fence, some saying this is all union beat-up, some saying they really do worry about their children's futures.

JOURNALIST:

And they are not just Labor voters because

JOURNALIST:

No, they're not. We know that some of them are conservative voters who are concerned.

TREASURER:

Sure. Look every time there is change people want to know how the change is going to work out. And you can have different scenarios and that is why, you know, when you are doing a change like this - and this would be my advice - you have got to wait until all the things settle down. I think you will find that there won't be a lot of the horror stories that you are hearing about. I think that the economy will strengthen, that there will be more jobs and that life will go on, I think for the long-term, better. And as somebody who went through all of the tax changes when we did the GST, boy there were horror stories around then, you know, about how it was going to be the end of the world as we know it. And we did it, we made the change, that was in 2000, the economy has been strong and people know that it was a change worth doing. And I think it will be the same in relation to industrial relations.

JOURNALIST:

People know that it was a change worth doing for the economy but the small businessman out there still finds that the BAS and the GST he is paying is exorbitant and it is there all of the time, every month if you are reporting monthly, it sneaks up on you

JOURNALIST:

It is still not a popular thing. I don't think people have really embraced it and said we love the GST.

TREASURER:

No, but I don't think anybody in their right mind would propose to change it, not even the Opposition wants to change it. And you take the small businessman, it is quite true, although the really small businessmen do quarterly returns and if you are really, really small you don't even have to do them quarterly. But with the quarterly return, yes it is a pain in the neck to fill in the form but a lot of businesses have said to me it helps them keep a watch on their cash flow and their accounts. And they have got a much better handle on the

JOURNALIST:

It does that, because you are constantly giving it

TREASURER:

well you are doing a reconciliation quarterly. And back in the old days when people used to keep their invoices in a shoe box you could spend the whole year without knowing you had actually traded at a loss. This way you can actually get a better handle on it.

JOURNALIST:

Yes, yes, that's fair enough. Now if there is hysteria and people are saying they will vote differently, there are either of two things that have happened. The new IR changes are flawed or you haven't sold it to the public effectively. And I think there is probably a little bit of both of those things that have happened. Obviously the public haven't been able to embrace this at all. So has it been sold well?

TREASURER:

Well, look, it is quite complicated because you have got a few issues going on here. One is State and Federal, because the Federal system is going to overtake the State system. The second is you have got quite an extensive Act that is being debated in the Parliament. So there is some complexity I must say in relation to this. Bear in mind that it has only been through the lower House, so the Parliament hasn't even finished debating this as yet. And I think as time goes on that there will be a clearer understanding. I think it is important that we do keep re-emphasising, what the objective is here. The objective here is to get a stronger economy which will create more jobs and better wages. That is the objective. There is no other objective. People say, oh well you know the Government is trying to reduce jobs or reduce wages. We are the Government, that is not our objective.

JOURNALIST:

Yes.

TREASURER:

People would hardly vote for re-electing us if they lost their jobs. We actually believe that this will create more jobs. That is why we are doing it.

JOURNALIST:

All right. We had a call yesterday from a conservative voter, we know that he is, and he said the sort of things that are concerning him are what is the future for his children, his boys, and also a friend of his who works at a service station, who is working on Christmas Day. He said to him well you will get triple time and he said no I won't because I have signed this agreement. And he said that is the sort of thing that concerns him about these new IR laws.

TREASURER:

Well look you would have to go through the cases bit by bit but the reality is that people who work on public holidays like Christmas Day are entitled to penalty rates and if they continue working in those jobs they will keep them. Now what you have got, you keep. That is the reality in relation to all of these things. And you know, unfortunately, there are people that have to work on Christmas Day and do people in petrol stations, people who are nurses, people who are in emergency services and in order to get them to do that employers offer them additional financial incentives and I am sure that will continue.

JOURNALIST:

Yeah sure, he signs an agreement to get a certain income but that means that he won't be getting any penalties. So he feels as though he is not getting as much as he used to before.

TREASURER:

Well, you have got to look at the way they calculate it. Sometimes what they do is they bulk up all the penalties into the overall salary so that you are still getting the same or more, it is just the way in which you do the calculation. It doesn't matter how the calculation is done. If you are getting the same or more as they will be getting then they are not going to be worse off.

JOURNALIST:

The same or more for every worker?

TREASURER:

Every person that is currently on an award or an agreement will continue to receive what they are getting. And that is the guarantee that has been put in place. People under awards continue to get those conditions. Now in the future, when you are renegotiating awards, certified agreements or other agreements there will be more flexibility. But the idea is that you keep what you have got when the new system comes in.

JOURNALIST:

There was another chap who wrote an email to us and he rang and said he had signed an agreement, he was getting about $34,000 a year, he was working 37 to 39 hours a week, but he felt that his boss was giving him far more work than he had time to do so therefore he felt like he had to work a lot harder to please the boss. And that was his big concern about these IR laws that somebody could abuse the system, have the guy do so much more work than the 37 or 39 hours.

TREASURER:

Well of course that is something that can happen at the moment and in the case you referred to, apparently is happening at the moment. That can happen right at the moment under an award the boss can say, here are the hours, here are the conditions, I would like you have more output.

JOURNALIST:

Hmm.

TREASURER:

There is nothing in the award system that stops that. That happens at the moment. And I guess the reality is that, if people feel that they are being overworked they have the option at the moment, and it is probably the only option they have got at the moment, is looking for other employment and many people do exercise that. The one thing I will tell you is it is much better and much easier to get other employment when unemployment is at 5 per cent

JOURNALIST:

Hmm.

TREASURER:

which it is now, than when it was at 11 per cent, which it was 15 years ago. This is, I think, an important point to bear in mind. In an economy which is performing well, where unemployment is low, whatever you happen to be working as you have got more bargaining power and more strength than you have in an economy which is performing badly and unemployment is high

JOURNALIST:

Right.

TREASURER:

whatever the system.

JOURNALIST:

We will come back after the news.

[NEWS BREAK]

JOURNALIST:

And we've got visiting the studios this morning, the Federal Treasurer, Mr Peter Costello, who was looking at me in a funny way, and I thought what are you looking at, and he said when did this fashion of leaving the shirt out of the trousers come in?

TREASURER:

There are two kinds of men in the world today, those who leave their shirts out, and those that tuck them in.

JOURNALIST:

Oh dear. We have two of one sort, and one of the other.

TREASURER:

Yes, yes. When did the shirt out fashion

JOURNALIST:

Ages ago.

JOURNALIST:

Oh, yeah, a long time ago (inaudible)

JOURNALIST:

Well it will never hit Canberra. Trust me. I can never image a politician sitting there with a suit coat, with a shirt hanging out. By the way, your Prime Minister has said that any boss that sacks a worker today will

JOURNALIST:

Well he didn't go that far.

JOURNALIST:

No.

JOURNALIST:

But did say be lenient if they turn up late.

JOURNALIST:

Turn a blind eye.

TREASURER:

I think that is fair enough. Or if they turn up and they look a little, shall we say, subdued.

JOURNALIST:

Yes.

TREASURER:

Don't you think?

JOURNALIST:

I think.

JOURNALIST:

Yes.

JOURNALIST:

(inaudible) I don't, subdued maybe is not the word that I would use.

JOURNALIST:

Well, you know what I mean, do you?

JOURNALIST:

Well I want to talk about Telstra, because I've got some shares, and I am pretty ticked off to be completely honest because they have done nothing for five years.

JOURNALIST:

Well I am not sure about that.

JOURNALIST:

Terrific at the beginning. Nothing after that, and of course everything's been going through the roof, or all other stocks, but not Telstra.

JOURNALIST:

Twelve thousand jobs to go, and of course supposedly the money saved on that will go back into creating a better service.

TREASURER:

Well I think a lot of people will be disappointed that Telstra shares have declined in recent days, and they will be looking to the management, obviously, to come up with a plan which is not only going to restore value, but will give good telecommunication services to people right throughout the country. I think it is important that the management focus on those things. There has been a lot of talk from the company about the regulatory regime. The regulatory regime is set by the Government. It is set by the Government to make services competitive, and the company has to work within that regime. There is no point in complaining about the regime all the time. They are the rules of the game, and the company has to work within it.

JOURNALIST:

What do you think of this Sol Trujillo?

TREASURER:

Well that is the point I would make, that this is a company, which is a competitor in the market with other companies. The rules are set, and you compete within those rules. It is like other businesses. It is like the radio broadcasting business. The rules are set, 4BC competes with other stations. There is no point trying to run around changing the rules all the time. They are the rules. They are designed to have competitive players. You run your business to do you best within those rules. This is the telecommunications regime. It is designed to aid competition. Telstra has to compete inside those rules, alongside other companies, and it has got to focus on doing the best it can within the rules, rather than spending its time trying to change those rules.

JOURNALIST:

Hmm

TREASURER:

That is the point I would make.

JOURNALIST:

I can never understand how they can produce an obscene profit year in and year out, and yet deliver nothing to shareholders?

TREASURER:

Well the profit is quite a strong profit as you know, and when you say that you have got to remember that shareholders do get a share of the profit, don't they. They get a distribution.

JOURNALIST:

Yes, but I guess the layman wants to know why

TREASURER:

(inaudible)

JOURNALIST:

when you get these huge profits, and then the stock market reacts angrily, why does that happen?

TREASURER:

It is all about expectation. The stock market will have priced the stock on what it believes the profit will be. Now if the profit comes in under that, they will mark it down, and it is all about expectation. If the stock market believes the profit is going to be 3 billion, and it comes in at 2.5 billion

JOURNALIST:

Oh, a bad day

TREASURER:

2.5 billion, so what will actually give growth is where you beat expectation. It is not the actual outcome, it is the outcome as measured against expectation.

JOURNALIST:

But it makes the average Australian very cynical about the process

TREASURER:

I think that is right, and I think the average Australian is looking to the management to come up with a plan which will add value, and also give a good telecommunication services, and that is the management's obligation. It is not the management's obligation to be writing the competition rules, that is the Government's obligation, and the Government will be doing that.

JOURNALIST:

Right, okay. We have very limited time left, I suppose we should move onto terrorism. That is the other burning issue at the moment. I believe there are yet more men under surveillance in Sydney at least, and possibly Melbourne. Are we living in changed times if there are men under surveillance? Are there still, is it likely that there are other cells out there as well? What is the state of the nation at the moment?

TREASURER:

Well we can't be complacent about this. The most important thing when you are dealing with would-be terrorist events is to stop them happening in the first place. It is no consolation to the victims and their families after the event, to say, oh well, we had intelligence but we didn't do anything about it. We have got to have good intelligence and we have got to try and act in a pre-emptive way, and there are people, who for whatever reason, are prepared to kill and maim. We have seen that happen to Australians in Bali - not once but twice. We do not want that to happen here in Australia.

JOURNALIST :

Do you believe people who hold dual citizenship who in some way become entangled in these plots should be deported?

TREASURER :

Well I have made this point, that there are some people, radical people, who said that they want a different kind of Australia. They don't particularly like the kind of Australia that we have, that is under our Constitution, a civil government, parliamentary democracy, rule of law. Some of them have said they want a society with Sharia law, and I make the point that that is not going to happen in Australia. That is not Australia. We have a Constitution, and if that is the kind of society that you really want to live under, then you are not going to be that happy living under the form of Australia we currently have, cause that is the way it is.

JOURNALIST :

So get out?

JOURNALIST :

It is a great country as it is

TREASURER :

Look this is a great country, and what has made this country great is it is peaceful, stable government, democratic elections, independent world courts

JOURNALIST :

We're in the World Soccer

TREASURER :

We are in the World Soccer. Great radio commentators

JOURNALIST :

Yeah, last question. Have you read the Mark Latham book?

TREASURER :

Yes. Oh, yes

JOURNALIST :

You can pick it up for $2.20 apparently down at Angus and Robertson

TREASURER :

Is that right? That makes me feel bad. I paid full tote odds. But it was worth it

JOURNALIST :

Especially on your side of politics.

TREASURER :

I enjoyed it very much.

JOURNALIST :

Thanks for joining us.

TREASURER :

Thanks Peter, thanks Ross, good to be with you.