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 01/02/2006

Interview with Jon Faine
ABC 774

Wednesday, 1 February 2006
8.30 am

 

SUBJECTS: AWB, National Party, Helen Kroger, Budget forecasts, Safeway, ACCC, Qantas, civility

FAINE:

Peter Costello, Happy New Year.

TREASURER:

Thanks very much Jon, great to be with you.

FAINE:

Well you look refreshed after a holiday. Kevin Rudd on AM this morning repeats calls that are coming from several quarters for a broader inquiry into the Wheat Board scandal. Do you concede?

TREASURER:

Look, the Government called the inquiry to establish whether or not any Australian laws have been broken and that is still in progress and we have to wait until we get the final report to know what the answer to that is. Can I just say Jon, lest there is any doubt, no one would condone rorting of the UN programme. If the Wheat Board rorted the UN programme then it shouldn’t have and it is thoroughly reprehensible. And if any Australian laws have been broken then people will be prosecuted.

FAINE:

The inquiry will only look at what the inquiry is entitled to look at. Commissioner Cole has terms of reference that limit who he can call and what questions he can ask. What is wrong with a broader inquiry as we learn in today’s Fairfax newspapers, The Age, on the front page today, that the Australian Government’s Ambassador, nothing to do with the Wheat Board, your Ambassador, the Government’s representative was lobbying for a US inquiry not to go ahead into the Wheat Board issue.

TREASURER:

Well you heard from Alexander Downer on AM, he said that the reason for that was that there was a UN inquiry and he made the point that the UN inquiry was likely to get to the bottom of the matter rather then get caught up in US politics. I think he is absolutely right.

FAINE:

He may be right, he may not be right. Aren’t we as citizens, as taxpayers, as voters entitled to know?

TREASURER:

And the UN then did do the report and coming out of that it wasn’t as if the Government tried to cover anything up, the Government called an inquiry and that is happening now.

FAINE:

A limited inquiry, Peter Costello.

TREASURER:

No an inquiry as to the relevant matter as to whether or not this scheme was rorted.

FAINE:

The question what’s relevant is now up for grabs, isn’t it?

TREASURER:

No, no…

FAINE:

(inaudible) that very parameter of relevance is what is being (inaudible).

TREASURER:

…no, no. What is relevant is whether the UN Food For Oil Programme was rorted and what is relevant is whether or not Australian laws were broken. Commissioner Cole who has full powers of a Royal Commissioner is calling everybody who is relevant to that and he will report. And as I just said to you…

FAINE:

Well who is relevant? We don’t know.

TREASURER:

…well Commissioner Cole decides who is relevant.

FAINE:

But is it people who are public servants who are relevant, departmental heads are relevant, perhaps even politicians are relevant. We want to know the full extent of the knowledge and the cover-up that has led to us being the world’s worst bribers of Saddam Hussein’s regime.

TREASURER:

Who knows who is relevant is Commissioner Cole. Commissioner Cole can call whoever is relevant and as the Prime Minister has made clear, if that includes anybody they will go. Now it is up to Commissioner Cole, it is not you, it is not me, it is not John Howard, it is a Royal Commissioner who has a counsel assisting, who has got lots of money, he can take evidence on oath, they can be cross examined. He decides who is relevant.

FAINE:

So if he calls for a broadening of his terms of reference that will be granted?

TREASURER:

I am sure of one thing, if he makes a request of the Government it will be very carefully considered, absolutely.

FAINE:

It has to be granted, surely doesn’t it? As we, as the ripples are spreading and we want to know how far this goes.

TREASURER:

Well Jon, it is not up to me to answer what would happen if a hypothetical request were made but I have no doubt whatsoever that all consideration and support will be given to Commissioner Cole as it has been. Now let me say again, if bribes were paid to Saddam Hussein that is absolutely reprehensible and unforgivable.

FAINE:

Money that is perhaps being used for…

TREASURER:

Unforgivable.

FAINE:

…armaments to hit back at Australian troops who are out there to unseat him, that is about as bad as it gets.

TREASURER:

You know, Saddam Hussein was a dictator. Saddam Hussein was a tyrant. The Oil For Food Programme was designed to allow innocent Iraqis to eat whilst there were sanctions on his regime. If anybody knowingly paid money to Saddam as part of that programme, it is reprehensible, unforgivable and most probably broken Australian laws and they will be prosecuted. But you understand I have to say this, Commissioner Cole hasn’t made any findings…

FAINE:

Not yet.

TREASURER:

…everybody is innocent until proven guilty so let’s just wait and see what he reports.

FAINE:

Well at the same time though his report will be limited and I have to go back over this once more, his report will be limited by his terms of reference. If his terms of reference have been exhausted now and are shown to be inadequate for the task that you say you want done, then they need to be expanded, don’t they?

TREASURER:

If Commissioner Cole wants to make any request of the Government, he will, but can I just make this point Jon, the inquiry was set up by the Government, it is funded by the Government, it was the Government’s idea and I think you would have seen in the conduct of that inquiry, Mr Cole is pursuing it in a fearless way and any suggestion that Mr Cole is pulling his punches…

FAINE:

There is no such suggestion and as we see with Royal Commissions time and time again at state and federal level they can sometimes turn around to bite the hand that created them, whether that happens here or not we are yet to see. But as citizens we need to know whether or not it was incompetence or collusion and whether it involves people within the Government or the public service as well as the Wheat Board.

TREASURER:

Well we don’t know if it involves the Wheat Board at this point.

FAINE:

Well we surely do.

TREASURER:

Well hang on, evidence has been given and Commissioner Cole will make his finding.

FAINE:

Yes.

TREASURER:

If he makes that finding, you and I have got to be very careful, if he makes that finding then it would be unforgivable, reprehensible and I am certain would lead to a prosecution. But let’s see what the finding is.

FAINE:

As matters stand on the 1st of February, and that could take some time and I am sure politically you would like the heat to fade in the meantime, as on the 1st of February though, surely the Wheat Board’s monopoly arrangements need to be reconsidered and is that already underway within the Government?

TREASURER:

Well look, there is a provision I believe for other people to be licensed to actually make export sales. I believe there is that provision. The trouble is nobody has ever been given such a licence. If you ask me, in appropriate circumstances those licences should be given and this is something that the Government will have to look at.

FAINE:

So taking away the monopoly of the Wheat Board, the Wheat Board could stay there as an entity, it could be restructured, people may come or go but it may no longer be the monopoly exporter for Australian wheat?

TREASURER:

Well as I said, I do believe there is already provisions for other people to be licensed it is just that it has never happened yet so it could actually allow that to happen under the existing legislative framework.

FAINE:

Are you looking at that now?

TREASURER:

I believe it should be looked at, yes.

FAINE:

So you are encouraging the Government to embark on that course?

TREASURER:

Well I am not the responsible Minister and so it is not my area but if you ask me my personal view, yes I believe that ought to be looked at.

FAINE:

You could talk to your close friends in the National Party about whether or not that is the way to go, Peter Costello.

TREASURER:

I could and…

FAINE:

What would they say?

TREASURER:

I probably will.

FAINE:

Would they return your calls at the moment? Relations between you and National Party leaders would be poisonous wouldn’t they?

TREASURER:

They are very good actually. I spoke to Mark Vaile shortly before he went overseas, he just got back I think yesterday and we had a discussion about things and I can assure you the relations are very good, very good indeed. Mark and I enjoy a very close relationship.

FAINE:

Whilst you are doing your best to undermine the position of the National Party in the Coalition is a bit odd that he would enjoy a close relationship with you at that point.

TREASURER:

Nice try Jon. Of course I am not doing my best in any such pursuit. What I am doing my best to do is to ensure a Coalition which has worked well for a long time and has seen a stable Government for ten years continues, that is what I am doing.

FAINE:

Do you really believe in a Coalition or would you rather that the National Party just basically went away and become, well everyone who is involved became a part of the Liberal Party, one conservative force in Australian politics?

TREASURER:

No I really do believe in a Coalition and the reason I believe in a Coalition is that the Liberal Party wouldn’t have a majority in its own right, it needs a Coalition partner to form a majority and to become a Government and that is in the interests of the people of Australia so I very much do believe in a Coalition.

FAINE:

Now your fingers weren’t crossed when you said that, I just checked, but there is a view in the commentariat that you wish the National Party just disappeared and you would get all of their support, their voter base, the conservatives who vote National would all vote Liberal, wouldn’t they?

TREASURER:

Look Jon, this has been discussed over the years. There are some people who do believe in amalgamation…

FAINE:

Are you one of them?

TREASURER:

…well I haven’t traditionally, no, and by the way they are in places you may not expect. I believe that the Queensland National Party leader put forward a proposal for some kind of amalgamation, Lawrence Springborg. The risk of an amalgamation and this is why I haven’t traditionally supported it is that sure, most National Party supporters would part of an amalgamated organisation but there would be some who wouldn’t. And you could go right down the amalgamation path and still be left with a continuing National Party or some kind of new political force that springs up to try and represent those people. That is the downside.

FAINE:

Pauline Hanson-style you mean?

TREASURER:

Possible.

FAINE:

Sixteen minutes to nine on 774 ABC Melbourne, Jon Faine with you, Peter Costello the Federal Treasurer is my guest in the studio this morning. Well, if you don’t want to see complete amalgamation it would seem that your fingerprints are all over the defection of Julian McGauran and the National Party are saying well, this is going to provoke a reaction in us, they are saying we are going to now assert ourselves from the Liberal Party within the Coalition. Does that cause policy problems for you?

TREASURER:

Well I know part of your job is being controversial, but you just said my fingerprints are all over this. Jon as I have made clear on numbers of occasions, I did not orchestrate anything in relation to Julian McGauran, I just say that again for the record because I don’t think I should leave that assertion unchallenged, that he made his own decision, that over the years he has been a part of the Coalition and he wants to continue to be part of the Coalition. Now, to me, whether he has a National Party hat on or whether he has a Liberal Party hat on is not a big deal. The critical thing is whether he votes for the Government’s legislation in the Senate.

FAINE:

But what it has done is provoked a reaction from the Nationals saying we will now assert our independent identity within the Coalition more aggressively.

TREASURER:

Well, these are matters for the National Party but you know, I would point out that the strength of the Government has been the Coalition, that Julian McGauran has been a great supporter of the Government and Julian McGauran wants to continue to be a great supporter of the Government.

FAINE:

You could now end up with three-cornered contests in critical federal seats, even here in Victoria, Corangamite, but particularly in Queensland or Western Australia.

TREASURER:

Well we will have three cornered contests when a sitting Member retires. So if a sitting Member retires in a Liberal Party seat the National Party can run and if a sitting Member retires in a National Party seat the Liberal Party can run. That has been the situation. This is what happened in the seat of Murray when Bruce Lloyd retired and that was Black Jack McEwen’s seat. The Liberal Party was able to run and the Liberal Party won it, Sharman Stone won it, it is now the safest Liberal Party seat in Australia. And if any Liberal retires then the National Party is welcome to run and if any National Party member retires the Liberal Party is welcome to run.

FAINE:

And you have now got some Liberal backbenchers saying that they think Peter McGauran, Julian’s brother should be dumped as Agriculture Minister because he is not up to the task. So there is all sorts of ill-discipline breaking out over this issue.

TREASURER:

Well I don’t agree with that. I think that Peter McGauran is a valued member of the Coalition, he is a Cabinet colleague of mine, I have a great deal of respect for him. You know, in politics people are entitled to criticise your job, I have learnt this over the years, you wear criticism but just because someone criticises a particular Minister that doesn’t mean it is right.

FAINE:

When is the last time you had Liberal backbenchers calling for the dismissal of one of their own Ministers? It is like kicking an own goal.

TREASURER:

Probably every month.

FAINE:

No, I’m sorry, not so.

TREASURER:

Some of those Liberal backbenchers have I think done it before in relation to National Party Ministers and you know, there are some National Party Senators – and I won’t got through them – who regularly have a go at the Liberal party. But what does it all mean though, Jon?

FAINE:

That is a fair question. 12 minutes to 9, Peter Costello to some other issues, The Age newspaper reports today that your hand-picked President of the Victorian branch of the Liberal Party, Helen Kroger will shortly quit and will seek preselection to replace Kay Patterson as a Liberal Senator. Senator Kroger are we going to see?

TREASURER:

Well as I said, I know you do this to be controversial – “my hand-picked President” – no, somebody…

FAINE:

Well you are the Senior Victorian Liberal.

TREASURER:

…yes, yes, yes, somebody who is elected by, overwhelmingly elected by the delegates of the Liberal Party State Council, of whom there are about 700 – okay, so let’s just put that on the record. Now, Helen has been the President I think for three years. The normal term of a President is three years, whether she decides to run again for a fourth year is a matter for her but ordinarily you do three years but that is a matter for her and I don’t really know what she is thinking at the moment but this State Council I think is in April. I read in the newspaper that other candidates are putting themselves forward and may well have briefed the newspaper in order to put their names forward, those candidates. But in my experience if you brief the newspapers and say, oh people are urging me to run as President, generally that is counter-productive in the Liberal Party, the Liberal Party members make these decisions.

FAINE:

Would you like to see Helen Kroger as a Senator?

TREASURER:

Well it is a matter for her if she wants to nominate. I have enormous respect for Helen Kroger, I think she is a fabulous person, she has been the best State President of the Liberal Party certainly since I have been in Parliament in 15 years. We had the best Federal Election result under her State Presidency that we have had in those 15 years so I think she is a woman of enormous energy, high intellect, great character and I would wish her well in whatever she decides to do.

FAINE:

You wouldn’t want to see the President leave during an election year though would you? Surely that is an undesirable outcome?

TREASURER:

The reality is two years out of four or two years out of three we have an election year, that is state and federal.

FAINE:

The biggest challenge for any President of the Liberal Party is to steer the Party towards the election date which is fixed for late November of this year and you don’t want your President leaving in April, surely?

TREASURER:

Well the normal term is three years, Helen saw the Party through the Federal election in 2004, I am sure people would want her to be President and I am sure people would want her to fill any capacity they could find but this is a matter for her and it is a matter for the branch members.

FAINE:

Well the interpretation everyone is going to put on it is if she leaves, people are saying well that is to distance herself from the train wreck of the Robert Doyle-led effort in this year’s State Election.

TREASURER:

No Jon, because let me tell you, in State elections it is the organisation’s responsibility to get the preselections ready, the get the campaign team in place, the organisation has a responsibility in relation to finances but it up to the candidates to win their seats and it is up to the Parliamentary Party to carry the campaign…

FAINE:

And the President has nothing to do with all of that?

TREASURER:

…well the President has to get the organisation in place, help raise the money, ensure the preselections in place, get the campaign manager in place, all of which has been done and the important thing now I think is to get on with the campaigning.

FAINE:

Is Robert Doyle still going to lead the Liberal Party at the State Election in November?

TREASURER:

As far as I know he will.

FAINE:

Are you happy for him to do so?

TREASURER:

He has my support to do so, but Jon, you read in the paper from time to time that other people think they should be leader. Well, it is a democratic Party, they can nominate and they can seek the support of their colleagues to become leader. That is their right but if they don’t want to become leader they should make sure that they lock down behind Robert. And as far as I can tell, although you read in the papers from time to time that X or Y would like to be leader they keep on saying they don’t, they don’t want to be leader, they are not going to run. So given that, I can’t see that there is any point in keeping these issues alive, they should all lock down, support Robert, get on and win the State Election, that is my view.

FAINE:

Eight minutes to nine, Peter Costello my guest on 774 ABC Melbourne, Jon Faine with you through to 12 noon, a couple of other things certainly before we get to the news Peter Costello. The Business Council lashed out at Budget forecasts, you are the Treasurer, you are in charge of all of this and pointed out that over the past five years Treasury’s annual Budget forecasts have been wrong by an average of 255 per cent and they make the obvious point, how can you plan an economy when you keep getting the figures so wrong?

TREASURER:

Well it shows that you can use a statistic for any purpose, doesn’t it?

FAINE:

In what way?

TREASURER:

Well let me say to you, Commonwealth revenues are about $200 billion, Commonwealth expenditures are about $200 billion. So a 1 per cent error is $2 billion and 2 per cent is $4 billion. Now, let’s suppose there has been a variation of $4 billion. That is a 2 per cent error. But the way in which they did their statistics is they say oh you know, the balance was suppose to be 2 and it turned out to be 6, that is a 200 per cent error. You know, take the 4 on the 2 rather than the 4 on the 200. I must say, I thought it was quite inventive the way whoever did it, did it…

FAINE:

But the bottom line…

TREASURER:

…and the bigger point was this, and this is where the author of the report was completely mistaken, the bigger point was this. That they said somehow the costing of tax proposals had counted against them being introduced and they had three case studies in that report. One was on international income, one was on foreign source income, one was on something else. Ken Henry, the Treasury Secretary put out a compete refutation of that which showed that whoever wrote that report was wrong.

FAINE:

But you are still, the Treasury estimates are billions of dollars out and this dampens the appetite for tax reform. People say hang on, you have actually got buckets of money to play with even though during your projections, phase of the Budget you keep thinking you haven’t.

TREASURER:

If you could get a forecast which was within 1 per cent or 2 per cent, what amazes me is how accurate that is, not how inaccurate. You are talking about $200 billion, when you bring a May Budget, when we bring down a May Budget, let’s think about this, we bring down a May Budget in 2006 we are trying to forecast what a financial outcome will be as measured in September of 2007, right. Now, let’s suppose you are sitting down now, you tell me what the oil price will be in 2007?

FAINE:

Who knows?

TREASURER:

Tell me what the Australian dollar will be?

FAINE:

Who knows?

TREASURER:

Tell me what inflation will be?

FAINE:

Well you (inaudible) that.

TREASURER:

What will the state of the US economy be? Jon, tell me this. Will the stock market be up or down? Give me the All Ordinaries in June of 2007. If we knew all of these things Jon, you and I would be living in Omaha, Nebraska with Warren Buffett giving him investment advice…

FAINE:

Wouldn’t be my first choice, would that be yours?

TREASURER:

…well that, he is considered to be the oracle, the greatest financial analyst in the world, Warren Buffett nobody knows. And the fact that when you have to take into account the oil price, the exchange rate, the US economy, inflation, the all-ordinaries, employment, you can get within 1 or 2 per cent it amazes me actually how accurate it is.

FAINE:

Well, State Government’s boast that they are able to do it but on another couple of things…

TREASURER:

Well the State Government’s always revise up and down.

FAINE:

…the ACCC…

TREASURER:

It’s just that their numbers are smaller.

FAINE:

…The Australian Competition and Consumer Commissioner yesterday handed out a $9 million fine to Safeway the supermarket chain over price fixing and cartel operations excluding products from competitors who are undercutting their shops in other outlets, this is a huge slap in the face to one of our biggest corporations, isn’t it?

TREASURER:

Well this illustrates that business, whether you are small or big but in this case big business, cannot abuse its power in the market to damage competition. If you have power in the market under Australian law you cannot set out to injure your competitors. Safeway was found by the Federal Court to have done that, the biggest fine I believe in trade practices history, possibly in corporate history, $9 million. If anybody thinks that the law doesn’t have teeth, go and read this case, if anybody thinks that the ACCC is not serious, go and read this case. The ACCC is well funded to prosecute abuse of market power and this is a classic case where it took on a big business and succeeded. Now what is in it for the small consumer? What is in it for the small consumer is this, in a more competitive market process will be lower. That is why we do this. In a more competitive market prices will be lower and business has to get this message that we are building a competitive market and will not tolerate abuse of market power.

FAINE:

In that case will you open up air routes to competition between Australia and the US? Qantas are saying they don’t want that.

TREASURER:

Well this is a matter that the Government is considering at the moment.

FAINE:

Prices will be lower with competition.

TREASURER:

Well this is a matter that the Government is considering at the moment and we will take on board your submission, Jon.

FAINE:

Well if you are going to be consistent between bread prices and airlines you will be…

TREASURER:

Yes well, there are a lot of things to… look if Qantas were found to be using market power to suppress competition they would be subject to these laws same as anybody else. That is not the situation in relation to the air route, that’s a bit more of a technical argument.

FAINE:

Alright, on the final issue if I get the chance before the news, civility, the Chief Justice of New South Wales, Jim Spigelman, the Prime Minister, say that we are losing civility in our society, do you agree?

TREASURER:

I think we could profit from more manners, I think we could, yes, it is incumbent on all of us to do our best, you, me, everybody, media…

FAINE:

Even you in the Parliament?

TREASURER:

…yes.

FAINE:

You are one of the most scathing debaters in the Parliament.

TREASURER:

Yes, but always on issues.

FAINE:

Are you going to tone it down?

TREASURER:

Always on issues. I am not one of those MPs, I never have been, there are some that specialise in going through people’s private affairs, I have never been interested in doing any of that kind of thing, what I am interested in is jobs, interest rates, inflation, the state of the economy, whether people can afford to school their kids and I will debate those issues with all of the vigour I can.

FAINE:

Peter Costello, thank you, we have covered a lot of ground, it has been most worthwhile, thank you.

TREASURER:

It is great to be with you, thanks Jon.