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 31/03/2006

Doorstop Interview
Parliament House, Canberra

Friday, 31 March 2006
9.15 am

SUBJECTS: GST, Single Asian Currency, Payments to States, NSW Advertising, Cole Inquiry

TREASURER:

GST revenue which will be distributed to the States in the next financial year is $39 billion. That is a 7 per cent increase and this is a growth tax distributed to States which is available at their discretion for their spending. The allocation of that money is done by the Commonwealth Grants Commission, an independent umpire, according to principles that have been agreed between the States themselves. The Commonwealth will be following the decision of the independent umpire. Everybody in Australia knows the GST was introduced in order to abolish other taxes. Taxes like stamp duties on mortgages, taxes like stamp duties on lease agreements and rental agreements. Australians should not be double taxed and I pay tribute to many of the States which have put in place programmes to abolish other indirect taxes in return for GST. As far as the Commonwealth is concerned this has to be observed by all of the States. The Australian public should not be taxed twice. The GST replaces other State taxes and the Commonwealth wants to protect taxpayers to make sure that is the case.

JOURNALIST:

Mr Costello, do you think it is a bit of a waste to see hundreds of thousands of dollars spent on newspaper ads by the Commonwealth and by the State of New South Wales when it could be spent on hospital beds?

TREASURER:

Of course, it is a complete waste. The advertising campaign initiated by New South Wales is a complete waste of money. And if they hadn't initiated such an advertising campaign there would have been no response. So, New South Wales on the one hand claimed that it needed more money and then went out and wasted money on advertising. One of the biggest wastes of money ever. And when you hear the New South Wales Government complaining that it needs more money, just remember all of the money it wasted on advertising.

JOURNALIST:

New South Wales says the Commonwealth's ads misrepresent the situation and they are sending it off to advertising authorities.

TREASURER:

Well good luck to them.

JOURNALIST:

I mean the original agreement did not commit them to abolishing those taxes, it just said review.

TREASURER:

Everybody in Australia knows that the GST was introduced to get rid of State taxes. Some of them have already been abolished Financial Institutions Duty, Bank Account Debits taxes but there are others like stamp duties on mortgages. Now let me ask you this question. Why is it that seven States can do that and one can't? We have now got seven States that are abolishing those taxes there is only one that won't it just happens to be the most mismanaged State in the Commonwealth, that is why they can't abolish these taxes.

JOURNALIST:

Treasurer, would you support a single Asian currency?

TREASURER:

Look, I think that is a matter for the countries concerned but my own view is it would be a long way off, it depends what you mean by Asia. If you are talking about countries like China, I can't see them joining with other Asian countries in the one currency.

JOURNALIST:

Is there a new push for it at the moment?

TREASURER:

No, there is a push for cooperation in Asia with countries buying each others financial securities to keep savings in the region. One of the funny things about Asia is it is a great saving region, but it mostly invests its savings in Western financial instruments, particularly US Treasuries and there is a move on to provide enough financial instruments for Asian investors to buy Asian savings instruments and I very much encourage that. I have been pushing that for a long time through APEC and the IMF of which I have been a Governor for quite some time.

JOURNALIST:

What do you think of Victoria's proposal for extra payments to the States as part of a more general push on COAG general economic reform?

TREASURER:

Look, I welcome the fact that we have got to continue with reform. I think that is very very important. And the Commonwealth view is that measurable objectives and financial accommodation to meet those objectives. Objective by objective. Not large lump sum payments to States, we have been through that and I do not think that worked as well as it could have.

JOURNALIST:

Mr Costello, isn't it time to refer the GST distribution system to an independent arbiter like the Productivity Commission just to see what they think; whether it is the most efficient and best way to get into so much money?

TREASURER:

The GST is referred to an independent arbiter. It is the Commonwealth Grants Commission. It has been in existence since 1933. There is nothing new about these arguments between the States. This has been going on since 1933. The only difference is they now have more money to argue about and the terms were agreed between the States. This is a very important point. Now, New South Wales will come in here and say it needs more money. That is an argument it is having with Queensland and Western Australia. Not an argument with me. I am not going to be joining into an argument between New South Wales and Queensland and New South Wales and Western Australia and New South Wales and South Australia. Because the argument of New South Wales is that those States should get less so it can get more

JOURNALIST:

(inaudible).

TREASURER:

it is not my money. It is the States' money and if it were my money let me tell you I probably would not be giving it to any of them. I would be ensuring that the Commonwealth spent it in its own areas of priority.

JOURNALIST:

So you would not be drawn into it, but you have been haven't you because you have major advertisements in the Herald today and other papers?

TREASURER:

Look, if somebody decides to waste their money with an advertising campaign, of course it will be answered. Of course it will be answered. They were silly to do that. It was a complete waste of money by New South Wales. They were so poor they decided to spend what little they had and waste it on advertising

JOURNALIST:

Is the Commonwealth

TREASURER:

Now you have got to expect if somebody does that you will get a reply.

JOURNALIST:

Is the Commonwealth not wasting its money in return then by being drawn into it?

TREASURER:

Well we would not have done it if New South Wales had not had wasted its money and started an advertising campaign it would not have done. Everybody knows who decided to waste their money on advertising. It was New South Wales.

JOURNALIST:

Do you think that Commissioner Cole will now be likely to call Mr Downer and Mr Vaile to the witness box after they issued statements?

TREASURER:

Well look they will put in statements. What happens in relation to those statements is a matter for the parties concerned and the Commissioner himself and I will not pre-judge what happens. Thank you very much.