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
Ministerial Entrance
Parliament House, Canberra

Friday, 31 March 2006
1.05 pm

SUBJECTS: GST, Intergovernmental Agreement, Qantas, COAG reforms, building approvals

TREASURER:

Well in the next financial year there will be $39 billion of GST distributed between the States, which is a 7 per cent increase, for the States as a collective an increase of 7 per cent in the GST revenue which will be granted to them. In addition to that in the forthcoming years the good news for consumers as a result of an agreement we have reached today is that State taxes on mortgages, on rentals, on leases will be abolished. This means that it will be cheaper to rent a video, cheaper to rent a car, cheaper to take out a loan as a result of tax reform. I welcome the agreement that has been reached between the Commonwealth and the seven States and Territories in relation to that matter. It is a victory for taxpayers and I must say that the productive discussions which occurred in relation to that are really a great step forward. This is what the GST was introduced to do, to abolish State taxes, and to have that timetable, to get the benefits back in consumers pockets is a great testament to the ability to make the process work.

In relation to New South Wales the Australian Government will not leave the taxpayers of New South Wales paying taxes which you don’t have to pay in every other State. The Commonwealth will be insisting on the abolition of these taxes in New South Wales as they are going to be abolished in the other seven States and Territories. The Commonwealth put a timetable to New South Wales for their abolition, New South Wales has asked to discuss an alternative timetable and the Commonwealth, the Australian Government has indicated that we are happy to consider a different timetable as long as these taxes get abolished in New South Wales. We had productive discussions with New South Wales in relation to that and I believe that we can come to an agreed timetable shortly.

So, the good news then will be that the citizens of New South Wales, like the citizens of the other seven States and Territories will get cheaper rentals on videos, cheaper rentals on cars, cheaper stamp duties on mortgages, that they too will get the benefits of the GST which is the abolition of other taxes.

JOURNALIST:

If New South Wales does come to the party on scrapping those, where will the money come from that the other States are making clear they are not going to give up any of their extra GST money?

TREASURER:

Well the money comes from GST.

JOURNALIST:

But that would involve a carve-up, that would involved shifting money back to New South Wales, wouldn’t it?

TREASURER:

No, New South Wales is getting a 7 per cent increase in its GST next year. A windfall over and above what the previous tax system would have delivered and the windfall is designed to abolish other indirect taxes just like the other seven States and Territories are doing.

JOURNALIST:

Treasurer, how long is the timetable that New South Wales is seeking for the abolition of these taxes and is it substantially longer than other States have been given so it gives them an unfair advantage perhaps?

TREASURER:

Well I would be looking for a timetable which is parity with other States. The other States have set out a timetable which commences over the next couple of years and takes place over three or four years. The important thing is to get an agreement with New South Wales, we want some progress in the near future, there will be an extension for them in other areas, but the important thing is to get the timetable.

JOURNALIST:

What are they proposing to do, what sort of a timeframe were they looking at?

TREASURER:

Well, what I would be looking at in relation to New South Wales is a timeframe which sees them commence on this in the next year or two to follow up after that and to get to the position of the other States where all of these taxes can be dealt with in this decade.

JOURNALIST:

What timeframe was New South Wales asking for?

TREASURER:

Well, up until today, there was no timetable.

JOURNALIST:

2030?

TREASURER:

Well up until today, I think it was 3000. There wasn’t any timetable.

JOURNALIST:

(Inaudible) agreement how do you deliver those benefits to the consumers of New South Wales?

TREASURER:

Well look, we had very productive discussions today, it has been a breakthrough. We are now negotiating a timetable, the important thing is to get the timetable in place. Obviously the earlier the better, but the important thing is to get the timetable and let’s just see if we can do it, I believe we can. Yes.

JOURNALIST:

Mr Costello, will there be an allocation for national reform payments in the forthcoming Budget?

TREASURER:

What the Commonwealth is going to do is we are going to make available money for adjustment in areas of important economic reform so that if for example in relation to water, we have a detailed plan and measurable objectives then money will be available when those objectives are hit. What we are not going to do is we are not going to make pre-payment of global amounts and then have a system where States complain of deductions when they don’t implement changes. It is going to work the other way. They are going to get payments when they hit the objectives rather than have deductions when they don’t hit the objectives.

JOURNALIST:

In that case it is unlikely to be in the 06-07 Budget?

TREASURER:

Well, you know, we will present our Budget in due course but we will make certain assumptions. Let me make this point, we want the business of economic reform to go on and to step up and we think the best way of stepping it up is having a reward when certain objectives are met. I think what was wrong with the old system was the money was made available, it was factored into State Budgets, it was assumed that it was guaranteed and spent for other purposes so that when reform came up it wasn’t available for adjustment and States complained that they were being deducted. We won’t have a system where States will be able to complain there were being deducted, States will be joyously able to proclaim that they are being rewarded, so it is going to work the other way around.

JOURNALIST:

Treasurer, on something else, do you think it is appropriate that…

TREASURER:

Oh, sorry…

JOURNALIST:

…do you think it is appropriate that Cabinet Ministers receive gifts from companies that they are just about to make a commercial decision about?

TREASURER:

Well the guidelines in relation to disclosure which have been put in place have been laid down by the Parliament, they ought to be followed.

JOURNALIST:

Do you think that is appropriate though? Do you think (inaudible)?

TREASURER:

I think the guidelines that have been laid down have to be complied with and what the guidelines say is that in relation to various matters you have to make full disclosure.

JOURNALIST:

So no problems with getting a gift from Qantas just before…?

TREASURER:

No, no, you have to disclose these matters and as far as I know there has been full disclosure.

JOURNALIST:

Mr Costello, among the States (inaudible) leading the economic reform agenda given New South Wales constant carping on about the GST?

TREASURER:

Well the Commonwealth is leading the economic reform agenda…

JOURNALIST:

Among the States.

TREASURER:

…and we get assistance at various levels from different States. You know, and I made this point in the meeting, what is the biggest economic reform that Australia is going through at the moment? industrial relations reform. Which State is assisting?

JOURNALIST:

Victoria.

TREASURER:

Well, no Victoria is not unfortunately. It is not assisting in industrial relations reform, it along with the other states as far as I know is a party to a High Court challenge. But Victoria has done some good things in some other areas. I think Victoria did well on Australian Competition Commission issues, they were great supporters of putting Graham Samuel into the ACCC.

You recall the difficult we had in getting Graham Samuel into the ACCC, some of his critics said he wouldn’t be good at competition, have a look at his record. The ACCC is probably been more aggressive on competition issues than ever, I pay tribute to Victoria because Victoria didn’t join the attempted boycott so in some areas yes Victoria has done well. But you know we would warmly embrace assistance from all of the States. I think there are economic benefits if we can all work together her. I have been coming to these meetings now for 10 years and I think this is one of the most cooperative I have ever seen.

JOURNALIST:

(Inaudible) The Warburton review, you get that on Monday. When will we see this review?

TREASURER:

Well I will have a look at it I will read it, it will be made public, I can’t give you a date but it will be made public.

JOURNALIST:

How far away are you…

TREASURER:

As I said I can’t give you a date, but it will be made public.

JOURNALIST:

(Inaudible)

TREASURER:

As I said I can’t give you a date so…

JOURNALIST:

Before the Budget?

TREASURER:

Well I would think before the Budget, yes of course, earlier if we can.

JOURNALIST:

Is this just for you to analyse it and rehearse your lines or is this to make sure you can give it stronger thought before the Budget?

TREASURER:

Well normally when you get a report you read it because you are interested in what is in it and that is what I will do.

JOURNALIST:

Do you plan to take up Michael Costa’s offer to take over health (inaudible)?

TREASURER:

Look I don’t think that I regard this as a serious offer. I don’t think it was seriously made and I don’t think he was expecting me to accept it.

JOURNALIST:

(Inaudible) has NSW agreed in principle to the abolition of those State taxes and all that is remaining is to agree on the timetable?

TREASURER:

Yes.

JOURNALIST:

Treasurer, the retail trade figures that come out today, they showed a fairly strong movement…

TREASURER:

There is one tax that nobody has yet agreed on, we ought to be entirely specific here and that is stamp duty on real property as part of commercial conveyances. That has not been agreed by any, but the other taxes such as stamp duty on mortgages, stamp duties on rentals, stamp duties on leases – yes they have agreed.

JOURNALIST:

On the retail trade figures today they were a fair bounce and surprise to the markets and there was good signs of the building approvals, do you think the economy is strengthening now?

TREASURER:

Look I think the domestic economy is a little less strong than it was two or three years ago but it still has got some momentum behind it. We would like to see the composition of growth move increasingly to investment and exports. I think that is occurring. But I still see continued growth albeit at a slower rate than we had two years ago.

JOURNALIST:

Before the meeting you referred to the NSW government as the most mismanaged government in Australia, in light of what seems to be fairly cordial outcome Treasurer, are you of a mind to repeat that or are you more positive in relationship with the NSW government now?

TREASURER:

Look, the problems in NSW do not stem from the application of Commonwealth - State financial relations. Do not stem from that. This system by which money is equalised across the States has been going since 1933, and if anything the equalisation is less today than it has been at any other period back to 1933. So if there are problems in NSW it is not because of a system that has been going now for 73 years. You would have to look to other matters that are causing those problems. Having said that I do welcome the fact that we have had very cordial meeting with NSW and I hope to bring these negotiations to a successful conclusion.

JOURNALIST:

Is your ad campaign better than their ad campaign?

TREASURER:

There shouldn’t be any ad campaigns. You know and there would not have been any ad campaigns, I nearly choked on my Weeties when I saw the NSW ad campaign begin, but what do you do? You have got to reply to it. I wish it never occurred, I think it didn’t serve any great purpose but when it did occur we had to make sure we got the facts out there and we did and let’s hope we can come to an agreement then there won’t be any advertising and the only people who will be worse off will be newspapers and television. Thank you very much.