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 10/05/2006

Interview with Jessica Rowe
Today Show

Wednesday, 10 May 2006
7.09 am

SUBJECTS: Budget 2006-07

ROWE:

Good morning to you Mr Costello.

TREASURER:

Good morning Jessica, good to be with you.

ROWE:

Now, are you feeling pretty weary this morning after crunching all of those numbers?

TREASURER:

It is a long process, the Budget starts in November, it takes six months to finish and we announced it last night and now we have got to enact it through it the Parliament before the 30th of June, so still quite a bit to go Jessica.

ROWE:

Well you have delivered tax cuts worth $37 billion, why have you ignored warnings from economists who is saying that this is going to force an interest rate rise?

TREASURER:

Well obviously I look very carefully at the economy and over the period that I have been Treasurer, we have had the lowest interest rates really in a generation and you recall that home loan interest rates were averaging 12 ¾ per cent under the previous government now they are around about 7 ½ per cent. So I know a little bit about interest rates and I have brought down a Budget which is consistent with reforming the Australian economy, keeping it growing and is responsible, and it is designed to continue to be responsible, to boost savings and to be consistent with our objective with keeping people in work, keeping home loans affordable, keeping inflation low and making sure that our economy is strong.

ROWE:

But Mr Costello, can you rule out that these tax cuts will not force interest rates up?

TREASURER:

These tax cuts, which are responsible reform of the Australian tax system, are totally consistent with our monetary policy objectives. Objectives which I put in place the objective of having underlying inflation of 2 to 3 per cent over the course of the cycle and they have been carefully designed to be thoroughly consistent with our objectives.

ROWE:

Treasurer, critics are saying that the tax cuts are not going to compensate for the high petrol prices and the current rate rises.

TREASURER:

Well you see some critics say that the tax cuts are too big which was your previous question and other critics say they are not big enough which is the essence of this question and it just illustrates that you can look at anything from two angles but this is a careful and deliberate balance

ROWE:

Are you though Treasurer

TREASURER:

consistent with our economic objectives

ROWE:

sorry, I am sorry to interrupt, but aren't you though delivering tax cuts to the wealthier and the middle income earners are really missing out a lot on these tax cuts?

TREASURER:

No, not in the slightest. This is a reduction in tax, reform of tax across the board. For most Australians, 80 per cent of Australians, they will never face a higher tax rate than 30 cents in the dollar. That is fantastic. If you were on $75,000 six years ago you would have been paying the top marginal tax rate, it won't worry you now, you will be on a 30 cent top rate, the rates above that will only kick in at higher thresholds, this will be good for incentive, it brings us into line with the developed world and it makes sure that the Australian economy is strengthened up to face the challenges of the future.

ROWE:

Moving now onto childcare, you have slightly reformed the system there but experts are saying you haven't gone far enough, there needs to be more reform.

TREASURER:

Well this is total reform of the childcare sector because we have uncapped childcare, that is there is not government limit on it

ROWE:

But Treasurer the subsidy won't be covering long day care though.

TREASURER:

oh yes, the childcare benefit covers long day care, absolutely and the childcare rebate does as well and the reform that we have put in place is a reform which says there will be no cap on places; any eligible group will be able to start a childcare centre, it might be a private group, it might be a church, it might be a school, it will attract Commonwealth funding, the childcare benefit, and so if there is an unmet demand then people will be able to produce places to get there and to make sure there are good childcare options. Now, by 2009, we reckon there will be 700,000 childcare places in Australia and that compares with only 300,000 back in 1996. That is an enormous increase. From 300,000 to 700,000.

ROWE:

Just finally Treasurer, how do you respond to speculation this is going to be your last Budget?

TREASURER:

Well there is a lot of speculation goes on in politics and Jessica, I have found over the years the best thing is not to respond because if you do people can always interpret that in different ways. I just get on with what I am responsible for which is managing the economy, keeping Australia strong and helping people stay in jobs.

ROWE:

So will you be delivering your twelfth Budget next year?

TREASURER:

I have just delivered my eleventh and I am totally focussed on it and I am going to enact it.

ROWE:

Treasurer thanks for your time this morning.

TREASURER:

Thank you.