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 Peter Dick & Ross Davie
4BC

Wednesday, 10 May 2006
7.20 am

SUBJECTS: Budget 2006-07

JOURNALIST:

Federal Treasurer Peter Costello joins us on the line. Good Morning Mr Treasurer.

TREASURER:

Good morning Peter, good morning Ross.

JOURNALIST:

Very difficult gig last night, you were up against wall to wall coverage of the Beaconsfield disaster and then euphoria and Dancing with the Stars, but I think you managed to pull it off.

TREASURER:

Well Beaconsfield I can accept, that was a great story; Dancing with the Stars, I would be a little bit peeved if they beat me.

JOURNALIST:

Oh, I think they might have out rated you! (inaudible) you were on the ABC, though, so you were up against it.

TREASURER:

I was up against it; maybe if I wore a dancing costume when I delivered the Budget I could improve the rating.

JOURNALIST:

I think so.

JOURNALIST:

Well, maybe so

TREASURER:

(inaudible) me too.

JOURNALIST:

Well, a lot of congratulations to you today, but I just can't understand why you can't address the petrol excise tax. Your average earner is going to save about $9.80 a week and petrol continues to go through the roof, you are taking 38 cents a litre from the petrol as tax, and that is what really is hitting middle Australia.

TREASURER:

Well, like all Australians, I understand that petrol prices are extremely high and punishing the family Budget, but it is not caused by any taxation arrangement. That is the unfortunate fact.

JOURNALIST:

Well you do take 38 cents in the litre though, don't you?

TREASURER:

Well, when we introduced the 38 cents in the litre tax the price was 80 cents and it has gone to $1.50 and it is still 38 cents in the litre.

JOURNALIST:

Yes, but other countries don't impose that impost.

TREASURER:

Well, can I say Australia has the fourth lowest tax in the world.

JOURNALIST:

Yes.

TREASURER:

Other countries impose much higher impost. If you were buying petrol in Britain at the moment you would be paying $2.50.

JOURNALIST:

We have done many discussions about this on the programme, I can tell you people have told us they would rather petrol be cheaper than get $9.80 a week in their back pocket.

TREASURER:

Well so would I. I would much rather that petrol be cheaper.

JOURNALIST:

Well why couldn't you do something about it?

TREASURER:

Because I don't control the world oil price.

JOURNALIST:

But you do - 38 cents per litre contributes greatly to the overall price.

TREASURER:

No it doesn't because when the 38 cents per litre came in, it used to be 44 and we cut it, we cut it from 44 to 38, do you know what happened to the price? It went from 80 cents to $1.50.

JOURNALIST:

Yes, we understand that

TREASURER:

And what that shows you is that cutting the excise doesn't determine the price. The price is determined by the world oil price which is terribly unfortunate. I wish I could do something about the world oil price because that is what is going to fix things. Unfortunately I can't and until such time as the world oil prices come back, we are not going to have reasonable petrol prices. It can't be controlled from Australia

JOURNALIST:

All right

TREASURER:

it is something that is set globally unfortunately.

JOURNALIST:

Very, very frustrating issue

TREASURER:

Very frustrating issue.

JOURNALIST:

we could spend a lot of time on it but we have limited time so lets move on. Sweeping changes to superannuation. Very, very good news for those with large amounts in super, that they won't be paying tax on it. But really, it is just a long overdue change to the taxes on super, don't you think?

TREASURER:

I think so, I think about 20 years overdue. When the taxes were introduced in the current form they were back in 1988 they massively complicated the system and this is the first breakthrough in 20 years and it is a massive simplification. You paid tax on your contribution and the fund has paid tax on its earnings, no tax at all on end benefits. No tax on lump sums, no tax on pensions, you get rid of the complexity, people know what is in their funds and that is what they are going to get in retirement. This is the largest breakthrough in superannuation for 20 years

JOURNALIST:

I think a lot of people would agree with that.

TREASURER:

a massive improvement.

JOURNALIST:

Analysts would agree with you there. Paul Keating recently said in the last week or so that he believes that personal income tax should come down even further and company tax, which sits at 30 per cent, should rise. How would you respond to that?

TREASURER:

Well Mr Keating had very high company tax which we cut.

JOURNALIST:

But he says it is too low at 30 per cent.

TREASURER:

Yes, well, that is what I said. He thinks it is too low because we cut his extremely high rate and it is one of the reasons why companies have been profitable. Now people will say what is in it for me if a company is profitable', actually you spend a lot in this Budget. If a company is profitable and it pays company tax and company tax receipts rise, it is one of the ways in which we can cut individual income tax. We cut individual income tax in this Budget. Not because people's individual income tax has gone up overall, but because company tax has gone up, companies have been profitable, it gave us the money to cut taxes for individuals. That is one of the great things that comes out from this Budget.

JOURNALIST:

All right, higher tax thresholds, lower tax rates. You seem to be giving an awful lot of money away. Where are you collecting it or where is it coming from?

TREASURER:

Well mostly it is coming from companies, as I said earlier, companies, particularly resource companies that are trading in the international markets where prices are very high and very profitable; banks are extremely profitable, so our company taxes have been very strong. Now, with the money that the companies are paying in this extremely profitable time for them, we have been able to give tax relief to individuals, particularly middle income earners, and I think most people would appreciate that fact.

JOURNALIST:

We did not have a lot of time this morning unfortunately Treasurer, but you will deal with this more in depth with Lawsy after nine o'clock.

TREASURER:

I will try and do my best. Thanks very much for your time.

JOURNALIST:

Thank you very, very much.

TREASURER:

Thank you.