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 17/05/2006

Doorstop Interview

Hyatt Regency, Perth

Wednesday, 17 May 2006
12.30pm
(Perth time)

SUBJECTS: Budget, WA economy, GST, Rupert Murdoch, Fortescue Metals

TREASURER:

Well, it is good to be here in Perth again and to be on part of an explanation of the Federal Budget, a Budget which brings tax relief for all Australians, which brings the largest reform of superannuation in Australia’s history and which invests for our country in the years ahead and I think there is a great deal of interest in our economic prospects, our economic prospects will be strong as long as we keep reforming the Australian economy. And this is a Budget which reforms the Australian economy, invests for the future and sets us up for a high standard of living which will underpin good services in health, in education, in defence and in security.

JOURNALIST:

How much longer can the resources boom go on for?

TREASURER:

The demand for resources will continue for some time, I believe with the emergence of China and India but Australia is not the only country which is seeking to export to those markets, other countries such as Brazil, Indonesia, other countries around the world for example in the Middle East where gas is plentiful will be increasing capacity to take advantage of those markets. And so I would expect as the supply rises to meet the demand you would get more normative prices coming through in the years ahead.

JOURNALIST:

Can you see an exodus of capital and professionals from the eastern states to the resource states?

TREASURER:

Well I think if there are good job opportunities in resource rich states people will take them up and good luck to them, they are entitled to take them up and I think those states that want to capitalise on the resource boom will do so, there are lots of things that the state governments can do to capitalise on their position and if they do that good luck to them, this is a free movement, a free one market in Australia and people may well take advantage of that.

JOURNALIST:

Are you concerned though that that movement could be at a cost to say the manufacturing industries in the east or investment in other areas as opposed to the resource rich states?

TREASURER:

Well I think things are more difficult for manufacturing at the moment particularly with the level of the Australian dollar and whilst the emergence of China is good for the resources industry it is the emergence of a competitor in the manufacturing industry. So I acknowledge that in relation to manufacturing, the emergence of new competitors, the high Australian dollar is putting pressure on Australia’s manufactures. But I believe that in high value add and skilled areas there is a great future for Australian manufacturing and we want to see that.

JOURNALIST:

Do you envisage a capital loss to investors in the eastern states though, especially with property?

TREASURER:

Well property markets move up and they move down, they have predominately moved up over recent years but I won’t give any investment advice.

JOURNALIST:

Just in regards to the resources issue, the WA Treasurer doesn’t seem to think that Western Australia is getting its fair share of Commonwealth funding given the contribution it makes to the national economy, what would you say to that?

TREASURER:

Well Western Australia is still subsidised under the GST arrangements. That is, the more populous and the more, larger states still redistribute money out of the GST entitlement to Western Australia. I have stood by the formula which advantages Western Australia because I think the principal of equalisation is right, and when you look at the redistribution of the GST, WA is a net winner. I often get criticised for this in New South Wales and Victoria so I hope there is some acknowledgment of that in Western Australia.

JOURNALIST:

But the situation will change though won’t it, it is on the decline?

TREASURER:

The amount that is being redistributed is narrowing and the level of the redistribution in favour of Western Australia is declining and I would expect in years ahead as Western Australia benefits from the resources boom in particular, that the amount and possibly even the redistribution at all would decline.

JOURNALIST:

Doesn’t it make sense though to invest Commonwealth money in the infrastructure that is needed in the north-west will continue the boom to, you know, facilitate those industries?

TREASURER:

Well in the Budget that I brought down the largest single new roads announcement outside of the Hume Highway was the national highway in Western Australia. We had a huge investment in national highway in Western Australia in our Budget and per head of the population that would be the largest in Australia, so we did actually invest more money per head of the population in roads in Western Australia than we did in any other state.

JOURNALIST:

Rupert Murdoch…

TREASURER:

I sometimes get criticised for that back east, too.

JOURNALIST:

You spend most of your time there though.

JOURNALIST:

Rupert Murdoch thinks that John Howard should go out on top and not wait until he loses an election, what do you have to say to that?

TREASURER:

Well Mr Murdoch is entitled to his view and he has expressed his view and he is a very, very significant businessman globally and a great Australian and I always pay a great deal of attention to his view and I note carefully what he says but these are matters for him.

JOURNALIST:

What is your reaction to it though?

TREASURER:

Well these are matters for him.

JOURNALIST:

Would you welcome his support?

TREASURER:

As I said, Rupert Murdoch is a very significant businessman by world standards, he could well be Australia’s most successful businessman ever and he is an extraordinarily intelligent person and I always listen very carefully and I value his views but I don’t advise him on his views.

JOURNALIST:

Do you think the Prime Minister listens carefully (inaudible) his views?

TREASURER:

I am sure he does.

JOURNALIST:

Do you agree with his sentiment that it is best to go out while you are still on top?

TREASURER:

Well, people make their own minds up in relation to that.

JOURNALIST:

Can I just ask you a question about your decision to take over the decision on whether or not to hand FMG group…

TREASURER:

You had better make this the last question.

JOURNALIST:

…the access to the BHP railway…

TREASURER:

Yes.

JOURNALIST:

…that is due on Monday, isn’t it?

TREASURER:

The 22nd I believe next week.

JOURNALIST:

I just wonder why you took over that decision yourself and what your thinking on it is?

TREASURER:

Well look, under the Act the decision is given to the Treasurer, the Treasurer can delegate it but because it is such an important decision I thought that it was important that the Treasurer do it himself personally and that is why I will do it.

JOURNALIST:

And how are you thinking at this…

TREASURER:

I can’t tell you until I…

JOURNALIST:

…(inaudible).

TREASURER:

…I can’t tell you until I decide, I have got to be very careful about these things, there are statutory matters that I have to address my attention to and I will and I will do it in accordance with the statute.

JOURNALIST:

You are under pressure from Rio and BHP not to do that because of the precedent it might set.

TREASURER:

Always under pressure from everybody under everything but we can withstand pressure.

JOURNALIST:

Can I just quickly ask one question on the PBS reforms?

TREASURER:

No, no, no, I had better go, thank you.