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 19/05/2006

Interview with Virginia Trioli
ABC Radio, Sydney

Friday, 19 May 2006
8.35 am

SUBJECTS: FOI, economy, bank fees, New Zealand Budget, Australia-US relations, leadership, NSW Liberal Party, Indigenous affairs, Snowy Hydro, ABC

TRIOLI:

Good morning Mr Costello.

TREASURER:

Good morning Virginia, good to be with you.

TRIOLI:

I will be asking you in a moment where all of the money is going, but you have had a Chaser morning, you have been Chasered as you arrived here at the ABC.

TREASURER:

Yes as I arrived here at the ABC.

TRIOLI:

What did they do to you, the boys?

TREASURER:

They had a cheer squad saying no, Peter, no.

TRIOLI:

Like that ad for a certain anti-smoking…

TREASURER:

I think it is an anti-smoking ad.

TRIOLI:

What were they saying ‘no, Peter, no’ to?

TREASURER:

Well I am not a smoker so whatever I am doing, I shouldn’t be.

TRIOLI:

What about…

TREASURER:

Perhaps I shouldn’t be coming on the ABC.

TRIOLI:

Probably not.

TREASURER:

Perhaps they were saying, don’t go in there.

TRIOLI:

Hey, apart from being Chasered, you are in trouble this morning.

TREASURER:

Really?

TRIOLI:

You have got three High Court judges lined up against you, disbelieving and deeply critical of you keeping secret details of income tax bracket creep that are clearly matters of public interest, they say. They have strongly implied that what you have done is not even democratic. Now, you must feel bad about that by now.

TREASURER:

Well, this is a High Court case that was heard yesterday and we will see what the judgment is.

TRIOLI:

Well the judgement so far is not good.

TREASURER:

Well, no, no, what happens is that judges ask questions of counsel, counsel ask them and they try and ask curly questions and then after considering the matter the judges bring down their decisions. Let’s see what the judgement is.

TRIOLI:

But let’s listen to what the judges have had to say: why possibly in a nation like ours, an open democracy with freedom of expressions, could it possibly be not in the public interest to disclose a document made by the public servants who are paid by the taxpayers in this country and this from Justice Ian Callanan, ‘I don’t know how you could argue these were not matters of public interest.’ Now, your banning of those documents from FOI requests…

TREASURER:

No, stop there, hang on, stop there…

TRIOLI:

…well, putting a code of secrecy over it.

TREASURER:

…no, no, no, no, the Freedom of Information Act says working documents are exempt…

TRIOLI:

But the judges can’t even see these documents.

TREASURER:

…no hang on, the reason, they can if they want.

TRIOLI:

No, not according to this report the judges are not able to see the documents.

TREASURER:

Well they did in the lower court. This is an appeal and they can if they want. Now the question is working documents which may or may not be accurate are exempt from FOI.

TRIOLI:

So is that the problem, those documents might be wrong?

TREASURER:

Yes, well what happens with working documents is you start off with a draft and then you refine it over a period of time and when you get to the final answer, that is a matter which is accurate and you shouldn’t actually put out working documents as they go on, it is like your scripts here that you are reading from this morning, you might have gone through a few drafts, you read out the final draft but you don’t read out the first draft because the first draft presumably had errors or omissions which is why you ended up with a second or a third.

TRIOLI:

So the High Court is bothering itself with just a matter of draft documents?

TREASURER:

Working documents, whether it is a working document. Yes, that is the whole issue.

TRIOLI:

But you have got nothing to be ashamed of with the way your economic credentials are going and what you have achieved so far.

TREASURER:

Nothing in the slightest, nothing in the slightest.

TRIOLI:

Well then why the element of secrecy?

TREASURER:

Well because the Act exempts working documents because quite often a working document, at least in the first draft is wrong and that therefore by putting out wrong documents you are actually much more likely to mislead.

TRIOLI:

The High Court will end up vindicating your position, do you think?

TREASURER:

Well we will see what the judges say.

TRIOLI:

What is your feeling?

TREASURER:

I never instruct judges on what to do.

TRIOLI:

I don’t think they would even listen if you tried.

TREASURER:

Well one hopes that they would.

TRIOLI:

Closer to home, we have got market jitters, in just four days the ASX200 has fallen almost 4 per cent, does this worry you and if not right now, at what point would you be concerned?

TREASURER:

The Australian Stock Market has been at all time records before this recent correction. We would be the only stock market in the world at an all time record. Not the Dow, not the Hang Seng, not the Nikkei, not the FTSE, no other country would have a stock market at all time records. So there has been a correction but it is still quite high and you never want your stock markets to run away from fundamentals and so if you have corrections from time to time in an overall healthy economy, it is not a matter to worry about.

TRIOLI:

Could we see even more of a correction? Is that how you anticipate it playing out?

TREASURER:

Look, when you see a market in an all time high you think to yourself, there is only one way a correction will go, that is what you think to yourself. But I don’t want to give advice on where I think the market will go and people have stockbrokers for that purpose.

TRIOLI:

But you have still got faith in what the commodities boom…

TREASURER:

Oh sure…

TRIOLI:

…Australia at the moment.

TREASURER:

…there is no doubt about that. Look, what is happening at the moment, the demand that is coming out of China, it means that countries such as ours which can export gas, coal, iron ore, base metals, will do very well because the demand is such that prices are increasing. And I believe that the Chinese process of industrialisation has a long way to go so those prices will remain strong for some time. The other part of the Australian economy which is unbelievably profitable at the moment is the banking sector because the banking sector is lending to all these companies and to households so banks are making unbelievable profits at the moment and if you look at…

TRIOLI:

Yes it is gouging us terribly one might argue.

TREASURER:

Yes, they are doing pretty well and so if you look at the stockmarket it is basically led by miners and bankers.

TRIOLI:

Would you like to see the bankers perhaps ratchet back a little bit of that profit taking and ease up on us a little bit?

TREASURER:

I think…

TRIOLI:

Their fees and charges are pretty spectacular.

TREASURER:

…yes, yes, I have discussed with the banks the fact that exit fees and entry fees should be low to zero. That is you should be able to get out of one bank and into another bank with a minimum of cost. And the reason I want to do that is I want people to be able to walk away from banks that have fees that are too high.

TRIOLI:

That would be seen to be competitive, wouldn’t it?

TREASURER:

That would be a very pro-competitive move. I called the banks in and asked them about this, they have assured me that they are on the ball and they have given me a document which when I return to my office I am going to carefully scrutinise but I do give notice to the banks, uncompetitive exit and entry fees are not in the consumers’ interests and we want to see those as low as possible.

TRIOLI:

Why do you think…

TREASURER:

In fact we want to see all bank fees as low as possible but they are the ones that actually allow you to switch institutions.

TRIOLI:

…what if anything can you do as Treasurer if they don’t come to the party on them?

TREASURER:

Well we will take it step by step. I have raised this with them, they have given a response, we will take it step by step, we will see what they are actually doing. But you see we have gone to great lengths to try and stop what are called transaction fees, a fee on a transaction. We, the Commonwealth Government as part of our tax reform got rid of bank account debit fees, you don’t pay them anymore. We got rid of financial institutions duty which was part of the GST. We are now getting rid of, in conjunction with the States, stamp duties on mortgages. And the reason we want that is that if this bank over here has a lower mortgage rate than this one, we want you to be able to swap without paying a stamp duty and that will put competitive pressure on these banks. So transactional fees are bad things and we are trying to get rid of them and that includes entry and exit fees for banking institutions.

TRIOLI:

Treasurer, you have been right around the country this week spruiking the Budget and we have heard from you and other commentators about how it has been received. Rather than go through it line by line which you have been doing ad nauseam, sorry…

TREASURER:

Virginia.

TRIOLI:

Repetitively, what are people telling…

TREASURER:

Energetically, enthusiastically and to great acclaim, yes.

TRIOLI:

…what are people telling you when you speak to them? What are they telling you worries them at the moment and just for the short term future about their own economic future, what are the subjects they are bringing up with you about, okay, this is what we have now, this is what we would like you to do next?

TREASURER:

Well I think there is a lot of interest in you know, will the economy keep growing and will I keep my job, I think that is a big issue.

TRIOLI:

Would you keep your job?

TREASURER:

Well if the economy keeps growing, yes, they will. We have got more jobs in Australia than ever before and we will keep them if the economy keeps growing. People are worried about oil and petrol prices, obviously…

TRIOLI:

There is not much reassurance you can give them on that.

TREASURER:

…there is not much reassurance on the world oil price, that is another feature really, of the boom in demand. There is a lot of interest in superannuation, because the big change in this Budget was superannuation.

TRIOLI:

And are people getting that, are they understanding because it is the long term payoff…

TREASURER:

Sure.

TRIOLI:

…whereas people like to see it in their pay packet now.

TREASURER:

Sure, but they understand this one point. At the moment you have very complicated taxation arrangements when you take your superannuation and we are going to abolish them for people over 60 from 1 July next year. So people are saying, wow, boy, what does that mean? What does that mean for my retirement? And my message is superannuation just got a whole lot more attractive and those Australians who have a bit of savings should be encouraged to put it into superannuation and keep it there until they are 60 because when it comes out it will be tax free.

TRIOLI:

Are people talking to you about investment in Australia, investment in infrastructure? We have just seen the New Zealand Budget handed down and it was described as a boring budget which probably isn’t a bad thing depending on where you are in the political sphere of things, but there was at least serious investment in infrastructure even if that be at the expense of taxation. It is a longer term way of building a nation.

TREASURER:

Sure and people do speak to me about investment. I was in Adelaide yesterday and enormous interest in the $500 million we are putting in the Murray Darling Basin Commission and that is of interest in Adelaide because they are at the end of the Murray River but it is an interest in New South Wales too because the Darling comes down through New South Wales as does the Murray. I got a lot of questions about investment in national highway which we had a large investment in but, so I don’t want you to underestimate the fact that we are making very large investments in this Budget but we are also cutting tax. And I think there is a lot of interest on the other side of the Tasman today on Australia’s tax cuts.

TRIOLI:

Yes indeed, New Zealanders perhaps heading over here what, in order to enjoy the largesse.

TREASURER:

I think in New Zealand you go on the top tax rate of $NZ63,000 which would be considerably less Australian, it might be down around $50,000 whereas in Australia you are not going to go on the top tax rate until you earn above $150,000. So, for a Kiwi who is on average wages you pay a lot less tax in Australia and this is now becoming a bit of an issue in New Zealand and if there are Kiwis who have skills and who want to come to Australia as skilled immigrants, of course they would be welcome in this country. If they can play…

TRIOLI:

(inaudible) welcome sign (inaudible).

TREASURER:

…if they can play rugby union, they will be doubly welcome in this country.

TRIOLI:

It is a quarter to nine on 702 ABC Sydney, the Federal Treasurer Peter Costello is with us. Treasurer, I am very interested in a very generous speech just given by the Prime Minister about how important it is that American power and influence abroad not only continues but that it prevails. He was saying that no other dominant force in history has been as righteous as America and that without American leadership the trials and tragedies of recent years would be a prelude to darker days, he said. Do you agree with that? What is your thinking on that whole notion of American power abroad?

TREASURER:

Well America is a country that historically represented the best and the worst. There was the pilgrim fathers who wanted to build a city on a hill and there was the slave owners who imported and ran slaves. And I think you have always had this duality running through the United States, a great aspirational power which stood for liberty and freedom but like all great powers had its downside, its underside. And I think certainly since the Second World War, the United States has been a great power for good. We should never forget in Australia in the Second World War when the Japanese advance was almost unstoppable and was bombing Darwin and Broome, our country, without American power we wouldn’t have been able to defend our own country. We will always owe that to the Americans.

TRIOLI:

It is true and we have had really no trouble acknowledging that over the years, but how do you account for that fact then that in Australia – and I think it is undeniable – it was always that underbelly of anti-Americanism, of resentment, of those bloody Yanks and it is hard when you go overseas and you are the Prime Minister and you rightfully want to take your place if you have got a good working relationship with the US President, half the country is going to be going, yeah, yeah, the Americans again.

TREASURER:

Well part of it of course is everybody resents the big kid on the block and this is the world’s superpower, the only superpower of the world and so everybody resents the big kid on the block…

TRIOLI:

Do you understand that resentment?

TREASURER:

…yes, I do but you see it just depends which block you are looking at. If you go out to the Pacific where Australia is the big kid on the block, there is a bit of resentment to Australia out there. In fact, I remarked once being an Australian in the Pacific made me realise how the Americans must feel in the world because you know, we are the big economic power, we have the aid.

TRIOLI:

It is funny thinking of Australia as a hegemony, isn’t it?

TREASURER:

Well, well, in the Pacific we are the economic power and if something goes wrong in the Solomon Islands, we are the military power as we are called to do at the moment and in East Timor and so when you see it in that perspective people both love you and resent you, you can understand I think how people respond to the Americans on the global stage, they both love and resent but let me say this, the world would be a worse place if this great superpower instead of being a democracy and extolling the virtues of liberty was a military power. You know, let’s suppose you had this great power which America is and it was under a dictatorship. The world would be a much, much worse place and we are lucky that the great power of the world which happens to be a friend of ours, is a democracy.

TRIOLI:

Have you spoken to the Prime Minister since Rupert Murdoch appeared to tap him on the shoulder as this being the right time for him to graciously step down?

TREASURER:

Yes I have.

TRIOLI:

Have you spoken about that…?

TREASURER:

Oh look, I get asked about my conversations all the time and I can’t go into them Virginia, I have lots of conversations with lots of people and if I get on the radio and I say what I discussed then they are going to stop talking to me. And don’t think…

TRIOLI:

Oh I think the Prime Minister would keep talking to you.

TREASURER:

…yes but you know, they might say you know, he might be a bit more guarded if he knew that just after I had a conversation with him I went on Virginia Trioli’s programme and told the world about it. So don’t read anything into that. Don’t read that we did or we didn’t discuss it. We have had discussions, yes, do I go into my discussions, no.

TRIOLI:

Okay, well then I will ask just straight off the bat, your thinking then, would you be a very different kind of leader to the Prime Minister should you ever get the top job?

TREASURER:

Well these are hypothetical questions…

TRIOLI:

No, I am sure they are questions you have thought about, we certainly have, those who watch the developments of politics in the country.

TREASURER:

…well sure, I just don’t think it is worth going into though because these are hypothetical questions and they are apt to be misunderstood.

TRIOLI:

What is your exercise regime? We know the Prime Minister goes for a walk every morning, what do you do to keep fit?

TREASURER:

Well sometimes I go walking and I do do a bit of swimming and other than that I attend sporting events in a chair.

TRIOLI:

Who would you rather go up against, Kim Beazley or Bill Shorten?

TREASURER:

Oh dear, that is the good, the bad and the ugly, isn’t it?

TRIOLI:

Who is the third? Are you thinking there from Kevin Rudd or Julia Gillard.

TREASURER:

I was going to say that is the Labor leadership alternative, the good, the bad and the ugly. You choose which.

TRIOLI:

Suggestions are around that the Prime Minister might like to do a Bob Carr and make a surprise announcement about when he is going to leave.

TREASURER:

Well that is a matter for him.

TRIOLI:

There has been a key Liberal leadership change in Victoria, Ted Baillieu now in place of Robert Doyle. How about New South Wales in your view, do the Liberals stand a chance under Peter Debnam, how are they travelling?

TREASURER:

I think he has done very well, actually. I think he has made a very good start and…

TRIOLI:

In what way?

TREASURER:

…well I think he is credible, I think he is plausible, I think he is available to the media. I knew him when he was the Shadow Treasurer and I think he has blossomed as he has become leader. And he got the leadership in unexpected circumstances, obviously, and probably it was the last thing on his mind at that time but I am quite impressed with him, to be frank.

TRIOLI:

You have been commenting this week on the terrible revelations on Lateline about abuse against women and children among Indigenous communities. I was wondering this morning if you are starting to think that the various immigration and multicultural and Indigenous affairs ministers are simply too overburdened by their portfolios to actually keep this particular issue front of mind. They are very big portfolios and usually in the last 10 years it has been immigration that has sort of taken the lion’s share of attention. Is the job too big?

TREASURER:

I think it is more direct than that, Virginia. I was in the Territory and that is why I was speaking out on these issues. If you go to these communities for most Australians it would be a terrible shock. It looks like the third world. It is the third world in terms of life expectancy, education, health, housing. You are struck immediately about the level of alcohol abuse and in some communities petrol sniffing. It now appears that people affected by alcohol, or petrol sniffing may engage in the most horrific crimes against women and children and the level of violence in this community is just scary. Now, I think that there has been a tendency in the past to say, oh well, it is a different culture, you know, we can’t intervene. We have to intervene. It has got very bad and we have to intervene for the sake of the children and the victims. Now, this is where people get very sensitive because if you intervene and take a child out of a community, the next thing that will be said is stolen generation. And this is one of the reasons why people have been very slow to act, they have had this on their mind, they don’t want to be accused of doing that but I think for the sake of the child whether the child is black or white, a child in abuse has to be taken out of a dangerous situation.

TRIOLI:

I guess why I asked that question in particular about the responsibilities of various ministers is that from the sense that we have known about this for quite some time, these detailed reports full of all these printed allegations have been written about since, well since the mid-1990s. You could actually stack those reports about yay high. Why has it slipped from the urgent list? It can’t just be because it is a kind of political correctness.

TREASURER:

I think there has been a realisation that something bad has developed. But I think what has made it different this week is you had the Crown Prosecutor in Central Australia who spoke very forcefully and she had cases, facts, people, and she went through them one by one.

TRIOLI:

Yes but these reports contain all of those too.

TREASURER:

And people now realise that this is not an isolated, well you have got to be careful here, it is not a one-off that there is more than one-offs, that there are far too many is the way I would put it and that is what has brought our attention back on it. Now, what do we do about this? Well, firstly we have got to get the children into a safe place. Secondly, the people who do this are criminals. It doesn’t matter what the colour of your skin is, if you rape someone or you interfere with a child you are a criminal and you…

TRIOLI:

So it is the Police Ministers…

TREASURER:

…and you have to be charged, prosecuted and jailed. I think there was a view in the past that culturally we would handle this in a different way, you cannot excuse this behaviour on the basis of culture, it is a crime, it has to be prosecuted and punished.

TRIOLI:

We have got just a couple of minutes left but I did want to ask you following the news this morning the details of the Snowy Hydro float and the proposed safeguards that have apparently failed to win over irrigators in southern New South Wales, they have now withdrawn their support for the sale, that Murrumbidgee (inaudible) and Murray irrigation back to privatisation with conditions but that has ended now, what is your response to that?

TREASURER:

Well this is something where three governments have an interest – New South Wales, Victoria and the Commonwealth – the Commonwealth, the New South Wales Government was the first to announce its interest in privatisation, the Commonwealth agreed and it will offer its stake, but it is a matter for the New South Wales Government to deal with those irrigators.

TRIOLI:

But they have got to be assured, don’t they?

TREASURER:

Well they will want assurances and the Government should give them assurances but the irrigation system is managed by the New South Wales Government and it will have to deal with those farmers.

TRIOLI:

Now to much more important issues, when are you going to attend a Cronulla Sharks match?

TREASURER:

I was down at…

TRIOLI:

You were giving away some money the other day.

TREASURER:

…Toyota Stadium which used to be Shark Park which was a much more…

TRIOLI:

Everything goes the way of sponsorship (inaudible).

TREASURER:

…much more atmospheric if I may say so, Shark Park a couple of weeks ago…

TRIOLI:

Yes but a match, a match.

TREASURER:

…I know, I know, I know, I know, I have got it in my diary and…

TRIOLI:

Yes, when?

TREASURER:

…well it is in my diary and I am looking forward to it. In fact, here is an interesting fact. Since the announcement of the upgrade, and I will call it Shark Park because I know the ABC doesn’t like advertising…

TRIOLI:

We don’t like advertising.

TREASURER:

..since the upgrade of that stadium the Sharks have been unbeaten. They have come out and they have…

TRIOLI:

You are the rainmaker.

TREASURER:

…beaten all comers…

TRIOLI:

Be careful what you are saying.

TREASURER:

…I was going to say, now, Virginia…

TRIOLI:

Because your AFL team is not going so well.

TREASURER:

…I wonder if it is the same. Since the Budget and the announcement of more money to the ABC, the ABC has beaten all commercials.

TRIOLI:

(inaudible).

TREASURER:

Is that a claim you could make?

TRIOLI:

I don’t know, it depends on how fondly you feel about the ABC and I think the jury is out on that one.

TREASURER:

Well you know, we might as well say it here because we get attacked on other radio stations, you know we did increase funding to the ABC in the Budget.

TRIOLI:

Indeed we did. And interestingly, in an article in The Bulletin which is terribly critical of our Chairman Donald McDonald, it was suggested and it has been suggested to me that their views that they were expressing about are rather similar to your own that there is no way that the ABC is getting more money.

TREASURER:

Well it did, for Australian production and we hope that they can use that to leverage maybe some outside production in and put some more Australian drama on, I guess that is mainly on the TV stations but we could do with some more drama on radio too.

TRIOLI:

Isn’t that what we get whenever you come in?

TREASURER:

Well I try not to do boring Budgets, I noticed you cited the New Zealand Budget with approval, we try not to do that here in Australia.

TRIOLI:

I think a lot of people might look forward to a boring uneventful budget, particularly if there is no tax.

TREASURER:

Don’t wish for it, you might get it.

TRIOLI:

Nice to see you Treasurer, thanks so much.

TREASURER:

Thank you very much Virginia.