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 05/07/2006

Doorstop Interview

Solomon Islands

Wednesday, 5 July 2006
7.45 am (AEST)

SUBJECTS: Solomon Islands, education, COAG, health, GST, Nauru

TREASURER:

This afternoon we will be going to the Weather Coast which was the area right on the partition between anti-government rebels and government troops. It is one of the most needy areas in the Solomon Islands, it is only about 40 kilometres away from here in Honiara but it has been subject to violence and a great deal of economic deprivation. There is a guard post there now which has been put in by the Australian police presence and AusAid is assisting with building a school and I will take the opportunity to look at the school and make a presentation. This is Australia helping on the ground with law and order, with education as part of its commitment to the Pacific Islands.

JOURNALIST:

Given how many, how growing the population is here, I think the majority of the population is under the age of 20, how important is schools and education and what support can Australia provide in terms of that?

TREASURER:

Well it is extremely important. With the growing population a country like this will have to grow its economy above 3 per cent just to break even. If it doesn’t grow above 3 per cent per capita, living standards will go backwards. So, this is the great challenge and education is going to be the key I believe to the development of industries here. There is great potential for industries in the Solomon Islands. Tourism could be a great industry. We are going to fly over a gold mine later on, an Australian owned gold mine. Palm oil plantations. If governance can be improved, law and order stabilised, corruption eliminated, foreign investment welcomed, a country like this has a great future. But if law and order deteriorates, if corruption takes over, if governance is not improved, then living standards will go backwards.

JOURNALIST:

Treasurer, reports today that the draft communiqué from COAG is looking that the States are going to sign off on some more regulatory reforms, have you heard any message back that there is going to be movement on any of those issues, and if so, which ones?

TREASURER:

Well I think the objective ought to be single national economic regulatory arrangements for key national infrastructure, particularly infrastructure which has an export importance for our country. We are 20 million people, if you think a country of 20 million people can sustain seven or eight regulators, you are going to put a cost on business which will in the end make all of us poorer. We are fronting up to a world where you have got NAFTA, a free trade area of 400 million, the European Union, a free trade area of 400 million, China emerging with 1 thousand 2 hundred million people, India emerging with 1 thousand million people we can’t sit still in Australia.

JOURNALIST:

How would you sum up the atmosphere in the meeting yesterday, is there a real recognition of the scale, the problems and resolve to tackle them?

TREASURER:

Look, interestingly enough as I spoke to the business community there is immense gratitude to Australia for RAMSI, for securing the law and order situation, immense. I think the Government also recognises what has been done but it is important that the Government doesn’t try and curtail the programme in any way. This is not a programme that can go ahead with just police and troops, this is a programme which requires line people in the Treasury, in Customs, in the Tax Office to make this governance issue much improved. And that has been my message to the Prime Minister and the Ministers all the way down.

JOURNALIST:

What about health there has been some suggestion of extra or different special purpose payments to the States if they work on preventative health, tackling diabetes, things like that, do you see any changes in the payments to the States in regard to health?

TREASURER:

Well, without going into payments to the States, I do believe that more of our health dollar will go to preventative measures because I think that is where you get much better value for money. Try and stop people from developing high cholesterol before you have to treat them for heart attacks.

JOURNALIST:

What do you think of this idea of the Solomons Prime Minister about a joint customs arrangement funded by (inaudible) tax on imports?

TREASURER:

Look, I think if the Pacific Islands can cooperate in regulatory arrangements, let’s suppose in customs, or you know, telecommunications, I think they will get economies of scale. I think that would be good for them. I wouldn’t recommend they go back to the Australian model of multiple regulators.

JOURNALIST:

Treasurer, the US Federal Reserve lifted rates in America last week, what is the sense that we are in a rate tightening cycle, do you think inflation in Australia as such and a further rate rise could be warranted?

TREASURER:

I never comment on future movements in interest rates, as you know, Mark. Not even in the Solomon Islands.

JOURNALIST:

Any chance do you think of actually getting agreement from the States on the business transaction tax at the COAG meeting?

TREASURER:

Well it is part of our agreement and we will keep pushing it. But remember the GST was introduced to abolish those state taxes and one of them – a big one of them – is stamp duties on business transactions. Now, why do we make a big thing of this? Let me explain it. If there is no stamp duty on your mortgage you can swap banks and take advantage of a lower interest rate. If there is a tax on taking out a new mortgage you can’t do that, you get locked in by a bank that may not be giving you the best deal. It is the same with business. When businesses are rearranging assets it should have low transactional costs. Why? So, businesses can be more efficient. There is a big economic point in all of this, to make business as efficient as possible in Australia so that we can keep our economy growing. Thank you.

[TAPE BREAK]

TREASURER:

…that he and his government were very supportive of it, he gave me a run down on the conditions, there are only two people there at the moment, they have complete freedom of movement in Nauru, he said in fact one of them visits him in the Ministerial Finances Office on a regular basis. These are two people that have had adverse security assessments and that is why they are still there but, he made it clear that Nauru was very supportive and they wanted to see the offshore processing centre revived.

JOURNALIST:

Yesterday when we spoke to Mr (inaudible) he made the point that he thought that Australia had taken too long to resolve the issue of the two Iraqi’s, that it was a humanitarian issue and that they couldn’t be left to stay there indefinitely, what can we do to resolve that situation?

TREASURER:

Well he said to me he understood why they wouldn’t be admitted to Australia when they had an adverse security assessment. He also said to me that he believed that the best way of resolving it may be to find a third country that would take these two people.

JOURNALIST:

They have been there for five years, doesn’t this go to the very issue that Petro Georgiou and his supporters have been arguing about failing to have procedures in place so people are not left indefinitely? They have been there for five years.

TREASURER:

Well I think, if people are not security risks they will not be left indefinitely but you have got to ask yourself this question, if Australia’s intelligence organisation says that somebody is a security risk, you can’t expect the Government to bring them into the country and let them walk the streets.

JOURNALIST:

Someone else should take them?

TREASURER:

Well I hope that there is a third country and Australia is making every effort in that regard.

JOURNALIST:

They have been reinterviewed by ASIO, are you aware whether that assessment might be…?

TREASURER:

I am not aware, no I am not. Okay, thanks.