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 14/08/2006

Doorstop Interview

Forest Lake, Brisbane

Saturday, 12 August 2006

12.40 pm

SUBJECTS: Interest rates, alternative fuels, Mr Beazley and the Reserve Bank

JOURNALIST:

Treasurer if you want to comment on Ian Macfarlane’s comments today on the economic good times being over?

TREASURER:

I think the Governor of the Reserve Bank was making the point that around the world interest rates are rising – the United States has had 17 interest rate rises, Japan is now having interest rate rises and with global growth being as strong as it is, you are not going to see globally the very low rates you had in the United States or Japan. Now the important thing for Australia of course is to continue to manage our economy well. We have now reduced Commonwealth debt to zero, we have now had 9 surplus Budgets, we have put in place changes which will improve our labour markets and all of this reform is absolutely essential if we want to keep the Australian economy growing with opportunities for all.

JOURNALIST:

Do you think it was foolish of you to promise low interest rates?

TREASURER:

When I first became Treasurer the standard variable mortgage interest rate was 10 per cent and it is now 7.8 per cent. And for many people lower because they can get lower rates than the standard variable mortgage interest rate. So, under the term of this Government interest rates have fallen but unemployment is nearly halved. We now have the lowest unemployment in 30 years and to be able to have low interest rates with low unemployment has been very good for the Australian economy.

JOURNALIST:

But you promised low interest rates and it is likely that they are going to go up.

TREASURER:

When I became Treasurer the home mortgage interest rate was 10 per cent, about 2 per cent higher than it is today. That is the way in which rates have come down but if we want to ensure that we continue to have interest rates that people can afford, it is important to have good strong economic management. We have now retired $96 billion of debt, we have had 9 surplus Budgets, we are reforming our labour markets, all of this is essential for good economic management.

JOURNALIST:

You have said before that if interest rates got to a single digit, under 10 per cent, are low. Is that still the case?

TREASURER:

The interest rate of 7.8 per cent is lower than it was when the Government came to office. It was 10 per cent and had been as high as 17 per cent. So interest rates are lower now than when the Government came to office and less than a half of the peak of what they were under the Labor Party.

JOURNALIST:

How much further do you think they will go up?

TREASURER:

The important thing for Australia is good strong economic management…

JOURNALIST:

How much further do you think they will go up?

TREASURER:

…retiring $96 billion worth of debt, 9 surplus Budgets, reform of our taxation system are all essential to ensure that we have good strong economic management.

JOURNALIST:

So how far do you think they will go up?

TREASURER:

Well I never comment on future monetary policy.

JOURNALIST:

Are the good times over?

TREASURER:

Unemployment is a 30 year low so in terms of unemployment these times are better than we have had for 30 years. The Australian economy has grown in its longest period of continuous growth ever recorded. So you would have to say in terms of job opportunities and growth – the Australian economy is probably going through one of the best periods of growth that we have seen.

JOURNALIST:

Beazley said this morning that he would like the Government to have a plan to render us independent from being so reliant on Middle East oil. What is your reaction to that?

TREASURER:

Well I think that there are alternatives to petrol and we would like people to be encouraged to use. One is LPG, you can get much cheaper fuel prices with LPG and the Government would like to encourage people to take up LPG. We are now seeing ethanol come into the petrol stations with the E10 blend and we want to encourage that. So I think that there should be encouragement for other fuels and with petrol prices as high as they are – punishingly high – these other fuels are going to become much more competitive and they will offer some relief to motorists.

JOURNALIST:

Would the Government maybe help drivers move their cars to LPG? Is there anything in the pipeline to be announced maybe on Monday?

TREASURER:

Well the Government would like to encourage people to take up LPG and we would like to have incentives for them to do so.

JOURNALIST:

What sort of incentives?

TREASURER:

And those incentives are under consideration by the Government and I expect that they will be announced shortly. They are incentives in addition to the fact that you can actually get LPG much cheaper than petrol at the moment.

JOURNALIST:

Can you give us any further insight as to how it is going to be announced on Monday morning?

TREASURER:

Well if I announced it now there would be nothing to announce on Monday. Any other questions?

JOURNALIST:

A Queensland election looks imminent, what is your critique of the Queensland Government’s economic management?

TREASURER:

I think that Queensland has benefited from the GST, it has certainly been the biggest winner from GST and it has certainly been benefiting from strong mineral commodity prices. But I think in other areas Queenslanders will feel that the Government hasn’t been doing what it should have, particularly in the health area, in the water area and now the task is before the Liberal Opposition, they have the opportunity to offer Queenslanders a better government and they will be doing everything they can to get support in the state election.

JOURNALIST:

You are in the Federal seat of Oxley. Have you got any message for Bernie Ripoll about some goings on earlier in the week?

TREASURER:

Well it is a pity that Mr Ripoll will only be remembered for one thing in the Federal Parliament and that was a juvenile stunt for which he got thrown out and I think the electors here will wonder why they bother electing somebody whose most memorable action in Canberra has been a stunt for which he was ejected and they will wonder whether they shouldn’t have somebody more mature as their local member. Okay, thanks. One last one.

JOURNALIST:

This morning Mr Beazley was asked about the comments to do with Ian Macfarlane about interest rates. Instead of knowing it was the Reserve Bank he was actually thinking it was Ian Macfarlane the (inaudible) Minister. He said something like – he ought to do his job. Does this show that he was ill briefed on the situation?

TREASURER:

You see Mr Beazley doesn’t even know who the Governor of the Reserve Bank is. The Governor of the Reserve Bank is Ian Macfarlane and he is doing his job. And for Mr Beazley to go out and gratuitously insult him because he doesn’t even know his name is just another indication that Mr Beazley understands precious little about economics. Thanks