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 18/08/2006

Doorstop Interview

4 Treasury Place
Melbourne

Friday, 18 August 2006

12.45 pm

SUBJECTS: Coles Myer, RBA Governor, Ajax, PNG gas pipeline, postage allowance, State election, Welfare to Work

TREASURER:

If there is an offer by foreign interests to acquire an Australian company, that is assessable under the Foreign Acquisitions and Takeovers legislation and any application that is made in relation to that will have to go to the Foreign Investment Review Board. The Foreign Investment Review Board will carefully look at such an application and make a recommendation. The recommendation goes to the Treasurer. The Treasurer has powers to stop a foreign acquisition that is against the national interest. That is the one criteria that the Treasurer takes into account. These matters are looked at as commercial-in-confidence, we don’t conduct a running commentary in relation to these matters but there is that ultimate sanction, if you like, of being able to reject a foreign acquisition which is not in the national interest.

JOURNALIST:

The outgoing Reserve Bank Governor has indicated this morning that the possibility of interest rate rise is imminent some time before Christmas. Is that your reading of his testimony?

TREASURER:

Well I don’t give a running commentary on the testimony of the Governor of the Bank. I put in place a provision by which the Governor gives testimony on a twice a year basis and he gives an assessment of the economy and I think his assessment should be explained by him.

JOURNALIST:

He also said the good times will come to an end. He says that it is unusual, that in his 15 years that he hasn’t had a recession.

TREASURER:

Well we are in the longest period of economic growth in Australian history. We have never had a period of economic growth like the one we have experienced over the last decade. Normally in the Australian economy we have seen regular recessions. So this is, by the standards of Australia, the best period of growth that we have ever seen. Now the task is not to rest on our laurels but to keep that going and to ensure that our economy continues to grow in the future. The longer the period of expansion, the more difficult economic management becomes. But I think the economic management, the reforms that we have put in place that have given us the longest period of expansion in the history of Australia should also help us in relation to the future.

JOURNALIST:

Do you deal with the Governor’s, do you agree with the Governor’s assessment – his prediction?

TREASURER:

Well look, he gives his assessment of the economy and monetary policy. We give our assessment of the economy and the Governor and the Government have worked very well for the last 10 years and I think the evidence is there. This has been the best period of economic expansion in the history of Australia.

JOURNALIST:

Is it coming to an end?

TREASURER:

Well as I said, the task is to continue it. Just because we have had the longest period of expansion in the history of Australia it doesn’t mean that we are going to give up the game now. The task is to keep that expansion going. This is what all of our reforms are for – balancing the Budget, repaying $96 billion of Labor Party debt, putting in place the new monetary policy, reforming the taxation system, improving industrial relations, now we have got welfare to work changes that are coming in to play. These are the reforms that got us to where we are and these are the reforms that will take us on.

JOURNALIST:

Will there be another rise by Christmas?

TREASURER:

Well obviously I don’t comment on monetary policy and future movements.

JOURNALIST:

(inaudible)

TREASURER:

Look an application will be made if foreign interests want to acquire Coles Myer to the Foreign Investment Review Board. That application will be considered on its merits and ultimately referred to me as the Treasurer. Foreign acquisition can be rejected if it is not in the national interest. It is something that I did in relation to the Shell application to takeover Woodside. That is the last time in which an application was rejected and I did it for reasons which were in the national interest at that time. Now I can’t prejudge these things. We have got to wait for application to be made, if indeed it is made, we need to know what the outlook for the company will be and in particular what the Board of the company has to say about it. We will then take into account the views of all relevant persons and then we will make a decision on the application if it comes. But such an application has not been made yet.

JOURNALIST:

Treasurer, will the Federal Government be able to assist with the rescue package for the Ajax workers that have been stood down?

TREASURER:

The Federal Government has a scheme in place which guarantees entitlements to employees where a company fails. Now let me make this clear: the first responsibility to the employees is the company itself and the payment of employee entitlements has priority over other creditors. But if there is not enough money then the Federal Government has a scheme which guarantees a list of minimum entitlements. And that scheme which this Federal Government put in place will be activated.

JOURNALIST:

Doesn’t that scheme differ between if you’re in administration or liquidation though Treasurer - your Government changed the rules late last year?

TREASURER:

No, we have a scheme called GEERS and that scheme will guarantee entitlements where a company is not able to pay. As I said, the company ought to pay if it has got assets or if the administrators can realise sufficient assets, the administrators on behalf of the company ought to pay, but if all else fails then the Federal Government has a scheme.

JOURNALIST:

That is only in liquidation not administration which (inaudible)

TREASURER:

Well if you are in an administration and you are trading, the administrators are seeking to put the company on the best foot and seeking to realise assets and if they can realise assets then, on behalf of the company, they should make the payment - not the taxpayer. The taxpayer only steps in when the company doesn’t have the resources to pay itself. This is not a plan for the taxpayer to step in to pay directors’ obligations and shareholders’ obligations, you know. This is a plan where a company doesn’t have the required resources, for the taxpayer to step in on behalf the employees but we certainly don’t step in at the beginning, because that is the company’s obligation. We step in at the end.

JOURNALIST:

(inaudible) involved in the PNG gas pipe plan (inaudible)

TREASURER:

Look, we put in place a number of changes which should be of advantage, including tax advantages, but at the end of the day a pipeline will only be built if somebody wants to buy the product and as I understand it that is the problem at the moment, getting guarantees on a product.

JOURNALIST:

Is there anything more the Federal Government can do?

TREASURER:

I don’t think the Federal Government will be buying the product but we have put in place changes in relation to tax which are of advantage to people who are buying the pipeline. Our access regime I think has been such as to encourage the pipeline but if the problem is at the end of the day finding customers for the product, there is nothing the Commonwealth Government can do about that.

JOURNALIST:

Treasurer, how do you justify a 20 per cent increase in printing and postage cost for Federal MPs which comes to a $20 million expense to taxpayers?

TREASURER:

Well these are entitlements which are given to all Members of Parliament: Labor, Liberal, National, Independent, Democrat so that they can communicate with their electors. There hasn’t been an increase for some time and this is a provision which will enable them to catch up with costs and communicate with the voters and I think the voters themselves are appreciative of the fact that they do have communication from Members of Parliament.

JOURNALIST:

(Inaudible) do you think there are votes for Ted Baillieu and campaigning on (inaudible) would you rather see him (inaudible).

TREASURER:

Well the Victorian Opposition is putting itself forward at the next State election for election to be the Government. And to do that it needs to win the trust and the confidence of the people of Victoria. Now I think there are three months to go and I hope that they do put to the people of Victoria a plan for the running of the State which wins the confidence and trust of the people. People in Victoria want a better a Government and it is the task of Victorian Opposition to give them the chance to get it and I look forward over the next three months to seeing them put forward their policies and their platform.

JOURNALIST:

Has there been unrest so far about the stance he’s taking, do you think there will be Liberals that will approach Mr Baillieu and vent their concerns at the state council meeting (inaudible)?

TREASURER:

Well if there are such people then they will approach him and put their views to him, not to me.

JOURNALIST:

He’s stunned business leaders this week by his decision not to move the Melbourne markets should he win Government, given you have got a commitment to expanding the port how do you feel about that decision?

TREASURER:

Well I am not getting into the business of where the market is located that is not an issue for me or for the Federal Government. But for me in the Federal Government it is important to have Australia’s major container port, the Port of Melbourne, capable of taking ships including large ships that are trading between Australia and overseas. You have got to understand that one of the trade advantages that Melbourne and Victoria has is the largest container port in the country and Melbourne and Victoria need to keep their competitive edge if they are going to maintain Melbourne as a transport hub and as the person who is ultimately responsible for the Australian economic performance, as somebody who looks at our trade figures and wants to do everything we can to enhance capacity, I want to see a good container port in Melbourne and Victoria.

JOURNALIST:

Ted Baillieu has been leader for three months do you think he has not yet won the trust of the Victorian people?

TREASURER:

Well I don’t think you can do this in three months. I mean the critical day that he is working to is the day of the State election, and as I said, there are three months to the State election. It is the day of the State election when people will cast their votes, there is plenty of time to go between now and then and he has plenty of opportunity to win the trust and the confidence of the Victorian electorate and I wish him well. I think that people in Victoria want better Government and I wish the Victorian Opposition and Mr Baillieu every success as they seek to win the confidence and trust of the Victorian people.

JOURNALIST:

What do you make of the decision by the Catholic Church to pull out of your Government’s Welfare to Work programme, calling it immoral?

TREASURER:

Well look, nobody forces the Catholic Church take part in any Government programme. They are entitled to take part if they want to and if they do, to utilise taxpayers’ money, if they don’t, they don’t have to, and that is entirely a matter for them.

JOURNALIST:

How moral is it?

TREASURER:

Very moral.