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 09/05/2007

Interview with Karl Stefanovic & Kellie Connolly
Today Show

Wednesday, 9 May 2007

7.05 am

SUBJECTS: Budget 2007-08

STEFANOVIC:

Treasurer, good morning to you.

TREASURER:

Good morning Karl.

STEFANOVIC:

And it is a good morning for you, I see that you have got a smile on your face this morning. The Australian says or calls it a ‘Costello Master Class,’ the Telegraph says, ‘Who’s a Clever Boy then?’ It is quite an extraordinary morning for you. Is it the best Budget you have delivered?

TREASURER:

Well, I think it is the biggest investment that a government has ever made in our future and of course by investing in apprenticeships and investing in higher skills, will grow the capacity of the Australian economy. And if you grow the capacity of the economy then you are able to fund better health systems and better roads. That is what economic management is all about – getting us to a position where we can do these things and to be there and to be able to do some of these things, it makes all of the hard work of economic management worthwhile.

CONNOLLY:

Treasurer, it has been called an education revolution, education certainly is the centrepiece of this Budget but aren’t you just taking money out of a system, replacing what you have taken out over the years. The Opposition Treasurer, Wayne Swan is saying that it was 2 per cent of GDP when you came into office, it is now 1.6.

TREASURER:

Yes well, that is another one of his misleading figures. So I think we can leave him to one side. The fact of the matter is here that we have put down an endowment which will create a capital sum and will earn in a way in which we can fund universities whilst preserving the capital sum forever. $5 billion has been set aside and we will add to that in future years. We won’t touch the capital. No one should ever touch the capital but the earnings from that will go to the universities to build first-class institutions. And as long as you don’t get a future Labor Government that attacks that fund, that will grow and grow and grow and it will put us in a position where in five years we could have a very, very large sum which will be funding what I hope will be the first-class institutions with first-class students driving the economy of tomorrow. And again it all comes back to the economy. We have got to do this to build our economy stronger. If we build our economy stronger then the health standards, the aged care, the pharmaceuticals – everything else follows from that.

STEFANOVIC:

But whenever you make a large amount of money or put a large amount of money to something, you run the risk of people criticising it by saying, well, you should have done it years ago, why haven’t you done it years ago in the 10 years that you have had?

TREASURER:

Yes, it is a good question because 10 years ago you remember Labor had been in office and the Government owed $96 billion. So, we couldn’t actually invest in anything because we were $96 billion in the red. And it is because we have now been able to pay off that debt that we can now invest in all of these things. You see, if we had $96 billion we couldn’t invest in anything because we were too busy paying the interest bills and trying to pay the capital. But this is the benefit of that work over 10 years, we have got rid of the debt, we are now starting to be able to pay the superannuation and of course, now we can invest in education.

CONNOLLY:

Okay, well you are talking about superannuation, there will be some savings there for low income earners, I know pensioners are also getting a bonus. But we are getting emails, our viewers want to know, what about those self-funded retirees, what is in it for them? Not much, it appears.

TREASURER:

No, it is a good point because the $500 bonus which is going to be paid to pensioners will also be paid to self-funded retirees. Self-funded retirees who have the Commonwealth Seniors Health Care Card will get the $500 bonus just like the pensioners, so I think they will be very happy to know that news.

STEFANOVIC:

All right, in terms, they are calling it the ‘Battlers’ Budget,’ in terms of tax cuts, now $16 a week in terms of tax cuts, you wouldn’t get much change out of buying a burger and milkshake, is it going to make that much difference?

TREASURER:

Well you are talking about people who are on $30,000 or $40,000 a year, Karl, and that is a very large part of the tax that they pay. It is significant because at $30,000 or $40,000 you don’t pay that much tax. If you take $16 a week off the tax bill, that is quite significant to people at those levels and of course it is people at those middle income levels that other people who might be doing extra hours or coming off part-time work going on full-time work, or mothers coming back into the workforce that we want to encourage. You see, we are at a situation now where we have nearly got full employment. We have nearly got everybody who wants to work able to find a job – not quite but pretty close to it – and that is why we have got to encourage more people to come into the workforce. Mothers who maybe have had kids that want to come back to help them with childcare, older Australians who maybe want to work part-time, we help them with superannuation. And to focus in tax cuts at those levels will help grow the Australian economy and a strong economy is the basis for all we do. It is the basis for healthcare, for aged care, for pharmaceutical benefits, everything we want to maintain our living standards.

CONNOLLY:

Okay, now there doesn’t seem to be a lot ‘green money’ there, money for the environment. People are saying that is one of the short-falls here, do you have a few, I don’t know, savings up your sleeve? Are you holding a few cards up your sleeve?

TREASURER:

Well, we made some pretty big announcements in recent months. You recall the Murray-Darling Basin announcement, the $10 billion announcement in relation to that…

JOURNALIST:

Yes, provided you get Victoria on side.

TREASURER:

…provided we get Victoria on side, which is still dragging its heels and ought to re-think its position. The Natural Heritage Trust which we are extending out to 2013. We have got a great measure in this Budget for solar panels for houses – you can get a rebate of $8,000 if you put a solar panel on your house to supply electricity – I think that will be taken up, I think that will be great. And of course water grants to conserve water which I think will also be of enormous value.

STEFANOVIC:

Treasurer, let’s talk about the political repercussions that stem from this Budget. First of all, some as a result of the good press, and let’s face it, it is good press for you this morning, predicting the PM may go early for an election. Is that on the cards?

TREASURER:

Look, I don’t, I am not privy to any great secrets but I wouldn’t have thought it was likely, no. There will be an election in Australia by the end of the year, most people think it will be at the end of the year, that is certainly the programme to which I am working.

CONNOLLY:

Do you believe that this announcement, your chances of winning that election have vastly improved?

TREASURER:

Well I just focus on doing the right thing by families and keeping the economy strong. I think if you get the economy strong and people have jobs, they can keep their houses and businesses are profitable then they will bear all of that in mind then they go into the ballot box. That is the way I think about it. My job is to keep the Australian economy strong and that is what I am trying to do.

STEFANOVIC:

All right, I guess the big balancing act here for you was trying to keep spending in hand so that inflation doesn’t rise. Do you think you have done that? Do you think that interest rates will stay where they are?

TREASURER:

Well I think this is a very responsible Budget in terms of the overall economic effect. At the end of the day, after we have done everything we wanted to do – invest for the future, reduce the tax burden and help families – the Budget is still going to be in surplus, it is going to be decent and by world standards, probably one of the strongest. So, I think that is totally responsible in the current circumstances. I wouldn’t have done it if I didn’t think that and it was aimed actually to keep the Australian economy growing on low inflation and to lock in the benefits that we have seen over the last 10 years with 2 million new jobs.

CONNOLLY:

Okay, 12 Budgets, that is quite a job – do you have another one in you?

TREASURER:

Well, let me get this one through Parliament before I start working on the next one.

CONNOLLY:

Would you like to do another one? Or do you think you might be in a different job by then?

TREASURER:

Look, it is a big responsibility this, the Budget is $240 billion in an economy which is now $1 trillion. It takes a lot of work, this kind of thing takes five months of exerted effort and long nights and early mornings, but it is a great honour to be able to do it because you can do good things for your country and I think this is a Budget which does do good things for our country.

STEFANOVIC:

So essentially what you are saying Treasurer, is that you are over it and you are looking forward to moving up one chair.

TREASURER:

No, (inaudible) Karl, I think I said…

CONNOLLY:

(inaudible) anything.

TREASURER:

I said it is a great honour to be in this job and the great privilege is to be able to do good things for the Australian people.

STEFANOVIC:

Does it set you up a nice Prime Ministerial platform then?

TREASURER:

I will just concentrate on the job I have got.

STEFANOVIC:

All right, now Laurie Oakes showed you running in slow motion the other night and we look forward to seeing you run a bit more as the election come nearer. Thanks for your time this morning, Treasurer.

TREASURER:

Well I will tell you this Karl, if Laurie Oakes keeps showing me running, I will get footage of him running and that ought to go to air.

CONNOLLY:

Touché, touché.

STEFANOVIC:

All right, well Laurie is coming up I think. We will put that to him. Treasurer, thanks very much for you time this morning, appreciate it.

TREASURER:

Thanks very much Karl.