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 18/05/07

Interview with Alan Jones
2GB

Friday, 18 May 2007
7.10am

SUBJECTS: Labor Tax Policy, Budget 2007-2008, Kevin Rudd, Industrial Relations, Market Deregulation

JONES:

Wayne Swan, firstly.

TREASURER:

Well the extraordinary announcement from the Labor Party that they don’t have a tax policy.  They’ve been in opposition now for a decade, we’re heading up to an election at the end of this year, and their spokesman on Treasury matters said they wouldn’t have a tax policy for the election. Now, that can mean one of two things: it could either mean that they think that the tax system is ideal as it is – pretty unlikely. Or it means that they intend to get elected and then change it but don’t want to tell the voters beforehand lest the voters don’t like their plans, find them out, and therefore are less likely to vote for them.  You don’t announce your policy after the election, you announce it before the election so that people know whether they want to vote for you and if they do so you can be held accountable for the promises that you have made.

JONES:

Well what is going on out there? There is a booming job market, record share valuations, a strong dollar, confidence that interest rates will remain on hold this year, and the Westpac Melbourne Institute Consumer Sentiment Index the highest since it began in 1975, it’s jumped 7.5 per cent this month, this biggest post-Budget surge in yonks, yet Kevin Rudd is thrashing the Coalition at the polls and the Government seems to have no traction.  Why is that?

TREASURER:

Well Alan, my job is to manage the economy and to make sure that Australians can keep their jobs and stay in work, which I do.  And the Budget which I brought down is designed to do that.  Now, I think it has been received pretty well, I think most people say it’s a good investment in Australia’s future and in education. And we’ve again managed to reduce tax rates. And…

JONES:

It’s an 18 per cent rise in consumer confidence amongst those earning between $40,000 and $60,000.  That is where your tax cuts targeted low and middle income earners.  However, the polls say they are going to take the tax cut, but they are better off with it, then they are going to get rid of you. 

TREASURER:

I think people need to be reminded that these economic results just don’t happen by accident.  They’re not a fluke.  It’s been 10 hard years to get to where we are now and a lot of hard decisions along the way – like the GST which is a very hard decision, industrial relations reform, balancing the Budget, paying off debt.  A lot of people just think to themselves: ‘oh look, we’ll take the results and maybe put somebody else in control of the Australian economy’, it doesn’t happen like that.  You and I know in life that results come from hard work and to just say: ‘well, after all of this hard work we can have a go on an untried, untested group of people who opposed all of these reforms…’

JONES:

That’s the point I want to make – you are a potential Prime Minister, Deputy Leader of the Party, so what you say obviously is going to be analysed.  You were scarifying this week in your criticism of Kevin Rudd, you referred to a 2003 comment when he said ‘I’m an old fashioned Christian Socialist’, and now he’s saying he’s an economic conservative. 

TREASURER:

Yes well you see, there are advertisements on the TV at the moment, you would have seen them, Mr Rudd is sits in front of a high rise office building and says; ‘I’m an economic conservative’.  Well blow me down, that’s a shock to all of us! Because he’s been hiding it very well.  If he’s an economic conservative why did he vote against those measures which balance the Budget? Why was he opposed to paying off debt? Why was he opposed to cutting tax, why was he opposed to improving the waterfront? Why did he oppose abolition of wholesale sales tax and introduction of GST? 

There’s nothing in his record, nothing at all, that says he is an economic conservative and he’s just decided that with the economy in a strong position after all of those reforms he’d like to join the train.  Who wouldn’t want to be an economic conservative, because these policies have now balanced the Budget, paid off debt, put two million more people in work?  But, my point is, you don’t just become an economic conservative overnight by commissioning an advertising agency to say you are.  What you do is you demonstrate it with hard decisions over a long period of time so people know that you really have a commitment and you are not just a poll-driven media product.

JONES:

Let me talk about this WorkChoices which has got everybody in a lather – he has said, and Kim Beazley said before him, I think the word was not abolish but rip-up, they’ll rip up WorkChoices. Then two days ago, yes he is going to rip them up but no, he’s not, some companies will be given special status to keep their workers on Australian Workplace Agreements until 2013 and he said – his words – ‘protect the mining sector’.  Now, if WorkChoices is a ‘disaster’, how are you protecting an industry by allowing them to keep something that’s disastrous?

TREASURER:

Absolutely. People know at the moment the mining industry in Australia is doing very well.  One of the reasons why the mining industry is doing very well is that they have  been able to clean up work practices which 20 years ago were making the Australian mining industry unreliable.  We used to have overseas buyers, Japan and other countries were coming here and saying: ‘look, we like your products but they are very unreliable.  You have stoppages, your ships don’t sail, we can’t get our supplies, we’re using some of these supplies to power our cities and we can’t afford to have interruption of supply’.  Now we have changed industrial relations – Australian Workplace Agreements are right throughout the mining industry.  They have led to higher wages; they have helped the mining industry boost its profitability.  Now, why would you want to get rid of that?  Who is actually complaining?  Which person working in the mining industry in the Pilbara, where they’re earning $100,000 plus, is complaining?

JONES:

But then that being the case in the mining sector, what I can’t handle and a lot of people are writing to me here, the mining sector is one sector, yes, but one in three of these AWAs – over a quarter of a million of them – are in the retail and hospitality sectors, are they going to be exempt?

TREASURER:

Well who knows?  You see…

JONES:

Are we getting rid of AWAs or not?

TREASURER:

Well who knows?  I heard Julia Gillard say last night that if you are happy with an AWA you could stay on it until it expires.  Now, I thought to myself, if you are happy with an AWA why can’t you stay on it for as long as you want?  Why do you have to come off it?  She said you could stay on it until it expires and you know the last one would expire, I think she said, in 2013 then you have got to come off it.  Hang on, if you like an AWA, if you want to be on it and if it is good why do you have to come off it at all?

JONES:

Because they say they are disastrous. Why wouldn’t you say: ‘I can’t wait to get in there to look after industry and business by getting rid of this disastrous industrial relations policy, it seems to be a concession that if it works it will stay.

TREASURER:

Well if it is so disastrous, why don’t you give people free choice and say you can have an AWA.  If it is so disastrous, presumably they would all choose to get off them.  But you see it is not really about AWAs. Everybody knows that.  What it is about is that where people are doing well and getting wage increases and on individual contracts, you see, there is nothing for the union to do and that is what really grates with the Labor Party.  Fewer and fewer people are joining unions. The unions have got nothing to do if people are in jobs and wages are going well.  So you have got to get rid of that system so the unions can get back in and get membership and get fees.  And of course – you have got to remember this Alan – that unions all pay money to the Labor Party so you have got to get people into the unions to keep the income flowing into the Labor Party.  That is what Kevin Rudd and Julia Gillard are on about.

JONES:

Yes, I mean is it right that you can’t be a member, I don’t think, of the Federal Parliament in the Labor Party without being a member of a union? 

TREASURER:

That’s right.

JONES:

And I don’t think Kevin Rudd can quite remember what union he is a member of.

TREASURER:

Well he will be, but he couldn’t remember for the purposes of the interview. But he will be a member of a union. Under Labor Party rules all their MPs have to be a member of a union.  They have to find a union and they have to join and they all know what union they are in because they are all paying subscriptions to it.  Now it sounds a funny thing, isn’t it, that Kevin Rudd who wants to be Prime Minister, will be subject to union rules.

JONES:

You quoted a speech to the Sydney Institute in 2000 where Kevin Rudd said it was the duty of social democrats like yourself to draw up a new internationalism and he outlined a ten point-agenda for new internationalism and you said, quote: ‘full of Euro-left sentiment’, he said: ‘there should be a red thread running through all policies, including economic management’, and that ‘free markets must be managed markets’.

TREASURER:

A red thread is probably what he has in mind when he abolishes AWAs – the red thread running through industrial relations.  This, of course, he conveniently passes over this now because…

JONES:

Has there been adequate analysis of these sorts of speeches?  I mean this speech, a new dialectic (inaudible) of globalisation, where, globalisation, Australian impacts, he expresses a priority to quote: ‘redress the global situation where higher taxing regimes are punished and the reverse are rewarded’. Now by reversing it, what does that mean?

TREASURER:

Well that means that you would want countries to have higher taxes. He wants to have an international situation where countries are rewarded for higher taxes. You see, he is upset that those countries in the world that have lower tax burdens, and we know that countries that they, they are countries like the United States, they are countries like Australia, incidentally, Singapore, do better than those countries that have higher tax burdens. Countries like France, countries like other European and of course some of the Scandinavians.  He is upset by that, he would rather that the economically successful countries be the higher taxing countries.

JONES:

So is he telling the electorate what they want to hear and we are meant to all put these previous speeches aside?

TREASURER:

Well these speeches of course were made by a Labor Party frontbencher about three or four years ago. These speeches were made before the pollsters told him: ‘look this won’t help you get elected, you will have to junk all that stuff’.

JONES:

Did the Governor of the Reserve Bank, I mean these are big issues, we are all Australians first, Australians are facing the choice now what do you do, coming up to an election, how do you make sure that the economic wellbeing of the country is safeguarded by what you do.  Now, Ian Macfarlane, the Governor of the Reserve Bank was commenting last year on the industrial relations on the impact of industrial relations on interest rates and he said, quote: ‘Obviously, it makes the job of monetary policy easier with more deregulation of the labour market’.

TREASURER:

Yes, well that is what Ian Macfarlane said, that is his view. And that would be the view of practically every central banker in the world, that if you had union control collective agreement it makes keeping interest rates much more difficult. That is certainly my view that is the view of the Government.  That…

JONES:

The reality is though is that Kevin Rudd is thrashing the Coalition at the polls, and the Government has no traction.  Why in the light of all of this is that happening?

TREASURER:

Well you see people hear him say he is an economic conservative. They hear him say, well his policies are Costello’s policies or Howard’s policies, and they say: ‘yes, well that’s good, that is what we want’.  But my point is this – these are not his views. These are the views of the pollsters and the image-makers that have told him to say it.  If you want to find his views look at his record. He has been in Parliament, look at how he voted.  He voted against all of the things that we have put in place which were designed to balance the Budget, pay off debt, get more people in work.  Just because you say: ‘oh well, now I don’t agree with all of that. Now I’m just like Howard and Costello. Now I will just put their economic policy.  Now I will just keep all the jobs that have been created.’ Alan, you can’t trust it. You have got to look very carefully, you have got to scratch…

JONES:

Before we go, just one question before we go. Has WorkChoices become such an embarrassment to the Government that they have decided to re-brand it? I see there are references now to Work Place Agreements, is there something deep within the Government that we won’t refer to WorkChoices anymore?

TREASURER:

No, not that I know of.  I think the point which I saw Joe Hockey making last night was that the package is being made fairer with the fairness test, and that he is engaging in explanation as to how it has changed to bring in the fairness test, but no, as far as I know no edict has reached my ears Alan.

JONES:

Good to talk to you and thank you for your time.

TREASURER:

Thanks very much Alan.