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 06/07/07

Interview with Tim Cox
ABC Melbourne

Friday, 6 July 2007
8.45 am

SUBJECTS: Iraq, Fair Pay Commission decision, Indigenous emergency

JOURNALIST:

Peter Costello, good morning to you.

TREASURER:

Good morning Tim.

JOURNALIST:

Well we heard yesterday that it was democracy and freedom; that was from you.  The Prime Minister talked about WMD aspirations and terrorism.  The Defence Minister spoke earlier in the day about energy security and was then dispatched to Jakarta for his trouble, which one is it?  Which one of those reasons is the reason that we are in Iraq?

TREASURER:

Well as I said yesterday the most important thing about Iraq is to defend a government which has been elected by the people of Iraq in a fair and open election for the first time in a generation.  And to make sure that the forces of terrorism which are trying to depose an elected government and to turn Iraq, if they can, into a terrorist state are not successful.  And let’s be frank about this, if al-Qaeda is able to depose the elected government of Iraq and turn Iraq into a terrorist state then the world won’t be a safer place, Iraq will become a haven for the export of terror, and that is why it is so important to defend the government which has been elected and which is a free government and which has the support of the Iraqi people.

JOURNALIST:

Before that, Peter Costello, before the government was elected, why did we go to Iraq?  And why has that rationale changed more than four years down the track?

TREASURER:

Well as you know at the time the reliable view of intelligence and the international community was that Iraq had a capability of weapons of mass destruction.  This was something that was reported by the UN inspectors.  And in order to deal with that threat because the then dictator Saddam Hussein would not open all of his facilities, nor would he come clean in relation to those matters, the campaign to disarm his capacity – led by a coalition – was undertaken.  Now let me make this clear, that was not just the view of Australia, and the UN, and the UK, and the US, it was also the view of the Australian Labor Party, including Kevin Rudd – who  said that there was no doubt about the weapons of mass destruction in Iraq.  With the deposition of Saddam Hussein, for the first time in a generation the Iraqi people had the chance to elect a government which they have done. That government is in place, that government is making progress.  But….

JOURNALIST:

I am still trying to work out how energy security fits in with weapons of mass destruction and endeavouring to put in the provision or the infrastructure whereby a democratically elected government might one day govern Iraq.

TREASURER:

Well you do have an independent government which has been elected, governing Iraq right now. It is not a question of putting in place one day – it is there. It has been elected. There was a free election.  This is a democratic government.  Now you have al-Qaeda and associates which are trying to depose a democratically elected government.  You could say well we will withdraw we won’t train the Iraqis anymore, we won’t help them with their security forces and run the risk of al-Qaeda taking over Iraq, you might say that.  I think that would be a mistake. I don’t think that would be in the interests of the Iraqi people.  Nor do I think it would be in the interests of the region to have a terrorist state in the region, when you have other difficulties going on throughout the region.  Nor do I think it would be in the interests of the war against terror to abandon Iraq to the possibility of it becoming a terrorist state and the democratically elected government being brought down.  Now bear in mind that the Australian troops are helping to train the Iraqis and the intention is that after we and our allies have strengthened that democratic state, when it is in a position to defend its territory, then the Iraqi government will be able to do that on its own, but it is not at that point.

JOURNALIST:

That thought though, did you suggest again then that weapons of mass destruction existed in Iraq?

TREASURER:

What I said to you earlier was that the UN, that was the finding of the UN, that was the view of the company of nations and it was the view of the Australian Labor Party.

JOURNALIST:

Are you satisfied, well, that has been discredited now.  You talked about al-Qaeda in Iraq, I’m not sure what comprehensive or condensing evidence there is in Iraq, that al-Qaeda is at play in Iraq….

TREASURER:

I don’t think there is any doubt whatsoever.  I don’t think that anybody doubts that al-Qaeda is over in Iraq.  Several al-Qaeda operatives have been arrested in Iraq.

JOURNALIST:

What would you say that they are endeavouring to achieve there and where does Australia fit in with that?

TREASURER:

What they are endeavouring to achieve is the bringing down of an elected government.  Al-Qaeda doesn’t believe in elected governments.  Al-Qaeda believes that, in an Islamist way, that there should be non-elected governments running under an extremist ideology, not just in the Middle East but probably throughout the Islamic world.  The last thing al-Qaeda wants is for people to be able to vote in governments and vote them out, because that would be a sign of modernity and democracy that al-Qaeda and other Islamists are totally opposed to.  This is why they find an elected government in Iraq such an affront.  There hasn’t been a great experience of democracy in Iraq or in much of the Middle East.   If there is a successful democratic state, if people can see in this part of the world that you can elect a government, you can bring it in, you can take it out through the ballot box, this is a way of managing a modern country which will lead to better living standards for all.  This is a great setback to the ideological aims of al-Qaeda.

JOURNALIST:

Freedom and democracy, as you said yesterday, Peter Costello, but the Defence Minister was talking about energy security, something else completely different.

TREASURER:

As I said yesterday the important thing about Australian forces in Iraq was to make sure that the government that has been elected – let’s be clear about this: the government is there because the Iraqi people went into the ballot, many of them at great cost to their lives; they withstood bombings and other acts of intimidation and elected it.  Now the training by Australian troops and by other troops of the Iraqi security forces is designed to secure that elected government so it can manage its own security.  But if you withdraw before it is able to do that then you are leaving Iraq to its own devices.  And let’s be clear about this too: the defeat of an elected government in Iraq would be an enormous propaganda win and a logistical win for al-Qaeda and other non-democratic forces.

JOURNALIST:

Peter Costello, the Federal Treasurer my guest on 774 Mornings.  A 2 per cent pay increase for lower paid Australian workers yesterday and as was forecast I suppose by our listeners, that coming after a 6.7 per cent increase for you and your colleagues in the Federal Parliament.  Is the Fair Pay Commission doing a good job in your view?

TREASURER:

Well, I think the decision was about right.  The Fair Pay Commission is there to ensure that for the lowest paid, wages are adjusted but that the adjustment in wages is consistent with other goals, such as keeping inflation under control and keeping more job creation going.  The decision that it has given will protect the real purchasing power of wages, that is, it takes into account inflationary forces. It is a balancing act; you can always draw the line in different places but I think they have got it about right.

JOURNALIST:

Have they got it about right when inflation will pretty much annihilate the increase, won’t it?

TREASURER:

Well of course what this increase does is it maintains the purchasing power, that is, it protects the wage against inflation, but you do have to bear in mind that overall wages are increasing in advance of inflation.

JOURNALIST:

Not for the lowest paid workers.

TREASURER:

Well overall ….

JOURNALIST:

Not for the lowest paid workers

TREASURER:

Well overall, and there are many people who are on lower wages who actually will get advances over and above this for other reasons.  And bear in mind that you have to take into account that there are tax cuts that are coming on stream – came on stream last Sunday.  And of course the low paid workers would mostly be eligible for government benefits, many of which have been increased as well.

JOURNALIST:

Overall, the word you use, overall Australian are enjoying a booming economy, low interest rates, low unemployment, but the lowest paid workers are overall enjoying a tax cut, that is, a pay increase that is the smallest in 10 years almost the entire time that you have been Treasurer, Peter Costello.

TREASURER:

Yes, but you have got to bear in mind that for low income earners what the government does is that it has additional benefits including tax cuts, and as you said, other government payments.  Now we can tell this from ABS findings that were recently announced that the lowest quintile, the lowest 20 per cent of people in Australia have not just increased their real disposable incomes over that period but their proportion of the increase has actually increased.  Now with the lowest paid workers, because their salaries are low, there are generally other benefits for which they are eligible, including government payments that top up their wages.  Let me give you this statistic: 60 per cent of Australians pay no net tax.  That is they receive back in government tax credits or payments more then they pay in tax.  I think you will find for the lowest paid workers that this is very often the case.

JOURNALIST:

Peter Costello with me and I’ll get you here to clarify this for us, confusion continues around the detail of Mal Brough’s ambitious plan to tackle violence and hardship in indigenous communities in the Northern Territory.  Will welfare payments there be linked to health checks or not?

TREASURER:

Well I think that there is overwhelming support for what Mal has done.

JOURNALIST:

Will welfare payments be linked to their health checks or not?

TREASURER:

Let me come back to this point Tim. The important thing is to make sure that we do everything we can to ensure that children are protected and the government, within the confines of all of the legal ethics and everything else, will be doing that and I can assure you of that.

JOURNALIST:

Will be welfare payments be linked to health checks?

TREASURER:

Well I have told you that in relation to payments, payments are going to be designed and targeted in a way which will ensure that they are spent on proper things and Mal will be announcing all the details in relation to this and he will be doing whatever he can, consistent with medical ethics, to ensure that we protect the most vulnerable in our indigenous communities.

JOURNALIST:

I appreciate your time this morning Treasurer, thank you.

TREASURER:

Thank you very much.