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 27/07/2007

Doorstop Interview

Very Special Kids
Malvern, Victoria

Friday, 27 July 2007
11.35 am

SUBJECTS: Steve Bracks, share markets

JOURNALIST:

So what is your reaction to the Premier resigning?

TREASURER:

Well I think obviously it is something he has thought about.  Only he would know the pressures that have been on him from a family point of view.  I know that politics is a very hard business for families and so I understand what he would have gone through in making this decision.  Obviously I haven’t agreed with every policy he has had, but I wish him well as he goes on to the next chapter of his life. 

JOURNALIST:

How did you find him as a political opponent?

TREASURER:

I always found Steve Bracks to be good company.  He was a friendly Premier.  I think he was very focussed on Victoria.  Obviously I didn’t agree with everything he did but I thought as a Premier he did some good things for the State.  And…

JOURNALIST:

He’s…

TREASURER:

Sorry?

JOURNALIST:

I was going to ask you what you think his legacy or what he will be remembered for?

TREASURER:

I think that he’ll be remembered as somebody who tried to administer that State on a sustainable basis.  I wish of course that we had got agreement in relation to the Murray-Darling Basin in place and I think that is unfinished business which the next and the new Premier will have to do.  I think there is an opportunity now for a new start in relation to that.  But, I wish Steve Bracks well.  He’s given the best of his service to the State.  He’s done it to the best of his ability, he’s now going on to a new chapter in his life and he deserves the thanks of the public for the work that he’s done and best wishes for the next stage of his career.

JOURNALIST:

Do you sort of take your hat off a bit to a man that prepares to step down for his family from where he is?

TREASURER:

Well, politics is very hard on families – there is no doubt about it.  It’s in many respects harder on the children and the spouse that is not in politics than on the politician themselves.  You are never off duty and your family lives with the slings and the arrows of public life and so I can well understand that he has taken into account his family situation, his probably taken into account what he wants to do in the next phase of his life and he deserves thanks for the job that he has done and good wishes for his future.

JOURNALIST:

His son’s drink-driving charge would just push you over the edge wouldn’t it, if you were already debating it?

TREASURER:

Look, these are very personal things where children are involved and I wouldn’t make any comment on that in any respect other than to say that he’s a parent and he’s a father and he would feel all of the things that a parent and a father would.

JOURNALIST:

So, John Thwaites or Brumby do you think for the next leader?

TREASURER:

I don’t have a vote.

JOURNALIST:

He named John Brumby as the best Treasurer in Australia these days – do you have a view on that?

TREASURER:

Well I presume he was talking about State.

JOURNALIST:

He said all of Australia.

JOURNALIST:

Any Government.

JOURNALIST:

He’s best Treasurer ever in Victoria.

TREASURER:

I presume he was speaking about State Government I think.  I think the competition is a little stiffer at the Federal level.

JOURNALIST:

Do you think an interest rate rise in two weeks in warranted Mr Costello?

TREASURER:

I won’t be speaking about future movements in interest rates.

JOURNALIST:

How about the dip in share markets around the world today – any words of comfort to the shareholders?

TREASURER:

Well obviously we have seen a very large plunge in New York in relation to the share market, and this comes out of concerns about the housing market in the United States.   There has been a high degree of default, particularly in the sub-prime lending market.  This is because credit standards have slipped and loans have been made to a number of people who shouldn’t have qualified.  And you are beginning to see the fallout.  This shows you the importance of strong financial management.  Now, credit standards in Australia are stricter.  But the point I keep on making, particularly to mortgage originators is don’t let your credit standards slip.  Make sure that where you are lending money, the people who are borrowing it, have a reasonable prospect of servicing that loan.  We do stress tests here in Australia of financial institutions through our prudential regulation.  They show our institutions are sound.  Our prudential regulation in Australia is better than the United States.  But we can’t be complacent and you have seen in the United States some of the consequences coming home of policy errors.  Anyone who thinks that managing an economy is easy, it can be done by inexperienced people ought to think twice when you see these challenges that are going on around the globe. 

JOURNALIST:

Have there been times over your career that you have had this sort of feeling, that it just wasn’t worth it?

TREASURER:

Look, politics is very hard on families.  And at the Federal level it is much harder because you are travelling a lot more than you are at the State level.  So, I perfectly understand the pressures that come on a family in politics and I know the pressures that Mr Bracks would have felt and that his family would have felt and only he can make a decision.  He’s made that decision, he deserves the thanks from the public for the job that he has done and best wishes for his future.

JOURNALIST:

Just back to the markets and the sub-prime mortgage markets – given the recent problems with (inaudible), how sure are you that we won’t have a similar scenario here in Australia?

TREASURER:

Australia’s prudential regulation is better than the United States.  We have a prudential regulatory authority that stress tests our financial institutions on a regular basis and those stress tests have shown that the Australian financial system is in very good shape.  But having said that, I say particularly to mortgage originators to be careful about the people to whom they lend money.  Make sure they can service the borrowings because if they can’t service the borrowings it is the originator that will get in trouble – that’s what you have seen in the United States. 

JOURNALIST:

Markets down three per cent today, the biggest dip this year – that is obviously a concern for you?

TREASURER:

Look, the market has dipped today off all-time records.  So that over the course of the year it is still substantially up but not currently at an all-time record.  This is what happens in stock markets – you get corrections from time to time.  But, I think everybody would agree that the level of the Australian stock market is as high as we wouldn’t have thought possible some time ago.  Okay.

JOURNALIST:

You go.

TREASURER:

Last two.

JOURNALIST:

Mr Bracks was only elected late last year – do you think he should have told the Electorate that he was considering stepping down?

TREASURER:

Well I don’t  know if he was considering stepping down that’s the point isn’t it – I can’t see into his mind.

JOURNALIST:

What’s the greatest loss to Victoria – Sheedy or Bracks?

TREASURER:

It’s a close call.