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 14/08/2007

Interview with Chris Uhlmann,
ABC AM Programme

Tuesday, 14 August 2007
8.05 am

SUBJECTS: Economic management, RBA statement, Wayne Swan’s donation to political opponents

UHLMANN:

Peter Costello good morning. 

TREASURER:

Good morning Chris.

UHLMANN:

Is this the job you imagined you would have at 50?

TREASURER:

I think when I was young I didn’t even know what a Treasurer was and I didn’t imagine that I would be in politics.  I didn’t think I would be here, but what a pleasure it is to be here. 

UHLMANN:

What remains to be done in this job as Treasurer?  You have got another term, you are vying for another term, we hear a lot about what you think the Labor Party would do wrong, what would you do right?

TREASURER:

I think we want to see if we can get more Australians in jobs.  We are approaching full employment.  We want to ensure that we can fund the ageing of the population, which is going to be our greatest challenge.  I would like to deal with the climate change challenge from a position of economic strength and I would like to see Australia take its place as part of a liberalised trade bloc in the region which would give our young people opportunities for decades to come.

UHLMANN:

When we look at the state of working families in Australia, the Opposition yesterday tried to get you to repeat a statement that the Prime Minister said earlier this year, that working families in Australia had never been better off.  Can you make that statement?

TREASURER:

Well of course, the Opposition likes to throw off at the Prime Minister for making that statement, so the point I was making is what he said was eminently verifiable – that people are better off now than they are 10 years ago.

UHLMANN:

Never been better off?

TREASURER:

Eminently verifiable.  I think if you look at the number of people in work, their wages, their lower taxes, their higher family tax benefits, I don’t think you can contest that people are significantly better off, families are significantly better off, than they were 10 years ago. 

UHLMANN:

And yet there is a lot of stress, people are feeling the pinch of petrol prices, of grocery prices, of rents, of housing. 

TREASURER:

Sure.  And economic management takes a lot of work.  And we don’t live in some kind of nirvana you know, where every problem has been solved.  Challenges come at us from every angle.  They are coming from the United States at the moment, whose property market is on the way down.  They come at you through higher world oil prices.  They come at you through instability and financial markets.  We have made a lot of progress.  There are some people that might think all of our economic problems are fixed.  They are not.  There are huge challenges out there.  It takes a bit of time and effort and experience to manage this economy and we won’t wave away our problems for decades to come. 

UHLMANN:

But it has been a joint project though, a collegiate project with the Labor Party that started in the 1980s, the deregulation of the economy, the floating of the dollar?  These are all things that had to be done for a modern economy and the Labor Party did many of them.

TREASURER:

Well I pay credit where credit is due and floating the exchange rate was a good decision.  I have never made any bones about that and that was a good decision.  Taking Australia into the worst recession in 60 years was a shocking decision. 

UHLMANN:

But that recession delivered low inflation, the low inflation that we have now.  Well, it certainly was the same in the United States.  Wasn’t that the reason that we ended up with a low inflation economy, because we had that?

TREASURER:

Chris, inflation was then averaging about 5 per cent.  So, by putting a million people out of work you got inflation down.  What if I walked into your studio and said: ‘hey, I have got an idea.  Inflation is 2½, why don’t I put a million people out of work and get inflation down?’  I don’t think you would sit there and say: ‘brilliant decision, Treasurer.’  Now, that is precisely what Mr Keating did.  He put a million people out of work.  He didn’t intend to do it.  He tried to avoid it.  He mismanaged the economy.  After it was all over he said: ‘oh, but there was one good thing that came out of that.’ 

UHLMANN:

But wasn’t that a good thing, that we now have a low inflation economy?  Haven’t you reaped the benefit?

TREASURER:

No that was a shocking thing.  We should have got inflation low without sacrificing millions of Australian families and jobs and businesses.  And I guess the thing that distinguishes our record from Labor is Labor is the party of high unemployment.  The Coalition is the party of jobs.  And we have managed not only to create work, we have presided over an economy which has created 2.1 million jobs, and kept inflation low. 

UHLMANN:

And at points in history we have also seen Coalition Governments preside over economies that didn’t go so well and you can point to the Fraser Government. 

TREASURER:

Well Chris, I will take responsibility for the last 11 years and I will put that record up against any other government in Australian history and I will invite people to judge it on its outcomes. 

UHLMANN:

Is there a possibility that inflation might break out again?  Are we seeing that at the moment?

TREASURER:

Well you are seeing inflation which is still between 2 and 3 per cent, but towards the upper end of that target, which you would expect in a strong economy.  Let me make this point.  All of the writings of commentators and the commentary of the Reserve Bank is in relation to an economy which is strong, not weak.  The dangers that people are seeing at the moment is the strength of the economy, not the weakness of the economy.  This is not the United States you know, where peope are worrying about weakness.  If we have a worry, and you always have worries with economic management, it is that the strength of the economy that may actually put some price pressures in the system. 

UHLMANN:

And people look around them and they see a strong economy and they think that we should get our fair share of that and then the Government introduces WorkChoices which many of them believe is robbing them of their fair share of a buoyant economy.  Is that not a reasonable reason for some people to feel betrayed?

TREASURER:

Well, if you look at the evidence, since the introduction of WorkChoices we have had hundreds of thousands of new jobs, so more people have been able to get work and also when you look at wages, wages are actually increasing faster than prices.  It wasn’t always thus in Australia, you know.  It wasn’t thus under Labor.  Under Labor, not only did you lose your job, but if you kept it, your wage declined compared to prices.  That is the Labor way.  So you can judge WorkChoices even by its results. 

UHLMANN:

Speaking of presents on this your birthday, yesterday you were hammering away hard at your counterpart, the Shadow Treasurer, Wayne Swan, saying he should resign from the Labor Party for making a donation to the Democrats.  It is a bit of a reach, isn’t it, it is a seven year old birthday present you are after?

TREASURER:

Well I don’t think he should resign, I think the Labor Party should expel him.  Now, the Labor Party apparently has a rule that says if you give money to another political party you get expelled.  It was applied to Kevin Rudd’s own brother.  His own brother was forced out of the Labor Party because he made a donation to the Liberal Party – something which I don’t regard as an offence by the way.  But I ask this question: if Greg Rudd gets thrown out of the Labor Party because he gives money to another political party, how does Wayne Swan stay in when he gave money to the Democrats?

UHLMANN:

One last thing, if you had a birthday wish, what would it be?  Change of job?

TREASURER:

I think a day off.  I wouldn’t mind going for a celebration. 

UHLMANN:

Treasurer, thank you. 

TREASURER:

Thank you.