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 02/10/2007

Doorstop Interview
Treasury Place
Melbourne

Tuesday, 2 October 2007
12.20 pm

 

SUBJECTS: Labor’s lack of tax policy, Coalition’s tax cuts, hospitals, RAMS, Australian dollar, election date

TREASURER:

Well just weeks out from a Federal election, Labor has been unable to say anything about its tax policy.  And when it was asked today in an interview what its tax rates would be, the Shadow Treasurer, Mr Swan said it would be written on a piece of paper.  And that is all he could confirm.  Now, Mr Swan and the Labor Party have had three years to produce tax policy.  They need to tell the Australian people what they intend to do with tax and if you can’t tell the Australian people what you intend to do with tax, then you can’t assure them as to their household budgets, and you can’t assure them that any of your promises can be funded or implemented. 

Now, it is clear that the public does not trust Labor to manage the economy and there is a good reason for that.  They haven’t produced a tax policy.  They haven’t done the work.  They don’t know what to do about the most important area of economic policy.  And whilst they can’t come clean with the Australian people nobody can be sure what a Labor Government would mean for them in terms of the household budget, their mortgage, their job or their business.  

JOURNALIST:

Treasurer, when is the Coalition going to be releasing its tax policy?

TREASURER:

Well we released it of course in the Budget when we cut taxes from 1 July 2007 and we have legislated another tax cut on 1 July 2008.  Part of our tax policy which we have also implemented of course is to take all tax off lump sums on superannuation, all tax off pensions, on superannuation for those who are over 60 and are in taxed superannuation funds. 

JOURNALIST:

So the tax policy won’t be updated through the course of the campaign?

TREASURER:

Well the tax policy which we announced in May of this year has been legislated.  A very large part of it has been implemented and another part of it is yet to take effect but has been legislated and will take effect on 1 July 2008.

JOURNALIST:

You have cut taxes virtually every year for some years, would you like to think in the future you will be able to cut taxes further?

TREASURER:

Well we cut tax in 2003, 2004, 2005, 2006, 2007 and we have legislated another tax cut in 2008.  I think if we can keep the Australian economy growing strongly that we ought to aim to keep taxes low.  I think we are the eighth-lowest taxed country of the 30 countries in the OECD.  I want us to maintain our position and if possible become one of the lower taxed countries of the OECD.

JOURNALIST:

Treasurer, one thing Labor did say is, they said they wouldn’t increase tax as a percentage of GDP.  Will the Government promise to do the same?

TREASURER:

Well the Government has cut tax to GDP.  You see, when Labor says that it will maintain tax to GDP, what they are saying in fact is that taxes would be higher if they’d have had their way.  This Government has been cutting tax to GDP.  Let’s be clear about this: cutting tax to GDP.  So, if Labor comes along and says that they will maintain it, what they are in fact saying is that taxes under Labor would have been higher. 

JOURNALIST:

What about going forward?  Will you make any commitment at all about what the Government will do in terms of taxes in relation to GDP?

TREASURER:

Well we have cut tax to GDP over recent years and as I have said, we ought to aim to make Australia one of the low tax countries of the OECD.  We have got it down to eighth lowest out of 30.  If we can continue to grow the Australian economy, it ought to be our aim to keep taxes as low as possible, and if we can, become more competitive as against other countries in the OECD.  

JOURNALIST:

Aren’t those taxes in part to blame for some of the recent rate rises then?  The tax cuts?

TREASURER:

I don’t think so, no.  I think what you are seeing in Australia at the moment is you are seeing the fruit of increased employment which is being returned to people with a stronger economy and a lower tax base.  You see, since 1996, 2.2 million more Australians have got into work.  When somebody gets into work you save money because you are no longer paying unemployment benefits and you increase revenue because that person is now paying tax.  So, having got 2.2 million more Australians into the workforce, expenses have gone down, revenues have strengthened and everybody has been able to receive the benefits of that through lower taxes. 

JOURNALIST:

Just in regards to hospitals, how hard would a returning Coalition Government play hard-ball with the States to get what they want on health reform?

TREASURER:

Well, at the moment we are putting record amounts of money into health.  We know that the health burden is going to increase as the population ages and as technology improves.  So we have got to make sure that we get best value for that money.  And we think that getting best value for public expenditure on health will be improved if we manage the hospitals better.  If you have boards that have clinical expertise, medical expertise, financial expertise, that are accountable to the community that are appointing good chief executive officers that you can get better value for money and that is what we will be putting to the States. 

JOURNALIST:

In Victoria it won’t make much difference though, will it, to the system of management? 

TREASURER:

Well I think that the administration of the public health system can be improved in Victoria and in all of the States and we ought to be aiming to do that.  The Commonwealth is putting something like $42 billion into the health system over a five year period.  We ought to make sure that we get the best value for money so that patients are assured of the best treatment and that that money is used to the best possible effect. 

JOURNALIST:

Treasurer, do you think RAMS is going to need to get bailed out by the Federal Government?

TREASURER:

Well there has been an announcement this morning of an agreement by Westpac and RAMS which would bring Westpac in as a cornerstone shareholder, would make available some of Westpac’s reserves for underwriting RAMS loans and for the rollover of its commercial paper.  This will give added strength to RAMS if that arrangement goes ahead and I welcome the announcement that has been made, it is an in-principle announcement, and provided all of the parties are in agreement, I think it could be a very positive step forward. 

JOURNALIST:

RAMS still has got very large funding needs though. 

TREASURER:

Yes, well it does in relation to rolling over its commercial paper.  It has to ensure that it can get liquidity but I think with a cornerstone investor with the size of Westpac Banking Corporation, that will strengthen its position quite considerably. 

JOURNALIST:

Are you concerned by another record rise in the Australian dollar?

TREASURER:

Well the Australian dollar is now trading at highs which are around 18 year highs.  Most Australians will think to themselves that is good because when they travel overseas that will give them better value for money.  There is another side to this of course which is that it makes life harder for our exporters.  Because the Australian dollar is high, that means that the price of Australian goods overseas is higher than it otherwise would have been.  This is pretty tough, particularly for agricultural producers which are going through drought at the moment.  So it is a very mixed thing, the rise of a currency – good for travellers overseas, good for importers, not so good for exporters.  And it is just another thing that we will have to cope with in economic management.

JOURNALIST:

Treasurer, the Prime Minister has had the weekend to mull over possible dates for the election.  Have you spoken to him about it this week and would you be able to provide us with an update on the issue?

TREASURER:

Well I am afraid I can’t give you the election date. 

JOURNALIST:

Have you got any overseas trips planned?

TREASURER:

Much in all as I would like to.  Have I got any overseas trips planned?  No.  No, I haven’t got any overseas trips planned.  Thank you.