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 04/10/2007

Interview with Madonna King
612 ABC Brisbane

Thursday, 4 October 2007
10.10 am

SUBJECTS: Queensland, child care, pensions, executive bonuses, economic management, Election ‘07, education, water, wages

KING:

Good morning Treasurer and welcome to 612 ABC Brisbane.

TREASURER:

Good morning Madonna. Good to be with you.

KING:

Thank you. Before we go on, it is the eve of the election, you are up in Queensland. Why are you here now? Wayne Swan says you don’t bother to come any other time of the year.

TREASURER:

Well I am here to support the joint Senate ticket of the Liberal and National Party and I will be doing a speech on that today. And also to support Scott McConnel who is the Liberal candidate for Lilley.

KING:

But is Wayne Swan right? You go to the other States more than you come here? How many times have you been here in the last year or so?

TREASURER:

Oh, many occasions. The answer is that Wayne Swan is wrong, but you would expect him to say that. He is a political apparatchik.

KING:

Okay, we might leave that there and move on. And can I ask you about childcare first. You are in trouble with some of your own backbenchers over the issue of childcare. Have you ruled out full tax deductibility?

TREASURER:

The point that I have made about childcare is that the Government has a childcare benefit which is paid to childcare centres and they use it to reduce the cost of the childcare. Then in addition to that, the parents are entitled to get a tax rebate of 30 per cent of the balance that they pay. So, you have the benefit which reduces the amount which you have to pay and then you are entitled to a 30 per cent rebate on your out-of-pocket to what you actually have to pay after that benefit. And this, for over 90 per cent of Australian families, is better than tax deductibility. Because most families are on a 30 per cent tax rate, so if you gave them tax deductibility what they would get back would be 30 per cent – they get back the 30 per cent anyway – and they get the childcare benefit as well. So the way in which childcare is set up for the overwhelming majority of Australians, the system is better than full tax deductibility. And if you were to move to full tax deductibility the overwhelming majority of Australian families would be worse off, not...

KING:

Well it still seems to be an issue though. Is there a fairer system than the current one that you might consider?

TREASURER:

Well of course we have just announced changes to the childcare rebate – this is where you get the 30 per cent back of your out-of-pocket costs – to bring that forward because some people said that it was taking too long to actually get that rebate. And that system has just taken effect from the end of the last financial year. And I think for many Australian families they will now get two years rebate at the same time and I think that is going to be a much fairer system.

KING:

All right, from childcare to pensions, I am talking this morning with the Federal Treasurer, Peter Costello. One of the Parliamentary Committees sitting at the moment Treasurer, is looking at the cost of living pressures on older Australians. Do you think the pension is sufficient – that $259 a week or thereabouts – is enough for someone to live on?

TREASURER:

Well look, I would say that the pension is a very minimal payment. Yes, of course it is. And that is why we are encouraging more and more Australians to take out superannuation and to provide for their own retirement.

KING:

Why not just give them a bigger pension?

TREASURER:

Well what we have done with the pension Madonna, is we, we are the first government in Australian history which legislated to fix the pension.

KING:

At 25 per cent – we understand all of that – but people are still struggling on that amount of money. Does it deserve to be higher?

TREASURER:

Well let me just make the point that because wages are increasing faster than prices, this has meant that the pension has actually increased faster than the Consumer Price Index because we have fixed it to 25 per cent of wages and that meant that pensioners have been protected against price rises. Now, can we do more to help? Well we do do more to help. In my most recent Budget I announced a bonus to all pensioners of $500…

KING:

Yes, we know all of that, that is on the public record. But what I am saying is you know, do you think pensioners, should they be satisfied with what they are getting, I guess?

TREASURER:

Well as I said, it is important that we keep the pension growing faster than prices and where we can do more, that we do do more and that is what we did in this year’s Budget.

KING:

You keep hearing that – callers to this programme or you would be out and about and hear this – we keep hearing that the economy is really good and the economy is really strong, that perhaps we haven’t had it so good, but people are still struggling under grocery price rises, petrol prices, rising mortgages.

TREASURER:

Well there are a lot of people that are struggling in Australia. A group of people struggling terribly in Australia at the moment would be farmers who are struggling with drought and have no income at all. You are quite right. People who are on the pension still have limited income. People who are on disability have a limited income. Yes, there are a lot of people that are struggling in Australia at the moment. And you know, it is true that our economy is growing. In normal circumstance with a drought like this we would be in deep recession with mass unemployment. And so what we are saying is that notwithstanding those things, it is good that the economy is growing and it is good that for the majority of Australians there is still the opportunity to get work. But I acknowledge that there are many people that do it tough in a modern economy.

KING:

All right. Last time we talked I think the issue of executive bonuses and salaries came up. What do you think of the example set this week by out-going Coles chief, John Fletcher to voluntarily forgo about $4 million in bonus payments? A good example?

TREASURER:

Yes, I think it was a very good example and I pay tribute to him. He took the decision that with his company’s performance it wouldn’t be right to take a bonus, he surrendered that and all credit to him.

KING:

Should more chief executives follow his example, do you think?

TREASURER:

Well there are a few others, I think that could, yes. I think that there are some other chief executives who are taking large salaries and whose companies haven’t done so well who might take a leaf out of John’s book and consider their bonuses.

KING:

Do you want to name any?

TREASURER:

I better not name them.

KING:

All right. We are talking about spending. What does your Treasury Secretary think of the amount of spending the Coalition is doing at the moment?

TREASURER:

Well the Coalition Government will wisely look after the nation’s finances as we have over the last decade or so and I can promise you this, we won’t spend money that we don’t have. We are cutting taxes and we are keeping government spending within the tax base. And we will have another surplus budget this year, it will be the tenth that I have introduced and that is because we are managing to keep expenses reasonable.

KING:

If you are returned, if your Government is returned, well first of all I should ask you, what do you think the chances are of a victory in the election?

TREASURER:

Well it is going to be a hard election, I acknowledge that and if you read the polls then Mr Rudd is in front and he is already carrying on as if he has got the election in the bag. But I would say an election is not over until all of the votes have been counted on the polling day and I think it will be a hard fought election. The Australian people will decide who they want to be the next government, who they want to manage their mortgage, who they want to manage their jobs, who they want to manage the Australian economy and that is their decision which they will make on polling day.

KING:

Well if you are returned, you are expected to become Prime Minister sometime during the next term. And the Australian public know you as Treasurer, we don’t know a lot about you in terms of social policy, your views on education and health. Do you need to broaden the vision that you can offer Australia?

TREASURER:

I think it is important to talk about where we want our country to go, yes. And I will tell you my views on education. You know, I think we need a first-class technical school system in this country, training people for trades. I think we need improved standards of literacy in our primary and secondary schools and I think we need better facilities at the tertiary level. It is one of the reasons I established the Endowment Fund which will build first-class facilities at the university level for decades to come. And I have very strong views on education. I have, actually for a part of my life, I was a tutor in the tertiary education system and I have the view that we need first-class education for our children to make sure that they have every opportunity in life.

KING:

I mentioned a few things there. You immediately jumped on to education. Would that be a real focus if you became Prime Minister?

TREASURER:

I am very committed to education, in (inaudible), with technical education and technical schools, with standards of literacy and numeracy in our primary and secondary schools, and with first class facilities from the tertiary levels up. I am very, very committed to education. My father was a school teacher, I watched him influence generations of students, I know the difference that a good school teacher can make in a person’s life. I believe in the importance of education.

KING:

Do we put too much pressure on our teachers now do you think? They become almost pseudo parents in some incidences, that we expect teachers to pick up the slack that parents aren’t doing?

TREASURER:

I think it is tough for teachers. Teachers can’t be parents obviously, they can influence, they can shape a child’s life but they can’t be parents to every child in the class. I think a lot of the teachers feel that they don’t have adequate support; I think with discipline, there are many teachers that say to me ‘oh, we’re afraid that we can’t discipline kids because they will complain to the Education Department, or they will threaten us in some way’. And I do think teachers actually, particularly in secondary schools, do feel they are not getting enough support. I think they feel that they are not getting enough support to upgrade their educational qualifications. More should be done in that area. And you and I, we know don’t we, that you look back on your own career and there will be a couple of teachers who really changed your life for the better. And if a child can have a great teacher in their lives it can really change them.

KING:

Okay, so you are saying that education would be a big focus on your Prime Ministership. What would be the one other issue that you would focus on?

TREASURER:

I think water is going to be the key issue for Australia, for our development and our sustainability for the next couple of decades. I think the water, we have to manage our water better, we have to invest in water better, we have to harness water better, we have to price water better. I think we really do have a water crisis in this country and it is something we are going to have to deal with in order to keep our country growing and our lifestyle up in the decades which lie ahead.

KING:

Should we have been dealing with it a little bit earlier?

TREASURER:

Oh, absolutely, we know at the State level where they build these dams, there has not been enough investment in dams, there has not been enough investment in pipes and irrigation canals and I think we are going to have to look very, very carefully at desalination plants for our major capital cities.

KING:

Okay, just, a caller has called in and wants to know a specific question. So if I can ask you that that, that your government quotes that wages are up 20 per cent, is that right?

TREASURER:

Real wages have increased 20 per cent.

KING:

Okay I guess they want to know, is that the mean average, what is a real wage?

TREASURER:

Well this is a measure of average wages and it discounts for inflation. And what it is saying is that real average wages have increased about 20 per cent beyond inflation.

KING:

What about the minimum wage? How much has that gone up under your Government?

TREASURER:

The minimum wage has been adjusted both through national wage cases and it has been adjusted through the institutional arrangements for setting the basic, or minimum wage, and it has also risen through the period of our Government.

KING:

But can you give me a figure? How much has it risen, from what to what?

TREASURER:

I can’t give you the precise amount now, but it has been adjusted by the national wage case right throughout the period of our Government.

KING:

Are you able to get your office to get me those figures?

TREASURER:

Sure, no trouble at all.

KING:

Okay, and look just one last thing. People know you as Treasurer as I said. At this election it is fairly much a joint ticket, it would seem, voting for the Coalition. The Prime Minister is saying he will step aside at some time. What is something about you that we don’t know, that you could tell me this morning?

TREASURER:

That I am a lot of fun.

KING:

I am not sure that always comes across.

TREASURER:

A lot of fun and good company Madonna, and if we have the chance for a cup of tea and piece of cake you would see that.

KING:

I think I am a white wine type of girl really.

TREASURER:

We could easily extend to that.

KING:

All right, look do you promise next time you are in Brisbane you can come in and take some of our listeners’ calls?

TREASURER:

I’d love to and I would have loved to have been there but I had some demands from press media this morning, if you know what I mean.

KING:

We should always come first, all right, Peter Costello, thank you.

TREASURER:

Thanks very much Madonna.