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 15/10/2007

Interview
with
John Miller & Rod Tiley
4BC

Monday, 15 October 2007
4.07 pm

SUBJECTS: Tax cuts, petrol prices, food prices

JOURNALIST:

Mr Costello, good afternoon.

TREASURER:

Good afternoon John. 

JOURNALIST:

Peter, you have hit the ground running. 

TREASURER:

Well we think it is important to keep tax as low as we can, consistent with of course, running good services.  And we have announced this afternoon a tax plan which will recast Australia’s income tax system over the next five years and it will do that by helping low income earners.  Our goal is to make sure you won’t pay any tax until you earn more than $20,000 and to bring the top rate of tax down – it is currently 45 – and our goal is to get it down to 40 cents. 

JOURNALIST:

A lot of people will like that, Treasurer.  But the timing of the announcement is surprising.  Why so early in the campaign?

TREASURER:

Well I think it is important that this is such a big, bold plan, this is a plan really which will govern the competitiveness of the Australian economy over the next five years.  The important thing is to get it out there so people can assess it and we can talk about it and explain it during the course of this campaign.  It gives people an opportunity to see what we are about – which is making this country more competitive and getting more jobs – and that is why we want to get it out right at the beginning of the campaign. 

JOURNALIST:

Well the, the way of life nowadays seems to be for most people that you will have a main breadwinner in a family and then you will have someone working perhaps part-time to supplement that income.  What advantages are there in this for people like that?

TREASURER:

Well for a family where the main breadwinner is on average weekly earnings and the other partner is working part-time, this is an income tax cut of around $30 a week starting on 1 July next year and rising to $50 a week.  So they are your typical, you know, Dad is in the workforce, Mum is doing a couple of days now that the kids are growing up a bit, and it is a tax cut between $30 and $50 a week over the next years. 

JOURNALIST:

Saul Eslake in our news just gone was quoted as saying that he fears that this is going to put pretty substantial upward pressure on inflation and therefore interest rates. 

TREASURER:

Well it won’t and I don’t think you could say that because first of all, these are staggered.  These are tax cuts that grow over the next two or three years.  And the other point of course, this will get more people into the workforce and getting more people into the workforce and building the capacity of the workforce will actually take pressure off prices. 

JOURNALIST:

Treasurer, did you have this tax plan down on paper when you presented the last Budget?

TREASURER:

It has been something that we have been working on over recent months.  It is something I have always wanted to do, to aim at getting those top tax rates down and getting low income earners out of the tax system.  And it is something that we have been building towards.  The Budget was a step towards it and now I feel that we can show people where our goal is and how we are going to get there over the next five years.  We couldn’t have done this a year or two ago because there just wasn’t the money to do it, but we have revised up the number of people in work, we are expecting 100,000 more Australians in work this year than we were last year and when you get more Australians in work and they are paying tax rather than taking unemployment benefits, it saves you on payments, it raises revenue, it gives you the ability to distribute tax cuts widely in the community. 

JOURNALIST:

All right, well look, let’s just run through the details yet again.  You were saying that this is going to mean that we will have a tax free threshold of $20,000?

TREASURER:

Eventually, yes, that is what we are moving towards for low income earners, that is the goal in five years’ time, no tax until you go over $20,000.  We are doing it in stages, currently no tax until you go over $11,000; next year no tax until you go over $14,000; the year after no tax until you go over $15,000; the year after no tax until you go over $16,000 as a low income earner. 

JOURNALIST:

It is going to cost $34 billion.  Are you confident we can stay in the black with that?

TREASURER:

We can stay in the black as long as good economic management continues in the country.  If the economic management of the country changes of course you can’t guarantee anything.  But if we can keep this economy strong and keep people in work this can be delivered. 

JOURNALIST:

Okay, so as Rod pointed out earlier on, it is very unusual for a major policy like this to be launched on what is essentially the first day of the campaign.

TREASURER:

It is a pretty important policy.  I think it is one of the biggest policies that Australia has seen in a decade or more and that is why we want to get it out there.  We want to talk to people about it.  It will help them with their cost of living.  I know there are price pressures building up on people so let’s put more money back into their pockets and let’s also build the capacity of the tax system so that we have a competitive economy, we get a good competitive tax system, our economy grows, we get more people in work, we get more revenue, we can get an even better tax system.  This is the benefit that you see from economic growth and strong economic management. 

JOURNALIST:

Can I just take you to the debate for a moment, Mr Costello.  We had a suggestion today and we thought it was a pretty good one, that rather than just have the Prime Minister and the Opposition Leader have one debate, what about you have a second debate with say, Wayne Swan and then  maybe a third debate with perhaps you know, Julia Gillard and Joe Hockey.  Would you buy into that if there were three and you and Wayne Swan would do one of them?

TREASURER:

Yes, I am certainly very happy to debate Wayne Swan, very happy indeed and I look forward to it and I would be happy to debate Julia Gillard too and I would look forward to that. 

JOURNALIST:

Fair enough.  I am not so sure that Wayne wants to debate you. 

TREASURER:

Well look, I think it would be a good debate and well worth having. 

JOURNALIST:

Listen, has John Howard told you yet when you can become the Prime Minister if the Coalition wins on the 24th of November?

TREASURER:

No, we are running as a team as we have been for recent years – in fact all of the time in government – and I am looking forward to implementing my tax plan as the continuing Treasurer of the country. 

JOURNALIST:

Peter, the tax cuts well and good, but you are no doubt aware that people are finding that cost of things just keep going up and up, not the least of which is fuel prices.  I mean, are we really not just marking time with these tax cuts in a sense?

TREASURER:

Well fuel prices have gone up, I am conscious of that.  The world oil price has gone up and Australians feel that at the bowser.  Now what can you do about rising world oil prices?  Not much. 

JOURNALIST:

It is other consumables as well.  I mean, every time you walk into a supermarket things seem to get more expensive. 

TREASURER:

Sure, and then one of the reasons why food has increased in price is the drought as you know has cut rural production.  So there are price rises going on.  There is not much you can do about them.  But by cutting tax you are giving people more money, more take-home money and that would help them deal with the rising prices.  This is what cutting tax is all about, to put more money back in people’s pockets so they have the capacity to deal with the cost of living pressures. 

JOURNALIST:

Mr Costello, the Opposition Leader says that his tax policy will be unveiled in the coming weeks.  Do you think your announcement today is going to make him rush into that?

TREASURER:

Well I would be very interested to see what he has got to say because you will recall he was asked what the tax rates were two weeks ago and he didn’t even know what they were.  So I would be very interested to see what he is proposing. 

JOURNALIST:

Fair enough.  Thank you Mr Costello.

TREASURER:

Great to be with you.  Thanks John.  Thanks Rod.