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 19/10/2007

Interview with Jon Faine

774 ABC, Melbourne

Friday, 19 October 2007

8.35 am

 

SUBJECTS: Labor's 70 per cent union-dominated frontbench, Gavan O'Connor, tax cuts, cost of living, pensions

FAINE:

Peter Costello welcome back to 774 ABC Melbourne.

TREASURER:

Thanks very much Jon, good to be with you.

FAINE:

You have been leading the charge and demonising ALP potential future frontbenchers as being unionists.What is wrong with being a unionist?

TREASURER:

There is nothing wrong with being a unionist if you freely choose to be a unionist.I don’t think people should be forced into unions.But the point we would make is I think about 15 per cent of private sector employees are now members of unions and 70 per cent of the Labor Party frontbench are ex-trade union officials.

FAINE:

Sorry?

TREASURER:

That is completely disproportionate.

FAINE:

And most of them, a lot of those figures, the officials line, a lot of those people you say were officials, actually are just former members of unions.

TREASURER:

Well no, officials.Union officials and union bosses.

FAINE:

It is hardly surprising anyway, the Labor Party is a trade union party.

TREASURER:

Well as long as people know that the trade unions run the Labor Party and if you elect a Rudd Government 70 per cent of the federal ministry would be former trade union officials, as long as people know that.This would be completely disproportionate to the membership of unions in our community where they only have 15 per cent.

FAINE:

So Brendan Nelson, the Defence Minister used to be not only a union official with the AMA but he was also a member of the Labor Party, is that something that we need to highlight as well? I mean what is the relevance of all of this?

TREASURER:

Well, if the Liberal Party had one Minister who was an ex-union official, what would that put us, about 3 or 4 per cent.This is 70 per cent.And the ACTU has put together $20 million to get Mr Rudd elected and what would happen in a Rudd Government, with 70 per cent of his Ministers ex-union officials, is that the unions…

FAINE:

Some of these are members, that 70 per cent is simply not right…

TREASURER:

No, that is right, that is right and the unions would be running policies.So the teacher unions would be running education policy, the health unions would be running health policy…

FAINE:

And the nurses union in Victoria, does that run the nurses policy in hospitals?

TREASURER:

Well, come back…

FAINE:

We are seeing that the State Government here is in fact in a huge stoush with the nurses, so where’s your argument?

TREASURER:

Well, here is my argument.Have a look at what is happening here in Victoria under a Labor Government with the unions starting to flex their muscle: beds closing in hospitals.

FAINE:

Because the nurses are on strike against a Labor Government.

TREASURER:

Exactly right, exactly right.Now, under the Federal Coalition Government, Jon do you know we have the lowest number of days lost due to industrial stoppages ever, ever in Australian history.Since 1913.

FAINE:

Yep, and a booming economy.

TREASURER:

We’ve got the lowest unemployment in 30 years and the lowest level of industrial stoppages since 1913, now…

FAINE:

But the nurses’ strike, let’s stick to that (inaudible).

TREASURER:

Lets come back to that, no lets come back to the nurses’ strike.You have a State Labor Government, you have the nurses union in dispute with the State Labor Government. The consequences of that are you have got industrial stoppages and beds closing in our hospitals as we speak here in Victoria.Now, my point is this: if you have a Federal Labor Government and you have strong union power you will see industrial stoppages go up as you have in the past.

FAINE:

No, a minute ago you were arguing that if you got too many trade unionist in the Labor Party you will have the unions running the Government, now you are saying you will have more strikes because they won’t be able to get on with each other, which way is it?

TREASURER:

It’s always been the way in Australia…

FAINE:

But you can’t have it both ways…

TREASURER:

Unions, unions are at their most militant under the Labor Party and I will tell you why.

FAINE:

How can you have it both ways?

TREASURER:

I will explain to you why, just let me get it out Jon.An ALP Government can never actually ensure the framework which is required to keep stoppages down, let me give you an example.

FAINE:

What like Bob Hawke and the Accord?

TREASURER:

The Australian Building – well Bob Hawke and the Accord had far more days lost in industrial stoppages than John Howard and Peter Costello.

FAINE:

Have a look at Malcolm Fraser and John Howard as Treasurer and have a look at what their record was then.

TREASURER:

Let me give you an example.One of the things that has improved Australia’s building industry is the Australian Building Construction Commission.We now have a commission which can investigate intimidation and threats on building sites.Of course it is Labor policy to abolish it.I know they say they would leave it for a few years and then abolish it but it is Labor policy to abolish it.Let me tell you what will happen on Australia’s building sites if you abolish the Australian Building Construction Commission.

FAINE:

I don’t think, I think they are reviewing it, but either way.

TREASURER:

No, no, no they are going to abolish it.They are just going to allow it to continue for a few years before they abolish it.You will have all of the militants back on building sites, Joe Reynolds and all of the ‘bruvvas’ that are running the building sites going out at the drop of a hat, driving up building costs, having industrial disputation.You won’t have the kind of prosperity that you see now and the productivity that you are getting on building sites, Jon.This is a real risk to the Australian economy.

FAINE:

How can the Liberal Party on the one hand argue that dominance of the Labor Party is dangerous for the nation and then Joe Hockey yesterday says unions are irrelevant, which one is it?

TREASURER:

I come back to where I started.If someone wants to join a union freely they should be entitled to do so, there is no doubt about that.As long as they are not coerced into it they shouldn’t be forced to do it.But you would have the most unrepresentative federal government in Australian history comprised by 70 per cent ex-union officials.Now, don’t think that Kevin Rudd would be telling these people what to do, these people would be telling Kevin Rudd what to do.Now, you had Gavan O’Connor, very interesting, you would have heard it on AM

FAINE:

The Member for Geelong who has lost his pre-selection.

TREASURER:

Gavan O’Connor was rolled out of Labor Party pre-selection by an ACTU official.

FAINE:

Yes, Richard Marles.A bitter pre-selection which we covered extensively at the time.

TREASURER:

And Gavan is now running as an Independent.And when he was getting rolled by Richard Marles, the ACTU Assistant Secretary, Gavan O’Connor went to Kevin Rudd and asked for help, and you heard on AM Gavan O’Connor said this, ‘he said to me, Gavan, I am not strong enough to stop this happening and stop them mounting a challenge to you,’ and that was from within Rudd’s own faction.So Rudd couldn’t stand up to Marles and the ACTU in Corio.Marles and ACTU got rid of Gavan O’Connor, and what was Rudd saying, ‘I am not strong enough to stop this happening?’

FAINE:

In 1979 or 1980 you nearly joined Young Labor.

TREASURER:

Jon, let me say that the point that I made in relation to Gavan O’Connor…

FAINE:

You are not answering the question?

TREASURER:

No, I am very happy to answer all your questions.

FAINE:

Well go right ahead.

TREASURER:

Well in 1979 I was the, as you know, I was the Chairman of the Monash Association of Students.

FAINE:

You were being courted by and flirting with joining Young Labor…

TREASURER:

No, no, no.Let me tell you, I was being courted by everybody which I take as a…

FAINE:

Well not entirely everybody, but go on.

TREASURER:

…flattery.What?Not you?Jon, and as you know, I was the Leader of the Student Movement that got rid of the extreme left leadership of the Australian Union of Students, as you know.

FAINE:

You were flirting with (inaudible)…

TREASURER:

No, no, no, and let me tell you.Those people that opposed the extreme left of the AUS, and I was one, I am not sure that you were, Jon.

FAINE:

I was never happy with them but go on.

TREASURER:

Well, we can all go back to where we were in 1979.

FAINE:

And Julia Gillard has been demonised for exactly the same thing.

TREASURER:

Well I will come to her in a moment.I think it was very successful and there were some good Liberal students that were part of that.Some good Labor students who were anti-communist…

FAINE:

Michael Danby wanted to sign you up to the Labor Party, it is true, isn’t it?

TREASURER:

…and there were some good Jewish students.No, that is not true.But let me say, and I will say it again, I was very opposed to the communist leadership of the AUS, and you know had a very successful operation to get rid of it.

FAINE:

Yes, well there were people running around with sticks and things and that was a prospect that a lot of people weren’t happy with at the time.But student politics was student politics.Why is it relevant to drag up Julia Gillard’s activities as a student political hack and everybody else’s shouldn’t be?

TREASURER:

Oh well I don’t think anybody drags up Julia Gillard as a student political hack.

FAINE:

Well your colleagues are.

TREASURER:

She was a member of the Socialist Forum, that is a matter that she doesn’t deny.

FAINE:

It has been used to try and demonise her.It is ‘reds under the beds.’

TREASURER:

Well she doesn’t deny she was a member of the Socialist Forum.

FAINE:

No, there is nothing wrong with being a member of the Socialist Forum…

TREASURER:

Well…

FAINE:

…(inaudible) apparently it is not illegal now.

TREASURER:

Well people will make their own views as to the Socialist Forum.It may be your view that there is nothing wrong with being a member of the Socialist Forum but…

FAINE:

It is a democracy.In Pakistan they are letting off bombs, we talk about things instead.

TREASURER:

Sure, we do.But people make their own judgements.She doesn’t deny she was a member of the Socialist Forum – no, not a member, an organiser.

FAINE:

She was, okay, let’s move on because it is not the only issue around.Budget tax cuts in May are being blamed for the current pressure on interest rates by one of the nation’s leading merchant banks and you are talking about more tax cuts and more inflationary pressure presumably will then follow.Why are you so wedded to tax cuts to the point where it is the ink announcement so far in this election campaign?

TREASURER:

Because I think if you want to build a strong Australian economy you need a tax plan, which will make our economy competitive, which will encourage more people into work, which will allow people who up their skills to get higher take-home pay without having a large portion of it taken out in tax and that this will build our economy.So over five years…

FAINE:

JP Morgan, Macquarie Bank, Goldman Sachs JB Were, Merryl Lynch are all issuing warnings to their private investors saying that the prospect of an interest rate hike the day after Cup Day has gone up because of your tax cuts announced at the start of this election campaign.

TREASURER:

Well I will come that in a moment.Just let me tell you what the plan is.The goal is to cut, is to lift the tax free thresholds so that low income earners won’t pay tax until they go above $20,000; to have part-time workers who will be on a tax rate no higher than 15 cents in the dollar…

FAINE:

We know about the tax cuts…

TREASURER:

To have…

FAINE:

…we know the policy…

TREASURER:

…most Australians – let me just finish, it will take me two minutes – most Australians pay no higher than 30 cents in the dollar and a top tax rate of 40 cents in the dollar, right.

FAINE:

Yeah, yeah but it is inflationary is the argument.It will put pressure on interest rates and pressure on inflation and it is a bad thing.

TREASURER:

Well Jon, it is not inflationary and it is not a bad thing.It is a good thing to build a competitive tax system.This will start from 1 July next year over a five year period.Now, people who take positions on what is happening in November of 2007 – which is now – are taking positions on November of 2007, not a tax plan which is being implemented from July 2008 through to July 2010.

FAINE:

So you are not concerned if it is inflationary or you just…

TREASURER:

Jon, Jon, I wouldn’t have done it if it wasn’t consistent with our overall economic goals which are low inflation and continuing growth.I wouldn’t have done it.This is a tax plan for Australia’s future.It is the most ambitious tax plan we have seen in the last decade.It will take us out over the next five years and it will build capacity in the Australian economy.

FAINE:

Economists, opinion polls, vox pops in the streets and now also your great friend from the Liberal Party in Victoria, Jeff Kennett, all coming out and saying that money would have been better spent on infrastructure projects and things like hospitals and schools rather than on fairly small tax cuts, which are in effect anyway, negating bracket creep.

TREASURER:

Jon, first point.These are not negating bracket creep.If you took our tax scales and you indexed to inflation, you would be paying a lot more tax today because these are tax cuts far and in excess of bracket creep.Let me make that point.Secondly, by building a stronger economy which this tax plan is all about, it will give us the revenues to invest in infrastructure.We now have a situation where we have more Australians in work than ever before and the lowest unemployment in 30 years.We can build this economy stronger.We can go for growth.And if we go for growth and build our economy stronger, then we can actually invest more in health, in education and in infrastructure.

FAINE:

Can we take some calls?You have got time for some calls, pop the headphones on.Soaring food prices, oil at nearly $90 a barrel and some predicting it could go as far as $100 and mortgage stress – more than 30 per cent of income for first home buyers going on paying for mortgages.That is going to be hitting people much harder than anything you are giving back through these modest tax cuts.

TREASURER:

But see, this is the point Jon, isn’t it?Oil prices are rising, not because of anything that Australia has done – this is a world-wide event – most recently kicked off by developments in Turkey.Now, oil prices are rising, that will increase petrol prices.What are you going to do about that?Well you could do nothing or you could as we believe, cut taxes, put more money back in people’s pockets, give them more money so that they can deal with cost of living pressures, so that they can actually adjust as a consequence.You are right in relation to food prices, food prices will go up.I acknowledge that, that is a consequence of the drought.Because production is going down, food prices will go up.What are you going to do about that?Are you going to pass a law controlling food prices?Nobody is going to do that in Australia.So the best thing to do is to put money back in people’s pockets so that they have the capacity to adjust to that.

FAINE:

Michael in Burwood.Good morning Michael, you are through to Peter Costello.

CALLER:

Yes, good morning Jon.Good morning Peter.

TREASURER:

Michael.

CALLER:

Look my question is regarding that $34 billion tax cut.I am a pensioner, now pensions are fixed at say 25 per cent of the male wage, when you give those people tax cuts there is nothing in that for pensioners because the pension is still fixed at the 25 per cent of the male wage which doesn’t change.Only the tax, the tax cuts come through for these people so pensioners are actually worse off because they have still got all of these pressures but they are not getting any extra money.And I mean, a $500 bonus is useless because you spend it, you get it today, you spend it today.You need something on a regular basis to keep people going and I feel that (inaudible) unless you have got coming out of for pensioners, pensioners are left out of this.

FAINE:

Peter Costello.

TREASURER:

Well, it is fair points that Michael has made and I make two points in response.He is completely right, the pension is indexed to wages now and because under our Government, wages have been rising faster than prices, that has meant that the pension has risen faster than prices, faster than the Consumer Price Index.It wasn’t always that way and that has been a good reform of this government.The second point is as he mentioned, the Government paid a bonus to all pensioners of $500 after the last Budget and that was of assistance.Now, I would say to Michael, nobody has ever paid a bonus to pensioners before I became Treasurer – that had never happened before – and we have now had a couple of these bonuses and my view is if we can keep the Australian economy growing strongly I would like to see what we can do in the future.

FAINE:

Are you going to be announcing another one in this campaign?

TREASURER:

Well we have just paid one before the 30th of June…

FAINE:

Yeah, yeah, a part of your Budget announcements.

TREASURER:

Part of my Budget announcements, but…

FAINE:

Yeah, yeah.You have got this massive surplus that’s been revealed since.

TREASURER:

Well you heard what I said.I am the first Treasurer in Australian history that has ever paid a bonus…

FAINE:

You are foreshadowing another announcement for pensioners?

TREASURER:

And I am saying, in the future if the Australian economy is strong, I would like to do that again.

FAINE:

Anne in Box Hill.Morning Anne.

CALLER:

Morning everybody.Yes, I was just wondering if there could possibly be a change of attitude in this new Millennium – the Millennium of 2007 we are at – to unions.All right, I don’t like the bullying part.I think Mr Costello and managers of hospitals etcetera, need to remember that they do not need a union.Your wages, salaries, allowances and whatever else are given to you, no begging bowl, it is just given.

FAINE:

Have you got a question for the Treasurer, Anne?

CALLER:

No, I just want to make that point.

FAINE:

Okay, thank you.Rob in Sale, good morning to you.

CALLER:

Well hi.All I want to say straight up, is I think our democracy is under threat especially within that studio considering that 100 per cent of the people within it on the two microphones are ex-lawyers.

FAINE:

Thank you Rob.That is very kind of you.Brian in Belmont, good morning to you, Brian.

CALLER:

Yes, Jon, Peter.

TREASURER:

That was a pretty good point there, that Rob made, I thought Jon.

CALLER:

Hello.

FAINE:

Guilty as charged.You are on air Brian.

CALLER:

Yes, Peter, your latest ad about the Labor Party stacking the Party with union members, that is nothing new, that has been going on ever since I was a child.But what does concern me, I did a bit of a search through the Parliamentary records and found that 50 per cent of your Cabinet are lawyers.Can you explain that because that does concern me?

TREASURER:

Oh well, you will be very concerned about Jon’s background as the commentator here on the ABC.

FAINE:

A lot of people are.The point is, the point you are making Brian, is that demonising politicians because of their previous occupation, are you saying that is meaningless or irrelevant or what?

CALLER:

Well if, well yes, it is meaningless and irrelevant because they are doing it just as much as what the Labor Party is only they are doing it covertly because…

FAINE:

Okay, so the Liberal Party is the representative Party for business in the way they…

TREASURER:

Well look, look, it is true that there will be more people in the Liberal Party who have business backgrounds than in the Labor Party.But I would argue that is a good thing, because if you are looking at an economy which needs to grow and you are looking at getting people into work you have got to understand business.Because it is business that creates the jobs, Jon.And if you have an alternative government like the Rudd Union Government which…

FAINE:

A what?A Rudd Union Government it is now?

TREASURER:

Well it would be 70 per cent of his ministry…

FAINE:

He doesn’t say himself and says who his Ministry will be.How do you know?

TREASURER:

Well we know he has got a frontbench (inaudible)…

FAINE:

It is his Shadow Ministry and he said none of them are guaranteed jobs except, I think he named Wayne Swan and Lindsay Tanner.

TREASURER:

You know what would happen…

FAINE:

And Julia Gillard.

TREASURER:

…if he didn’t appoint the people who were on his frontbench as his Ministry and he went to his backbench, the proportion of ex-union officials is higher.

FAINE:

Who is going to be your Treasurer if you are Prime Minister?

TREASURER:

Now, let me finish this point.It is not…

FAINE:

Well no, this is just as relevant, if not more so.

TREASURER:

You asked me this question…

FAINE:

Yourefuse to name who your Treasurer would be.

TREASURER:

Jon, you said to me, ‘you can’t say that 70 per cent of his Ministers will be ex-union officials because that is just the composition of his frontbench and he mightn’t appoint his frontbench.’

FAINE:

Well he hasn’t…

TREASURER:

And I said to you, okay, let’s suppose he doesn’t appoint his frontbench.Let’s suppose he appoints his backbench as his Ministry.The point is, if he appointed his backbench as his Ministry, the proportion of union officials would be higher…

FAINE:

It might not be.

TREASURER:

…not lower.

FAINE:

He might bend over backwards to find people in the Labor Party who haven’t been in trade unions.

TREASURER:

No, they have got to be in the Parliament, Jon.And we have gone through and we have done an analysis.Do you know in the Senate, the Labor Party candidates in the Senate who have a union official or have been staffers to the union, to the Labor Party, is 95 per cent.So once you go outside the frontbench the union influence, Jon, doesn’t decline.It gets worse.

FAINE:

Peter Costello, I have got a senior police officer waiting to tell us about violent assaults in the streets of Melbourne.I have to get to him before the news at 9 o’clock.It has been a lively discussion and I thank you for your time this morning and I look forward to seeing you again between now and November the 24th and maybe even after that.

TREASURER:

Thanks very much Jon.