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 23/10/2007

Interview with Alan Jones
2GB

Tuesday, 23 October 2007

7.15 am

 

SUBJECTS: Polls, tax policy, education, childcare, debate, Carers, land audit, State property taxes, Industrial Relations

JONES:

Peter Costello, good morning.

TREASURER:

Good morning Alan.Good to be with you.

JONES:

What do you think, what do you make of all of these figures today, the so-called polls?Do you talk about polls?

TREASURER:

Look Alan, you are going to have a poll a day in this election and if we sit down and we analyse a poll a day then we are not going to be talking about the issues which are of concern to Australians.

JONES:

Well didn’t Kevin Rudd – talk about issues, say – I have to say I have real concerns about all of this and my job I think, as a broadcaster is to ventilate those concerns.Didn’t Kevin Rudd say that 45 per cent of his electorate would be paying under him, whether it is aspirational or not, but aspirational for the benefit of my listeners as much of this stuff is about what we aim to achieve in 2013.But that is not the issue.The issue is, well even if it is 2020, do you get your figures right?He said 45 per cent of the electorate would be paying under him, 15 cents in the dollar.Now, the threshold for 15 cents is $37,000, isn’t it?So does that mean 45 per cent of Australians would be on $35,000 or less?

TREASURER:

Well this is where he made the error.You will recall we put out our tax policy on the first day of the election.Kevin Rudd waited five days and then he copied 91.5 per cent of it.Now, you know, I can’t complain of him copying our policy – because it was a good policy – what I am complaining about is he didn’t copy 100 per cent.He copied 91.5 per cent and then he decided to change 8.5 per cent.And it is the 8½ per cent that he got wrong.The 8½ per cent is where he laid down what he thought the taxation system should be in six years time.He made a fundamental error because he didn’t take into account that you need to raise thresholds over that period and the consequence of that is that 45 per cent of Australian taxpayers would be worse off under Mr Rudd’s proposal.

JONES:

Because (inaudible) go past until $37,000 and the 15 per cent in the dollar goes up.

TREASURER:

That’s right.And these are all of the people…

JONES:

He keeps saying: ‘we will just stick the thresholds where they are.’Doesn’t this man understand the tax system?

TREASURER:

Well he doesn’t understand the tax system you see.Because if you want to keep middle income Australians – those that are earning between $37,000 and $102,000, that is middle income Australians, if you want to keep them in an improved position you have got to move that threshold.

JONES:

Well he says it will be $37,000.

TREASURER:

He says it will be $37,000 because he didn’t understand the tax system.

JONES:

Well okay, let’s take it to the next step.I mean, as aspirational stuff and I am not worried about that.I am worried about whether a person is saying things that he doesn’t understand and expects us to buy.And now, his aim aspirationally is to reduce the $80,000 to $180,000 from 40 cents in the dollar to 30 cents in the dollar.You have said 35 cents.Now this means basically, that whether he knows it or not he is arguing that there be bigger tax cut under him to the $80,000 to $180,000 than there would be under you.But it is a $10 billion shift, isn’t it?

TREASURER:

Look you see, again he doesn’t understand it.What he thought he would do is he thought he would put out something that would sound good and then he would be able to say, well you see, I didn’t copy them in their entirety – he only copied 91.5 per cent – and I changed the remaining 8½per cent.But the 8½ per cent that he has changed will mean that middle income earners are worse off.45 per cent of Australians worse off.He might say…

JONES:

Because once they go past $37,000 they go into a higher tax bracket because…

TREASURER:

That is right.

JONES:

…he is leaving the threshold at 37, yep.

TREASURER:

These are the people that are worse off.Anybody who goes above $37,000 gets worse off because he doesn’t move that threshold.So he leaves middle income earners worse off.Now, when I alerted him to this problem – I put it out on the weekend – he had the opportunity to say: ‘well look, I made a mistake, I will move that threshold, I will make sure that middle income earners aren’t worse off.’He had an opportunity to do that but when the press asked him whether he would move those thresholds he said: ‘no, they stand.’So rather than actually help middle income earners by correcting the mistake, he has now confirmed the mistake and Alan…

JONES:

Do you seriously think he understands this or not?

TREASURER:

Well this is the whole point.He didn’t understand it.And he was okay while he was copying 91.5 per cent of our policy…

JONES:

Is it valid to offer a tax policy which is a replication of someone else’s policy and call it your own?

TREASURER:

Well, you, I can hardly complain if Kevin Rudd wants to adopt our policy.I mean, it is a good policy.But the point…

JONES:

But on Aboriginal care in the Northern Territory adopts that policy, on the Medicare levy, he adopts that policy…

TREASURER:

Yes.

JONES:

…I mean, where is there, this vision for the future which is different from yours?

TREASURER:

Well this is the point I would make.I mean, when he adopts your policy you can hardly complain but the point is he wants to be Prime Minister and if he is Prime Minister we won’t be there writing the policy for him to adopt.He will be on his own.And that is the risk.If he is on his own, whose policy would he actually copy?

JONES:

Well we are told today that the ratings have gone up or the polls have gone up because of the educational revolution which is linked to his tax policy release.Now what is the educational revolution?Is this providing a refund for families who are receiving Family Tax Benefit A if they get themselves a computer or something such?Now, this doesn’t come into being until the second half of 2009…

TREASURER:

Yes.

JONES:

So in other words a family has to fork out the dough first by July 2008 and they won’t get a rebate until way down in 2009.How is that an educational revolution?

TREASURER:

Well there are two things that are wrong with his policy.The first is as you say, you won’t get any money for two years.So you have got to spend money now to get a rebate in two years’ time.That is the first point.The second point of course is this only applies to things like laptops and computer connections and books.Now, it is all very well to say we will have a rebate if you buy your primary school child a laptop.How many primary school kids are going to take laptops to and from school?Certainly not kids in grade one, two or three…

JONES:

But is a laptop dearer, is a laptop cheaper for a primary school child than for a secondary school child?

TREASURER:

Well but, how many laptops does one child get, by the way?Because he says you have got this rebate every year which you can use to buy a laptop.I doubt if you would be buying a laptop for a child every year…

JONES:

But the rebate is for a laptop for educational use.Now is the Tax Office going to knock on every door to determine whether the laptop in that home or the two laptops are used for education or for business?

TREASURER:

Well, a very good question.I doubt that he has thought about this either.Because if a parent buys a laptop they may well be claiming it as a tax deduction.Under his rebate it could well be claimed on behalf of the child as well.

JONES:

Absolutely.

TREASURER:

Now, has he thought about that?Has he thought about the possibility that these laptops could be claimed under different provisions of the Income Tax Act and has he actually given any consideration to the detail?

JONES:

Well there are no details.

TREASURER:

Now these are…

JONES:

Can I ask about childcare?Now he is going to give a childcare rebate of 50 per cent so that the cap will go from your $4,250 to his $7,500 per child.It will be paid every three months.Won’t this just encourage childcare operators to bump up their costs?I mean, childcare costs already are soaring faster than the CPI.I saw some figures where they have increased 65 per cent over the past five years when household income has gone up by 17 per cent.Now, how on earth is this going to do anything other than say to people oh well, if the Government is going to subsidise all of this, we will jack up the cost?

TREASURER:

Again, a very good point and again a point that he hasn’t thought about and a point he hasn’t addressed.If all you do is you increase the rebate, you do run the risk that the value will be captured by the provider.I don’t think he has thought about that.I don’t think he has given any consideration.He wasn’t asked the question.He hasn’t laid down any markers as to how the value would actually be translated out to the parents themselves.It is the same when you get onto the laptop.It is the same when you get onto the tax system. This is someone who hasn’t thought about policy.When he actually writes his own policies – we found with tax he got it wrong, he got it wrong – he was all right while he was actually copying ours but he got it wrong.

JONES:

Okay, well then why shouldn’t the electorate have a debate between you and Wayne Swan?That is what they are asking for – Treasurer versus Treasurer – have you extended that invitation to debate?

TREASURER:

I would like to debate Mr Wayne Swan.I would like to debate him next Tuesday.I have offered him the opportunity for a debate and I think we ought to talk about the economy.I think we ought to talk about the way in which he and Mr Rudd have opposed economic reform.

JONES:

But would you be prepared to debate both of them on the economy?

TREASURER:

…and I think we ought to talk about the influence that…

JONES:

Would you be prepared to debate both of them?

TREASURER:

Well look, I am prepared to debate who ever will debate me…

JONES:

And what is their response?

TREASURER:

I am offering Mr Swan the opportunity to debate me next Tuesday at the Press Club and I hope to see him there.

JONES:

What is the worth of a debate though when the people asking the questions ask nothing about water – about harnessing it, recycling it and transporting it – nothing about carers, nothing about the mentally ill?Is Canberra so out of touch with reality they don’t understand this is what struggle street is talking about?

TREASURER:

Well you know, you have seen the response to the debate, you would have thought there was two worms debating from the coverage after.

JONES:

Let me ask you a question I asked you last week which I must say, listeners here weren’t happy about your responses.I mean, if you wanted a knock-out punch there are 2.6 million people out there doing it tough, they are the carers.Their care is worth $31 billion.170,000 of them are under 18.Two million of them are of workforce age but they can’t work.The Carers Allowance plus the Carers Payment if they got the lot and one of them is means tested would qualify them for only $318 a week, $200 bucks underneath what average weekly earnings might be.Why not double the carers allowance?Why not introduce a superannuation scheme for carers receiving Centrelink support and the Government would contribute to the scheme?Why not extend medical benefit schedules to include annual health check for carers?I mean, there is a golden opportunity waiting for someone.

TREASURER:

Well as I said to you last week, I have enormous respect for the carers in our community.As you know in recent Budgets we have paid a bonus to carers and I have said to you that we are looking at ways that we can increase the facility for carers.We are actively looking at ways that we can (inaudible)…

JONES:

2.6 million of them.

TREASURER:

…and we value them very much in the community.

JONES:

But are you going to be doing something in this election campaign?

TREASURER:

Well as I said to you Alan, I am looking at it very closely and I value the work that they do and I want to help them as we have economic circumstances to do so.

JONES:

Kevin Rudd says he will create affordable housing without depressing the value of neighbouring properties.And my understanding the real problem in Western Sydney is that housing pricing have fallen by 15 per cent over the past two years.I mean, does his audit of Commonwealth land actually include Parliament House?

TREASURER:

Yes, this is a very interesting one.Of course, when I said we ought to look at land, not just Commonwealth land by the way but State land and private land for release for housing.He said that was no good.And then a couple of months later, guess what?He announces he is going to have an audit.So he has an audit.He says: ‘oh well there is $6 billion of Commonwealth land.Oh well, we can sell off all of that land.Well we will make all of the people that are on that land justify their land on a yearly basis and if they can’t justify it, we will sell it off.’Well, what he was talking about there was selling off all of the Air Force bases, all of the Army bases, all of the Navy bases, the High Court and Parliament House.That was all included in the $6 billion.

JONES:

But housing affordability, where do State Governments fit into this?In this State, it is State imposts which are the major constraint on housing affordability in places like Western Sydney, not land availability.

TREASURER:

Exactly right.One of the reasons, well the main reason in Sydney of course why land isn’t being released is by the time you release it the State Government charges are adding something like $160,000 to the block.That is in taxes and charges.Now, you have got to, if you really are serious about getting land released so young people can buy, you wouldn’t be putting taxes and charges of that dimension…

JONES:

Well just a quick one…

TREASURER:

…on those blocks.

JONES:

…just a quick one before you go.I mean, he says he is going to scrap individual employment agreements.I note the west Australian branch of the Australian Nursing Federation says it will accept your system of individual contracts and they are saying it is unrealistic for Labor to oppose the Government’s Australian Workplace Agreements when employees wanted them.

TREASURER:

Well exactly right.And I think you are finding now that many employees who are looking at this very carefully know that under an improved industrial relations system they have a chance for better wages – for better wages.And I think you are seeing that in Western Australia with the nurses.And I would say to nurses: think about this very carefully.I know that some of the nursing unions are taking an active role in this campaign but look at what is happening in Western Australia and think about it carefully.There is an opportunity to actually do very, very good agreements that will help nurses – people who we value very much in our community.

JONES:

Okay, you have got to go.I have got to go.Thank you for your time.

TREASURER:

Thank you very much Alan.