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 12/11/2007

Interview with Chris Uhlmann
ABC AM Programme

Monday, 12 November 2007

8.10 am

SUBJECTS: Election, interest rates, housing affordability, education

UHLMANN:

Peter Costello good morning.

TREASURER:

Good morning Chris.

UHLMANN:

Peter Costello, you are going backwards in the polls.Are you losing this election?

TREASURER:

As I move around the key battleground seats, it is clear to me that this is a very tight contest and I think the choice is becoming clearer.The choice is now crystallising between those people who have the experience and policy to manage the economy and Mr Rudd and his team who have yet to really announce any substantive policy that hasn’t been copied from the Coalition. And I think people will be asking themselves, after four weeks, Mr Rudd has been saying that he had ‘new leadership’, but we find out his policies are all Coalition policies and he has offered nothing new in this campaign.So I actually think in key battleground seats as the choice becomes clearer, it is becoming a tighter race.

UHLMANN:

You and the Prime Minister keep making this argument that this recourse to experience but of course, that experience didn’t stop interest rates from going up last week, did it?

TREASURER:

Well let me say Chris, with an interest rate of 8½ per cent, we have got lower interest rates than at any time during the previous Labor Government, including in the depths of a 60 year recession.Now you have always got to judge the interest rate at any particular time on the unemployment rate.The fact that unemployment is as low as 4 per cent or a little above and where interest rates are at 8½ per cent is miles away from the last time when Labor had its unemployment low at around 6 and interest rates at 17 per cent.

UHLMANN:

In fact you cast all the way back to the Whitlam Government in your ads, why do you leave out the Fraser Government’s record on interest rates?

TREASURER:

Well we would like people to know that this has been a recurring theme of Labor Governments over the last 30 years, and the important thing to go back to the Whitlam Government is it was under the Whitlam Government that unemployment was last this low.Before Whitlam got to the economy, you will recall unemployment had been about 2 or 3 per cent during the period of the late ‘60s and early ‘70s.Whitlam got to the economy, he drove it up to 4, interest rates were about 10½ at that point.That is the last comparable period of 4 per cent unemployment. We like to compare where interest rates were the last time we were on 4 per cent unemployment.

UHLMANN:

But if we are to have history lessons, why not look at John Howard as Treasurer.The market cash rate went to 22 per cent.And the only thing that stopped housing home loan rates from following them was that they were capped, they were regulated at 13.5 per cent.

TREASURER:

This is an important point because Kevin Rudd falsely and repeatedly claims that interest rates were higher under John Howard.They were not.

UHLMANN:

He stopped them from going up.He regulated them.That would work for anyone, wouldn’t it?

TREASURER:

Well it wasn’t just him.

UHLMANN:

But it was the Fraser Government.

TREASURER:

No, all governments prior to the 1980s did that.

UHLMANN:

So you are not comparing apples with apples then?

TREASURER:

No we are not comparing apples with apples…

UHLMANN:

No, you are not comparing apples with apples.

TREASURER:

No, you are not comparing apples with apples.If you want to compare business interest rates, compare business interest rates and I will do that with you.But if you want to compare home mortgage interest rates the all-time world record holder of the highest home mortgage interest rates in Australia is the Labor Party at 17 per cent.

UHLMANN:

Treasurer, do you think that there is a housing affordability crisis and will the Prime Minister be saying something about that today?

TREASURER:

Well I think because the price of homes has gone up it is making it much harder for young buyers to get into the market.Yes I do.And that is because the value of homes has gone up and people are borrowing more to buy them.But we will be making some measures which will assist young people with getting into the market.Don’t forget we were the Government that introduced the First Home Owners Grant of $7,000 which has now gone to a million young home buyers.We know that it is important that supply be increased because if you want to have more homes available for young people you have got to have more homes built, and we think buying a home is a very important thing for young people and Australians generally.In fact, Australia still has one of the highest home ownership rates in the world.

UHLMANN:

Will you be doing something on education, particular tertiary education?It has been a key point of attack from the Labor Party against you all year.

TREASURER:

Well our Government values education and our Government has actually been very, very keen on lifting standards…

UHLMANN:

And we have seen the money spent on tertiary education going backwards.

TREASURER:

Well no, you haven’t.Again, this is not true.The money has been rising, there are…

UHLMANN:

The money has been rising but a proportion that you are spending of public money is going down.

TREASURER:

Well you have got to be very careful when you see the old slippery Mr Swan and the even slipperier Mr Rudd.So education spending is…

UHLMANN:

Are you (inaudible) yourself with figures sometimes, Treasurer?

TREASURER:

Hang on Chris, that is not true and you have corrected yourself, quite rightly corrected yourself if I may say so.But let me say, it is very important that we invest in education.We have been lifting standards in schools.We want to have literacy and numeracy improved, we want to have national testing, we want to have grants to improve the training of teachers.We want to have teachers who get more time in practical experience before they become teachers.And we want to make sure that our educational institutions are not run for the providers, you know, the teachers, they are run for the benefit of the parents and the students.The teachers are going to be a very big part of that and we need good teachers to be a part of that but we need to make sure that the educational systems are run for the benefit of the students and the parents to get the best education that we can possibly give them.

UHLMANN:

Finally, briefly Treasurer, can you win this election?

TREASURER:

I think that in key battleground seats as the choice becomes clearer, the margins are narrowing.And I think that as the debate goes on over the next two weeks people are going to say - well here is a Government which has a fine track record but more importantly, strong plans for the future and policies.And against that is an opposition that has no experience, but worse than that, no real policies.If we hadn’t have been writing the policies in this election campaign, Rudd would have had nothing to copy and that is a problem for him.

UHLMANN:

Peter Costello, thank you.

TREASURER:

Thank you.