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 19/11/2007

Interview with Mel and Kochie
Sunrise Programme
Channel Seven

Debate with Wayne Swan

Monday, 19 November 2007
7.05 am

SUBJECTS: Election, spending, tax cuts, GST, superannuation

MEL:

Good morning to both of you. Thanks for your time.

SWAN:

Good morning.

TREASURER:

Good to be with you.

MEL:

Peter, if we can start with you. Just how much money has the Coalition spent this election campaign?

TREASURER:

The promises that we have made after the Pre-Election Fiscal Outlook are around $12 billion and we will ensure that the Budget remains in surplus, our target is 1 per cent of GDP. I have been Treasurer now since 1996, I have introduced ten surplus Budgets, we have repaid Labor’s $96 billion of debt – we are now saving $9 billion a year in interest bills on Labor’s debt – and that has put Australia in a much stronger position and it has allowed us to cut tax, which we have cut now five years in a row. We have a competitive tax programme to continue to cut tax and get more people into the workforce, which Labor has copied, and at the end of the day we will have our Budget in surplus.

KOCH:

Okay, $12 billion doesn’t count the tax cuts, does it?

TREASURER:

No, the tax cuts are $34 billion over the period to 2010-11. That is the tax policy which Labor copied during the campaign.

KOCH:

Okay, Wayne Swan?

SWAN:

Well we have spent $6 to $7 billion, we haven’t spent $12 billion, we take a healthy surplus really seriously and we said we wouldn’t match the Government in their spending spree in this campaign and we have no intention of doing so. But I think also as importantly we have directed our spending towards the productive side of the economy, I mean we do take the warnings from the Reserve Bank very seriously…

KOCH:

And you matched the tax cuts?

SWAN:

Yes we did.

KOCH:

So that is not the productive side of the economy, is it?

SWAN:

It most certainly is. The tax cut is particularly for…

TREASURER:

You copied the tax cuts.

SWAN:

We didn’t (inaudible).

TREASURER:

And well done, it was a good policy and it was worth copying, so well done.

SWAN:

Well can I just make the point that we suggested these changes back in 2005, we argued very strongly for them, but I think I have spoken to you on this programme about that because they go towards enhancing workplace participation, that is terribly important in an environment of skills shortages and the ageing of the population.

MEL:

Can I ask then, Peter to you, the tax cuts. Look we are all happy to have money thrown at us – don’t get any of us wrong by that – but one of the things that has been talked about throughout this whole campaign is economic responsibility. Is it economically responsible to be spending all of this money when we are being warned that more interest rate rises are on the way?The Reserve Bank is trying to rein it all in and you’re sort of throwing cash at us.

TREASURER:

Well we reformed the tax system you will recall in 2000, without any help from Labor. And we have cut company tax, capital gains tax, we got rid of indirect taxes, brought in the GST. Now the important thing is to have competitive income tax system and you know, if I may say so, on the Monday, the first day of the campaign I announced that tax plan. On the Friday, Wayne copied it.

MEL:

Can I, sorry, can I just jump in. We don’t want to cover ground again, obviously we are short on time. My question to you was, you are throwing a lot of cash at us, the Reserve Bank is trying to reign in things (inaudible) interest rates. Is it sort of one hand taking, one hand giving?

TREASURER:

No, I think the fact that Labor copied the tax cut indicated that they recognise…

KOCH:

No, it is not the copy that, it is the Reserve Bank quarterly monetary policy saying, we can’t stimulate the economy anymore, we are overstretched, if we stimulate it anymore inflation will go up, we will need to put up interest rates. Both you blokes are going to stimulate it more through tax cuts.

TREASURER:

Well that is the reason why the tax plan that I have announced which has been endorsed by Labor will get more people into the workforce. That is why we did it. Our modelling showed 65,000 new people would come into the workforce and build the capacity of the Australian economy. That is why we announced it, because it will get more people…

KOCH:

Okay, so you are saying it won’t put pressure on interest rate despite the Reserve Bank saying it will?

TREASURER:

Kochie, with unemployment now heading down to 4 per cent, what we actually need in Australia is we need more people in the workforce and having a competitive tax system is a good way of getting more people into the workforce.

KOCH:

Okay, well Wayne, you are spending just as much.

SWAN:

The Coalition’s spending over and above the tax cuts is irresponsible. Peter Costello…

KOCH:

A couple of bill, in the overall scheme of things it is not.

SWAN:

No, it is. It is $6 billion more. And the…

KOCH:

That is not a lot in the, it sounds a big number, but it is not…

SWAN:

It is a lot.

KOCH:

…in the economy.

SWAN:

The Reserve Bank warning came just one hour before Mr Costello went on his spending spree. We spent one-quarter in our policy launch than the Coalition spent. The Reserve Bank was warning…

KOCH:

(inaudible).

SWAN:

The Reserve Bank is warning that the spending spree over and above the tax cuts is the problem.

TREASURER:

Oh right, Wayne, don’t make it up. And where does the Reserve Bank say that?You pull it out.

SWAN:

It says it in the quarterly statement on monetary policy.

TREASURER:

No hang on, hang on. Let me stop you there. You said the Reserve Bank said…

SWAN:

Very clearly.

TREASURER:

You said the Reserve Bank said that spending over and above the tax cuts would be inflationary. Okay Wayne, pull it out…

SWAN:

(inaudible).

TREASURER:

…show me, show me. Come on, you said that now, say it. You made it up Wayne, didn’t you?

SWAN:

I know you are very sensitive about breaching your 1 per cent of GDP, Peter…

TREASURER:

No, no, no.

SWAN:

I know you are very sensitive about that and so you should be. Because the Prime Minister admitted it.

KOCH:

Answer the question, answer the question.

TREASURER:

The (inaudible) show…

KOCH:

(inaudible) the Reserve Bank.

TREASURER:

…that that is what you said. Where does it say…?

SWAN:

In both MYEFO and PEFO the tax cuts…

KOCH:

What? MYEFO and PEFO?

MEL:

What does that mean?

SWAN:

The Mid-Year Economic Review and the Pre-Election Fiscal Outlook factor the tax cuts in. The statement from the Reserve Bank came after both of those documents and it warns very clearly that we shouldn’t have excessive spending.

TREASURER:

There is a very direct question there. Wayne said, and your tape will show it, that the Reserve Bank said spending over and above tax cuts would be inflationary.

SWAN:

I didn’t say that.

TREASURER:

I have asked him to show where it was…

SWAN:

It is factored in as (inaudible)…

MEL:

How about, all right, sorry, how about the two of you clarify, we can read it tomorrow morning. If you can find it, provide it for us, that would be fantastic.

SWAN:

I am quite happy to…

MEL:

That would be great.

SWAN:

(inaudible).

MEL:

(inaudible) tomorrow.

KOCH:

Okay.

MEL:

Thank you. Let’s answer some viewer questions if you wouldn’t mind. Susan in New South Wales wants to know if the GST rate will change after election day. Peter, if the Government wins, will the rate remain at 10 per cent and do you foresee any changes?

TREASURER:

Well this government introduced GST, all of which goes to State Labor governments. Every single last dollar. The only way the GST rate can be increased is if all the governments – six state governments, two territory governments and the Federal Government – agree to increase it. Now, if Labor gets elected you will have Labor in six states, two territories and federally and it would be up to Labor to increase it.

MEL:

If you get elected, is that a ‘no’?

TREASURER:

Under no circumstances. I introduced it, I have made sure there has been no increase over the last 11 years and there won’t be under a Coalition Government because we won’t agree with the Labor States to increase it. And we won’t be influenced by them.

SWAN:

And there will be no increase and no change under a Labor Government. The only person…

KOCH:

You will guarantee that?

SWAN:

Absolutely, over my dead body and over Kevin Rudd’s dead body.

KOCHIE:

Okay.

MEL:

Okay, Susan there you go. Next one.

KOCH:

Yeah well put your mother up, like Julia Gillard did with that one. Superannuation. Wayne Swan, will you guarantee that there will be no changes to superannuation that will water down the attractiveness of it?

SWAN:

I made that guarantee in the Parliament, we are the authors of the superannuation system and we are very supportive of it.

KOCH:

So you won’t fiddle, you guarantee there will be no watering down.

SWAN:

I absolutely guarantee there will be no changes at all.

MEL:

Peter, any changes to superannuation in the pipeline?

TREASURER:

You would recall when I abolished tax on superannuation payouts, Labor didn’t support that. For 12 months they reserved their position…

SWAN:

That is not true.

TREASURER:

…and you won’t find Wayne Swan on the record anywhere in the Parliament endorsing and saying what a good policy this was. Now, the second point I am going to make is this. Wayne has already said he wants to direct private superannuation into public-private partnerships…

SWAN:

No I haven’t.

TREASURER:

…Kevin Rudd wants to raid the Future Fund and we had a bizarre statement from Kevin Rudd yesterday that he thinks Western Australia should be investing in Latin-American real estate which The Australian today said was the kind of thing you would normally read in an email from Lagos.

KOCH:

Okay. Hang on, Wayne Swan has guaranteed that superannuation won’t be watered down, what about you?Will the superannuation be watered down under you in the future?

TREASURER:

Well Kochie, I abolished the taxes on superannuation…

KOCH:

Yep, that’s terrific.

TREASURER:

…I put that in place and that is my policy. But I tell you this, superannuation is under risk from Mr Rudd and from Mr Swan.

KOCH:

Well Wayne Swan has guaranteed that it won’t happen.

TREASURER:

Why don’t you ask…

KOCH:

(inaudible).

TREASURER:

Kochie, ask him this question. Does he want to direct where your superannuation is invested?

SWAN:

No.

TREASURER:

Will you guarantee Australian…

KOCH:

Will you guarantee not to direct where our superannuation…

SWAN:

I will guarantee not to direct superannuation.

TREASURER:

Well why will he take money out of the Future Fund, Kochie?

SWAN:

(inaudible) just silly.

TREASURER:

No, no, ask him why he is taking money out of the Future Fund.

KOCH:

I feel like…

SWAN:

Do you want to do the interview, Peter?

KOCH:

(inaudible) we have got a few more questions to get to.

MEL:

Absolutely. And all of this is on tape, gentlemen so that’s okay, we will hang onto the promise. Peter, will you guarantee that the Coalition will keep every single promise made during this campaign?

TREASURER:

Of course.

MEL:

Every single one?

TREASURER:

We carefully, of course, we have carefully costed them, we have put them out, they will be introduced in full, they will do things for Australia, they will keep our economy strong and they will get more people in work.

KOCH:

Wayne Swan, will you guarantee to keep every promise you have made, we are not, that we don’t have anything, blaming the previous government: ‘we have got to change our mind because the previous government didn’t tell us about this’?

SWAN:

Yes, I guarantee that. Yes, absolutely.

KOCH:

Guarantee you will keep every promise?

SWAN:

Yes.

KOCH:

Okay, all right. Thanks a lot.

MEL:

Sounds like wedding vows really, doesn’t it?

KOCH:

Well, we want to clear it up for everybody…

MEL:

Exactly.

KOCH:

…we have had lots of emails on GST, lots of emails on super, lots on core and non-core promises…

MEL:

Yep, (inaudible).

SWAN:

And apologies as well.

KOCH:

All right, okay.

MEL:

Gentlemen, thank you very much for joining us, all the best for Saturday…

KOCH:

Good luck.

MEL:

…and it is all on tape so we will check it all again in 12 months from now and see what comes of it all.

TREASURER:

Thank you very much.

MEL:

Thanks for your time.