TREASURER:
Today the international rating agency Standard and Poor's upgraded Australia's foreign currency credit rating to AAA. It is a rating which Australia lost during the Labor period, the `Banana Republic' period of 1986, when Australia had its first downgrade and its second in 1989.
It has been a long road back, and it has taken a lot of work. But Standard and Poor's has now recognised that Australia's financial position is strong again and we are AAA.
The other international ratings agency Moody's also rated Australia at its highest level as a result of the reforms in 2002, last year. So both of those agencies now have Australia along with some other 16 countries around the world at the top level of foreign currency rating.
What this means is that if the Government were to borrow it would be able to borrow at cheaper rates but the Government is not borrowing at present because we are repaying debt. But it means the ceiling for the private sector has been improved so that private sector Australian companies can now borrow overseas and not have a risk premium built in as a consequence of a lower than top rating.
So, the good news is that Australian companies will now be able to borrow at better rates, that's better for them and it means that Australia's economy will be stronger for it. Australia has returned after some 17 years to the AAA rate, a AAA rating for sovereigns, and that will improve our private sector's position as well.
JOURNALIST:
What sort of credit can you take for this?
TREASURER:
Well, the Standard and Poor's said that the two reasons why Australia regained its AAA rating. The first is we have got one of the strongest Budget positions in the world. As Standard and Poor's said, "Government surpluses in all but one year since 1997", "Net Government debt to GDP projected to fall to nearly 3 per cent".
What you are seeing is you are seeing the long hard work that we have been engaging in since 1997, repairing the finances of the Australian economy, has now put Australia back in the position it was before the damage was done during the eighties. In addition to that the announcement recognises the sophistication of the Australian private sector in relation to the high credit standings of the banks, the depth of foreign exchange and derivative markets and the substantial claims on non-residents by the Australian private sector. So, with a sound financial sector, now backed-up by a Government sector which is in a very strong financial position, Australia has now regained its AAA rating, something it lost in 1986, 17 years ago. So, it has been a long way back.
JOURNALIST:
How does this position Australia as part of the international economy?
TREASURER:
Well, the international economy is very difficult. There is no doubt about that. The United States has been through a recession, Japan has been through a recession, Europe is weak and the international environment is as difficult as it has been, certainly in the last couple of decades. So it is a difficult situation but Australia is one of those countries in the world best placed, to ride it out. I don't say that there will be no effect. There will be an effect. That is obvious. But we are one of the countries best placed to ride out a very difficult international situation.
JOURNALIST:
Treasurer, something like this, how does it impact on the currency?
TREASURER:
Oh look, I don't predict currency movements. Long experience has told me it is not a good policy.
JOURNALIST:
But surely like an upgrade such as this has got to be a positive?
TREASURER:
Look, the positive of this is that now that Australia, the country, the Commonwealth, has got the top AAA rating, our companies which cannot exceed that ceiling can now get upgrades. And what that means is that those companies borrowing the same amount of money can get cheaper finance. Now that is good for them, that is good for the economy. So you can draw your own conclusions in relation to foreign exchange markets.
JOURNALIST:
Treasurer, speaking of companies, do you have plans under CLERP 9 to (inaudible) companies to better reveal their (inaudible) executive remuneration?
TREASURER:
Well, CLERP 9 is a proposal for corporate law improvement which we put out last year to enhance transparency, and I have said that if there are any new measures that the regulator, ASIC, wants to have incorporated as part of that I would be very happy to do so. In fact I will be discussing that with the Chairman of ASIC later on tonight. So, we stand very ready to enhance transparency. I guess the good thing is, that under the current laws this was forced out. That is the good thing. Whether or not it should have been forced out at an earlier stage, back when it was entered into, the early nineties, when our corporate laws weren't as advanced then as they are now, but we have got to have a look at that question, and I think it is very important that these things are made transparent.
JOURNALIST:
So the payout last week by the Commonwealth Bank has encouraged you to set (inaudible)?
TREASURER:
The contract as I understand it was entered into back in the early nineties, and it was the disclosure rules that forced the disclosure in recent times. Now, the thing to remember about this is that this money was shareholders' money. It wasn't the Government's money, it was the shareholders of the Commonwealth Bank that owned this money, and the Directors have to account to the shareholders for what they do with their money. And if shareholders are unhappy they have the right to get an explanation or indeed to get further action in relation to the Directors. That is where the chain of responsibility lies.
JOURNALIST:
Treasurer, just with the meeting with ASIC tonight, are you saying you will specifically be asking them do you want to tighten up the disclosure or will you be specifically...?
TREASURER:
Well, the good thing about what has happened in relation to this contract is the existing rules forced the disclosure. So it is not to do with this current one because the existing rules forced it. But some people say that ASIC's guidelines are still complicated. That they have trouble knowing where they begin and where they end. That is one of the things that has been put to me. In view of that, I am meeting the Chairman of ASIC tonight and I want to raise with him whether or not those requirements can be made user-friendly, whether there can be an explanation to give greater guidance to company directors in relation to compliance.
JOURNALIST:
Mr Costello, you have chosen to publicly back Helen Kroger for the State Presidency. Why did you choose to go public and secondly what reforms do you think she, if she was successful would she need to implement to the Party?
TREASURER:
Look, my view on the Victorian Liberal Party is that it is in urgent need of reform and renovation. I think that is obvious. When you come out of your worst defeat ever, you can't sit around and say that everything should remain the same as it was. Defeat is a wake up call for political parties. To wake up and to renew and renovate. And I am supporting renewal and renovation. That is what I am supporting. And I want to make sure, as do my Federal colleagues, that no stone is left unturned before the next Federal Election because we certainly don't want a result like we had in the State Election.
JOURNALIST:
But what specifically are you pushing for Treasurer? What do you think needs to be done? What is the...?
TREASURER:
It's not my role to publicly talk about the things that need to be done in the organisation. I will make my views known in private. But the organisation needs to be rebuilt and renovated. That is what needs to happen.
JOURNALIST:
There is some suggestion that you were being asked to take a leadership role as the most senior Liberal in Victoria. Are you prepared to take, that's from senior people talking to me, do you think, are you prepared to take on that leadership role to pull us through what happened in the late eighties and early nineties under Michael Kroger?
TREASURER:
I don't see it as my role to run the organisation. That is not my role. I have other duties. I have a role as an MP, I have a role as a Federal Minister, I have a role with my Federal colleagues. But my Federal colleagues want to know that they will be put in the best possible place at the next Federal Election. They have been to me and they have asked me to do that, and they have asked me to represent that view back to the organisation, and I am representing that view back to the organisation. They have asked me to register that with the organisation, and they are concerned. And I have registered that fact, and their concern is that we not repeat what just happened. And to not repeat that we want to make sure we have got a renewed and rejuvenated and renovated organisation.
JOURNALIST:
Treasurer, how do you respond to speculation that the Government may go to an early election (inaudible)?
TREASURER:
You will always have that speculation. The fact that you have the speculation doesn't mean that it is going to happen.
JOURNALIST:
Is it possible?
TREASURER:
Look, the way I put it is this, it is up to the Senate to pass our legislation. I am now doing a Budget, 2003-2004 Budget, in a situation where our Budget Measures in 2002-03 have not yet passed. We are leapfrogging last Budget and we are going now into next years' Budget. There are some measures which were announced two Budgets ago which have still not passed the Parliament. You have got this campaign of obstructionism by Labor in the Senate and what I say to the Senate is: pass the legislation. Now, that is what I am focussing on, and let's be very clear about this, the best way for a Government to function is if the Senate, sure it is a house of review, passes the legislation which the Government has a mandate and an obligation to introduce. And that is what I am focussing on.
JOURNALIST:
Are you suggesting it might be (inaudible)?
TREASURER:
I am saying it would be in everybody's interest, for legislation to pass the Senate. That is what I am saying.
JOURNALIST:
Would an early election be a solution to the obstruction?
TREASURER:
Well I am not jumping down the path. I am looking at clearing the obstruction. That is what I am looking at.
JOURNALIST:
And if that means a double dissolution...?
TREASURER:
No, I am not speculating. There is far too much speculation. What I, the only point I am making is I think the Senate should deal with the Budget legislation and pass it. And that is what I am calling on the Senate to do. And I am not speculating on anything other than that.
JOURNALIST:
So while you are doing the figures on the Budget, how is it looking for next year?
TREASURER:
Well, it is going to be a difficult year. The international economy is weak. There is all of the uncertainty of war, possibility of war. There is the effect that that has in relation to confidence and it is going to be a difficult year.
JOURNALIST:
So is the Budget going to (inaudible)?
TREASURER:
Well, I have made the point before that obviously there is going to be a big call on the Budget in relation to our defence as we have pre-deployed troops and that will have the priority in relation to new expenditures.
JOURNALIST:
What is your sense of...?
TREASURER:
Last question.
JOURNALIST:
What is your sense of the significance of the anti-war marches over the weekend and the number of people that (inaudible)?
TREASURER:
Look, I think that over the weekend there were a number of people who expressed their views that they would like to see peace, and I think we would all like to see peace. But it is a question of short-term and long-term peace. We would all like short-term peace. But it is very important that we also get long-term peace and in my view, long-term peace involves ensuring that dictators, brutal dictators, don't have the capacity to unleash chemical and biological weapons. And whilst brutal dictators still have the capacity to unleash biological and chemical weapons your long-term prospects of peace are not good. So I think a lot of people are saying they want peace and I thoroughly agree that in both the short and the long-term sense, we ought to be aiming for peace. And we have got to keep both in mind. Thank you.