SPEERS:
Treasurer, welcome.
TREASURER:
Thank you very much.
SPEERS:
Is this your education revolution?
TREASURER:
This is the biggest investment Australia has seen in education, which sets up a fund which will go forever. Not just yearly, a fund which will grow. And the earnings of this fund will of course go into the university and the higher ed sector.
SPEERS:
Why not give that $5 billion just to the universities for their own endowment funds?
TREASURER:
Well, because if you spend it, it would be gone forever. You know, it might be good now, but I want a fund which will grow, be here in 10, 20, 30, 40, 50 years, the earnings of which will be available for the sector. I think we could put this on a firm footing forever.
SPEERS:
But universities currently do this, don’t they? They invest in you know, investments that are meant to provide revenues for entering capital works, why, you don’t trust them to look after this money?
TREASURER:
Oh no, they can have their own endowments but the whole collected endowment for the whole university sector in Australia doubled tonight. That is, the endowment I set up tonight equalled everything that the university sector has accumulated for 150 years. And what’s more, our intention is if we are re-elected, to increase that again next year. So the dimension of this is far greater than anything anyone has ever conceived of in Australia.
SPEERS:
Labor may well say, 11 years, why has it taken this long?
TREASURER:
Well of course, 11 years ago, the Budget was in deficit and we had $96 billion worth of debt, we were paying $8½ billion a year in interest payments. We were borrowing to fund our own interest. We didn’t have money, we have just come off a Labor Government. And it has taken us all that time to get rid of debt, reduce our interest payments to zero, establish our Future Fund and now we can do good things but you couldn’t have done this 10 years ago because you didn’t have the money.
SPEERS:
You have been very critical of Kevin Rudd for his plans to raid the Future Fund…
TREASURER:
Yes.
SPEERS:
…for his broadband rollout. Presumably, this $5 billion for education would have otherwise gone into the Future Fund, aren’t you raiding the…
TREASURER:
No, we will do both. We will do both. And it is very important to bear this in mind. Kevin Rudd wants to pull money out of that fund. That is what he wants to do. Once a politician gets his paw on a honey pot, the honey will disappear very quickly. You can’t start pulling money out of that fund. It is not money Kevin Rudd put in there.
SPEERS:
But it could have been $5 billion the richer, the Future Fund.
TREASURER:
Well, the Future Fund will meet its target. The target is to find all superannuation liabilities. Or I should say, the Future Fund will meet its target as long as Kevin Rudd doesn’t get elected. And in addition, we will also set up this endowment fund.
SPEERS:
Now, the tax cuts, you said in the speech $16 for the average, a week for the average worker, I think $21 for those on lower incomes. What about those at the high end of the income scale? How much a week are they going to be better off?
TREASURER:
Well they will also get that tax cut of around about $15 a week but in addition to that, when we move the thresholds from 1 July next year they will get an additional amount.
SPEERS:
So they will be about $50 a week better off?
TREASURER:
$50 after the second instalment which takes place on 1 July of next year.
SPEERS:
And how is that fair?
TREASURER:
Well it is a question of how much tax you pay. For an average worker a $16 a week tax cut is a much larger percentage tax cut than for a high income earner who has a larger dollar amount but in percentage terms it is much less. And if you actually look at what we have done over the last three years, somebody on say, $40,000, I think we have cut tax by 45 per cent now, which is, you get to a point where at lower income levels, up to $11,000, you are not even paying tax so you can’t cut anymore.
SPEERS:
The cynics might say you are giving the battlers a tax cut this year before the election and the higher income earners, you know, the promise of one after the election.
TREASURER:
Well it is all there on the public record. The aim is to keep the tax system as competitive as possible and give the first benefits, the first fruits to the middle income earners and I think they will appreciate that, much more than saying that they have to wait. This will be from 1 July, the start of the financial year.
SPEERS:
And are you sure that $31 billion in tax cuts won’t put upward pressure on interest rates?
TREASURER:
Look, at the end of this tax cut, the Budget is still going to be in surplus, it will be a surplus of about $10 billion. It will be in surplus when hardly any other developed economy in the world will be in surplus, most of them are in deficits, like America and Japan and Britain. So, we will still be in front of the pack by a long shot.
SPEERS:
This wasn’t a very green Budget, there is the rebate being doubled for solar panels but beyond that is this something we are going to have to wait for?
TREASURER:
Well Low Emissions Technology, the Murray-Darling Basin, the Natural Heritage Trust, the global initiative on forests, the tax deductibility for carbon forest sinks, there is a lot of measures in this Budget.
SPEERS:
Well a lot have been announced already, I suppose, but there will be more to come?
TREASURER:
Well we have said that we are waiting for a paper on an emissions trading scheme and of course we will announce a response to that. So there will be a statement on that when it is finished.
SPEERS:
And spending as well.
TREASURER:
Well, let’s not pre-judge what the report recommends or what the Government says in its response.
SPEERS:
But have you left room in this Budget for that and also the big one – the election campaign?
TREASURER:
Well look, this is a very responsible Budget for the next four years and I think the responsible thing is to make sure that we continue with surpluses, we continue with surpluses of about 1 per cent of GDP, I think that reasonable, I think that is responsible.
SPEERS:
And will it put the Government back in the election race?
TREASURER:
Look, I am just worrying about the economics. I want to keep people in jobs, I want to invest for the future, I want to…
SPEERS:
You are not worried about the politics?
TREASURER:
I want to lock in the benefits, so that is what I think about. And if you get the economics right, the politics looks after itself.
SPEERS:
All right, Treasurer, Peter Costello, thanks for your time.
TREASURER:
Thank you.