KELLY:
Treasurer, good morning.
TREASURER:
Good morning Fran.
KELLY:
All of this upheaval, all the soul searching of the last week or two, all of the instability, all for what looks to be a correction in the poll. Your Party panicked needlessly, didn’t you?
TREASURER:
Well I am not going to get carried away with any one particular poll because I think you can draw too much into particular polls.
KELLY:
But your Party did get carried away with one particular poll?
TREASURER:
You know, the funny thing Fran, is the moment you say you got carried away with the last one particular poll, you get carried away with the next one particular poll. That is my point. So I am not going to get carried away by any one particular poll either way, except to say this: I think that the way in which these things were handled last week worked out positively, and I think that we now have the opportunity to concentrate on policy and what we are going to do for the Australian people. And we have got the opportunity to put forward a future vision in areas like water, climate change, education, tax, jobs. And that is what I think people want to hear us talk about.
KELLY:
When you say it worked out positively, I mean, was it in fact just a lost ten days of sort of internal soul searching and as I said before, panic within your Party and we are almost back to the point where you were two weeks ago before that last Newspoll?
TREASURER:
Well I think…
KELLY:
I mean what is the change, why is it more positive, you have got the same leader?
TREASURER:
…I think as we came out of last week we had the opportunity to focus on the future and that is what I think is positive. And when you think about the agenda that we have got here to deal with the water problems of Australia, in the midst of this terrible drought; to deal with climate change, in the midst of this great challenge; to deal with tax and jobs. These are the things that the Australian people want to hear us talking about. And I think it is positive when you focus on the future and particularly when you contrast it with the lack of policy you are now getting from Labor and Mr Rudd.
KELLY:
Well Treasurer, I know you are not really interested in talking about one poll or another, but if we could stay with this one for a minute. After such a shocking fortnight, what do you put this jump down to, this bounce-back for the Coalition? Do you think it is a correction, do you think it is a sympathy vote or do you see it as something more positive? Endorsement for perhaps the new leadership transition plan to you that has been announced?
TREASURER:
What I see it as is a reminder to all of us to get on and to talk about our future plans for Australia. That is what I see this telling us. Plans in relation to water and climate change, tax, jobs, education. These are the things that people are interested in and that is why I think it is important we talk about our plans, specific plans, which we have in specific areas and contrast it with Mr Rudd’s rule-by-committee approach.
KELLY:
I will come to you talking about your plans in a moment. But essentially, I mean it has been said tongue-in-cheek around the corridor here, but essentially you are Prime Minister-in-waiting now if you win the next election. This poll shows low support for you still as Prime Minister, just 18 points compared to John Howard on 52 points. Do you accept that at this point you are not popular with the electorate? You are not a popular choice as Prime Minister?
TREASURER:
I think that the message that comes out of the week is that what the public wants to see is the team ready to govern Australia. And we have a Prime Minister, we have a Treasurer, we have an Education Minister, we have a Water Minister, we have an IR Minster which are all battle hardened and proven and you couldn’t even name the Labor team, let alone…
KELLY:
But you yourself have said you know, you and John Howard lead the Coalition.
TREASURER:
Well that is the point. Who leads Labor? Julia Gillard? There is a scary thought.
KELLY:
Well maybe the electorate isn’t so scared because a lot is a bounce back for the Government in the polls now, there is still a ten point gap.
TREASURER:
Well sure, you have got to say at this stage the Labor Party is still favourite to win the election and Mr Rudd has had his campaign launch and the way he is talking he is getting ready for his election night victory. We will probably see that next weekend, I would think. But what he forgets is in between you need policy and that is what he doesn’t deliver. You can’t have this policy by committee. Thirty committees he is going to set up to tell him what to do. A political leader actually knows what to do and announces it and gets support for it. They don’t announce committees.
KELLY:
Well what will you be doing as the Leader-in-waiting in this election campaign? You go in now as the anointed Government Liberal Party Leader, potential Prime Minister if the Government wins. Does that give you a different role to play in this coming election campaign? Will you be taking on a broader role?
TREASURER:
I will be talking about what Australia needs to develop for its future. And in particular, what we have to do to take our economic credentials, which we have been putting in place for the last ten years, and to use them to draw into the mainstream of our society, people who have been marginalised. Maybe they have been marginalised with health problems. Maybe they have been marginalised by the welfare system. Maybe they have been marginalised by an education system which has failed them. Now that we have a strong economy and we have paid off Labor debt and balanced our Budget, now we can use our economic strength to reach out to these people and bring them into the mainstream. And that is the vision that I want to talk about.
KELLY:
With respect Treasurer, this is the vision that you have been laying out now for the past, well for much of the past 12 years and certainly the last few years. Labor is ahead 10 points in the poll. You only rate 18 points as preferred Prime Minister. It would seem the people either aren’t listening to you or don’t like the message. Do you have, now that you are anointed to be handed over to, do you have a different platform to say these things now? Do you think you will be heard?
TREASURER:
Well you will hear me saying to them Fran, and explaining to people how we can do this. And with the health system for example, we now have a much stronger economy than we had 10 years ago. We are now spending much more on health. What we have is the opportunity to treat people with medical problems that couldn’t be fixed in the past. And as we do that, we not only give them a quality of life, but we can draw them back into the mainstream of Australian society. Now we have unemployment low, we have the opportunity to help people who have been marginalised in the welfare system, sometimes for 20 and 30 and 40 years. And with training and incentives, to bring them back to a place where they can get a job and join mainstream Australia again. The reason we have been working at getting unemployment low and the reason we have been working at balancing our Budgets is so we can do this investment and so that we can now reach out and bring those people back into the mainstream of Australian society. This will make us stronger as a nation. It will make the families of Australia stronger and it is part of building a much better country for the future.
KELLY:
If the voters like your message, if they buy it and sign on to that, you will take over at some point in the next three years as Prime Minister of this country. John Howard has now said he will serve out his full term, some of it on the backbenches. As a potential Prime Minister, how would you feel about that and have you got an agreed handover point from the Prime Minister?
TREASURER:
Well he has made his undertaking to the electors of Bennelong and he will keep it. And…
KELLY:
Are you happy about that?
TREASURER:
Well I have no doubt about it and of course I think it is very important that they know that in the circumstances where they vote for him that he will be serving out the full term. And I think it is a very sensible thing to do. I think people would want to have their Member of Parliament who is there and available for them for throughout the full period of the term.
KELLY:
Treasurer, there are some important economic questions to put to you which I will get to in a moment, but just before we leave this, Kevin Rudd is demanding three Leaders debates, I am wondering if you expect to be involved in those given you are a Leader-in-waiting. But also, one of those he thinks should be broadcast on You Tube and Foreign Minister Alexander Downer obviously thought that was a silly idea yesterday. Is it a silly idea?
TREASURER:
Well I don’t think it matters who broadcasts it, frankly. If it is broadcast on television, provided the television stations don’t mind, you can broadcast it wherever you like. You can podcast it, you can stream it. It is just a way of actually getting it out there. I don’t see any problem with doing anything like that. The way in which these things are negotiated as you know, is they are generally negotiated by the political parties and the networks themselves all vie for the rights. So it is a question between them, I think.
KELLY:
Okay. And just before we get to the economy, how quickly should you go to an election? It is time now, isn’t it?
TREASURER:
Well there will be an election…
KELLY:
You have got the leadership team sorted out, you have got your policies?
TREASURER:
There will be an election sometime this year and I think it is important that…
KELLY:
You look desperate the longer you delay it, don’t you?
TREASURER:
I don’t think so. I mean, whether it is September, October, November or the beginning of December doesn’t matter very much.
KELLY:
Let’s get to the economy now because there is important things going on overseas. The Bank of England has intervened to help stabilise the UK mortgage lender, Northern Rock with a $4 billion run on its deposits. Its shares went down 24 per cent in early trade overnight. Other UK bank shares were down up to 15 per cent. There are queues of people outside some of the banks. Turmoil in the world’s credit markets is already fuelling that crisis. Is there any danger that this could happen here, do you think?
TREASURER:
Australia’s financial system is very strong. Our banks are profitable and they are well capitalised. And our prudential system I think is the best in the world. And we do stress tests on these financial institutions regularly to see whether they could cope with an external event like this and they do pretty well. But let’s not be complacent about this. You are seeing a huge fallout in international financial markets brought on by poor financial regulation in the world’s largest economy – the United States. That has already had some effect here in Australia. It has affected some of the mortgage originators who have already put up their lending rates. It has affected some of the stockmarket, it has even affected the currency. It is not over yet. It will take very careful management here in Australia to insulate against the worst effects of this international fallout.
KELLY:
In fact, Alan Greenspan, former head of US Federal Reserve has warned the US economy, it is certainly not over yet. He said it could be headed for a recession.
TREASURER:
Well, the US economy is weaker than the Australian economy. People don’t understand this. The US was in recession five years ago and people think well just because Australia hasn’t had a recession, oh well, the globe must be strong. No, the US had a recession five years ago and we managed to avoid it with careful management here in Australia. With the fall out in the US, this could well affect the real economy. It could well. And their economy is not as strong as ours. They don’t balance their Budget. We not only balanced our Budget but we have paid off debt. They have debt up around 40-50 per cent of GDP. So, the way in which we have been strengthening the Australian economy has been designed to protect us against this kind of fall out which you see in other countries, some much larger than ours and much bigger economies.
KELLY:
Treasurer Peter Costello, thank you very much for joining us on Breakfast.
TREASURER:
Thanks Fran.