FAINE:
Peter Costello is the Federal Treasurer. Joining us in our Parliament House studios, Mr Costello, good morning.
TREASURER:
Good morning Jon.
FAINE:
Simon Crean on AM a few moments ago said that because you promised a surplus and you delivered a deficit, because he cares about Australian families and he doesn't think you do, he may block your Budget in the Senate. What will you do?
TREASURER:
Well would you be surprised if Mr Crean would take an opportunist position? No. He's been doing it for the last six years. Remember this is the man that said for six years that GST would bring a plague on Australia and throw our economy into recession and then announced last week that he really isn't against it anyway and if he were ever in Government he would keep it. So, what Mr Crean does, and it's his standard tactic, is he opposes anything that has to be done and is necessary for the country and secretly hopes that we get it through so that if he ever gets into office he can take advantage of it.
FAINE:
You'll need to negotiate with either the Democrats or the Labor Party if indeed they both adopt the stance that they don't approve of some of your budget measures.
TREASURER:
Well if the Labor Party and the Democrats decide to join up against the Budget, that would be a great difficulty, but they would be doing Australia short. They would be doing damage to the long prospect, long-term prospects of Australia and at the end of the day people will suffer because of opportunist politics. We'll argue our case and we will put forward to the Australian people the measures that we think are necessary to keep our economy strong. We've dealt now for six years with a cynical and opportunist Labor Party and I predicted that Simon Crean would be more opportunist than Kim Beazley and I think you heard on his radio interview this morning that he hasn't disappointed us.
FAINE:
What ever happened to the aspirational voter, Peter Costello? In the last election you appealed to the very people who get nothing from this Budget.
TREASURER:
Jon, when you say nothing, this is a Budget which keeps Australia's economy strong, stronger than America or Britain or Europe or Japan, the comparable countries. Which sees unemployment falling and predicts it will be at six per cent next year, which is territory we've not been in since the, Labor's recession of 1990. It's a Budget which keeps taxes low, income taxes, which lays down a program for further tax reductions over the next years and it's a Budget which delivers additional benefits to families. And I think it's a very responsible, pro-family, pro-employee, pro-aspirational person's Budget.
FAINE:
There's a huge emphasis on defence, billions of dollars on defence. This is the same organisation that's wasted billions on Collins submarines that are years late, Seaspright helicopters, $780 million. There's $31 million being spent on a maintenance contract for helicopters that haven't even been delivered. The Bushmaster Personnel carrier, two years late. And the war against terror is virtually over. What's going on here?
TREASURER:
Well, let's hope it's over, but Australian Special Forces are still on operations in Afghanistan.
FAINE:
Hardly doing much. They're just mopping up.
TREASURER:
Well, I wouldn't say that to any of the Special Operations fellows Jon. We have Hornets in Diego Garcia.
FAINE:
Also not doing much.
TREASURER:
Well, providing air defence. With all due respect Jon, I wouldn't say that to the pilots of the Hornets. We have amphibious ships and we're patrolling the Gulf in support of UN sanctions in Iraq. Now let me come back to your original point. Yes, I believe that in relation to these defence contracts, we expect the Defence Department to be as scrupulous and as tight-fisted with every dollar as the taxpayer wants them to be. And I'm not disputing your opening proposition in the slightest. But in relation to the war against terror, our Special Forces have performed magnificently in Afghanistan and they've won the respect of a lot of other countries as well. And I think that the support that the Government's given has been very necessary.
FAINE:
And despite all that money on supporting President George W Bush, yesterday he decided to dud us on farm subsidies. In exchange surely for some military support and expenditure of the magnitude that you announced yesterday, we're getting no dividend whatsoever from our support for the USA.
TREASURER:
Well can I separate out these issues. We don't do this to support George W Bush.
FAINE:
I thought we did.
TREASURER:
We do it because it's in Australia's interests. Let's go back a step here. Australians were killed in the World Trade Centre. You know Australians died in that terrorist attack. Let's not forget that. Let's also remember that we are in a defence alliance with the United States, which says that where there is an attack on any one of us, we'll both respond. And Jon, if there's an attack on Australia, we expect the United States to respond. When there's an attack on the United States, we respond. That's our treaty. That's the ANZUS alliance.
Now let me come to the question of the American administration. I actually thoroughly oppose their farm bill and that's a point that we'll be making. We thoroughly opposed their tariff decision on steel. We were able to have some improvements made. These are domestic policy arguments we will have with the United States, but we are military allies, we work together on military matters but we don't do it for them, we do it for us as much as anybody else. Can I make this point Jon. If the Al Qaida and Taliban networks were to be wound up in Afghanistan, then a lot of the domestic security matters could be relaxed. And fighting the roots of Al Qaida in Afghanistan, in my view, is much better than having the potential of these terror networks hitting at home.
FAINE:
So you might unwind some of those defence announcements in the event that the outcome in Afghanistan is quicker and better than expected?
TREASURER:
Look, Jon, nobody would be happier than me if we could responsibly take the decision that the war has been successfully concluded or that threats to domestic security have abated. Look I said last night, I'll say it again, one of the things we're doing here is, we're raising a permanent regiment to deal with chemical biological nuclear incidents, like an anthrax outbreak.
FAINE:
Yes.
TREASURER:
Or an attack on, let's say, a nuclear reactor that we have at, say, Lucas Heights or somewhere.
FAINE:
...inaudible...
TREASURER:
I hope there isn't another one. I hope, I hope that regiment is never called out. You know nobody will be happier than me if it never is. But let's suppose we did have an anthrax outbreak, we've got to have somebody who can respond, and I think you'd all be sitting around here saying, well what's the Government done to prepare for this. So we have to make preparations. As I said last night, we're prepared for the worst and we hope for the best.
FAINE:
Alright. Nearly twenty minutes to nine. We've only got a few more minutes Peter Costello before you move to your next interview appointment. On health, the Pharmaceutical Benefits Scheme, it's costing more and more. No measures though to stop the drug companies from their rampant advertising of these drugs on television which is surely much of the demand. Why not try and, in some way cap, their marketing power?
TREASURER:
Well we've got a four-point plan actually in the Budget. The only one that's been attracting attention for obvious political reasons is the co-payment. But our plan is to involve doctors, pharmaceutical companies, consumers and the Government.
FAINE:
But they're putting ads on television telling us to go and see your doctor and get something for weight loss, for your sex life, for smoking, it's endless.
TREASURER:
Well hang on, hang on. You know, some of these drugs we don't subsidise. You know my ears pricked up when you said sex life. They tried to get Viagra onto the subsidised scheme and we wouldn't allow it. So we don't even subsidise Viagra. A lot of these other things we don't even subsidise. There's a very strict process to get a subsidised prescription onto the scheme. Now once you've gone onto the scheme, the pill or the prescription may cost $200, it may cost $1000, but if you're a pensioner you only pay $4.60. That's why we've, one, got to control drugs coming onto the scheme. Secondly, what we say here is we are now expecting the drug companies to go around to doctors and to disclose to doctors tight conditions in which these prescriptions can be given. We are asking doctors to be very careful in the way in which they prescribe them. We've got measures to crackdown on fraud.
FAINE:
The first homebuyers' grant, Peter Costello, has in many ways driven the domestic economy. About 250 people have used the first homebuyers' grant to buy properties worth more than a million dollars. Are their measures in the Budget to stop that from happening?
TREASURER:
No Jon, the first homeowners' scheme is available to all people who have not previously owned a home. We don't operate an income or an assets test.
FAINE:
Well why not? It's just a waste of a couple of million bucks. It's a rort.
TREASURER:
Well hang on, $7000. Let's suppose, how many people did you say?
FAINE:
250 people. It's cost nearly $1.75 million so far.
TREASURER:
Well in relation to that can I say that the money which the State Government will have made out of stamp duty by having those people buy those homes would have been a very, very large sum indeed. And when I see the State Government complaining about all these sorts of things, I never hear them offering to give back the stamp duty which they've collected on those sales.
FAINE:
Peter Costello, it seems that it's a Budget without any big ideas. Either, is it that you've run out of big ideas, or are you keeping your powder dry for when you're the Prime Minister?
TREASURER:
The new thing, which we've never done before in this Budget is an Intergenerational Report which tries to project 40 years. Now, people say, and they quite validly say, how can you be precise about what the nature of society will be in 40 years, and I fully accept all of that. But within reasonable assumptions, and we set them all down there, we try and talk about what will be happening in 40 years time and what the cost pressures driving the Australian economy will be. We try and identify now the cost pressures for 40 years time and my message is in relation to these cost pressures, and medical science is one of the greatest cost pressures that we're facing, because medical and science is improving all the time Jon. More and more treatments for more and more conditions, more and more sophistication. There's more and more costs. And my message is, that if we don't take moderate steps now to try and prepare for the future, you're going to have to take drastic steps in the years to come. And I want to say to people, moderate, gradual adjustments to the long-term cost pressures which are emerging in our society will give us a vision of 20 and 30 and 40 years time with a decent society and a decent aged care system and a decent health system and a decent pharmaceutical system.
FAINE:
Sixteen and a half minutes to nine on 774 ABC Melbourne. Peter Costello, my guest on the program this morning. More Budget reaction coming up shortly. Don Watson, in his book on working for Paul Keating as his speechwriter, remarks that Keating always thought he spent so long as Treasurer that he ran out of horsepower, that he ran out of energy by the time he became Prime Minister. Are you at risk of doing the same thing?
TREASURER:
Well Jon, I try and keep myself energetic and active. But look Budgets are a huge amount of work. And you get locked-up unfortunately for weeks at a time doing them. The Budget is a $160 billion operation every year and you can imagine the care and the effort that goes into that. But I'm not complaining. That's my job. And I've got to do it and it's been a difficult year. The US recession, September the 11th, Al Qaida and the Taliban in Afghanistan, border protection...
FAINE:
Did the Prime Minister last night at any stage take you aside, give you a handshake, give you a nod and a wink and say don't worry Peter, all's okay, you'll get there sooner or later mate?
TREASURER:
He took me aside and gave me a handshake. Put it that way.
FAINE:
I saw that.
TREASURER:
I think he said good Budget.
FAINE:
Jeers, jeers from the Labor side of the benches.
TREASURER:
Oh well what would you expect them to do. You don't actually hear very much policy from the Labor side of the benches.
FAINE:
You're not going to comment any further on what's clearly the burning and most pressing issue in Canberra politics at the moment?
TREASURER:
No.
FAINE:
Alright. Specifically on Victorian issues, the MCG funding for the Commonwealth Games redevelopment seems to have hit some sort of a hurdle in Tony Abbott's office. Are you going to poke your nose in there and tell him that it's an important and vital project for Victoria?
TREASURER:
Well it is an important and vital project for Victoria and we allocated $90 million for the redevelopment of the MCG for the Commonwealth Games. And what we are asking is that the industrial relations arrangement on that site respect freedom of association and the Government's policy on industrial relations. We don't want to get into a situation like Federation Square where the building unions have been able to delay the whole thing and cause cost blow-outs. And I call on Mr Bracks to stand up to the CFMEU and the other unions, to tell them that he is the Premier of Victoria, that they will not be controlling these building sites. That this is important for the people for Victoria and freedom of association and proper terms and conditions will be respected.
FAINE:
Stephen Gough from the MCC told us yesterday that he thought it was the Commonwealth that should be compromising.
TREASURER:
Well the Commonwealth has principles to protect freedom of association and good industrial relations. And we can't put taxpayers' money into a project which is run by the CFMEU and delayed and blows-out. We've got to have good industrial relations on that site. And it would be nice if the State Labor Government could stand up to the CFMEU and tell them that.
TREASURER:
Our time is up. I'm grateful to you. Thank you indeed.
FAINE:
It's a great pleasure. Thank you very much Jon.