FAINE:
Peter Costello good morning to you.
TREASURER:
Good to be with you Jon.
FAINE:
Acting Prime Minister, sounds pretty good, doesn’t it?
TREASURER:
Well it is something that I do from time to time when John Howard and John Anderson are on leave, so it’s just filling in for them while they are having a well earned break.
FAINE:
Thank you for agreeing to come in. Ron Boswell, the Leader of the National Party, on yesterday’s announcement of the outcome of the Senate race in Queensland that has delivered complete control of the Senate to your side of politics, said it is good to have the balance of power. It struck me as a very odd comment, I thought that the National Party was in a Coalition with the Liberal Party and we have…
TREASURER:
We have…
FAINE:
…on your side rather than as a third party independent (inaudible).
TREASURER:
It is funny how these things get reported. Reading the newspapers or listening to the media you would think that one Queensland National had single handedly won control of the Senate. The reality is that you have got about 34 Liberals I think, and about four Nationals, something like that, so that anyone of those people could say that it was their election that led to the majority, it is never one person. And of course in Queensland the fact that the Liberals won three, which they have never done before and the Nationals won one, meant that we got a majority of Senators from that State. But everyone of those, the three and the one, go to make up the majority.
FAINE:
But you are avoiding the issue, the thinking being portrayed by Ron Boswell’s comment is that they are not beholden to a Coalition agreement with your party, instead they are now thinking of themselves as outside of the Liberal-National Coalition and able to exert influence the way the Democrats used to, the way the Greens aspire to.
TREASURER:
Well I don’t think it would be right to draw that conclusion because the National Party is in Coalition with the Liberal Party.
FAINE:
No, they hold the balance of power according to Ron Boswell. You can’t if you are in a Coalition.
TREASURER:
We were jointly sworn in as part of the Coalition Government earlier this week…
FAINE:
And you think Ron…
TREASURER:
…in the one Cabinet with Ministers. Look, it is a Coalition Government, it has been for the last eight and a half years, it will continue. You have just had this result in Queensland which is a great result, let’s make no bones about it, it is a great result, four of the six from the Coalition partners. And I think Ron, like all politicians is making the most of the moment in the sun.
FAINE:
But what we are seeing here Peter Costello is that he is already seeking to exert some leverage over your next term agenda.
TREASURER:
Well the National Party as a Coalition Party has always been influential in the Government.
FAINE:
How influential is it going to be the question this time around. Will they support your policies on completing the sale of Telstra? Number one first and foremost.
TREASURER:
It is not a question of Liberal policies and National policies, it is a question of Coalition policies. And the Coalition policy is that Telstra should be in the hands of Australian investors. That it is important to have adequate and good services in the bush and that we will ensure that both of those objectives are met.
FAINE:
What do adequate and good services mean when it boils down to it?
TREASURER:
Well we had a report from a fellow called Dick Estens who went out and had a look and gave us the benchmarks that we have to meet and we will meet those benchmarks and that way we will be able to accomplish both objectives. We will be able to have good services in the bush and we will be able to resolve the ownership of Telstra. But the problem with the ownership of Telstra, let me just say this, every time a question comes before the Cabinet of regulating telecommunications, the Cabinet, Jon, has a massive conflict of interest because the Government has majority ownership of the monopoly supplier and as the majority owner of a monopoly supplier the temptation is always to do everything you can to entrench your monopoly and increase your value. The Cabinet is also the regulator which is supposed to be writing rules to allow new entrants. I have sat through these Cabinet meetings where we have been faced with massive conflicts of interests because we are the majority owner of a the monopolist and the regulator which is setting the rules for the monopolies and the new entrant and you have got to resolve that problem.
FAINE:
You are also the vendor of an asset.
TREASURER:
Sure.
FAINE:
When is it worth selling Telstra? Is it worth selling it if it is under $5?
TREASURER:
Well I don’t think it is worth selling shares until you get a good value.
FAINE:
Do you get good value under $5?
TREASURER:
We have previously said that we think there is a value which we put in our Budget papers which was about $5. Now, I have also made this point entirely clear. There are two separate issues here, one is passing legislation which will allow further shares to be offered to Australians, the other is the timing. And you certainly wouldn’t do that except at a time which would get full taxpayer value.
FAINE:
Are you playing a second guessing game then with the people who are screen jockeys in New York, Singapore and Sydney principally, some left in Melbourne these days, and they are trying to second guess the Government, they are going to keep the price down until it suits them and then it might just magically make it to the trigger point. What do you reckon?
TREASURER:
You have got to be very aware of what people might do in the market, but I can assure you of this, that we will be getting full value for the Australian taxpayer in the event that that legislation passes. I have made that clear for years.
FAINE:
Meg Lees was dangling bait on AM this morning inviting you to negotiate with the current Senate rather than waiting until the next lot are sworn in. Are you going to take the bait?
TREASURER:
Well it is a fair point that the new Senate doesn’t come into effect until 1 July of next year. The Parliament is going back in November, there is no point just sitting around and saying we won’t be doing anything until July of next year. We are a Government, we are expected to govern. We have got a legislative programme, we are expected to try and pass that legislation into law. In the current Senate there will be a lot of negotiation with the minor parties to try and get some of that legislation through. We would even negotiate, by the way, with the Labor Party. I saw that Mr Latham has started junking some of his policies, he is talking now about becoming a constructive opposition. If the Labor Party wants to negotiate about good legislation, we would negotiate with them too.
FAINE:
Who would you get a better deal out of? The Democrats, the Labor Party or the National Party? The National Party might strike a tougher deal.
TREASURER:
Well in the new Senate you have got the Coalition, you have got some Democrats, people like Andrew Murray, you may have Family First and of course you have got the Labor Party. If the Labor Party supports national interest legislation then it goes through the Senate. Our position when we were in opposition in the 80s was; good legislation, good decisions - we support it. And that is actually the best way to get good legislation through the Senate. This only comes about if Labor keeps obstructing and at that point you have various negotiating partners.
FAINE:
Nineteen minutes to nine, Peter Costello, Acting Prime Minister, is my guest in the studio this morning and he will take your calls, 9414 1774. Still talking Telstra, last question before we move to some other things, if you sell Telstra, if you get to the trigger point, if you get it through with whichever Senators supporting it in the Senate, what do you want to do with the money? Do you retire debt or create infrastructure?
TREASURER:
Well I have always said that if the Government has an asset and it sells the asset and spends the money that is bad because at the end of the day you have sold your asset and the money is gone. If you are going to sell an asset you have either got to build another asset or as we have been doing, pay off your debts. But anybody who thinks that it would be a good idea to sell an asset which has been built up over years and just spend the money, that is like selling the family silver, we are not in that business. And I announced during the election campaign that we would start building other financial assets to fund the Government’s superannuation bill. Now the Australian Government has a very large superannuation bill, a debt, $80 billion, of money that has accrued to public servants which has to be paid as part of their retirement incomes and it is about time that we start putting some money away to help fund that.
FAINE:
So you want to use the proceeds of Telstra to meet the unfunded superannuation of debt of the Government…
TREASURER:
One of the ways in which we would…
FAINE:
…(inaudible) your first priority?
TREASURER:
…would build a financial asset. Well, that is the one that I announced during the election campaign and I think it is a very, very important one.
FAINE:
Alright, a couple of other quick things. The Fishing Party in Queensland, which the Nationals say helped them win that final seat, claimed 28,000 first votes on a campaign to take away the exemptions to fishing in 1/3 of the Great Barrier Reef. Are you tempted?
TREASURER:
No, we have announced protection of the Reef and as part of that there are areas where fishing is not allowed and other areas where licenses have been brought back and we are paying compensation to those fishermen. Now, you can always argue at the margin as to where the zones should be, but the deal is a deal that we have entered into to protect that wonderful asset. We won’t be re-opening the deal as a whole.
FAINE:
Even with 28,000 protest votes?
TREASURER:
No, we have announced our position in relation to protecting the Reef.
FAINE:
Alright, industrial relations, some 41 separate occasions the Senate have refused to pass your industrial relations laws. Is that going to be the first one put back to a Senate that you have control of?
TREASURER:
It may even be put back before July. We have put it up 41 times so we may even have a go before July, and I will tell you why. The Labor Party now says it wants to get economically responsible. They acknowledge they lost the election on economic management and they want to prove they have changed. What better way of proving they have changed than to pass a bill which they have defeated 41 times already, so we may even put that up before July.
FAINE:
What better way to try and drive a wedge between those in the Labor Party who want to shift to the middle ground and the trade union base?
TREASURER:
Well they tell us they are going to change, they tell us they are going to get economically responsible, let’s see if they are. Here is a big test. You have rejected this 41 times, what about showing that the leopard can change its spots. You see Jon, it is not just enough to say ‘Oh, we will be economically responsible,’ you have got to demonstrate that with some change. And how can they demonstrate it? Well they could have demonstrated it by junking Medicare Gold which they haven’t done. They could have done it by changing their view on industrial relations. Well let’s see if the Labor Party is interested in being economically responsible.
FAINE:
You will have a ball with that, that is wedge politics.
TREASURER:
(inaudible). Well it is a promise that we made to the small business community for eight and a half years which we are trying to legislate which we have been defeated in doing and we are now facing an opposition which says, we have changed. So this could all be fixed before Christmas.
FAINE:
Put it to the test. A quick thing, Bob Carr says that the New South Wales Parliament will look if necessary to compel James Hardie to meet the unfunded liabilities of the compensation fund, do you support him in that?
TREASURER:
Well I think James Hardie should meet its liabilities in full, absolutely.
FAINE:
And (inaudible) the New South Wales Government pass laws to make it happen?
TREASURER:
Well it is a matter for the New South Wales Government. But I would say this to James Hardie Jon, they ought to meet those liabilities and I think when they think about it, the sooner the better, and they would be far cleverer to meet it before any legislation is passed. Now if I listen to James Hardie, they keep saying they are prepared to meet these liabilities in full and then they get drowned in the technical detail. I am not quite sure what the sticking points are but I would say to James Hardie, fix the sticking points and compensate in full. It is in the interests of the victims, let’s make that point, but I would also say to James Hardie, it is in the interest of James Hardie and its shareholders not to dilly-dally here.
FAINE:
And are you going to pass laws to change the plans for tax deductibility that were successfully upheld by a convicted drug dealer the other day which the Tax Office say they are powerless to do anything about?
TREASURER:
Well the Tax Office did their best, they appealed from the Federal Court to the full Federal Court to the High Court. The High Court refused them special leave, said that this drug dealer could claim as a deduction some money that was stolen from him. Well if that is the state of the law as interpreted by the High Court I don’t think it is very good and I will seek to introduce legislation to change that law.
FAINE:
It is going to be difficult because at the moment if you claim a deduction you can also pay tax on the income, you can’t have it both ways so you are going to have to artfully weave.
TREASURER:
It will be very technical, and then you run into all of these problems about retrospectivity which is why if the courts had come to that conclusion it could have been fixed much easier, but the courts have not come to that conclusion. We have to accept the decision of the courts …
FAINE:
And legislate around it …
TREASURER:
We will have to try and think up legislation and do the best that we can, (inaudible) …
FAINE:
Pop the headphones on Peter Costello, we have lots of people with questions for you, and Nick from Croydon is first up. Good morning to you Nick.
CALLER:
Oh good morning Jon, Mr Costello.
TREASURER:
Hello Nick.
CALLER:
You just said that you wanted to make sure that Telstra goes into Australian hands, and you also said that the Labor Party needs to demonstrate what they say with actions. How are you going to demonstrate with actions the fact that if you sell Telstra, there is a possibility of it going to non-Australian hands?
TREASURER:
Oh no we have a law that restricts foreign ownership in Telstra, and that law will be left in place. And it means that the Telstra will always be in majority Australian ownership as it is currently. That is that the current shares are restricted as to the amount that can be held by foreigners, and the current shares have majority Australian ownership, and when we sell the shares in Telstra, we will maintain majority Australian ownership.
FAINE:
Quickly Nick.
CALLER:
Well I wish I could believe that because it does not have to be fifty-one per cent majority, all you have to do is buy forty-nine per cent, and you have no say in that.
TREASURER:
Oh no, we can restrict the number of shares that can be owned by foreigners, and we have. We have got that law in place which already applies to current Telstra shares which are in the market.
FAINE:
Good on you Nick. Bill in Ferntree Gully, good morning Bill.
CALLER:
The means test for the pension, I think it should be scrapped because people that pay a high income deserve some benefit from all their taxes, and I also believe it is pushing up the price of houses because people are trying to find investments instead of just living on the pension, and they are buying investment properties which is pushing up the price of houses.
FAINE:
So housing affordability is your concern? (inaudible) new entrants into the market?
CALLER:
And also the people who pay taxes, I think that they deserve the benefit of the taxes. You are taking the benefit from the people that pay the most tax.
TREASURER:
Well, there is a means test, I guess you are talking about the age pension here, Bill. There is a means test on the age pension. If your income is above certain limits you can not get the age pension. If the value of your assets is above certain limits you also can not get the age pension. The reason that is put in place is that it focuses the aged pension on the more needy in the community. The only thing I would say to you Bill, is if you made that age pension universal, if you said everybody could have it regardless of their income, and regardless of their assets, you would be paying a lot more in age pensions, and your taxes would be a lot higher than they are at the moment.
FAINE:
Well there is nothing much you can do about housing affordability while you have negative gearing though can you, because that is what drives the price at the moment.
TREASURER:
No I do not believe that …
FAINE:
You don’t …
TREASURER:
No I don’t Jon. I think the reason why prices are high at the moment is that interest rates are low, that is the most important reason, and employment is strong. So people have jobs, and they are able to buy houses and service their mortgages.
FAINE:
Well but they are not just buying one house to live in, they are buying houses as investments because interest rates are low, because they have got reasonably stable jobs in good economic times. So they are using negative gearing to provide for their future, and that is what is driving the price up. So in a way you and I are agreeing, I am just putting the emphasis on the negative gearing.
TREASURER:
Well, some people buy investment properties, that is quite right. I do not actually think that is a bad thing Jon because when people buy investment properties, they rent them out, and that means there is a stock for people who can not afford their own homes, but want to rent.
FAINE:
But it drives the price up.
TREASURER:
I will make this point, that if people were not buying investment properties and renting them out, rents would be much, much higher than they are, and we know in our community it is the poor that tend to rent more than the rich, and you would be driving up rents on the poorer section of the community.
FAINE:
Bill thanks for raising it. In Richmond, morning Nigel.
CALLER:
Oh good morning. Firstly I would like to congratulate Mr Costello on the re-election of the Howard Government.
TREASURER:
Thanks Nigel.
CALLER:
I have always been a long-term Party supporter since the eviction of Gough Whitlam in ‘75, and I am increasingly becoming concerned about the religious factors involved in both the National Party and the Liberal Party these days, and I have noticed that since the election quite a few social commentators like Andrew Bolt, Babette Francis and I think it was in the paper yesterday, they are starting to make comments about, you know, the move towards perhaps anti-abortion legislation, perhaps greater emphasis on censorship and things like that during this term of the Government. So, as an atheist Liberal, which is an unusual combination, I am increasingly concerned about the influence of the religious right which is in both Parties.
TREASURER:
Well, there has been a lot of focus in this election Nigel, on the issue of religion and faith. I guess partly because you had the new Party Family First running, which looks as if it may win a Senate seat. I have had contact all my life with the Church and people of Christian faith, and other faiths indeed, and there is no doubt in my mind that there is a growing interest in the non-mainstream churches, if I can put that way, outside the Catholic Church and the Anglican Church, and the organised Churches. They are growing, they are vibrant, they have got a lot of followers, and it is only fair that they seek and obtain political representation like anybody else. But I think (and this is the way I look at it) I think this is the way the Government looks at it, the Government is elected has to represent all Australians. We have to make sure that we have a strong moral fibre to our nation, but we have to also preserve liberty and freedom for the practice and conduct of all religions. That is the way we look at it.
FAINE:
Are you actively courting the religious vote?
TREASURER:
When you say courting, I have been to numbers of these churches. It was very well published that we went to …
FAINE:
You went to Hillside …
TREASURER:
… Hillsong in Sydney
FAINE:
... that was almost read as an endorsement of them …
TREASURER:
Well there were twenty thousand people there. It was a cross between a church service and a rock concert. I enjoyed it very much. I thought the people were very sincere and enthusiastic, and I thought had a lot in common with the views of most of us Jon.
FAINE:
So you agree with Nigel, that you think religion will play a greater role in Australian politics from here on?
TREASURER:
I do not know that it will play a greater role, but my impression is this, Jon, here is my anecdotal impression, that probably overall the number of religious believers is declining, but amongst those who still adhere to strong faith, the fervor is growing. And amongst those people their faith is very, very important to them, and they see it working out in public questions, and therefore it will be an important influence in Australian life.
FAINE:
So instead of the old style churches taking a back seat, you are going to get some of these new style religious groups trying to take a front seat.
TREASURER:
I think that is probably right. I think it is a good way of putting it, but you see it is not as if religion has never played a part in Australian politics.
FAINE:
(inaudible).
TREASURER:
We go back to when we were young, the argument about State aid for independent schools, the influence of B A Santamaria and Daniel Mannix, and the Catholic Church on the Labor Party, and subsequently the DLP. Religion has always played a part in Australian political life. The point that I am trying to make here is that the religious faith seems to have moved more out of the organised churches to these new enthusiastic charismatic or Pentecostal churches, and so it is not that the influence of religion is new, it is those that are religiously engaged are perhaps different to those that were religiously engaged thirty or forty years ago.
FAINE:
And of course the Howard Government has played its part in making sure that it happens by providing a lot of Government funding to religious based schools that some of those new churches have created from scratch.
TREASURER:
Sure.
FAINE:
You have helped them along, haven’t you?
TREASURER:
In this sense: - that when we came to office, we said those that were setting up new schools with religious base or faith base would qualify for Commonwealth Government funding.
FAINE:
And that has been the fastest growing sector in the education industry.
TREASURER:
Absolutely. Yes, and before we came to office there was a ban on Commonwealth funding for new schools. We removed that ban, and the fastest growing school area are the low fee systemic schools, some Anglican schools, some Catholic schools, and what you would call from the charismatic or Pentecostal or Assembly of God churches, they are setting up schools too. I think it is actually a good thing. I think parents should have choice.
FAINE:
Nigel, thanks for the question. Very interesting conversation. Pat from Seaford, good morning.
CALLER:
Good morning Jon and Peter. Peter where were you six years ago when Jeff Kennett was tolling roads? We didn’t hear anything from you, and I understand it is a State issue, but you were very much to the fore this year.
TREASURER:
Absolutely and I will tell you why, because the Scoresby Freeway is not just a State road. It is a Road of National Importance to be funded fifty, fifty by the Commonwealth and the State, and there is a signed agreement between the Commonwealth Government and the State Government to build the freeway without tolls. So we actually have a written agreement with Victoria for no tolls on the Scoresby Freeway. Now unfortunately …
FAINE:
That is ancient history now …
TREASURER:
Well, what do you mean it is ancient history …
FAINE:
Well it has been replaced by a signed agreement between the State Government and a consortium to build a toll road …
TREASURER:
Well let us be more clear. It was unilaterally breached, and ripped up by the Victorian Government.
FAINE:
But we now have the bizarre situation in Victoria were a Labor Government’s in bed with industry to build a toll road, and the Liberal Opposition are saying they want to tear it up and dud the private sector in order to build a road out of taxpayers funds.
TREASURER:
We have a agreements …
FAINE:
(inaudible)
TREASURER:
No, no. We have agreements with the Victoria Government to build Roads of National Importance all over Victoria. Take Calder freeway, Calder highway, for example.
FAINE:
Do you support …
TRESAURER:
No, no let me ask you this question. Do you think the Bracks Government would be entitled to rip up that agreement and put a toll on the Calder Highway?
FAINE:
Clearly not.
TREASURER:
Clearly not. The Scoresby Freeway is in precisely the same example. We have got the Hume Freeway, which is a national road. Would you put tolls on that?
FAINE:
Clearly not, but having the debate moved on a little bit, do you support Robert Doyle’s policy …
TREASURER:
Look the Pakenham Bypass is another Road of National Importance. Do you think Mr Bracks would be entitled to rip up our agreement and put a toll on the Pakenham Bypass? See once he has done this Jon, once he has put a toll on one Road of National Importance, where is it going to stop?
FAINE:
Do you support Robert Doyle’s policy to renegotiate the contracts if he is elected …
TREASURER:
I support Robert Doyle entirely in his efforts to have a freeway built without tolls. Entirely.
FAINE:
Well that is not quite the answer we were looking for. Peter Costello, thank you for joining us this morning, and I might say a very relaxed and different Peter Costello to the one that we have seen in the past, and this may well usher in what perestroika, glasnost and the Peter Costello social reform agenda we have been waiting for years to see.
TREASURER:
No, I just think it is your caring and nurturing nature that brings the best out of me Jon.
FAINE:
Hardly. Thank you for your time. Peter Costello, Acting Prime Minister.