KENNERLEY:
Well, I know it is not the Macarena, but I reckon he did feel like dancing on Saturday night, and I welcome to the program, Kerri-Anne at midday, Mr Peter Costello.
Welcome to the program Peter, and did you feel like dancing?
TREASURER:
Well, thank you very much for the invitation, Kerri-Anne, but I only save my dancing for you. You know that.
KENNERLEY:
What time was last drink call on Saturday night?
TREASURER:
Oh, it was pretty early in the morning. We didn't really get final results until about eleven o'clock, so celebrations began after that, and sometime early on Sunday morning they came to a close.
KENNERLEY:
So, everybody was feeling fairly good?
TREASURER:
Yes, well, it had been a tough 3 years. We had put in place probably the biggest reform package that Australia has ever seen with the taxation reform, and we were going into an election, and you are never quite sure how things will work out. But, having put before the Australian public, I think, some pretty big choices, we were pleased to see that the Government was returned.
KENNERLEY:
You addressed Sydney business people last week, and you talked about Australia being the fifth most competitive nation in the world. Why didn't we hear that as a louder message during your election campaign?
TREASURER:
Well, it is something that I was trying to get publicity for. There is a group called the World Economic Forum, based in Switzerland, which tries to rank countries around the world in terms of competitiveness for investment. And over the last year we moved up from eleventh place to fifth place on their rankings, and overtook countries like Hong Kong, and Switzerland, and the Netherlands, and became one of the real competitive countries of the world. And a lot of that was due, of course, to the tax changes which we have been putting in place. So, it meant that Australia is now right up there at the head of the league tables. You have got to work hard to keep there, but, it is a recognition that we have come along way over the last 5 years.
KENNERLEY:
Well, Australia's stance, your Government's stance, on the asylum seekers, according to Paul Keating, even this very morning, has said that it really, that stance has damaged our international reputation and the way people want to trade with us?
TREASURER:
Well, look, people will trade with Australia where they have goods and services to sell to Australia and where they want to buy goods and services from Australia, and, that is the way that modern trade operates. And, really, Mr Keating is now, sort of, trying to re-insert himself into Australian politics.
KENNERLEY:
Why do you think that is?
TREASURER:
Well, it is because the Labor Party does not seem to have any leadership at the moment.
KENNERLEY:
Well, why is he taking it upon himself would you imagine?
TREASURER:
Well, he is taking it upon himself because, obviously Mr Beazley was defeated, the Labor Party does not seem to have any strong leadership contenders, so Mr Keating has popped back out of the box to tell Australia what the Labor Party should be doing. But I make this point, during the federal election campaign, Kim Beazley, and all of his team, over and over again, said that they fully supported the Government's stand on unauthorised boat arrivals. Now...
KENNERLEY:
But Paul Keating is saying that your stand was, quote, `the sleazy option'.
TREASURER:
Well, if that is his view he must have the same view of Mr Beazley, and Mr Crean, and Mr Brereton, and all of the Labor Party, most of whom were colleagues of his, who fully supported our stand.
KENNERLEY:
Why do you think he is so vitriolic at the moment?
TREASURER:
Well, I think he is vitriolic because he lost the 1996 election...
KENNERLEY:
Gee, he's got a long memory...
TREASURER:
He has got a long memory, I think that is right. And I don't think this will help the Labor Party, by the way. I don't think the Labor Party, which now desperately, wants to put a new face on itself, is going to be happy with Mr Keating coming out and reminding everybody of the influence that he has, and speaking in the name of the Labor Party. I don't think they will be very happy about that at all.
KENNERLEY:
Mr Costello, so you are very content with the fact that our international reputation and the business that will be done on trade will not be affected by our stance on asylum seekers?
TREASURER:
Of course it won't be. What will affect our trading opportunities are the goods and services that we have got to sell, the state of the world economy, whether or not people require the goods and services that we are exporting. They don't sit down and look at these political issues. And, the other point that I would make here, is, that Australia is not alone in ensuring that it has an orderly immigration and refugee policy, by the way. Other countries do the same thing and you would have noticed recently that Tony Blair in Britain, has recently tightened up border protection in Britain.
Now, I am not aware that anybody is sitting down and saying, well, we won't trade with Britain because we don't like Mr Blair's policy on immigration. Nobody is saying that in relation to Australia either.
KENNERLEY:
Well, let's look to the future. What do you think is your, what is your priority for Australia?
TREASURER:
Well, we are coming into a pretty difficult time.
KENNERLEY:
So, how do you combat that when the world looks as if it is going to go into economic recession?
TREASURER:
Well, the world's largest economy is the United States, and that is most probably in recession, and you have terrible events, like the events of September the eleventh, worse events, more events of a terribly worrying nature today with the aircraft crash, that is not going to help the United States confidence or its economy, and that is not going to help the world. So, we have got to make sure that we can strengthen the Australian economy against some very chill winds which are blowing and we can make sure that in a very, very difficult world climate Australia can be the best that it possibly can.
KENNERLEY:
How?
TREASURER:
Well, it is going to take good management in relation to budgets, it is going to take good management in relation to interest rates, it is going to take good management in relation to economic policy and tax policy, and it is going to take firm leadership, and that is what we have got to concentrate on for the next 3 years.
KENNERLEY:
Well, leadership was part of the election campaign. There is a rumour that Jeff Kennett is going to throw his hat into the federal ring. What is your reaction to that?
TREASURER:
Well, there, I think Jeff has been the subject of those rumours now for, well, as long as I can remember. They have always been around and I am sure while Jeff breathes they always will be around. And I think they are just that, I think they are rumours.
KENNERLEY:
He did say this morning that he hoped Mr Howard would retire on a high note and isn't defeated.
TREASURER:
Mmm. Well, being defeated in politics is not a pleasant experience and I wouldn't wish it on anybody. And whether it is John Howard, or whether it is Kim Beazley or Jeff Kennett himself. Jeff, of course, as you know was defeated, and obviously it was a very severe disappointment for him. So, he knows about defeat in politics and going out on a high note would be something that everybody in politics would wish for.
KENNERLEY:
So, is Jeff Kennett creating these rumours himself?
TREASURER:
Oh, I don't know. I, you know, I think Jeff is one of those people that enjoys having a bit of fun.
KENNERLEY:
Do you have fun with him?
TREASURER:
Oh yes, he is...
KENNERLEY:
When was the last time you two had a drink?
TREASURER:
Oh, I think, actually, the last time I saw him was the last time I saw you, it was at the Grand Final breakfast, the end of September.
KENNERLEY:
Now, of course, you mentioned the leadership, and everybody talked about that during the election. Have you had a conversation with John Howard about leadership aspirations?
TREASURER:
No, we don't really talk about those sorts of things. What we talk about is how to run the Government. He is the Leader, I am the Deputy Leader, he is the Prime Minister, I am the Treasurer, we have got a lot of issues on our plate and I can assure you that we speak very, very regularly, and it is nearly always about what has to be done to run a good Government for a good economy and a good country.
KENNERLEY:
Is there some sort of Kirribilli-like pact, as Hawke and Keating had?
TREASURER:
We don't do those sorts of things, and I think it was the wrong thing for Mr Hawke and Mr Keating to do at the time, and we certainly would not follow their example.
KENNERLEY:
Now, in 1996, when I talked to you on Midday, we did discuss superannuation. It was a big part of the interview that we conducted. And you said there was a review, that you would put in place, on the generosity of political superannuation. What happened to that review?
TREASURER:
In relation to Members of Parliament?
KENNERLEY:
Yes, Members of Parliament, and what many consider, lavish political superannuation?
TREASURER:
Yes, well, we did change the rules so that Members of Parliament have to have lump sums preserved to the preservation age. And that will apply to all of the Members of Parliament that...
KENNERLEY:
But that has just come in, hasn't it?
TREASURER:
Yes, that has just come in.
KENNERLEY:
But when you and I talked it was 1996, it took a while to come in?
TREASURER:
Well, the important thing, well, I am not sure how much legislation it required, and it required a lot of actuarial type work, and it was actually done over a period of time. But it is now in place as we said we would do it, and we have done it.
KENNERLEY:
Because it is frightening to think if the baby boomers all get their pension by about 2020, the country will be broke.
TREASURER:
Well, we have got to make sure that the country is not broke and one of the things I am trying to do with the public service, generally, is to start funding public service retirement benefit as we go, rather than leave them un-funded, and that is why I was so critical of the Labor Party policy during the campaign. They...
KENNERLEY:
Do you think you, you know, people who want to look after themselves in the future, we pay 15 per cent when we put it in and we pay 15 per cent on earnings, and pay 15 per cent when we want to get it out, and we are trying to look after ourselves. So, shouldn't we get a better break?
TREASURER:
Well, if you took the money as salary it would be taxed at 40, 48 ½ per cent as a top rate, and if you put it into superannuation the general rate is 15 per cent, so, it is a big tax break to put money into superannuation.
KENNERLEY:
Mmm.
TREASURER:
If you were just, had a normal investment, say money interest on money in the bank, you would, again, be on the top marginal rate be taxed at 48 ½, but if in a super fund then...
KENNERLEY:
Well, it is slightly better, but don't you think, you know, taxpayers who want to look after themselves deserve something just a little bit more? It has been very confusing for very many years.
TREASURER:
I think it has been very confusing, I agree with that, but I am making the point that the rates, in relation to superannuation, are very much lower than the normal rates of taxation, and that is designed to encourage people to save, and to encourage them to put money into superannuation. And people can rest assured that if they do do that, then they do get tax incentives, quite substantial tax incentives, as a consequence.
KENNERLEY:
Well, Mr Costello, I really do appreciate your time today. And one of the other issues I am going to bring up today is friendship. I mean there is a lot of issues, we are very time poor these days, and friendship is considered the armour necessary to weather the inevitable rollercoaster of life. Who is your best friend?
TREASURER:
Oh, I think my wife is my best friend. She is the one that puts up with me more than anybody else, and, I only wish that I spent more time with her. But she has been through a lot in public life and you take the slings and the arrows and she has always been a great support for me, and so I would have to say without a shadow of a doubt.
KENNERLEY:
When did you last send her flowers?
TREASURER:
You always get me into trouble.
KENNERLEY:
I don't mean to. I am just a girl who likes to dance.
TREASURER:
That's a good point.
KENNERLEY:
Mr Costello, I do appreciate your time. Congratulations on winning, and you know, look after the country.
TREASURER:
Thank you very much Kerri-Anne, all the best to you too.
KENNERLEY:
Thank you very much. Peter Costello.