BYNER:
Let's welcome the Federal Treasurer, Peter Costello. Good morning.
TREASURER:
Good morning, Leon.
BYNER:
Good to see you.
TREASURER:
Great to be here.
BYNER:
You're in the paper playing golf. Was that just a publicity shot or do you actually know what an iron is?
TREASURER:
I know what an iron is. I do not know how to use it, though. I was in Merimbula yesterday, and doing a function at a golf course, and the press said to me, "Come out and hit off the first tee." Well, it was a pretty ugly shot, I can assure you. If you saw, if you saw the picture, you would know it was a pretty ugly shot.
BYNER:
All right. I want to ask you about the controversial changes to the Federal Budget which you delivered very recently. There's been a lot of public reaction to the Public Benefits Scheme with regards to subsidised medicines. Now both Simon Crean and Natasha Stott Despoja say you will not get these changes through. What will that do to your increases for a dollar for pensioner and a few dollars for each person to paying around $28.50 or $28.60?
TREASURER:
Sure. Well, can I just very briefly say what the changes are. For pensioners, the current co-payment is $3.60, and it is going up by a dollar. And for pensioners, after you have 52 scripts in a year, they are free. So, it is an additional dollar. For other people, the maximum that you can pay is going up to $28.60. But, there is a lot of people saying, "Oh well, that means they are all going up." No, they are not all going up. Many of the common medications are sold for less than $28.60. For example, Ventolin is sold for about $17.00. $17.00. It will stay at $17.00. The only thing that goes up is the maximum contribution if you are taking a treatment which has a cost of $100.00 or $200.00, or some of them have thousands of dollars.
BYNER:
Yes.
TREASURER:
The maximum that you can be asked to be paid, to pay, if you are not a pensioner, is $28.60. If you are a pensioner, it is $4.60. So what we are trying to do is, we are trying to have a system where we can afford to bring new drugs, which are effective but very expensive, onto the Scheme by financing the whole Scheme.
BYNER:
All right. Now, but you, despite your rationale this morning, which people understand, you're going, you've got a problem in the Senate where you won't, you probably, if Natasha and Simon are true to form, you won't get them through. What will you then do?
TREASURER:
Well, my first argument will be that they should be responsible. And I am not going to let them off the hook. I mean, you know, here you are, you had an election, what - late last year? The Government's first Budget. The Labor Party did not win the election. Natasha had a very bad election outcome. And now the Labor Party and the Democrats want to block the Government's legislation in its first Budget. And the point I will be making to them is this: That if we do not get the Pharmaceutical Benefits Scheme on a sustainable basis, you will not be able to bring new, expensive treatments onto the Scheme. That is what we are looking at. We are trying to make this Scheme sustainable, so that you can bring new treatments onto the Scheme. If the Labor Party and the Democrats will not co-operate in making it sustainable, if they are going to force this Scheme basically to be financially stretched, which looks like it is their tactic, the consequence of that is, you will not have a sustainable system, bringing new medications onto the system at a reasonable cost in the future.
BYNER:
Now, I spoke to you briefly just before we went on air about the fact that there are 240,000 people now approximately, but that's a pretty good figure, who suffer from Hepatitis C, which once you've got, you're stuck with it. Now, the virus treatment for this as you go through life is very, very expensive. And Dr Greg Pyke from the Southern Cross Bioethics Institute made the point yesterday that the harm minimisationists around the community who have been giving out syringes, not in exchange but just handing them out to people, lest they get AIDS, have produced another monster which is really going to affect a lot more people. How are you going to handle that in terms of the cost?
TREASURER:
Well, this is the point about the Pharmaceutical Benefits Scheme. Some of these medicines, in fact, are bought by the Government, have to be bought from the people that make them, for thousands of dollars. Right. There is one we put onto the Scheme last week which cost $6,745.00 a prescription.
BYNER:
What's that?
TREASURER:
It is, Glivec it is called. It treats cancer. $6,745.00. Now, what the Government is saying is, for pensioners, pensioners can have access to that for $4.60 and the taxpayer subsidy will be $6,740.40. Now, now these things do not actually cost $4.60. It costs $6,745. The taxpayer puts in a subsidy of $6,740.40. So, when you put it in that context and you say that the pensioner's contribution is a maximum of $4.60, you can see how cheap and opportunist the Labor Party is being, you know, in trying to stop these measures. And why are we putting these measures in place? We are putting them in place because all the time there are new treatments, they are effective and they are very expensive. And if you do not have a sustainable financial way or running the Scheme, the Scheme will break under its own financial weight.
BYNER:
The entire car industry, Treasurer, and all State governments, are united in their push for a freeze in tariffs of 10 per cent past 2005, especially given that most of our Asian neighbours have import tariffs on cars ranging from 20 to 300 per cent. Does the Federal Government agree with the push to freeze tariffs until 2010?
TREASURER:
Our policy is to bring the tariff down in 2005 to 10 per cent, and we are currently looking at the assistance that we will be giving to the motor car industry in the post 2005 era. And let me put this in context. I think this Government has done quite a lot for the car industry. We cut the tax on cars, which was 22 per cent Wholesale Sales Tax, to 10 per cent, the GST. We have given a great deal of assistance to Mitsubishi Motors, which Mitsubishi has indicated will allow it to continue here in, here in Adelaide. So, it is our policy to bring the tariff down in 2005, and we are looking at assistance thereafter.
BYNER:
Okay. What about the countries we trade with, many who do not share the same, if you like, verocity of bringing tariffs down that we have? Many of our trading partners do not give us, I mean, for example, we have a problem where in some Asian communities there are tariffs three, four, five times what we have. Is that fair?
TREASURER:
Well, it depends what countries you are talking about. But, yes, there are countries, the United States is one, for example, which is, at the moment, well, was putting tariffs on steel - and we were able to negotiate a lot of those tariffs away - and is now unfairly subsidising agricultural production. Now that affects our exporters. So, we are going to be very, very active in opposing the US moves to subsidise agricultural production. We are going to try and get them to change their policy in relation to that. But, if you were to say, "Oh well, the answer is that we will put tariffs on all of their goods," that would not actually help us. We are trying to get into their markets. It is in our interests to bring tariffs down, not to put them up.
BYNER:
So, so you think that we should play the good Samaritan?
TREASURER:
No, I think it is in our interests to have our exporters able to compete overseas. And part of that is getting other countries' tariffs down, and we have a consistent position in relation to this. But, you know, you take the Australian car industry. Mitsubishi Motors has announced that, with Government assistance, it is going to stay here in Adelaide and have a new model. But we are actually a car exporter now. We should not be thinking about banning imports, we should be thinking about how we actually get exports. We are a big car exporter to the Middle East.
BYNER:
I don't think it's a question of banning imports. It's about fair trade as opposed to free trade. That's really been the catch cry. Surely you understand that?
TREASURER:
Oh I do and we, around the world, champion fair trade and the fairest trade is the kind of trade which gets our trading partners to reduce their tariffs so our exporters can get in, and correspondingly we operate a lower tariff regime here in Australia.
BYNER:
Okay. I want to go through a couple of very important issues just quickly because I know your time is precious and I thank you for coming in this morning. There are a couple of things. First of all, we have got about 600,000 people on disability pensions. From 1990 upwards there was a huge growth of the number of people on disability pensions and a lot of it was done for opportunism, to get people off one list of unemployment figures onto another. So are we, are we now saying that by reducing the number of hours from 30 to 15 we want to put some of those people back from the list they were, they are now on back to the one they were on before we made the change?
TREASURER:
Well, look, the Government got criticised for that very point. People have said, oh look, you are disguising unemployment by putting people on disability pensions. So we said alright, well we will tighten up the rules on disability pensions. What's the first thing that happens? The Labor Party, which had demanded, which had demanded that we address this policy, says oh, now it is going to oppose our measures. Talk about cheap jack opportunists.
BYNER:
So, what will you do if they do?
TREASURER:
Well, look, the point on disability pension is this, a lot of people think, oh well disability pension, they must be talking about people in wheelchairs. The largest category of people on disability pension are people who have muscular skeletal problems…
BYNER:
Yeah.
TREASURER:
…simply bad backs.
BYNER:
Yes. Is that the RSI of the new millennium?
TREASURER:
Well, that is the largest single category on disability support pension, people with bad backs. And in the past if you were incapable of working 30 hours you went on the disability pension, you stayed on it for the rest of your life until you went onto the aged pension. There was never any attempt to give rehabilitation or training, maybe get people back into part time work. What we are saying, is, if you can get people back into part time work, if they can work 15 hours, maybe in a desk job, they have got a bad back but they can work in a desk job, you should give them rehabilitation training to get them back. That's what we're trying to do.
BYNER:
Okay, what will you do if you get opposed though, in the Senate, what would you do?
TREASURER:
Well, if this is defeated in the Senate, what will happen is it will be more or less an open invitation for more and more people to go on the disability support pension, and the taxpayer will pick up the tab, that is what will happen.
BYNER:
When do you think you might be Prime Minister?
TREASURER:
I don't really think about that Leon.
BYNER:
It never strikes your mind, you never think about it, never give it a thought?
TREASURER:
No, too busy being Treasurer. It is a lot of work being Treasurer.
BYNER:
I'm sure it is. So, you have never thought at all about when you might be Prime Minister?
TREASURER:
No, I don't think about it, no. We are in the middle of a Budget. I am out explaining the Budget and that is the thing that is on my mind.
BYNER:
Do you agree that the Liberals and the Nationals should merge?
TREASURER:
Look, different people in the Party have different views on this and I think it is something that should be discussed, I do. I think it should be discussed within the forums of the Party. Now, you would have seen overnight that Senator Minchin was going to say something to the National Farmers Federation, which is I am sure why you asked me this question
BYNER:
Yeah, sure.
TREASURER:
And the point that is being made there is he was representing the Prime Minister and it was not the Prime Minister's views, so, I think Nick acknowledged that and withdrew those comments.
BYNER:
But, do you think if there was a merger it would drag the Nationals to the right? Do they, do they need to be of that particular part of the political spectrum do you think? What do you think?
TREASURER:
I don't think the Nationals regard themselves as a, as a left-wing operation which needs to be dragged to the right. It is the first time I have heard that proposition actually.
BYNER:
Yeah.
TREASURER:
I think the National Party would regard itself as pretty much on the conservative side of the spectrum and not in need of a right-wing blood transfusion.
BYNER:
Okay, let's talk to Lorraine. Lorraine, you are talking with Treasurer, Mr Costello.
CALLER:
Hello Mr Costello.
TREASURER:
Hello Lorraine.
CALLER:
Nice to speak to you.
TREASURER:
Thank you.
CALLER:
Two questions I'd like to put to you and it concerns the transferring of costs of State Government liabilities onto the Federal Government. The first one is that I am actually on Workcover. Now I have been told I will never work again, I am pretty well had it. My medication costs around about two to three hundred dollars a month. Once I hit the $800 I then get a health care, or get the concessions, but because the medications are work related my insurance company is being subsidised by the Federal Government under the PBS scheme. Secondly…
TREASURER:
That is cost shifting.
CALLER:
… that is cost shifting. Secondly, under the new Workcover Scheme, after 2 years I will be virtually thrown off the system. I will be eligible then for a disability pension. That is cost shifting again.
TREASURER:
Yes.
CALLER:
Why are the taxpayers of Australia paying for my employer's negligence?
TREASURER:
Well, look, I am very pleased you rang, you rang in with examples like that. The point that is being made here is that somebody who is on Workcover under a State scheme is effectively being pushed onto the Commonwealth schemes through the Pharmaceutical Benefits and Disability Support Pension so that the Workcover Scheme is making a saving and the Commonwealth taxpayer is, is picking up the cost of (inaudible), it is a very good example.
BYNER:
What might you do about intervening in a matter like this?
TREASURER:
Well, look, it is something I will ask our officials to have a look at and come back to the South Australian State Government about. I am sure the South Australian State Government would be horrified to realise they were reducing their own costs at the expense of the Commonwealth taxpayer.
BYNER:
One quick question, and I thank you very much for coming in. Is there a time in your Treasurership that you will index tax brackets so that we don't get this bracket creep where, if things keep going the way they're going, within a couple of years your average wage and salary earner will be on nearly the highest marginal rate of tax?
TREASURER:
Well what we did, Leon, back in July of 2000, is, we raised all the thresholds and effectively dealt with that problem. But it is something you have always got to keep an eye on. But, if you go back to July of 2000 when we reformed the system, we raised all of the thresholds and cut most of the rates and the effect of that is that the so-called bracket creep was more than compensated for with the income tax reductions.
BYNER:
Although the Taxpayers' Association sent out a document which I saw recently that said that 50 per cent of those cuts have now gone because of bracket creep?
TREASURER:
Ah, well, I would have to look very carefully at the figures. But I can tell you at the time that we cut income taxes by $12 billion, the effect of those income tax cuts was far greater than any bracket creep during the time of our Government.
BYNER:
Mr Treasurer, thanks for coming in.
TREASURER:
Thank you very much for having me Leon.
BYNER:
And your message to the people of South Australia is what?
TREASURER:
Keep supporting the Crows, and if you don't support the Crows, support the Port Power.
BYNER:
Treasurer Peter Costello on 5AA.