BONGIORNO:
Thanks for joining us, Treasurer. Well that surprise tax cut certainly takes the wind out of Labor's sails, but at $4.00 a week for most taxpayers, is that offering them the relief they really need?
TREASURER:
Paul, when you sit down and you do a Budget, as we did this year, we had a couple of goals. One is we want to keep it in surplus, which we've achieved. Second is, we had to fund a war and increased security and drought assistance. When we sat down and we looked at all those things and realised that we could cover them and we still had quite a decent surplus, we took the view that it was fair to share some tax relief amongst the Australian taxpayers. Now, if we hadn't have had a war and we hadn't have had a drought, maybe we could share a bit more, but given the fact that we had to fund the drought and the war and security, I think this an affordable tax cut and it's a fair tax cut.
BONGIORNO:
Your university reforms, won't that mean that most graduates will start out in life after university under a mountain of debt?
TREASURER:
Well they pay a higher education contribution charge at the moment, and what we've said is that can't change for teachers or nurses or priority areas, but in other areas, the universities can drop that or they can increase it by up to 30 per cent. But the student will still get a loan for the amount which they only have to pay back once they join the workforce and earn more than $30,000. It's a fair way, we believe, of sharing the cost of the university place between the student, who'll benefit, and the taxpayer who'll pay for still three quarters of it.
BONGIORNO:
But the interest rates you'll be charging, 3.5 per cent plus interest. For example if the scheme was going now, that would be an interest rate of around 7 per cent, it's hardly generous in those terms.
TREASURER:
Well the HECS, the HECS loan, which is the places you win under the current system, that has no interest rate, that's just indexed to inflation. There's a new system coming in for people who are full fee payers and they'll pay a 3.5 per cent real interest rate. But that's only for full fee payers, that's the people that go to private universities and who don't get any assistance at the moment.
BONGIORNO:
Well the tax cut, the rabbit out of a hat, some would say reminiscent of another Treasurer, we won't go into that. Would you be happy enough to go to an election on this Budget?
TREASURER:
Well I hope the Budget passes. We still haven't passed last year's Budget, you know. And you've got a Senate which is trying to obstruct the Government, and I call on...
BONGIORNO:
The tax cuts of a mid-term Budget.
TREASURER:
Well...
BONGIORNO:
It looks like an election Budget, doesn't it?
TREASURER:
...it defies political logic because people would say, people would say well you should keep the taxes high and cut them before an election. Our view is, if you can balance your budget, fund your expenses, the taxpayer should get a return.
BONGIORNO:
Treasurer Costello, thanks for joining us.
TREASURER:
Thanks Paul.