HADLEY:
Mr Costello good morning.
TREASURER:
Great to be with you, thank Ray.
HADLEY:
A much more sociable environment than the one that we previously occupied for your visit.
TREASURER:
It's much better, I must say. Come up in the world a bit, it must be all those successful radio commentators, Ray.
HADLEY:
Something like that, or Singo's got too much money and wants to spoil us. Something like that. Would it be fair to say, in light of the decision of the Prime Minister to bat on for a little bit longer, that you have had to re-assess your goals, and re-assess where you are headed beyond 2003, 4 and 5?
TREASURER:
Well obviously it is important now that we get on with the job and there was a lot of speculation as you can imagine leading up to that. He has made his decision and that having been made, we have got to make sure that we get on with the job of governing the country, and governing it well.
HADLEY:
It must be difficult but, if you're viewed by everyone, and I am not talking about you, but everyone else including, I guess the electorate, as the heir apparent to either lead the Government, or lead the Opposition, depending on what happens at the next election, to try and put those personal disappointments aside, and obviously you have had trouble accommodating that but, you seem to have come to terms with it now, would that be fair?
TREASURER:
Well, people have always got expectations and want to know what you are going to do next, but I think it is important to concentrate on the job you are doing. And people say, well you have been doing that for 7 ½ years, and that is true, but it has been a very difficult time Ray, and gee, there are a lot of challenges in the economy, and the world economy, and making sure that we keep people in work, and working at keeping taxes down. And that is a pretty full-time occupation and that is what I am focusing on.
HADLEY:
Historically people go from being the Treasurer to being the Leader, but it doesn't seem to go hand in hand, and would it also be fair to say that in more recent times, you are trying to overcome the fact that people view you as being a bit of a bogey man, that you are out there, that you are the wicked fellow that does all these things to us, but you are trying to portray that there is another side to me, that I am not all bad news and doom and gloom about Treasury and about what happens to the Budget.
TREASURER:
Well I think that is true. The Treasurer's job is the second most difficult job in a government after the Prime Minister's job, and because you are the person that is responsible for the finances, you often have to deliver the unpleasant news which is, no we can't afford to spend more money, no we can't afford to engage in new programs for other Ministers, and you do tend to become the tough guy in the Government, if you are doing your job properly. We have had Treasurer's that didn't do their job properly and their whole economy paid for it. But if you are doing your job properly, you do tend to become the tough guy and the, one of the advantages that other Ministers have is they get to announce the good news, you get to announce the cost of the good news. So, that is difficult but, when you get the chance, and I do from time to time, to talk about other non-economic issues, actually I find it very stimulating. People actually write to me and say, gee we never knew you had views on social fabric of society, which I have been talking about a lot recently, or how to strengthen families, and it does come as a breath of fresh air when you actually talk about it.
HADLEY:
It is a bit hard perhaps, when people view you as being one-dimensional. That can happen to a lot of people in a lot of areas because they think that is the little pigeonhole that he fits in to, and doesn't do much else about.
TREASURER:
I think that is right. You don't often get the opportunity to talk about wider issues, because this is just a full-time hands on job, and you are doing budgets, and interest rates, and taxes...
HADLEY:
Real exciting stuff.
TREASURER:
...well, you know, necessary but, the truth of the matter is this Ray. If something goes wrong in the economy, if interest rates were to go back to 17 percent, where they were, as you remember under Labor...
HADLEY:
Yes, I bought my first house at that particular time.
TREASURER:
...17 percent, you know, or if we were to go into a recession and unemployment would jump to 11 percent, then people would be screaming the place down and millions would be thrown out of work. And so it doesn't sound interesting, running Budgets and taxes and the economy and all the rest of it, but at the end of the day what it does is it keeps people in work and allows them to have homes, and it pays for the education of their kids, and all of the things that they think are really important, and they are really important.
HADLEY:
Well let's talk about some of those other issues. Homes. You live in Melbourne, obviously we live in Sydney, and it is particularly difficult for first homebuyers to get into the market. Mr Howard made the point with my colleague Alan Jones yesterday morning, that those of us that have homes aren't whinging about the escalation prices, but those trying to get into the market. What about other capital cities, your hometown, is it as difficult for first homebuyers in Melbourne as it is in Sydney?
TREASURER:
Oh Sydney is the most expensive town in Australia, there is no doubt about that. And the median price, that is the average price you pay for a home in Sydney is...
HADLEY:
$460,000.
TREASURER:
...$460,000.
HADLEY:
It buys you a lot in Melbourne or Brisbane.
TREASURER:
It would buy you more in Melbourne, it will buy you more again in Brisbane, it would buy you a pretty good house in Hobart, if you were living in a country town, $460,000 would buy you a great house. A fantastic house, probably on about 5 acres.
HADLEY:
You might be in the middle of a drought and won't have a job, but at least you will have a nice house.
TREASURER:
...so Sydney is the most expensive town in Australia, there is no doubt about that. That is fine if you're in the market, as John Howard said yesterday, and I have been saying all week, our plan is not to bring down the value of people's homes. People who have actually invested a lot of money, don't want the value of their investment to fall. I want to be very clear about that. But, for those that are trying to get into the market for the first time, that first home is the hard one. Once you have got a home, as you know Ray, the price tends to go up, you make a little bit of a gain when you sell it and you buy your next one. For most of us, I'm sure you're the case we started off with pretty cheap home, but we have, over the course of our lifetimes, been able to trade up. So it is just a question of the first homeowner getting that first homeowner into the first property and that is the question that we are going to look at. I have called an inquiry into that to see what can be done. A lot of ideas are now coming forward. For example the release of more land, looking at some of the costs in relation to stamp duty, and we will have an inquiry, it will be an open inquiry and we will look at the results as they come back.
HADLEY:
It's all pretty pointless, the finger pointing from the State Government and the finger pointing from the Federal Government, saying well you charge GST on new homes and you charge stamp duty on new and pre-owned homes. I mean at the end of the day, if the interest rates, and we will have an announcement on that shortly, stay at the affordable level they're at at the moment, we're going to have a problem because while it's $467,000 the median price in Sydney, it means that it is far more affordable at six and a half percent than it would be at twelve and a half percent.
TREASURER:
Oh, absolutely. This is the other point that I keep on making. The fact that interest rates are now at thirty-year lows, means that people have been able to afford better houses. And that is one of the reasons why prices have gone up, absolutely. Ray, you could bring houses down tomorrow, if you wanted to go back to a 17 per cent interest rate. That is what Keating and Hawke did back in the late 1980's early 1990's, but that is not the plan here. The plan here, is, not to put up interest rates and bring on a recession. The plan is to ensure that interest rates remain low, so that people can afford good housing. It is this question of getting the first, first stake in the market. I just want to make one point about GST because you raised it then. We have done the figures these will come out in the Productivity Commission inquiry, 85 per cent of first home buyers buy established homes on which there is no GST. So it is an absolute furphy to say this is somehow related to GST. Eighty five per cent of first homeowners buy established homes. It might be a flat, it might be a unit. There is no GST on established homes.
HADLEY:
And so their second home would be affected by GST but that comes when they are in a much more stronger position
TREASURER:
If you buy a new home, a newly constructed home, the GST will go into the construction cost. But, as you know yourself, your first homebuyer, your young couple don't tend to go and buy a brand new home. In fact only 15 per cent do that. What they tend to do is buy a flat or a unit and get their place in market. So this is not GST question. There are a lot factors that I said that are impacting. I have made the point, I do believe that as prices have gone up the stamp duty rates have remained unchanged and that has worked against first homebuyers
HADLEY:
Mr Howard has today ruled out supporting gay marriages, I note off the website, because they're now incompatible with an institution designed to ensure the survival of the species. Where do you stand on so called gay marriages
TREASURER:
Our view is that marriage is a partnership between a man and woman and that is the definition we've got in legislation. I think that has always been the understanding of marriage. The legal definition of marriage and the legal institution of marriage, and obviously people have relationships, and they might be long term relationships between people of the same sex, but to have a marriage, it has to be people of the opposite sex.
HADLEY:
That is the legal definition. What does Peter Costello personally think of it
TREASURER:
I think that's the right legal definition, but as I said earlier, obviously I understand and accept that there are many people of the same sex who have a relationship and a partnership, and sometimes a long term partnership. I understand that and I respect that.
HADLEY:
Do your views change as you get older. Do you find that the things that you held near and dear at twenty one and twenty two disappear as you...
TREASURER:
Look I think over the course of your life you do change a lot...
HADLEY:
Do you think that you get softer or tougher?
TREASURER:
Um, probably softer.
HADLEY:
Is that because of wife and family or other influences?
TREASURER:
Yes, in my experience as you go through life, and you see different things, you get more understanding and more accepting. That has been my experience anyway, particularly and as you go through life and you have teenage kids, you have to get more understanding and more accepting. Whether you like it or whether you don't, that's has also been my experience.
HADLEY:
I'm just getting into phase myself.
TREASURER:
Are you?
HADLEY:
I know why you're laughing.
TREASURER:
Yes, well prepare yourself for it. Believe me nothing prepares you for it until you have been through it. I think a lot of parents will say that...
HADLEY:
It's funny how people will say to you when you've got children, and I've got three younger than teenage and one into the teenage years and said to me "Oh look you don't know what's going to happen, these three girls of yours are going to get up there and then all of a sudden you think, no, I'm doing exactly what I should be doing as a parent, and all of a sudden you say to wife, gee, things are going tremendously well and then yesterday something happens you think, well maybe I'm not quite at adept to all this as I thought I was 48 hours ago.
TREASURER:
Well I once heard a definition that said a conservative is a person who used to be a liberal but who now has a teenage daughter...
HADLEY:
(laughing) It's probably...
TREASURER:
...nothing will prepare you for it Ray, so get ready. You have the people who say when they're young, they're a handful but in my experience they can more difficult when they're older.
HADLEY:
We are all influenced by our friends and our family and we discussed wives and children but what about siblings? Your brother's a high profile man who has views and particularly set views in some areas which many people support and others don't. Do you converse with Tim regularly...
TREASURER:
Oh sure and on some things we agree, and on some things we don't...
HADLEY:
You would be disappointed if you agreed on things surely because that is the nature of life, is it not?
TREASURER:
Oh look, in families you know people have different views, and I think that is probably the strength of families. That's what makes individuals. Some things we, for example, he's been campaigning against gaming, poker machines. I agree with him on that. I think there a far too many of them and in fact we called a big federal inquiry into the issue and put it squarely on the political agenda. There are other things that I wouldn't agree with him on. And he has criticised me from time to time, that's fair enough. I've got broad shoulders.
HAELEY:
In relation to poker machines and gambling generally. Poker machines particularly, we can take the blame for that here in New South Wales, we started it all. And I think it is now a crutch that the Carr Government relies for revenue upon and all of a sudden there is no where else to go, because if the gaming machines disappear, and as they put restrictions on them, so when they put the restrictions on and no more machines now they're attempting to double the tax on the clubs because there is no money coming in and no continued income stream because instead of getting thirty poker machines in a pub now the prospect was maybe 40 or 45, but they've capped it. Which is I guess admirable. What it means is just the taxes go on, and they've got to pay for the hospitals and the schools and roads
TREASURER:
Well, this the problem when a Government gets dependent on it, you see, what the Productivity Commission Report showed, is a very high proportion of the revenue that comes through pokies actually comes from problem gamblers. And so whilst Governments will say, oh, we don't want to encourage problem gambling, the truth of the matter is, if you wiped out all problem gambling then the revenues would significantly deteriorate as would the tax takes. So, a Government has this conflict of interest, in its better moments it is saying to itself, we should try and prevent problem gaming or problem gambling, from developing. On the other hand, it is saying but we want to keep our revenues up. So this is one of the difficult situations Governments get themselves into. They become too reliant on these activities.
HADLEY:
And of course they have available all these gaming machines, phone the G line. By the time the poor bugger has finished they don't have the money to phone the G line anyway.
TREASURER:
Well, that's right and the thing, look if there are people that put money in a poker machine and they can walk away, okay fair enough, it is their money. But we do know, that there are people that can't walk away and we do know in relation to poker machines, that is quite a significant part of the revenue and these are the people that shouldn't be there that need help not to be there, to be able to walk away. And yet if all of them did, then the revenues and the tax take would be down significantly.
HADLEY:
Okay, we are getting half way or beyond half way through 2003. You appear to be at peace with decisions taken by people that you are affected by. What is the time frame for the next step for Peter Costello. Have you had dialogue with the Prime Minister about that?
TREASURER:
Well, obviously I have spoken to him about the party, and about the future, and you know I have been the deputy leader and he is the leader and we do talk about it. I think it is our responsibility to make sure that the party is put in the best state possible to form Government and to run the country.
HADLEY:
Is he reluctant to talk about it or do you go to him and say "John, in (inaudible)...you can't go on forever, you can't be when you're seventy."
TREASURER:
Well, we have had various discussions, I'm not going to go into detail obviously, but we've had various discussions...
HADLEY:
He's not going to be here till he's seventy
TREASURER:
I'm not going into anything like that, Ray, because you know, these things tend to get magnified, but obviously we've had some discussions and I think both of us want to do what's in the interests of the party and the Government and the country.
HADLEY:
Right, I don't know how you will take this but in a perverse sort of way, I think he's actually done you a favour, because if we look at Peter Costello twelve months ago, I mean we haven't seen the other side and how he feels about all those other issues. Because there is an interim period and he continues on, I think it gives you an opportunity to explain to the electorate about the fact that you are more than one dimensional, that you do care about other issues and you're not just some bloke in the back of Parliament in some room looking at figures and deciding whether we can take it from here and put it there and all the rest of it. And then people know that you care about all sorts of other issues. And so to a certain extent, I think inadvertently, he has done you a favour.
TREASURER:
Well, as you say Ray...
HADLEY:
You always look on the positive side. I'm trying to find inaudible
TREASURER:
You're really heartening me there, Ray.
HADLEY:
I can see the enthusiasm oozing from every pore.
TREASURER:
No, look it is a fair point, and you have got to look at things from different perspectives. I think that is quite right.
HADLEY:
All right, you have got other things to do I appreciate you coming in to say g'day this morning. We hope to see you again in the near future
TREASURER:
Thanks very much for your time Ray.