TRIOLI:
Peter Costello, good morning.
TREASURER:
Good morning Virginia.
TRIOLI:
So what should the States do exactly?
TREASURER:
Well you recall when the GST was introduced, it was introduced to replace a whole raft of indirect taxes, many of which have now been abolished such as Financial Institutions Duty and Bank Account Debits tax, but not all. And we have been pushing the States to agree to abolish all of those taxes, we have got a timetable out of New South Wales now for the abolition of stamp duty on mortgages, they will be the slowest State to do that and we have to get a timetable out of them for the abolition of stamp duty on business conveyances.
TRIOLI:
Well something already has been done here though, to be fair, the State Treasurer, Michael Costa has announced that the Government is going to offer stamp duty concessions to first home buyers using shared equity schemes, that is exactly what you are talking about, isn’t it?
TREASURER:
Well, not everybody will want a shared equity scheme. A shared equity scheme is where you only own half of your house and the bank owns the other half. Most Australians want to own the whole of their house. And one of the reasons why housing is becoming more expensive, particularly in Sydney, is that land release is slow, stamp duties on conveyances are so high and of course development charges are so strong, so that a very, very large proportion of a new house, in particular, is in fact State Government taxes and charges.
TRIOLI:
I am sure that if the Treasurer was here, the State Treasurer Michael Costa, he would say, Treasurer, we can’t afford to be cutting back on any of the revenue that we raise here until we get a fairer share of the GST revenue. Is it $13.5 billion that we generate but we only get $11 billion back?
TREASURER:
No.
TRIOLI:
(inaudible) 2006 figures aren’t they.
TREASURER:
New South Wales is getting more revenue from the GST than it was promised and more revenue than ever before. In fact…
TRIOLI:
Well Michael Costa would say that it is only what we deserve.
TREASURER:
Well he has had more money than ever before. Now, you know, you might say, I would like much, much, much more money than ever before, but it is not as if Mr Costa has been treated worse than any of his predecessors. Mr Costa is the luckiest Treasurer New South Wales has ever had because he is getting more revenue than ever before and they will get a windfall gain – a windfall gain – of $690 million in 2007-08.
TRIOLI:
Yes but that still doesn’t equate to the amount of GST revenue generated by the State. That is the point of difference, that is the point of argument, isn’t it, it is the discrepancy…
TREASURER:
No it is not, no it is not, Virginia. Don’t fall for this argument. Since the Federation was formed in 1901, there has always been assistance for the small States and the assistance for the small States continues, the smaller States of South Australia, Tasmania, the ACT and the Northern Territory. What has in fact changed is that the States that were previously givng assistance from 1901 were always Victoria and New South Wales, now Western Australia also gives assistance to the smaller States, and it looks like in the next two years Queensland will also become a donor State. So again, New South Wales is in a better position in terms of giving assistance than it has been since Federation.
TRIOLI:
Peter Costello, Paul (inaudible) asks you, what about the Wine Equalisation Tax and the petrol excise that the Federal Government still imposes?
TREASURER:
The Wine Equalisation Tax was introduced to replace the Wholesale Sales Tax when it was abolished and in fact, I think 94-95 per cent of wineries don’t even pay it because we now have a threshold in relation to the Wine Equalisation Tax. I think you will find that the only wineries that do pay it are the big ones such as Southcorp, Fosters, those sorts of ones.
TRIOLI:
But the question of the petrol excise still remains and it is difficult for a Federal Treasurer to try and pull rank over stamp duty when excises like this remain.
TREASURER:
What, petrol excise? Yes, well Australia has a petrol excise, it always has. I cut it and froze it at 38 cents a litre. When I became Treasurer it was 44 cents and indexed and I think if we had have continued indexation, Virginia, the petrol tax would now be about 54 but it is cut at 38 cents and it doesn’t rise. By the way, you compared Australia’s petrol excise to countries around the world. With the exception of the United States which is lower, I think we are the third or fourth lowest in the world. As you know in Britain when you buy petrol you pay well over $2 a litre, I think the British taxes on petrol are around 90 cents or $1, in Australia it is 38 cents.
TRIOLI:
We have a State election underway here at the moment, Peter Costello as you would be well aware, you have got a Ministerial Council with your State Treasurer counterparts next week, do you believe it will be Michael Costa or Barry O’Farrell joining you at that meeting next week?
TREASURER:
Well I look forward to welcoming whoever is successful in the election. We deal with the Treasurer who is elected, obviously, that is a matter for the voters. Over the years I have dealt with Coalition Treasurers, not in New South Wales but around Australia, and Labor Treasurers. I think in New South Wales I have dealt with now at least three Labor Treasurers so…
TRIOLI:
It could be possible that it might be in your view, either one probably joining you at that table.
TREASURER:
Oh yes, whoever is elected should be at that meeting representing New South Wales.
TRIOLI:
Not quite what I am asking you, Treasurer, where do you believe the election (inaudible) is running at the moment?
TREASURER:
I am not a pollster, I can’t give you the answer as to who is going to win except to say is there is another five days before people vote.
TRIOLI:
Well let’s speak about one poll that is out today, the Newspoll figures must be very alarming for the Coalition, 57-43 on a two-party preferred basis running in favour of the Federal ALP and that is now one of several polls all sequentially showing the same thing. Would the Coalition be doing better if you were the leader, Peter Costello?
TREASURER:
Well it is not the question and it is…
TRIOLI:
Is it not the question you are asking yourself?
TREASURER:
No, it is not the question and I am running very much as part of the team. I expect the election will be later this year, I can’t tell you precisely when, but when we go into that election we will be going to the Australian people and putting forward our experience and our policies and of course we note the polls but it is a long way to polling day at the Federal level, it could be 6 or 7 or maybe even 8 months.
TRIOLI:
Kevin Rudd, he is providing a younger a face to the electorate and they seem to like that, that is what you have wanted to do for some time with the Coalition. Wouldn’t you stand a better chance against him?
TREASURER:
Well I do my job, my job is to look after the national economy. It is now a $1 trillion economy, it takes a lot of management and my focus is making sure people can keep their jobs. We have had the best jobs growth in the last year that we have probably had in a decade. Unemployment is at 30 year lows – that is what economic policy is about, giving people the chance to get a job and keep their home and keep their business and educate their kids.
TRIOLI:
And Treasurer you must find what sacked Aged Care Minister Santo Santoro has done as reprehensible, what is your response to news today that he was apparently sub-underwriter for capital-raisings and associated with 14 companies, one of which apparently wanted to develop retirement villages, what is your response to that?
TREASURER:
Well, there is no excuse. He should have declared all of his financial interests and…
TRIOLI:
But this is more than that, this is actually trading in areas that potentially involved your portfolio.
TREASURER:
Well it is a financial interest. If you are an under-writer you are providing financial accommodation for a float presumably, and there is no excuse. He should have declared it, he should have made sure that there was no conflict, he should have declared it to the Senate, he should have declared it to the Prime Minister, he failed to do so, he lost his job. That is the penalty for not doing the right thing.
TRIOLI:
But it is more than that, isn’t it, that there was a Minister in place for quite some time who was, putting to one side declaring that matter which of course goes without saying, who perhaps shouldn’t have even been involved in such share trading to begin with. Is there a question of judgment to be raised here about putting someone like that in that portfolio in the first place?
TREASURER:
Well, Ministers are not prohibited from owning shares or buying or selling shares on two conditions. One is it can’t be anything to do with their portfolio, where they would have a conflict of interest, and secondly it has to be declared. Now, he didn’t attend to that, there is no excuse and he lost his job and that is the consequence. He shouldn’t have done it, he was wrong to do it and he was wrong not to deal with it.
TRIOLI:
How do you manage your shares, your investments, Treasurer?
TREASURER:
Well I don’t have any shares. That is the only way I manage it.
TRIOLI:
So no shares and no similar investments?
TREASURER:
No I don’t own any shares. I don’t say that as a matter of pride because I spend a lot of my time encouraging people to buy shares. I want to encourage Australians to become shareholders. In fact we have got the greatest proportion of shareholders of any country in the world. I actually think share owning is a good thing and I am sure if I wasn’t Treasurer, I would own shares but I have found over the years that if you are Treasurer you do have a lot of financial decisions to make and I have taken the decision that in the circumstances I won’t own shares.
TRIOLI:
Just finally Peter Costello, Parliament does resume today in Canberra, will the Coalition be continuing with its tactic in Parliament of questioning the integrity of Kevin Rudd, the Leader of the Opposition, it doesn’t seem to have worked so well with the electorate if these figures are anything to go by. Will you stay with that approach?
TREASURER:
Well Mr Rudd is auditioning himself for the most important job in Australia and people are entitled to know what his judgment is like. When you vote in an election, the person you elect is there for the next three years, there is not a return policy, it is not like you can take the goods back to the supermarket and say I don’t like this Prime Minister, give me my vote back. If you vote for Mr Rudd he is in charge of running a $1 trillion economy for the next three years. You have got to know something about Mr Rudd and you have got to know something about his judgment. And he doesn’t have any experience in Ministerial office, so the question is, what is his judgment like and when he shows bad judgment like he did in his association with Brian Burke, people are entitled to know that.
TRIOLI:
You are not getting a glass, living in a glass house feeling here with Senator Santoro and others falling around you?
TREASURER:
Well Virginia, people question me and John Howard every day, every day for ten years. Don’t think this is some new experience for me. I’ve had the Labor Party go through me and my wife and my family and this has been going on for ten years. I must say the level of scrutiny on Mr Rudd compared to the level of scrutiny that has been on John Howard or me is miniscule – absolutely miniscule, because he has only been in the position of leadership for what, three or four months. Now, you are auditioning for the most important job in Australia, there is no one to look over your shoulder, you become Prime Minister, there is no one looking over your shoulder, it won’t be me running the Budget, it is him and him alone and Julia Gillard and Wayne Swan and people have got to know what this means before they vote. If they know what it means before they vote and they vote for him, well, he is on his own but if they get the chance they have got to have a very careful look at him before they cast that ballot.
TRIOLI:
Peter Costello, thanks so much for your time.
TREASURER:
Thanks very much Virginia.