Peter Costello

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Economy, tax cuts, risk of a union-dominated Rudd Labor Government, health, jobs, infrastructure, water, carers, drugs - Interview with Allan Jones, 2GB

Interview with Alan Jones
2GB

Thursday, 18 October 2007

7.10 am

 

SUBJECTS: Economy, tax cuts, risk of a union-dominated Rudd Labor Government, health, jobs, infrastructure, water, carers, drugs

JONES:

The Treasurer, Peter Costello, has joined me in the studio. Treasurer, good morning.

TREASURER:

Good morning, Alan.

JONES:

Thank you for your time. You can’t fight elections, can you, on a million fronts so what are the election issues? What do you distill it down to in your opinion?

TREASURER:

The most important thing, I think, is who has a plan to build Australia’s economy? Because if you don’t build the economy, people don’t have jobs, families can’t plan with security, business can’t be confident about the future, the Government doesn’t raise revenue to fund our hospital systems or our school systems or anything else.And so the most important thing is to have a plan to build our economy, to get people in work, to make Australia strong and prosperous and that’s why we’ve released our tax plan at the beginning of the week. It’s a five year plan, it’s one of the most critical areas of economic policy and it’s a plan over five years to build the Australian economy stronger.

JONES:

I’ll come back to that in a moment, do you think though there is a group of people out there voting for the first time who imagine that Australia was always like this, there is a job for everyone, big company profits, low inflation, low unemployment, no pilot strikes, no waterfront disputes, and those people think oh well, you know, it’s always like this, why should these people talk about the economy, anyone can do it.

TREASURER:

Yes.Some of the younger people won’t remember what it was like under Labor and you do have to remind them that 35 per cent of young people were unemployed.You do have to remind them that we had a million people out of work, interest rates got as high as 17 per cent and it has taken us a lot of work to get the economy from there to where it is now.This is a $1 trillion economy.It doesn’t run itself, it needs a lot of management and a lot of experience.It has been hard work, I can tell you Alan, because I have been there.And we need hard work and experienced management and good policy to take us forward in the future.It could all be lost.Countries go backwards.Our country was going pretty well in the ‘60s and the ‘70s and we went through those really bad times in the ‘80s and the recession of the early 1990s.Bad policy can muck up a country, it can muck up an economy.And that is why economic management is so important.

JONES:

Can it be that people give you credit for the macro-economic – that is the big economic picture – with an economic management record which in many ways is the envy of the industrialised world, as good or better than anything anywhere else in the world.But when people go about their daily lives as I have been saying, they see the price of beer has gone up 98 per cent since 1990, CPI only 57 per cent, there is this collapse of competition in the retail sector.So when they go into the supermarket or they go into the pub for the beer or they go to the bowser, they are struggling.

TREASURER:

Look, I think people are facing cost of living pressures – there is no doubt about that.Prices rising for food because of the drought.Prices rising on petrol because of international oil prices.That is the main reason we have decided to put down our tax plan which puts money back into people’s pockets.It puts money back into people’s pockets so that they can deal with those cost of living pressures.And I acknowledge that on petrol prices with world record oil prices which we have just seen in the last couple of days, that will put pressure at the bowser.But the important thing I think, is to have a plan that will put money back into people’s pockets so they can have that little bit of extra take-home pay to cope with these matters and to make sure of course, that the economy continues to run strongly so that they are kept in work.Nothing is more important that keeping people in work.Alan, if you don’t have a job, you don’t have any income.

JONES:

Absolutely.Just wondering if I could pick you up on something.You see, it has become sort of a common fallacy that the drought is affecting the price of say, bread.I mean, only 4 per cent of the price of bread is related to the product that comes from the farm.Only 4 per cent of the price of a bottle of beer is related to the barley and hops and the water.The rest is advertising – massive costs in advertising – and major profits from outfits which have a monopoly position like Woolworths.I mean, does it disturb you to see this growing trend in the supermarket area where competition is becoming progressively eroded.I mean the aim of Woolworths and these people is to get rid of competition.

TREASURER:

Well I think it is very important that we do promote competition in all sectors.You think about a loaf of bread of course, you have got the flour, you have got the manufacture, you have got the transport, you have got the packaging, you have got the retail.

JONES:

But the farmers’ part of it is about 5 per cent…

TREASURER:

Absolutely.

JONES:

…the price of bread has risen 115 per cent since 1990, the CPI 57 per cent.That is what out there in voter land they are whinging about.

TREASURER:

And you need to have competition at all levels from the farm gate to the shopping centre aisle.At all levels.Now, you might have seen that…

JONES:

Do you think you might have missed that bus?

TREASURER:

Oh well, you might have seen for example that there has been something going on in relation to cardboard boxes.People will say, what the is the important thing about getting competition in the cardboard box market?Well all of these products will be packaged.Now, let’s come down the retail level.At the retail level you are absolutely right.You have to have competition at the retail level…

JONES:

But you have now changed the Trade Practices Act to stop predatory pricing but predatory pricing has basically driven a whole lot of small businesses out of business.And the small businesses are aware of this.They are angry.As a voting community out there, they are not happy.

TREASURER:

Well you mentioned that we recently changed the law and one of the reasons we recently changed the law was to make sure that nobody could use their power in a market, or their share in a market to drive out competition.

JONES:

Is that too late?

TREASURER:

Well, that law has been passed, it is effective.If anybody tries to do that we have a very well resourced ACCC which will investigate.I mentioned before they have just done a very successful investigation in relation to the cardboard box market which has been in the news the last couple of days, and people ought to be very, very wary because it is quite an active enforcement agency that is out there at the moment and if there is any evidence to be collected then it is charged with collecting it.

JONES:

Nearly half a million jobs created since WorkChoices came into being.Have you allowed, do you think that there has been a bad selling of that message?

TREASURER:

Well look, I think the anti campaign was successful by the ACTU.You know, they had a very, very active advertising campaign, I think they are spending $20 million in this campaign.They will spend probably more than the Labor and the Liberal parties combined in this campaign.And why wouldn’t they?Because 70 per cent of the Rudd Government would be trade unionists or trade union officials.You have basically got the ACTU now getting itself elected through the Labor Party to run the country.No wonder they are spending $20 million doing it.And they realise that this is their chance to get control of policy in health, in education, in industrial relations and the economy.So they are going for broke, they have got off to a very good start, they are extremely well funded but I think the public is beginning to realise the union take-over through a Rudd Government is not going to help small business.

When a union goes into a small business, they don’t go in there to help the small businessman.They go in there to enforce union rules and that is not going to be good for our economy.It is not going to be good for jobs, it is not going to be good for interest rates, it is not going to be good for inflation, it is not going to be good for householders.And when you think to yourself that 70 per cent of the Government are trade union officials, it is not that the trade union movement will have to exercise influence on a Rudd Government, the trade union movement will be in the Rudd Government – 70 per cent – and that is the influence that they would be exercising.

JONES:

When you see Newspolls, which show you in the last couple of days comprehensively in front in the management of the economy and in national security, but the polls also show that they may not be the issues that the electorate want to talk about.They want to talk about health, it says, and things like climate change, do you think you have differentiated yourself sufficiently from State Governments who are responsible for health and hospitals and schools and roads?

TREASURER:

Well as you know, the State Governments run the public hospitals.They manage them, they are State public hospitals, they are accountable…

JONES:

Run them would be a euphemism wouldn’t it?

TREASURER:

Well, the person that is suppose to be running the hospital system is Reba Meagher and people I think will make their own judgement on how well she and the State Government are doing.What the Commonwealth Government has done of course is it has encouraged people to take out private health insurance, we have a 30 per cent rebate which never existed before the Commonwealth Government, before our Government was elected.We manage the Medicare system – and bulk billing has increased under Medicare, we manage the Pharmaceutical Benefit Scheme and I think we have brought a lot of good new drugs onto the scheme and managed costs there.We don’t manage the public hospital system.

JONES:

And it is in a mess here and Kevin Rudd says he will fix it up.

TREASURER:

Oh well, Kevin Rudd says all we need is a Federal Labor Government to fix the public hospitals.Well if Labor can fix the public hospitals, why don’t they?They are running them.Mr Iemma and Reba Meagher are running them.I mean, what evidence is there that Labor can well manage public hospitals?

JONES:

Was that a question to me?

TREASURER:

Well…

JONES:

I thought you were providing the answers.

TREASURER:

Perhaps I should get like Mr Rudd.He asks himself a question and then answers it.

JONES:

Can I just come back to the announcement at the beginning of the week?You are saying within – because this is a major issue – saying within five years if you are elected and you will be the Prime Minister, your top rate will be 40 cents in the dollar and it won’t kick in until you earn $180,000.What was the top rate when you became Treasurer, and when did it kick in?

TREASURER:

The top rate was 47 cents and it kicked in on every dollar over $50,000.So anybody out there who was earning $50,000 or more, would have their income taxed at 47 cents in the dollar.Under our tax plan, if you are earning $50,000 you will be paying 30 cents in the dollar – not 47 – 30 cents.

JONES:

And you are saying within five years there will be four rates – 15, 30, 35 and 40 – and…

TREASURER:

And you won’t go on the top rate until you go above $180,000.

JONES:

$180,000.And what, 45 per cent of Australian taxpayers will be on a top marginal rate of 15 cents or less?

TREASURER:

That is right.And of course, these are mostly working mothers who work a couple of days a week and they will be earning less than say, $37,000 – because they are only working one or two days a week…

JONES:

And a low income earner, those people that qualify for the Low Income Tax Offset, will pay no tax what, until they get over $20,000?

TREASURER:

That is our goal.You won’t pay over, until you go over $20,000 you won’t pay tax.

JONES:

And 98 per cent of Australians will pay a top marginal rate of 35 or less.

TREASURER:

And then you will go on the top rate of 15 per cent before going on 30 per cent…

JONES:

And you are saying this will encourage more people to join the workforce because they keep more of what they earn.

TREASURER:

The reason we have put this down as a plan is that we need to encourage people to get into the workforce, we need to give them incentive to do so and by making sure that you don’t pay tax until you have got a very decent income – and our goal is you won’t pay tax until you are above $20,000 – these are mainly people who will be part-time – you encourage them to come into the workforce.And the whole object of this is to encourage people to leave welfare and come into work, or maybe working mothers, to encourage them to come into work to build the size of the workforce, to get more people in work and to build our economy.

Now, here is the point, Alan: if you have more people in work, there are less people claiming unemployment benefits, there are more people paying taxes.If you have more people in work, the overall economy is stronger and because you have got more people in work you can afford to have lower tax rates. And then of course if you have lower tax rates, that gets more people in work again and the cycle goes round.Lower tax rates, more in work.More in work, that boosts revenue.Boosted revenue, lower tax, more in work.This is the way you build a strong economy.If you are going the other way, where you are putting up taxes, people leaving the workforce, revenues are dropping, unemployment benefits are going up, more people losing work.That was the way of the ‘90s.That was the Keating Labor way of the ‘90s.The important thing here is to get more people in work.Now, we have now 2 million more people in work than we had in 1996 – when Labor was last in office – and we want more in work.

JONES:

Okay, let me just turn the coin over to the flipside.So some people are saying, oh hang on, what about infrastructure?I mean, let’s re-build the country.Is there money for that as well?What about for example a very fast train, harvesting water, transporting water, subsidising local governments across the country to recycle water?

TREASURER:

Absolutely right Alan.And again, you can build better infrastructure with a stronger economy.People understand that.It is not a question of a stronger economy or infrastructure, it is a stronger economy that leads to infrastructure.Go around the world, where is infrastructure worse?Well infrastructure is worst in developing economies, third world economies, why?Because they are not strong.

JONES:

(inaudible) on infrastructure for us to say.For example, in transporting the water or harvesting water or building dams, they are saying, oh well, think about the cost.We never talk about the benefits.Shouldn’t we be harnessing those productive areas of western New South Wales and western Queensland and western Victoria to feed the whole of Asia?

TREASURER:

Well we should be and what we have got to do…

JONES:

You can’t do it without water.

TREASURER:

…what we have got to do, you have put your finger on it, is you have got to harvest water better.We…

JONES:

(inaudible) be announcing plans to facilitate the harvesting of water, whether it is building dams, filling aquifers?

TREASURER:

We have a major water plan.Our Murray-Darling Basin water plan – our $10 billion Murray-Darling Basin water plan is all about that.

JONES:

But it doesn’t put water into the Murray-Darling Basin.That is the point.

TREASURER:

Well it stops leakage…

JONES:

That is right, but it doesn’t put water in.

TREASURER:

…and it stops wastage…

JONES:

And one day it is going to rain, one day it is going to rain and they are going to let it all race off.

TREASURER:

I couldn’t agree with you more but you have got to make sure that you stop leakage.Do you know we have massive evaporation, we have massive leakage out of the system…?

JONES:

What about harvesting it?

TREASURER:

And harvesting, particularly if you are talking about the northern waters, where there is quite a lot of water.We have a group led by New South Wales Senator Heffernan, which is looking at this very issue at the moment to see what you can do in relation to saving northern water.

JONES:

(inaudible) we could feed the whole of Asia, the benefits would far outweigh the cost, no matter the cost.

TREASURER:

We are a major agricultural producer, we should always be a major agricultural producer.The Murray Darling Basin is absolutely critical to that…

JONES:

Just to interrupt you Treasurer, it is 7.30, I will continue talking to the Treasurer about these issues.Could I just turn the coin over again, because then we come with wealth to the social side.What about the people for whom the tax cuts and the superannuation mean nothing?2.6 million carers, Access Economics says their care is worth $31 billion, 1.2 billion hours of informal care, 170,000 of them are under 18, 2 million of them are of workforce age, they can’t work, no income, no super, no (inaudible).They would like to work but the carers allowance is $98.50 a fortnight, the carers payment $537.70 a fortnight.If they got both, maximum, and one of them is means tested, they would be on $318 a week.It is $200 below the minimum wage.What in all this wealth do we do for carers?

TREASURER:

Well Alan, as you know in recent years we have been making additional payments both to people on the carers allowance and the carers pension.We have only been able to do that because of our strong economic position and I certainly want to continue, as economic conditions continue, to improve, to improve financial support for carers.

JONES:

Could we double the carers allowance?

TREASURER:

Well you have got to look at all of these things carefully…

JONES:

Can we look for some of these things in the lead-up to the election date?

TREASURER:

Well I will point to you my record, I have done it in the last several years with these bonus payments and I want to continue to support carers.

JONES:

There is a survey today you would have seen, where a Newspoll that found that 29 per cent of voters would be more likely to vote for a party if it committed to providing additional support to carers of the aged and the disabled.

TREASURER:

Well we are committed to providing additional support and I have done it in recent years and let me say again, I believe that we have to continue to support them.

JONES:

What about a superannuation scheme for carers who get Centrelink support and the Government would contribute to the scheme in the same way that employers contribute to their employees and at least have something in retirement?

TREASURER:

You would have to look at that.A lot of carers in fact Alan, are in retirement.A large number of them will be for example…

JONES:

170,000 of them are under 18.

TREASURER:

Yes, yes, but a large number of them will also be where a wife cares for a husband…

JONES:

But 2 million are of workforce age…

TREASURER:

…so it is not, it is not straightforward.There are different carers at different stages but I believe they do a wonderful job, I really do and…

JONES:

But how do they live?How do they live?

TREASURER:

…and we have been increasing benefits to carers….

JONES:

How do you live on $318 a week?

TREASURER:

…and I want to do as much as we can for them.

JONES:

You see, children as young as 10 are living in nursing homes, why?Well nursing homes are your responsibility, so the State Government takes them out of respite care centres and offloads them onto the Commonwealth.

TREASURER:

Yes, well this is a particular problem.As you said it is a state responsibility to look after people who have say, an acquired brain injury.Because there aren’t enough facilities for those young people, they quite often end up in nursing homes because it is one of the few facilities that can actually look after somebody who has an acquired brain injury.Maybe they have been in a car accident or something like that.We announced that we, the Federal Government, although it is not a Federal responsibility, will come in and will assist States to build additional facilities.It is long overdue, it needs to be done.Some of the States are taking up this offer and I would urge cooperation here by the States to ensure that these very, very tragic cases, particularly people who have trauma injuries do get better facilitation (inaudible).

JONES:

You are a Victorian.Is the Brumby Government in Victoria using the WorkChoices legislation in a pay dispute with nurses?

TREASURER:

Well, you know, it is really a joke isn’t it?Here is the Labor Party running around attacking the Federal Government over industrial relations, what are we seeing in Victoria?We are seeing the nurses go out on strike against the State Labor Government – get a load of this – the teachers union are now threatening to go out during the final year exams.These are State teachers, State nurses.My view is that there are a lot of unions starting to get a bit restless because they think there could be a change of government, they are getting their demands in at this stage against State Labor Governments.Alan, one of the things that has marked the last decade is we have the lowest number of days lost in industrial stoppages in Australian history.That is under the John Howard-Peter Costello Government – that is under Liberal Government, Liberal-National Government.Disputes and stoppages were always higher under Labor Governments and of course we now see this restlessness starting to emerge – State strikes against State Labor Governments – imagine if you started to see that return at a national level, you would see the economy begin to turn down.You would see days lost increased and of course, all of these things put people’s personal circumstances under pressure.

JONES:

The electorate after all these years know Howard and Costello backwards.Do they know what they need to know about Rudd and Gillard?

TREASURER:

I don’t think they know enough about Rudd and Gillard.I don’t think they know that Rudd has no real economic experience.They don’t know that, well, they don’t know what his policies are because we are sitting around waiting for him to think up a tax policy.And I think they ought to know.

JONES:

George Megalogenis writing today about this in The Australian newspaper, says there is a sense of history repeating itself here, this time on the subject of tax with Kevin Rudd.He says Kevin Rudd seems uncharacteristically wobbly when it comes to talking about tax policy and that Kevin Rudd didn’t expect tax to be a headline issue in the first week of the campaign and he’s been caught off-guard.

TREASURER:

Well he’s got no plan.You see, he was running around for months saying call the election, call the election, call the election.In fact you might recall he launched his campaign.He went and had a campaign launch.So you would have assumed he had a policy.He’s demanding the election be called.He’s had his campaign launch.You would have assumed he’d have a policy.So we announce the tax policy and we wait for him to launch his.Monday, Tuesday, Wednesday, Thursday – all we hear from him now is that he’s got a tax policy in due season.There is only four seasons, Alan – Spring, Summer, Autumn and Winter and I hope we get it before summer is over.

JONES:

But he may be saying strategically, while I’m the small target leader here, I’m not going to give these people all these things to (inaudible) and he so far successfully has been able to convince people he’s got the plan.

TREASURER:

But how do you know where you would be under a Rudd Government?

JONES:

The public seems happy about it.

TREASURER:

He can’t tell you what the tax rates will be.He can’t tell you where they will cut in.He can’t tell you whether you will be better off or worse off.You won’t know what your take home pay is.You don’t really know what he stands for.Why would you vote for that?

JONES:

A whole stack of people, according the polls, are happy to accept all of that.

TREASURER:

Well, we will see and there are four or five weeks until Election Day and we will see.

JONES:

The biggest issue outside the economy is what?

TREASURER:

Well, I think the economy frames everything because that then gives you the where-with-all for your health system, your education system, the building of roads, addressing the environmental issues that we’ve talked about.And outside those domestic issues, the issues of national security – how do we defend our country.Law and order I think is a very big issue.People are very worried about street crime.

JONES:

You are a parent, and you have talked publicly about this before, just before you go, last question to you, you’re a parent.This terrible circumstance that we are facing now, it seems we are losing this battle in relation to drugs.The Prime Minister said last night if we approach drugs in the same way as we approached smoking, then perhaps there would be a lot less glamour about drugs.You’ve got young kids.How do you go about this?What do you say?What is the answer?You can formulate it all you like but they are not listening.

TREASURER:

Well these so-called party drugs, I think are becoming so prevalent…

JONES:

It’s a contradiction in terms, isn’t it?

TREASURER:

Well there is no such thing as a safe drug, but these so-called party drugs like ice and ecstasy, kids are being told that it is just a bit of fun. It is not.It can kill you.And I am really concerned about role models, particularly amongst sports people.I think it is extremely damaging when you see the high performance athletes who are taking these drugs because kids look at them and say, oh, they’re high performance athletes, it couldn’t be affecting you too much.It does.You’ve got to look at what sustained use of this does to these athletes.You’ve got to look at their behaviour, you’ve got to see how unhinged they become in relation to ordinary life.There is no such thing as a safe party drug.

JONES:

(inaudible) knows all of that.How do we get to the kids?

TREASURER:

(inaudible)

JONES:

But do they?Do you sit down and talk to your kids about this?

TREASURER:

Oh, sure.

JONES:

What do they tell you in return?

TREASURER:

Well, that these drugs are quite prevalent and they seem to be at big social events.

JONES:

We now learn today they are in primary schools.

TREASURER:

And you won’t – in my view, we should do everything we can to make sure kids never come across them – but the probabilities are that they will and you have got to make sure that kids know these things are dangerous.These are not made under controlled conditions where you have health standards.These are made in backyards.They are made with chemicals that are impure.Quite often they are made with chemicals which can do serious damage to your body.These are not health controlled.

JONES:

It is like you are buying rat poison.

TREASURER:

You could be buying rat poison and swallowing it.You know, some drug dealer has decided to make a lot of money out of you and he could put anything in this pill and some stupid person has bought it and if you put it in your body it could do anything to you.

JONES:

The Federal Government does talk in its drug policy about harm minimalisation.Isn’t that a contradiction in terms?What drug, what drug is anything other than harm?How do you take drugs and minimise harm?By not taking them at all.

TREASURER:

The only way to minimise harm is don’t take them.You don’t know what is in it.It is going to interfere with your body.It could interfere with your mind.In some circumstances, it can kill you.Don’t do it.That is the only way you can minimise your harm.

JONES:

Good to talk to you.Thank you for your time.

TREASURER:

Thanks, Alan.

 

18 Oct 2007

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