Peter Costello

Media Transcripts

Government advertising, Future Fund, World Bank - Interview with Jon Faine, 774 ABC

Interview with Jon Faine
774 ABC

Tuesday, 22 May 2007
8.45 am

SUBJECTS: Economic management, Federal Budget, Labors lack of tax policy, Senate Estimates, AFL drugs policy

FAINE:

Peter Costello, good morning. 

TREASURER:

Good morning Jon. 

FAINE:

We have been talking about government advertising in a non-party political way, government is the biggest advertiser in the Australian media.  Is that a good thing for democracy?

TREASURER:

Well, there are a lot of services that government provides.  When you take into account that the Government provides pensions to elderly Australians, to the disabled, when you take into account that the Government is running superannuation for millions of Australians, you have got to bear in mind that across a number of facets government services are going to practically every Australian.

FAINE:

All governments are major providers of services, but almost uniquely Australia has government as the biggest advertiser.  Other countries provide services too but they don’t end up with their governments as the biggest advertiser.

TREASURER:

Well, look I haven’t got the figures in front of me but I can tell you…

FAINE:

Hundreds of millions of dollars. 

TREASURER:

…well I can tell you that government services have to be advertised for people to be able to take them and benefit from them and that they have been advertised for a very long period of time.  If you want any proof of that you ought to see that it is not just the Commonwealth Government but State governments too. 

FAINE:

And every political party and opposition promises it will clamp down on waste by cutting government advertising campaigns and then once in office – oh no, they ramp it up.

TREASURER:

Well, as I said earlier Jon, this has been the practice in Australia for decades and I can remember the previous Labor Government being an extensive advertiser and I know that Mr Bracks is an extensive advertiser.  And of course the Commonwealth Government is advertising numbers of services at the moment, and many of these services are very important to people.  If you don’t know how to put money into superannuation for example, it could cost you tens or hundreds of thousands of dollars.  You would have seen superannuation ads encouraging people to put money into superannuation at the moment, that is a very important service. 

FAINE:

This is taxpayers money that could be spent on hospitals, on schools, on all sorts of other lasting pieces of infrastructure, instead it is straight into the pockets of commercial media outlets on, well bordering on propagandering and (inaudible).

TREASURER:

Well, we will take the superannuation ones with which I am familiar.  If that encourages people to put money into superannuation, that will save taxpayers billions. 

FAINE:

People will get advice from their accountants, tax advisers and everywhere else without needing to have it rammed down their throats with a government advertising campaign. 

TREASURER:

Most people don’t, most people – we are talking about people who get for example a co-contribution, people who are earning $40,000-$50,000 – they don’t have tax advisers and financial planners.  They can’t afford them.  And so what you do is you have a helpline, which tells them that if they put money into superannuation they can get a gofinvernment co-contribution, they can set up their retirement.  I mean that is just one area where I think it is perfectly legitimate and desirable and necessary to advertise government programmes that are designed for people to take advantage of. 

FAINE:

Seven minutes to nine on 774 ABC Melbourne, Jon Faine with you through to 12 o’clock.  The Future Fund, managed independently at arms length by an independent board, have decided to hand over management of their $51 billion kitty to a Chicago – based bank using its Singapore headquarters.  Are you happy about that?

TREASURER:

Well I don’t think that is right – hand over management.  The Future Fund is an independent corporation with independent guardians that manages the fund.

FAINE:

When you say you don’t think it is right, are you saying you object to it or do you think I am describing it wrongly?

TREASURER:

Well I don’t think that description is precise. 

FAINE:

In what way?

TREASURER:

From what I understand is that some banking services will be rendered by an international bank partnering with an Australian bank and that those banking services were awarded after an independent tender which came in with the best service at the lower price.  Now, I don’t make these decisions, this is an independent body…

FAINE:

Are you comfortable…

TREASURER:

…run by independent guardians…

FAINE:

…wouldn’t you rather an Australian bank manage a $51 billion fund of Australian taxpayers money?

TREASURER:

Well when you say manage, they don’t manage it.  What they provide in partnership with an Australian bank, which is the Australian leg, is banking services.  They don’t manage it, the Guardians manage it.  This is being managed in Melbourne…

FAINE:

The administration of it is to be done out of Singapore, the Singapore office of a Chicago bank. 

TREASURER:

No, no.  The administration of the Future Fund is done in Melbourne by the Guardians of the Future Fund.  Now the Guardians of the Future Fund, as I understand it – and bear in mind this is not my decision, I am going on what I have heard the Chief Executive say – Mr Paul Costello incidentally, not me, and no relation – that when they were looking for their banking services that they called a tender.  That there was an American bank partnered with an Australian bank that came in with the best tender. 

FAINE:

But do you…

TREASURER:

It is not management of the Fund, it is not investment of the Fund…

FAINE:

Understood.

TREASURER:

…the investment of the Fund, this is why I am quibbling with your word ‘management’…

FAINE:

Are you happy with a Singapore branch…

TREASURER:

…it is not managed.

FAINE:

…office of an American bank to win a contract that is worth about $30 million and as many as 100 jobs. 

TREASURER:

Yes, $30 million – not $51 billion - $30 million.  The management is $51 billion.

FAINE:

Are you happy for them to have won the contract?

TREASURER:

Now, look, if, and they will be using international banking services – yes – for which they will need an international bank.  Of course they will.  When they are banking with some of their investments.

FAINE:

The National Australia Bank put in a bid to do this job, other Australian…this is the only foreign tenderer and they won the job.  Are you happy with that?

TREASURER:

If they give the best service for the best price and partner with the best Australian bank and the tender has been done with all due process, which I believe it to be, and they give the best value for money, of course it is the right decision. 

FAINE:

How much better than the next best was it?  What is the difference between them doing it in Singapore and someone doing it in Australia. 

TREASURER:

Well, why don’t you get the Guardians on ABC and ask them, because it doesn’t come to me.  I am reporting to you what the Guardians have told the ABC radio this morning.  But if you want to say how much better and what was the difference in price, I suggest you get the Guardians on the radio.

FAINE:

You haven’t been briefed?  You have been told?

TREASURER:

Jon, this is not a government decision.  You have got to understand this point.  If the Government tried to intervene here it would be a breach of the law.  I could no more intervene here and tell the Future Fund who to award its contracts to than I could intervene in the ABC and tell the ABC what political line to run.  Now, would you like me to do that?

FAINE:

At the same time there is a lot of conversations that take place behind the scenes, off the record, nod and a wink, ‘are you comfortable with this before we go ahead with it,’ and we all know that is how a lot of decisions are made and arrived at.

TREASURER:

Can I intervene and tell the ABC who to employ as their morning presenters?  No.

FAINE:

You may well have a word or two to people to behind the scenes, over the dinner table, maybe in the dining room that is going to get a $500,000 makeover or now, not.

TREASURER:

Well I don’t do that.  I am forbidden by law from doing that.  Do I ring up the independent statutory Future Fund and tell it who to award contracts to?  No.  What I do is I put in place people of great repute who are known for their neutrality and their business acumen – Mr David Murray – probably one of the most respected bankers in Australia…

FAINE:

Yes.

TREASURER:

He is in charge of a statutory corporation.  He decides who to call tenders from, he calls tenders, he goes through the process, he awards it.  If you imagine Jon, if at the end of all of that, a politician said: ‘No, I want the contract to go to one of my friends’…

FAINE:

No, not one of your friends…

TREASURER:

…can you imagine…

FAINE:

…that we want it to stay in Australia. 

TREASURER:

Well hang on, you would want to it go to somebody who had a higher price.  Can you imagine, Jon, how you would be screaming the place down if there was political interference to award a contract to somebody for whom the taxpayers had to pay a higher price?  Can you imagine what you would be doing with that, Jon?

FAINE:

Just finally Peter Costello, there is a vacancy at the head of the World Bank with Mr Wolfowitz’s departure, your name has been mentioned in dispatches.

TREASURER:

Well, let me say I have got enormous respect for the World Bank, I have been a Governor of the World Bank for a very long period of time…

FAINE:

Are you interested?

TREASURER:

Well, I have got a job Jon.  I have got a job, it is Treasurer of Australia.  But I…

FAINE:

Are you ruling it out?

TREASURER:

…(inaudible) work of the World Bank and over a long period of time I have been on it and I want to see the best person appointed to the job.

FAINE:

Are you ruling it out?

TREASURER:

It goes to an American, Jon.  I am not an American citizen and I am ruling it out because I am not an American citizen, the Americans…

FAINE:

All right, I will have to leave it there because of the news.  Thank you Peter Costello.

22 May 2007

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