Peter Costello

Media Transcripts

31 March, AM

Transcript No. 2
Hon Peter Costello MP

AM interview with Matt Peacock

Tuesday, 31 March 1998
12.00 pm

SUBJECTS: Senator Parer, interest rate cuts, Asia, company bribes, waterfront


PEACOCK:

Treasurer I guess the Parer affair is lingering but you’re more pleased about the cuts to interest rates for commercial operations?

TREASURER:

Well this is great news Matt. Yesterday Westpac announced that they were taking their indicator rate for small business overdrafts down to 7.2 per cent. Now 7.2 per cent is the lowest rate since we’ve been measuring this particular indicator rate in almost 30 years. And there have been a lot of small businesses that have been saying for quite some time now, well look, you’ve done a great job, fantastic job in getting home mortgage rates down, when can we in small business begin to see some additional benefits and it was a great story.

PEACOCK:

So why have to banks held out for so long?

TREASURER:

Well the banks have been bringing their rates down as we’ve been bringing official interest rates down but the important point about yesterday’s announcement is that one of the banks has now shaved its margin. Margin is the difference between what they pay to get the money in and what they lend it out at, it’s profit margin if you like. And just as we saw margins being squeezed to give benefits to home buyers, now under the policies that we’ve been pursuing you’re seeing margins squeezed to give benefits to small business. And the great news of a 7.2 per cent overdraft rate means really direct financial benefits to small business and I think that the message to small business today is that you’ve got to get back down to your bank, it’s a very competitive market there, you’ve got to ask for the best rate and you’ve got to start shopping around because these are enormous, enormous benefits. 7.2 per cent overdraft rate, look back in 1990 when Mr Keating was the Treasurer the overdraft rate was 21 per cent. This is a third of the rate that it was at the beginning of this decade and the best since the measurements began in the early 70s.

PEACOCK:

What about the Governments stocks in the polls, the Parer affair clearly has cut through, hasn’t it, has it done you damage?

TREASURER:

I think what Labor’s successfully done is that its taken the argument off jobs, interest rates and tax and to that degree they’ve been successful, they’ve been able to get the argument off the things that the Australian public are really interested in.

PEACOCK:

It’s your own doing isn’t it? I mean Labor didn’t set up Warwick Parer’s trusts, it was he who did that and it was he who didn’t disclose it to the Senate.

TREASURER:

Well when you say it’s our own doing, it’s our own doing in the sense that Mr Parer disclosed it to the Prime Minister, yes. The muck racking, I must say, I give all credit to Simon Crean and the Labor Party for. Now it’s been a successful policy for them because they’ve managed to cover up the fact that they haven’t got policy formation. But I think interestingly enough yesterday as attention came off the Parer affair and Labor turned its attention back onto policy issues, with Mr Latham in particular making a good policy contribution, you are beginning to see, I think, some of the problems that they have in the policy area.

PEACOCK:

Now business has surveyed the Chamber of Manufactures indicated that there’s a down turn already over the wash up of the Asian affair with our exports. How concerned are you about the impact this is having?

TREASURER:

Well look I’ve been saying for a long time that Asia will have an effect on our economy and it’s an external down turn that we haven’t experienced in Australia for a couple of decades. The good news is that the domestic economy is strong, fuelled principally by low interest rates and good economic growth.

PEACOCK:

Is Asia biting earlier than you expected?

TREASURER:

No, no Asia is biting, it will have an uneven effect, it will have a bigger effect on finished manufactured goods not so big on raw materials. The other point to bear in mind is that it’s very important that we develop alternative markets. This has been a big part of the Governments policy and the good news is whilst Asia is turning down Australian exports to areas like South India and Australian exports to Europe and the Americas is picking up and I would say to many of the exporters, in the past we’ve had this Asia only focus. Now that was good whilst Asia was the engine driving world growth, but now that Asia has turned down it is increasingly important that we look beyond Asia to the global trading area as well.

PEACOCK:

Treasurer as you’re exhorting Australian business to export you’re proposing legislation that will bring in huge penalties for businesses from Australia that bribe foreign officials and you’ll be banning the tax deductibility of such payments. But as you’re about to hear the Chamber of Commerce, the Australian Chamber of Commerce and Industry is vigorously opposing the bill, saying it ignores the reality that some Australian companies overseas have to pay bribes or they close down and in any case it won’t work. Let’s hear the Chamber’s Brent Davis speaking to Tim Palmer.

DAVIS:

We’re not opposed to actions on corruption, we need to deal with it, it’s a cancer in our trading system and it really does distort what we are trying to achieve abroad. What our problem is is not we need to deal with corruption, we do, we just don’t like the way this convention in the legislation goes about it.

PALMER:

And what’s wrong with the legislation, is it simply that is tackling the problem head on?

DAVIS:

We don’t think it will be effective basically, it will create very severe criminal penalties for Australians (inaudible) its up to ten years in jail and $750,000 fine, for often very uncertain or doubtful outcomes, we don’t take account of our national interests, we see export opportunities being lost, investment opportunities being lost and of course going without job opportunities. And of course there’s a great many countries in the world who won’t be party to this convention, they will all race in and take these markets from us and we think that is not in our national interest.

PALMER:

So it seems that the (inaudible) on the basis on everyone else is doing it why shouldn’t Australians?

DAVIS:

Well it’s not a case of we just sit there and tolerate it, it is a cancer in our trading system and in international business and we do need to do something. We think the better approach is to get out there and do our overseas aid program and some other initiatives and train foreign lawyers, train foreign police, train foreign judges and give some countries legislation that’ll help them deal with it.

PALMER:

But if Australia does do that isn’t it time for companies to became individually responsible for acceptable business conduct?

DAVIS:

Many companies have good codes of conduct, most Australian companies don’t want a bar of corruption and bribery and extortion but in some places it’s part of doing business, it’s a very deeply ingrained part of the political culture and of the corporate culture. We don’t like it but Australian business suffers it.

PALMER:

So some Australian businesses do pay bribes?

DAVIS:

Some of them are confronted with it, we understand the great majority of them walk away from it but in some places it is part of doing business.

PALMER:

And is it acceptable business practice in those cases?

DAVIS:

To the Australian firm it is obviously a very vexed question, I know of many companies who will stand up and walk and just leave because they don’t want a bar of it. Some of them do get dragged into it.

PEACOCK:

Treasurer your reaction, I mean when in Rome?

TREASURER:

Well two points I don’t think that it’s right to make bribes tax deductible when you put in your tax return in Australia here’s my income, tax deductions bribe to Mr X or Mr Y.

PEACOCK:

It’s a cost of doing business.

TREASURER:

I don’t think that is a necessary expenditure. The other thing about the giving of bribes is this: there are a lot of Australian companies that don’t won’t to give bribes and morally I think that they are right. They say well I won’t give a bribe and my competitor will, I am at a disadvantage and there is a lot of Australian companies that want an evening of the field with their competitors in relation to this. Now what we’ve said as a Government is as part of an international effort, if other countries as they move to outlawing bribes we will too. I think the Americans have already outlawed bribes and as part of an international effort to clean up the slate, to make sure that people get a fair go in business, it’s right to try and get rid of bribery and I think good Australian companies that don’t want to be compromised in this area will support that.

PEACOCK:

Well Treasurer back home the final question, the so called Cobar option on the docks, would you support the proposition if Patricks decided to sack all of its work force and what support would the Government give in terms of redundancies for the workers?

TREASURER:

Well two separate points. One is that any company that has a legal obligation for redundancies is expected to observe it or put in place arrangements to observe it by our Government and that is the law and that applies….

PEACOCK:

They sometimes don’t though.

TREASURER:

Well if they don’t we have that investigated by the corporate regulator which is going on in relation to Cobar at the moment. The second point is, any company in Australia, in my view, is entitled to run its business in a way which maximises benefits for its clients and if down on the Australian waterfront you can’t run an efficient and cost competitive stevedoring business, you should have the right to do that. And I think that is what Patricks want, the right to manage its business and whose interests is it in: not only Patricks and its employees long term but it’s in the interests of every Australian exporter and importer.

PEACOCK:

And will the Government help with redundancies…….?

TREASURER:

Well the Government has made it entirely clear we will support any stevedore, Patricks or any other stevedore, in its efforts to make the Australian waterfront efficient and we will expect them to be done within the law and we will expect the law to be upheld. But at the end of the day there are dual obligations here and the unions have obligations, just like the companies to ensure that they don’t strangulate Australian exporters and importers through our lifelines.

PEACOCK:

Treasurer thanks for joining AM.

TREASURER:

Thank you.

31 Mar 1998

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