Peter Costello

Media Transcripts

January Trade Figures, Economy, Tax Reform, Biographies

Transcript No. 99/11
Treasurer
Hon Peter Costello MP

Radio Interview
Monday, 1 March 1999
Interview with Howard Sattler 6PR
12.00 pm

E&EO

SUBJECTS: January Trade Figures, Economy, Tax Reform, Biographies.

SATTLER:

But first up in this hour we are speaking with our Federal Treasurer, Peter Costello. Hes on the line now. Good morning Minister, thanks for joining us.

TREASURER:

A great pleasure Howard, how are you?

SATTLER:

Well, a great pleasure but news just through about the balance on goods and services, we have recorded a record January deficit, I believe, of $1.379 billion with sales to Asia down 16 per cent. Are you surprised?

TREASURER:

No, this is in line with the forecasts that we were making and it comes off the back of the December figures which were unusually low. The deficit was about $500 million. Clearly, that wasnt accurate and youve got an evening out in relation to this but, as you say, its the kind of thing you would expect, particularly with Asia in recession. The exports are down significantly to Asia. For example, exports to the ten major Asian trading partners fell 8 per cent in the seven months to January. The good news is that our exporters have managed to substitute to some degree and theyre now picking up their exports to other countries, which rose about 10 per cent. But, its the kind of figures you would expect in the midst of the financial turmoil of Asia.

SATTLER:

Well you said this is around about the figure you predicted, but most economists were saying the maximum would be $1.2 billion. This is way ahead of that.

TREASURER:

$1.2 billion, $1.3 billion and as I said, coming off the back of an unusually low figure in December. Look, weve forecast that Australias current account deficit will be high in this financial year. The reason for that is that your exports will be down if youre trading into Asia in particular, which is now totally in recession. And if you want to keep a strong domestic economy running youll, keep imports up. So this is to be expected. Now I dont say by any means that we can ignore good economic policy. But to keep the economy running at a time with growth when every country in our region is now in recession is a great performance, to which I pay credit to our exporters.

SATTLER:

But, only last week the Prime Minister was saying that he thought we could ride out the Asian economic crisis.

TREASURER:

Well, I think we will. If you go around Asia, Howard, lets have a look at it Hong Kong in recession, Singapore in recession, New Zealand in recession, Japan in recession, Korea, Malaysia, Indonesia, Thailand all in recession. Only country outside of China growing in Asia is Australia. Now . . .

SATTLER:

But for how long?

TREASURER:

Well, the most recent National Accounts we had showed it at 5 per cent. Now that was the fastest in the developed world. It was faster than the US and Germany and France. I dont think well be the fastest growing economy in the world in 1999, were forecasting it to slow, but to keep the economy growing at a time when all of Asia is in recession some countries probably in depression will be a great result.

SATTLER:

Well I think you said late last year that you thought we were going to grow at 3 per cent for each of the next four years. Are you still sticking with that?

TREASURER:

The forecast I gave was that we think it will be closer to 3

SATTLER:

Coming down.

TREASURER:

No, they were the forecasts that we gave late last year, closer to 3.

SATTLER:

Yes.

TREASURER:

In the following two years. If you were to grow at 3 per cent in the next two years that would be a fantastic result and I

SATTLER:

That would be a bit optimistic now would it?

TREASURER:

Oh no I think its still within our grasp. Well get some more National Accounts figures on Wednesday of this week and well have a look at those figures. But 3 per cent, when youve got countries in the region which are in depression, will be an outstanding result. I think

SATTLER:

I reckon it will be a miracle.

TREASURER:

Well, you know, one of the worlds greatest economists, Paul Krugman, said it had been a miracle that Australia had been going so well. But you can make your own future here. Look, if our Budget was still in deficit, if we were running a $10 billion deficit, and our interest rates were still at 10 per cent rather than at 6 per cent, we wouldnt be now where we are. But having fixed the Budget deficit, having got interest rates down, having given people more money to spend and having avoided recession, its one of the best performances in the world.

SATTLER:

But how does this affect the Governments ability to maintain what it plans to do if it can do in the tax area. I mean you were talking the other day about maybe a 30 per cent company tax which I think would be a fantastic incentive and so does every other, well Im not, but so does every small business person. Now, is that still going to be on when you get figures like this?

TREASURER:

Oh yes, if we can keep the Australian economy growing, and we can get our tax package through the Senate, we can do that. What would put at risk at the moment tax reform is the Senate. As you know the Senate is so far refusing to pass the Governments policy which it put to the electorate. And if the Senate interferes with that then other things are going to be at risk. But if we can get that through the Senate we can.

SATTLER:

But thats holding a gun at their head isnt it? Thats what youre doing.

TREASURER:

Well, you might recall before the last election I came in and you said to me give a guarantee that youll keep your promises.

SATTLER:

Thats right.

TREASURER:

And I gave that guarantee. And today, Howard, all I want to do is keep those promises. You realise whats going on here. We are trying to introduce the package that we promised and Labor and the Democrats are trying to stop us. You remember you had Kim Beazley in there and you said to Mr Beazley sign an agreement that youll keep your promises. What you should have asked him was sign an agreement that hell let the Government keep its promises. Thats all were trying to do here. All we are trying to do is

SATTLER:

No political leader signs a promise based on losing, does he?

TREASURER:

Well, it would have been an interesting question, wouldnt it. I mean, its very difficult if you go to the people, you have carefully targeted, costed promises. You say elect us and well introduce them. Well reduce income taxes. Well abolish wholesale sales tax. Weve now got a bill in the Parliament to do that and Labor and the Democrats say youre not entitled to.

SATTLER:

OK but look you talk about the Senate, what do you think of this, and I call it this, this charade where there are Senators travelling all over the country now to take advice, or they pretending that theyre interested in what individuals and special interest groups have to say about the tax package. Now, I interviewed both sides last week, one from your side, and I interviewed the Chairman, Peter Cook. Nobody is giving any ground at all. Do you think that these hearings are a charade?

TREASURER:

Well I think theyre a waste of taxpayers money.

SATTLER:

Yes, exactly.

TREASURER:

I mean Peter Cook chairs

SATTLER:

But your people are along for the ride too.

TREASURER:

Well we opposed it Howard. We didnt want this to happen.

SATTLER:

This should have happened before the election, shouldnt it?

TREASURER:

But we were out-voted. So weve got to take part in it. But Peter Cook is chairing an inquiry, so-called, into the Governments tax bills when he pledged before the inquiry was set up, under all circumstances he would vote against the legislation. I said at the time well what are we flying all these Senators all around the country, holding hearings at great expense to the taxpayer when they are pledged regardless of the outcome to vote against the tax.

SATTLER:

So all those people who are going along to these hearings are just wasting their time really arent they?

TREASURER:

Well, you know there might be some people down there, like Brian Harradine might be down there, to get information, but youre wasting your time talking to the Labor Party. It opposes tax reform.

SATTLER:

But youre wasting your time talking to the Liberal Party too because you want the whole tax package to go through.

TREASURER:

The Liberal Party is going, has actually put into Parliament the legislation which it promised

SATTLER:

Thats what I mean.

TREASURER:

And were not going to break our promises.

SATTLER:

But youre not going to alter it based on what somebody tells the Senate inquiry.

TREASURER:

Well, were not going to alter income tax cuts, no of course were not.

SATTLER:

And youre not going to alter food being included in the GST.

TREASURER:

And what pays for income taxes is the broad based goods and services tax. First up were going to deliver on our policy. So as I said at the beginning

SATTLER:

This is really comforting news, were paying for these people to fly all over the nation.

TREASURER:

Quite right Howard. I said at the beginning what the Senate should be doing is voting.

SATTLER:

Correct.

TREASURER:

The Senate could vote tomorrow. I mean, theyve all been elected. This debate has gone on for about 20 years in this country. All the ins and outs are known. The Senate could vote tomorrow but we are going through this expensive business and nothing really is turning on it. But I said that at the beginning. I said at the beginning why are we wasting taxpayers money on this and the Labor Party really sees it as a way of holding off the vote, hopefully to try and prevent the Government accomplishing tax reform.

SATTLER:

So is your package all or nothing? If they dont accept the whole lot including a GST on food, does the whole lot collapse?

TREASURER:

Well, you cant run the reduction of income taxes if you blast a big hole through the GST. I mean, if you blast a hole through the GST, a $5 billion hole, the rest of the package cant be fully funded

SATTLER:

OK, now I need to pin you down on this, if food is rejected by the Senate, do you not resubmit a tax reform bill then?

TREASURER:

Oh well we might. Well face that when it happens. But the point Im making is you cant run this package with an extra $5 billion cost.

SATTLER:

I know that.

TREASURER:

says well look theyve taken five, theyve added $5 billion onto the cost, why dont you run the rest of it. You cant do that.

SATTLER:

OK, but if they knock back food, youll have to go away and redesign it wont you and therell be less income tax cuts.

TREASURER:

Oh well, weve got a number of, well, let me make this point too, we are not giving way on income taxes either. The Government wants to cut income tax.

SATTLER:

I know but youll have to, to some degree, if food is knocked back.

TREASURER:

Well why should we Howard?

SATTLER:

Im not asking that, Im simply saying if its knocked back, and thats a real possibility, you will have to redesign the package.

TREASURER:

No, were not, we are firm on cutting income taxes, thats the whole object of this.

SATTLER:

No, but you know what I mean, not to the same degree.

TREASURER:

No, thats the whole object of this. The whole object of this is to cut peoples income taxes.

SATTLER:

Inaudible

TREASURER:

And were not going to walk away from that and say oh well, weve given up on cutting income taxes. The economic benefit of this is from cutting income taxes.

SATTLER:

We all know that but the point is you cant deliver what you promised if they knock back food.

TREASURER:

Well well see. Well see. I mean

SATTLER:

I dont imagine, I dont remember you doing a course in magic.

TREASURER:

Well, you know weve given them their inquiries and well keep arguing our case and well just see. We said to the Australian people look, we want to cut income taxes in this country and we intend to do so and I am going to go flat out to try and keep that. We are not going to walk away from it. The economic benefits for this country are in cutting income taxes and the Liberal and National Parties intend to do that.

SATTLER:

Alright, well leave you there but I understand a couple of books are about to be published about you too. Do you know about that?

TREASURER:

Yes, yes I do. None of them are authorised by the way.

SATTLER:

Have you seen any transcripts, any drafts?

TREASURER:

No. The thing about authors is when they write these books, you know, they want to keep it secret. They dont show me their transcripts unfortunately. I said to these people better to write a biography after youre dead, but maybe Ive got a few years of life left in me.

SATTLER:

You would hope so. Alright thanks for your time. Talk to you later.

TREASURER:

Thanks very much Howard.

SATTLER:

Alright thats Federal Treasurer.

1 Mar 1999

View more media transcripts …

Latest News

Paris Diary

Peter Costello Paris Diary

Read more …

PPI - Rising Role of Sovereign Wealth Funds

Peter Costello Rising Role of Sovereign Funds Speech

Read more …

The Hole Truth

Peter Costello in the Daily Telegraph

Read more …

Videos

Video Screenshot

Watch videos …