Peter Costello

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Bali Appeal, Budget, Higher Education, Pensions - Interview with Liam Bartlett, 6WF

TRANSCRIPT
THE HON PETER COSTELLO MP

Treasurer

Interview with Liam Bartlett
6WF

Tuesday, 20 May 2003
9.25 am

 

SUBJECTS: Bali Appeal, Budget, Higher Education, Pensions


BARTLETT:

...the way money is being distributed from the national Appeal, the Bali Appeal, some $14.3 million, and their representative of the Red Cross told us this morning on the program that they've had something like $45,000 ripped out in bank fees for administering the first part of the money, they've spent about $5 million or distributed about $5 million. What do you think about that? Is there a role...

TREASURER:

This is by the banks? The banks have charged this?

BARTLETT:

By one particular bank, they wouldn't tell us which bank it was, but they have written to them.

TREASURER:

Well I think it would be a nice gesture if the bank forewent its fees. Of course I do. Banks are in a pretty profitable situation at the moment. It's up to them whether or not they charge fees. I'm aware that in relation to some charities, some of the banks don't. And I would have thought in relation to the Red Cross, it would be a pretty good gesture if the bank did forego its fees. Maybe the Red Cross didn't raise it with them at the outset, but even now, if that means that people who should be getting money aren't getting money, I'd urge the Red Cross to arrange it with the bank.

BARTLETT:

It's a sizeable amount, isn't it? I mean, obviously they're dealing in large amounts of money, but you'd think in that particular case, the Bali Appeal, there would be a reasonable argument to say it's a special case.

TREASURER:

Sure. You would look, it's up to the bank, I mean the bank charges a fee for managing money. By the same token, generally speaking when a bank manages money, it can make money out of it. You should bear that in mind as well, generally speaking. I don't know what the bank is and I don't know what the terms and conditions are but, it would be a nice gesture if the bank forewent its fees. I'd recommend that to the bank.

BARTLETT:

Back to the Budget, there's a poll printed in the Sydney Morning Herald today, as you would know, finding that some two thirds of your voters, Coalition voters, would rather see the money that you dished out last week on tax cuts, spent on improving health and education, rather than on tax cuts. You'd have to be unhappy about that, wouldn't you?

TREASURER:

Liam, I'm not sure what sort of questions are asked and I'm not sure how much you can read into these polls. Put it this way, I've never come across anyone that wanted to pay higher tax. I've come across people that think others should pay higher tax, I've never come across somebody who's said I should pay higher tax.

BARTLETT:

Well, that's a given, isn't it?

TREASURER:

I've never seen anybody voluntarily write to the Government and say I'm not liable for this, but I'd like to pay an extra tax this year and send a cheque in. So, in my view, people want decent services and they want taxes to be as low as possible. In this Budget, we had the opportunity to balance the Budget and fund the war in Iraq and the security demands and Australia's most extensive drought in recorded history and also to reduce tax.

BARTLETT:

But Australians are pretty sensible about this, don't you think? If they're seeing that they're getting $4 or $5 a week extra, but they are still seeing at the same time an erosion in things like health and education, they think well maybe the money is better somewhere else.

TREASURER:

I don't think they're seeing an erosion in relation to health or education at all. In relation to health, there's more money spent on health now than in any other time in Australian history, and the Government has increased health expenditures by 65 per cent.

BARTLETT:

But that doesn't mean, with due respect, that the system works, Treasurer.

TREASURER:

Well, I think it does mean that they're not seeing an erosion in relation to health. In fact, the Government is spending additional sums in relation to hospitals, and doctors, and private health insurance. And similarly, in relation to education, funding in relation to education is increasing. Now, Liam, I think if you say to people would you like better services, they say, yes, we'd like better services. I think if you say to people would you like lower taxes, they'd say, yes, we'd like lower taxes. I've never come across anybody that would like higher taxes. In fact, I rather thought that most people thought the tax cuts should have been larger. I've not come across a lot of people that are saying that they didn't want them at all. And I'd say this, that if we can balance the Budget and pay our debts and expenses, then we should try and keep taxes as low as possible, and that's the principle that we're searching for here.

BARTLETT:

Did you and John Howard eventually work out between you who was responsible for the tax cuts?

TREASURER:

Well, look, in a Government situation, ultimately the Government is responsible, but obviously Treasurers have responsibilities and Prime Ministers have their responsibilities too.

BARTLETT:

Why is it so hard though for people in you position to say, you know, it was his idea. He thought of it and I thought it was a great idea?

TREASURER:

It's not hard at all, and in fact, it would be very easy. But the trouble is, once you start going into the detail of how Government decisions are made, then people want to play off it, and then they want to know how another decision was made and another decision was made, so by and large, what we basically say is that they're all Cabinet discussions, and they're all Cabinet decisions. That's what we say.

BARTLETT:

A team effort.

TREASURER:

Well, you know, this idea, Liam, of Cabinet solidarity that ...

BARTLETT:

But what's wrong with that? What's wrong with saying, look you know, somebody had a great idea and we said, yeah, good idea, we came along with it.

TREASURER:

Nothing wrong with that.

BARTLETT:

I guess that's honesty.

TREASURER:

There's nothing wrong with that. No, no, I'm not against that at all.

BARTLETT:

But when I saw you after the Budget on The 7.30 Report, which is the first media thing you do, isn't it after the Budget, you sort of basically go straight from the chamber up to the studio?

TREASURER:

Yes.

BARTLETT:

And it seemed to me like you were saying, well, you know, I thought of it, I came up with it and I put it to the Prime Minister and then the next day the Prime Minister says, well you know, so it's a Government thing.

TREASURER:

No, no, if you go back and have a look at the transcript, I think you'll find that wasn't what I said at all.

BARTLETT:

I didn't quote you, I was just saying, the impression you gave was that it was your idea.

TREASURER:

But, the press, the press then get into it, and they say, ooh, what does this mean, what does that mean, you know, the deep entrails. At the end of the day, frankly,...

BARTLETT:

Well they do that because you blokes muck around and can't give us a straight answer.

TREASURER:

Liam, at the end of the day, the process is not all that important, is it? What is important is the outcome? And the outcome is, that we were able to balance the Budget, fund the war, provide drought relief and reduce taxes. Now, if you want to compare us to anybody, compare us to the State Governments. They're not reducing taxes, they're increasing taxes, increasing them.

BARTLETT:

Well, we know all about that in WA. What about these education reforms? You know look, do you really think that children from less privileged backgrounds, from lower and middle income families are going to have a decent chance of going to university with your reforms in place?

TREASURER:

I think so because at the moment, the taxpayer pays about three quarters of the full cost of a university place and the student pays about a quarter. But the student is given an interest free loan, and they don't have to pay anything. It's only when they get a job and when their income goes above $30,000 per annum, we're lifting that to $30,000 per annum, that they start making repayments. There's no interest on that loan. So you don't have to actually put a dollar up for your education.

BARTLETT:

You're looking, well, you make it sound very cheap, but it's not. I mean, do you live in the real world?

TREASURER:

I'm not making it sound cheap. What I'm saying is, a system has been put in place, this system has been put in place, this is not a new system by the way, this system has been put in place since the 1980's.

BARTLETT:

But you're ratchetting it up again.

TREASURER:

No, no, no, this is a very important point. At the end of the day, the taxpayer will still be paying three quarters...

BARTLETT:

Or 73 per cent.

TREASURER:

Okay, 73, 75, okay, three quarters, 73 per cent of the place. And the student will have an interest free loan.

BARTLETT:

Well, why do you make an issue out of that?

TREASURER:

What?

BARTLETT:

Shouldn't education be a social cost, anyway?

TREASURER:

And the student will be paying one quarter, for which they will be given an interest free loan, which if they don't get a job, they never have to pay back for the rest of their lives, ever.

BARTLETT:

But Treasurer, you make it sound so simple. You know that costs are going up for students. Some of these fees will be up to $8,000 a year. That's a heck of a lot of money. That's a huge impost. And I come back to my point, do you seriously think that children from less privileged backgrounds are going to be able to do it easier?

TREASURER:

I seriously think that children from less privileged backgrounds will have an opportunity to get into university, into the course of their choice, without paying a dollar because they'll have an interest free loan, which is only repayable if they go into the workforce and get a job and start earning above $30,000. Now, ...

BARTLETT:

That's not easy thing. How much did it cost you for your education?

TREASURER:

This is different. This is completely different to the situation in some countries overseas, particularly the United States.

BARTLETT:

Yeah, look at that system, that's terrific, isn't it?

TREASURER:

Well.

BARTLETT:

A great raft of people who never get the chance.

TREASURER:

Well, you know, there are some of these universities in the United States, Harvard and Yale and Stanford, and so, are considered the best universities in the world. I mean, but there are pros and cons, but there are some universities that have international reputations. Now,...

BARTLETT:

And they're largely peopled by children whose families are quite wealthy.

TREASURER:

Well not necessarily, but...

BARTLETT:

Not unless they win a scholarship.

TREASURER:

Well, of course there are scholarships.

BARTLETT:

How much did it cost you go to university?

TREASURER:

In the 1970's, before the 1970's, there were fees and there were scholarships. Whitlam removed the scholarships and removed the fees and I was during that period.

BARTLETT:

So you had a free education.

TREASURER:

I was during the period when there were no scholarships. I didn't get the opportunity to win a scholarship either.

BARTLETT:

The same way, I just don't get this, I mean the same sort of social opportunities that were afforded to you by the country are not going to be available for the next generation.

TREASURER:

No, Liam, this is not a new system. I think you're overlooking this point. The HECS system was introduced by the Labor Party in the 1980's. This is not a new system.

BARTLETT:

And in 1997, you increased the fees by something like 70 per cent.

TREASURER:

No, no.

BARTLETT:

And now, and now this new measure, these reforms as you put it, will make it a heck of a lot more expensive.

TREASURER:

Let me go over it. If you're in favour of no fees, you would be against the situation as has prevailed for the last 15 years. This is not new. That is the system that has prevailed for about the last 15 years. Right.

BARTLETT:

It's not new. It's an improvement. It's an increase on the fees, Treasurer.

TREASURER:

No, no, I'm going through the fee situation.

BARTLETT:

Why worry historically, it's still an increase. A large increase.

TREASURER:

No, no, because your listeners might think from what you're saying that fees...

BARTLETT:

Our listeners are pretty smart about it. They know what's going on.

TREASURER:

Well then, can I, if I can just finish my sentence. Your listeners might think from you said, that fees have just newly come in. I think we agree that they've been in place for about 15 years.

BARTLETT:

Absolutely. John Dawkins was the architect.

TREASURER:

And the Labor Party introduced them.

BARTLETT:

Correct.

TREASURER:

And that has not changed. What has changed is that, two things have changed. One is we've introduced a new loans scheme for people who pay full fees, not subsidised fees, full fees, we can leave that to one side. The other thing is, we have said that the universities will have flexibility to vary those fees. Now, I want to make this point, that the fee that is charged by the university, does not go to the Government, not to the taxpayer, but to the university.

BARTLETT:

Because they're struggling for fees, for money, and they have been for a long time because they have been crying out for extra government funding.

TREASURER:

So this Budget increases government funding 7½ per cent, increases government funding, right. So the university can sit back and get increased government funding.

BARTLETT:

Well you've been decreasing it for the past six or seven years. You can't, you can't crow about that, surely?

TREASURER:

Wrong, wrong, wrong, wrong. No, no, sorry, that's not right. We haven't been decreasing it.

BARTLETT:

Treasurer, (inaudible)

TREASURER:

Now, now Liam, before we move on, so the Government is increasing 7½ per cent to universities. That's the additional amounts that they have. If the universities themselves are offering better facilities to the students, they can vary their fee. The university, but not the taxpayer, the university, and it goes back on the student's education and that's the flexible system that's being introduced.

BARTLETT:

Right. Twenty past nine, let's take some calls. And Laura is first up. Hello, Laura.

CALLER:

Good morning. Mr Costello, I'm an 88 year old pensioner and I'm calling on behalf of all my pensioner friends, for six months before GST, prices on everything rose dramatically. Pension is only assessed every six months, March and September, which means we have been required to absorb these crippling costs ever since. Wouldn't it be fairer if pensions were assessed three monthly?

TREASURER:

Well, Laura, what we did is we increased the pension.

CALLER:

No, you didn't, there's not much increase. It doesn't cover anything.

TREASURER:

Well, this is when GST came in, this is three years ago in July of 2000, we increased the pension in advance of the GST system, and we index the pension, as you say, twice a year either to the cost of living, which takes into account prices, or to average wages, and because wages have been rising faster than prices, we've actually been increasing them to wages over the last three years, which means that the increases in the pension have been greater than the increases in prices over the last three years.

CALLER:

Well, we haven't noticed Mr Costello, because we can't even buy a loaf of bread for over $2.20 or something for a loaf of bread.

TREASURER:

Sure, sure. Well, you know, look I know prices are rising, of course, there is no GST on a loaf of bread, so prices can rise for all sorts of reasons, partly, you know, it can be drought, it can be market conditions, but I can assure you of this, that the pension has been indexed and has been rising in line with wage rises which have been in advance of price rises.

CALLER:

Well, in March and September, the payments were exactly the same. We didn't get an increase at all. We just got exactly the same as we got in March for September. So, everything we go to buy, everything has gone up so much that we, all our shopping, vegetables, fruit, all the shopping, everything. And our insurances, our home insurance, everything has gone up. You know that. It's much fairer to do it three monthly.

TREASURER:

Sure, well as I said, it would have gone up in both March and September and it would go up in line either with prices or with wages, whichever is the higher, but I do agree with you, I think vegetables have been very expensive. Apparently, one of the main reasons why vegetables have gone up so much is that the drought means that the supply has been restricted.

CALLER:

Well we know that, Mr Costello, but it's not only vegetables, it's meat, the whole shopping. It's all gone up, our money just goes nowhere.

TREASURER:

Sure. Well, the, let me assure you, as I'm sure you know because, this has got nothing to do with GST or tax because there is no GST on meat or vegetables or bread.

CALLER:

I know that. Let's not get on the groceries and vegetables. It's just gone up on just every single thing we go to buy.

TREASURER:

And that's why we move the pensions in line with prices or wages.

BARTLETT:

Laura, thanks for calling.

CALLER:

Thank you.

BARTLETT:

Cheers. Hello, Lex. Good morning, Lex.

CALLER:

Good morning, Liam. Good morning, Mr Costello.

TREASURER:

Good morning, Lex.

CALLER:

I'm a taxation agent in the north west of Western Australia, in Carnarvon, and if I may, it's a bit of a circular argument, I'm afraid, but from where I sit, I see a couple of things differently to the way in which the honourable Treasurer does.

BARTLETT:

Got a question in there, Lex?

CALLER:

Yeah, I have. But the one at the top, is voluntary tax. People in fact do pay voluntary tax, quite often. And what they do is, they pay taxes for public services, which are not being delivered by the government, and if I may say, the Royal Flying Doctor, Silverchain, a myriad of services carried out by volunteer organisations, which the money is directed in tax to compulsory things, and if may be cynical, politicians' superannuation funds, travel, etcetera, etcetera, and what happens is the money that comes in by way of the compulsory taxation system, is distributed to areas which the Government would not ever get donations for, can't actually see someone in the boulevard collecting funds for Mr Costello's superannuation for argument's sake, but they will pay for the Royal Flying Doctor Service. And the administrators are aware of this, that people will pay for heart-rending type things, St John's Ambulance, etcetera, etcetera, but not for unpopular areas. So point of fact, people do already pay a voluntary tax, albeit in a very disguised manner. And when we come to HECS...

BARTLETT:

Is there a question here, Lex?

CALLER:

Well, it's a statement I guess in a way, is that Mr Costello, you're a little bit mistaken in that people do in fact pay voluntary tax.

TREASURER:

Well can I say, I think what you're referring to, is people make donations to charitable causes and this is a big part of society and it's something that we absolutely welcome. And sometimes, they get tax deductions for making those donations, not always, but sometimes they do. But, I don't think, well, look it's a question of semantics, but I wouldn't call a donation to a charity a tax. I'm not sure there is such a thing as a voluntary tax. In my mind, a tax is something that is compulsory, and it's compulsory generally speaking because people don't like paying it. That's my experience. But I'm not against donations for the Royal Flying Doctor Service or to any other charity. These are very welcome contributions and something we that we encourage.

BARTLETT:

Lex, we'll have to leave you there. We'll move onto Allan. Hello, Allan. G'day.

CALLER:

G'day. Mr Treasurer, regarding last night's Four Corners program, they actually showed a document, I believe it was for a month where they said they had $1.9 million in excess of projected profits. Now, you're the guy who's ultimately responsible for the Government's spending, how the hell could this be condoned and on my calculations, that's a quarter of a billion dollars a year to an American company who's running, making money out of people's misery. How the hell can you condone it?

TREASURER:

Well I didn't actually see the Four Corners last night, so I can't comment in detail. But from what you said, and I'm just going on what you said, it sounds to me as if the private company was estimating that it would, or forecasting that it would make a profit in excess of its original forecasts. Is that the case?

CALLER:

It estimated it was going to make, because it was fudging its figures on staff, it was going to make $1.9 million extra over and above its projected profit. Now, that's obscene.

TREASURER:

Well, a lot of companies do it.

BARTLETT:

It's not illegal.

CALLER:

Does that make it (inaudible)?

TREASURER:

Well, you know, banks regularly bring in big profits higher than forecast.

CALLER:

Well, isn't it the Government's job to control that sort of thing? That's obscene.

TREASURER:

The Government, no, the Government doesn't control company profits. You know, with a privately-owned company, whether it be a bank or whether it be farm...

CALLER:

But when the Government is paying these people, you're the person who is giving them the profit, you are paying them.

BARTLETT:

I think you might be confusing some of the issues around that company's operation, Allan, and we'll talk about that a bit later in the program.

TREASURER:

What we would do is, we would contract for a certain service for a certain price and we would pay the contractual price. If for some reason, the company makes a profit higher than it thought it would at the outset, in a private sector system, there's nothing illegal about that. The Government doesn't govern the profit, whether it be, whether it be a farm, or whether it be a manufacturer or whether it be a house builder. If he makes a profit, he's entitled to keep his profit.

BARTLETT:

Good morning, George.

CALLER:

Good morning. Mr Treasurer.

TREASURER:

Yes, George.

CALLER:

I am a pensioner, a war service pensioner, World War 2, and I just wanted to comment that dear old lady of 83 who claimed that the pension has not gone up, I just forget the exact period. I rang in because whilst I would like much more pension naturally, I'm also concerned that the truth be out there, and I'm in your corner here. And I'm now quoting from my bank statements and I can assure you, and whoever cares to listen, my pension currently is $504.00 per fortnight. And a year ago, it was $472.30. So it certainly has gone up.

TREASURER:

It has gone up. I can tell you it goes up every March and every September.

CALLER:

Indeed, I'm well aware of that.

TREASURER:

And it goes up either by the amount the Consumer Price Index rises, that's prices or by the amount which male total average weekly earnings go up, whichever is the greater. And wages have been going up higher than prices, so the indexed amount has actually gone up higher than price rises for a number of years now.

CALLER:

True, true.

BARTLETT:

Her argument was, can you look at it every three months, rather than every six because the cost of living is increasing.

TREASURER:

Well, look, you could have more indexation points which would be a pretty big, I forget how many pensioners there are, but there are several million, which would be, you know, a big administrative job, but at the end of the day the pension would only go up by the same amount.

BARTLETT:

You'd get the same result.

TREASURER:

You get the same result. You could do it more often, and that would involve a lot of administrative work, but at the end of the day, it wouldn't be a different amount, it would still go up by the same amount.

BARTLETT:

George, thanks for your call this morning.

CALLER:

A pleasure.

BARTLETT:

And Treasurer, unfortunately, that's all we have time for today, because you've got to zap off, but we appreciate you coming into the studio.

TREASURER:

Great to be with you, Liam, as always.

BARTLETT:

Good to talk to you.

TREASURER:

Thanks very much for your time.

BARTLETT:

The Treasurer, Peter Costello.

20 May 2003

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