Peter Costello

Media Transcripts

Telstra, economy, States financial mismanagement, ATO privacy breaches, Jack Thomas, Victorian Liberal Party, Don Chipp, Sydney - Interview with Virginia Trioli, 702 ABC

Interview with Virginia Trioli
702 ABC

Tuesday, 29 August 2006
8.35 am

SUBJECTS: Telstra, economy, States’ financial mismanagement, ATO privacy breaches, Jack Thomas, Victorian Liberal Party, Don Chipp, Sydney

TRIOLI:

Good morning Treasurer.

TREASURER:

Good morning Virginia, good to be with you.

TRIOLI:

Nice to be with you. Would you recommend T3 shares to anyone in your family?

TREASURER:

We are unable to actually give recommendations in relation to shares. Now, I have to be very careful here to observe the law…

TRIOLI:

But Mum and Dad (inaudible) applying for T3 it would seem, your parents, would they be interested in T3 do you reckon?

TREASURER:

They might be, but unfortunately I can’t give recommendations to the public. What I would say to people is there will be a prospectus, have a look at it, think about it carefully and make your decision. If you have got a financial adviser or a bank or somebody like that, by all means have a chat to them and I think Telstra is a well known company, there are a lot of Australians who have shares in Telstra and if you are thinking about getting some more, have a look at the prospectus.

TRIOLI:

On T3 a former Deputy Secretary of the Finance Department, Professor Steven Bartos has told the ABC today that your plan to sell some and pass most of the Government’s Telstra shares in the Future Fund doesn’t resolve the conflict of interest issue, what is your response to that?

TREASURER:

Well, I do believe that Telstra should be a private company and eventually the whole of the shares of Telstra should be held by private investors. So that is the ultimate objective. The fact is that with so many shares, and this is probably Australia’s largest company or at least one of its largest companies, you can’t sell them all at once so the object now is to put $8 billion on the market and then over time the balance will be sold down through the Future Fund. So that is the ultimate objective and I agree with what he says, that the ultimate objective to have it in the private sector is so that the Government doesn’t have a conflict of interest.

TRIOLI:

So the Professor is right, when he says it doesn’t solve the conflict of interest issue, now because Senator Helen Coonan is about town saying this is why we are doing it in this way, this is why we are doing it now. So, he is actually right and Senator Coonan is wrong?

TREASURER:

No, no, what is happening is that the Government is offering $8 billion so the Government will no longer be the majority owner, that the Government will still have quite a substantial interest but that substantial interest will be sold down over time. We are all in agreement it will be sold down over time. The Government won’t own that forever.

TRIOLI:

But that is his point, that is why he disagrees with you, he says that it still represents that majority ownership even with what you have in the Future Fund.

TREASURER:

Not a majority ownership…

TRIOLI:

A controlling influence.

TREASURER:

…it represents a substantial interest but we have also made it clear…

TRIOLI:

But a controlling interest.

TREASURER:

…well, we have also made it clear that the Future Fund is not going to have and is not going to exercise controlling interests in companies, it is going to be a passive investor in relation to that. So the Future Fund will not be exercising any control through its shares.

TRIOLI:

But criticism of this sale, a fire sale according to The Australian newspaper editorial, is coming from many quarters Treasurer, with the most serious observation being that by not dividing Telstra into the two sectors, the distribution sector and the retail sector before a sale, you have missed the greatest opportunity for telecommunications reform this country will probably ever experience. Are the criticisms giving you any second thoughts?

TREASURER:

No, because what people are saying is if you had the ownership of the network in one company then you could have interconnects by competitors. We have a regulatory model which says that you can have interconnect by competitors regardless of the ownership of the network and that is what the ACCC does. It actually sets and allows the interconnect by competing companies, they might be broadband companies, they might be other telephony companies, but it does actually allow that. And the proof is in the pudding – have a look at the market at the moment, you have only got to turn on your television set, you would have to have it on a commercial TV station and you will see lots of advertisements for broadband companies. There are plenty of competitors out there and they are competing into the network and they are doing that because the ACCC is actually giving interconnect prices. In some cases Telstra is arguing it is too competitive. I don’t think anyone could argue that it is not competitive enough.

TRIOLI:

So when those telecommunications experts say that it is going to put Australia behind the eight ball, that every other European country in particular is going to be miles ahead of us when it comes to telecommunications reform, they are all wrong, but in 25 years, 50 years time we will be fine, we will have a competitive market and we won’t have people falling through the cracks, you can assure us of that?

TREASURER:

We have an extremely competitive market at the moment and I will warrant to you it is as competitive as any other market around the world. Just look at all of the people that are competing for broadband and telephony at the moment. We have an extremely competitive market and I have no doubt that that will continue. In fact this has been one of the complaints of Telstra, that it is too competitive. I haven’t heard anybody saying that the converse of that.

TRIOLI:

(inaudible) Nick Minchin has admitted you seem to be doing this simply so that a sale doesn’t coincide with an election year. You can’t be too confident of your approach if that is the bottom line fear. If you were confident of the outcome, of the significance you wouldn’t mind this fabulous opportunity being made to all sorts of Mums and Dads investors in an election year.

TREASURER:

Sure. The timing is not set by elections, the timing is set by the fact that it was only after July of last year that the legislation went through. Once the legislation went through then you had to appoint advisers and the advisers have all been appointed and this is really the first window of opportunity to do this.

TRIOLI:

Why take the first window of opportunity? Honestly, it struck me over and over again in the last few days, Treasurer, why, why now?

TREASURER:

Because this has been on the Government’s books now, I think our first time we adopted the policy to resolve Telstra’s ownership was either 1990 or 1993 – it has been over ten years. We have already had one lot – T1, they call it – another lot – T2, they call it – and this will be T3. These things take a lot of time, if you don’t do it now, you know, when would you do it? It would be a long time in the future possibly.

TRIOLI:

Other reports are suggesting that Telstra boss Sol Trujillo might lose patience with the whole situation and resign, would you welcome that?

TREASURER:

Look, I think that the important thing is that the Board has confidence in the Chief Executive, the Board appointed the Chief Executive. I think it is important that the Chief Executive see through the process and I believe, as does the Board, that it is very important that Mr Trujillo see this matter through.

TRIOLI:

Do you have confidence in the Chief Executive ?

TREASURER:

Well look, I think he is very important in the sale process, absolutely. And that is why I think it is important that he stay there. Can I say, the Government didn’t appoint Mr Trujillo. The Board appointed Mr Trujillo. Mr Trujillo doesn’t even account for the Government, Mr Trujillo accounts to the Board. The Board has confidence in him and as far as I am concerned, as long as the Board has confidence in him, that is the important thing. I trust the Board’s judgment, but it is very important I think that he is there for this process because the process has begun and it is very important that he see it through. He will be one of the lead men in explaining the company. He has got a lot of international experience, he is well known in the United States market for example which is going to be very important for this float and that is why it is very important that he is there to direct this process.

TRIOLI:

If he did bail, would he be entitled to a multi-million dollar parachute?

TREASURER:

Well, look, I don’t know what his contract is. As I said, he doesn’t have a contract with the Government, he has a contract with the company which…

TRIOLI:

(inaudible) at the moment. Given workplace reform and the like, it would be nice to be able to pull the rug underneath someone who was annoying you, wouldn’t it?

TREASURER:

Well people don’t realise this is how Telstra is run, it is not actually run by the Government. Telstra is a corporation.

TRIOLI:

Try telling that to Telstra at the moment.

TREASURER:

The corporation is run by a Board of Directors. The Chief Executive is appointed by the Board of Directors. He has a contract with them, it is not my contract and they have confidence in him, I have confidence in them, it is important that he see the process through.

TRIOLI:

It would seem that the Government and the current management of Telstra has been unable to agree with recently on very much at all. Why is this and why have those relations been so poor at the moment, particularly stories yesterday about a pollster being hired by Telstra to do work normally a polling company associated with the Liberal Party, why has it come to this sad pass?

TREASURER:

Well I think there are two issues here. There is Telstra, a corporation run by a Board of Directors which is competing in the market, competing against Hutchison, Optus, Primus, all of these other companies. And then there is the regulatory system. The regulatory system which says how these competitors are going to be allowed to connect into the network. Now the regulatory system is set by the Government and it is administered by the ACCC. Telstra is a competitor under the regulatory system and here is what I think Virginia. Telstra has got to work under the regulatory system. Telstra doesn’t set the regulatory system. Telstra doesn’t run for election, the Government runs for election. The Government passes the law, the Government will set the regulatory system and Telstra has to compete under that regulatory system. Now, I think Telstra has been campaigning for changes of the regulatory system because they think if they could get changes which would reduce competition that would enhance their share value. Now, they are entitled, it is a free country, they are entitled to put their point, but Telstra is not going to set the regulatory system, the elected Government is going to set the regulatory system.

TRIOLI:

Seventeen minutes to nine on 702 ABC Sydney. If you are just joining us, Peter Costello the Federal Treasurer and the Member for Higgins is here in the studio having a chat this morning. A nationwide report that has been reported on the ABC this morning Peter Costello, has found that concerns about the nation’s economy amongst Australian business is at an all-time high, the expectation of these 1800 – thereabout – small and medium businesses for the next 12 months, is at the lowest point it has ever been in the 12 years of the survey. What assurances can you give these businesses about the economic outlook because they are looking, they are sounding pretty gloomy, not just about now but about the next 12 months, that is a failure in your department, isn’t it?

TREASURER:

There have been many surveys, so some show business confidence down, some show that it is up, some leading indicators actually show the economy accelerating over the next 12 months. But you ask me what assurances I can give, it is this: that the Australian economy will continue to grow, one of the faster growing economies of the developed world, that our inflation leaving out one or two statistical quirks like bananas, is…

TRIOLI:

We are told they are a crucial part of the basket, not a statistical quirk. You may want to leave them out.

TREASURER:

…our inflation is moderate, that we are enjoying good prices on our exports and our trade position is improving and business profitability is just off the all-time record. Now that is a pretty good story, actually.

TRIOLI:

You are quoted in the Financial Review today warning the States that their infrastructure programmes could fuel inflationary pressures. I can tell you Treasurer, from the calls that we receive here and the conversations that we have here on a daily basis, it is in a sense only commitments from the State Governments around the country, to infrastructure projects, that’s actually mattering to people – that is reassuring them, making them feel like their government is actually doing something – rather than just gathering cash into a surplus which is what you seem to be suggesting. That really seems to put you out of step with what most people want from their Governments, their State Governments in particular right now.

TREASURER:

Well I support infrastructure spending. The Commonwealth Government is engaging in the largest infrastructure spending that it has ever done.

TRIOLI:

So what is wrong with the States doing it?

TREASURER:

I support the States engaging in infrastructure spending. What I don’t support is the States running deficits and I would recommend that the States get their Budgets back into balance because if they don’t have their Budget back in balance, if they are borrowing money, that will be putting pressure on the economy. So, I would recommend to the States that they get their recurrent expenditures under control so that they can engage in more infrastructure programmes and keep their Budgets in balance.

TRIOLI:

But maybe that puts you out of step as well. It would seem there’s been a real swing in the electorate as well when it comes to the idea of understanding a deficit in terms of a State Government that is not in trouble but wants to borrow responsibly in order to invest long-term for its State. That thinking seems to have shifted a little bit, it’s a little bit old school what you are talking about, Treasurer?

TREASURER:

As I said, I support infrastructure spending…

TRIOLI:

But sometimes you might need to borrow for that.

TREASURER:

…well the Commonwealth is engaging in the largest infrastructure spending that we have ever engaged in. But in order to do that, and to keep your Budget in balance, it is important to get a grip on your recurrent costs and I think you will find in some of these State Governments, there is no shortage of money, no shortage of money. GST revenues are the highest they have ever been, stamp duty revenues are the highest they have ever been – there is no shortage of money. It is a question of keeping a grip on your costs and prioritising for the important projects.

TRIOLI:

So are you paving the way for blaming the States, should there be a rise in inflation?

TREASURER:

No, I am making the point that the Commonwealth, which is engaging in the largest infrastructure spending, we have ever done…

TRIOLI:

Yes we heard that.

TREASURER:

…is doing that with a balanced Budget. And I am recommending to the States to do the same thing.

TRIOLI:

The ATO, the Australian Tax Office, is now taking action against 27 workers for breaches of privacy looking into files when they simply shouldn’t be doing that.  What’s wrong with the culture in that Department?

TREASURER:

Well it is absolutely unacceptable for anybody to breach privacy in relation to tax matters.

TRIOLI:

Why do you think this has come about in the ATO which largely even though we might grumble about the ATO, seems to have quite a good reputation up until now.

TREASURER:

Historically it has had a good reputation and if anybody has breached the privacy guidelines, that is absolutely unacceptable and those people should be severely dealt with.  You know it is just not acceptable to access someone’s private details whether you are working in the Tax Office or the Motor Registration branch or anywhere else as far as I am concerned.

TRIOLI:

Is there a culture problem in the ATO as you see it?

TREASURER:

I don’t know if it is a culture problem.

TRIOLI:

It can’t just be a few bad apples when you are talking about 27.

TREASURER:

Well, the good thing is that the management has identified this and the management will deal with them.  And as I said it is absolutely unacceptable and I am very pleased that the management has identified this and they have taken proactive steps in relation to it.

TRIOLI:

Peter Costello, the control order on Jack Thomas that was announced yesterday following a senior court’s overturning of his conviction has bewildered some and pleased others.  Here’s what confuses me when I heard the news last night, if for some bizarre reason Jack Thomas could phone Osama bin Laden, which seems to be part of the restrictions that have been placed on him now, wouldn’t authorities actually want him to do that?  Wouldn’t it be a good thing that he try and place those calls, that we track the calls?  And we can track down this terrorist and catch him.  What’s the logic in that?

TREASURER:

Well let’s talk generally for a moment.  Let’s suppose somebody, not about a particular case, let’s suppose somebody has gone overseas and had terrorist training and after being given terrorist training, they’ve been given a passport and a ticket to come back to their home country.  Now, by this stage, if they have been trained in how to conduct a terrorist act, all they need is an order to do it.  You wouldn’t want after the event to say, oh my goodness, the order was given and we missed it, would you?

TRIOLI:

You imagine that authorities might completely take their eye of someone like that following this high profile court case?  That beggars understanding.

TREASURER:

The purpose of the control order is so that they don’t take their eyes off such a person.

TRIOLI:

So you believe the court got it wrong when overturning his conviction.  You are speaking like a man who is still persuaded that Jack Thomas is a terrorist or has terrorist connections.

TREASURER:

Well I was speaking generally when I gave you that example. 

TRIOLI:

Well let’s speak to the specifics.

TREASURER:

Okay.

TRIOLI:

Let’s (inaudible) Jack Thomas’ situation (inaudible) …

TREASURER:

Let’s come to the court decision.  The court decision turned on a question as to whether or not some admissions he made were properly admitted into evidence.  That is what it turned on.  And the court said in its view that they shouldn’t have been admitted into evidence.  Now, as I understand it, certain admissions had been made elsewhere and the court was considering whether or not to put those into evidence.  So the court decision just turned on the admissibility of evidence.

TRIOLI:

But the control order put in place yesterday turns, as Peter Hartcher in the Herald says today, surely, Jack Thomas into an investigative dead-end.  If there is anything more to be found out about terrorism links between Australian people and overseas, that’s now a dead-end because of that control order.  So, perhaps a foolish decision, we might regret it in the long run?

TREASURER:

I don’t think so.  Not for a moment.  I think this case has been thoroughly investigated.  Certain matters that came up in the investigation according to the Court of Appeal in Victoria can’t be put into evidence.  All right, we observe the rule of law.  That’s fair enough.  But the Government wouldn’t want to be in a situation where our society was subject to some damage and we hadn’t done what we could to protect the people of Australia.

TRIOLI:

Eight minutes to nine on 702 ABC Sydney.  Peter Costello is with us this morning. You had an interesting week or so down in Victoria, in your home town.  Jeff Kennett last week told you to shut up if you couldn’t be helpful about Victorian Opposition Leader, Ted Baillieu’s chances.  I’ve read your comments that you made about Ted Baillieu and about the Victorian Opposition there, when it comes to the next State election.  Why are you so lukewarm about endorsing Ted Baillieu and his chances?  We’ve heard the rhetoric over the years…

TREASURER:

I’m not lukewarm at all.  I think I made the stunningly obvious point that it was important to get some policy out there before the election in three months time.  No, Virginia, you know, let’s stop you there.

TRIOLI:

I’ll read out the quotes if you like.

TREASURER:

I think I made the stunningly obvious point that the election was in three months time and normally it is important to have your policy out before the election.

TRIOLI:

So it was a criticism of him not having his policies out?

TREASURER:

No, it wasn’t a criticism at all.  It was a statement of the obvious point that it is important to get policy out there in an election context and I am sure they will.  And can I tell you that I have offered assistance to help with that policy because I think it is very, very important to get it out there.  This is why you have elections incidentally.  Elections turn on policy and I think it is very, very important to get it out there.  Let me make the obvious point.  One of the reasons why the Labor Party at the Federal level keeps losing elections is they don’t have policy.

TRIOLI:

So has your assistance been taken up in Victoria?

TREASURER:

Yes.

TRIOLI:

So you’ll be helping with putting policy together for the Victorian State election?

TREASURER:

Absolutely, absolutely.  In relation to economic policy.  Now, I’ve got to be careful here because, you know, I am the Federal Treasurer and my obligation is to the country and to national policy.  I don’t want people to think that I spend all my time on State issues, but absolutely, where I can lend a helping hand, I do.

TRIOLI:

Well we were talking this morning, or at least the breakfast program was on 702 about how Sydney needs to get itself some more major events in the way that Melbourne has.  And one suggestion that has come through here on the SMS service, is why don’t we poach Jeff Kennett up here to poach some activities for us.  I am sure you would be very happy if we poached Jeff Kennett away from Victoria and away from you.  You two seem to irritate each other so much.

TREASURER:

No, well if people wanted to hire him, I would wish him well.  Absolutely wish him well.

TRIOLI:

Why can’t you two get along?

TREASURER:

Well, as far as I’m concerned, we do.

TRIOLI:

When he tells you publicly to (inaudible) to shut-up?

TREASURER:

The thing about Jeffrey is you’ve got to remember, he attacked Malcolm Fraser, he attacked John Howard, he attacked Robert Doyle.  You know, when Jeffrey has these comments you join a long, long line.  I think I’ve got in the back of my memory a few things he’s said about you over the years.

TRIOLI:

I’d be proud I think to wear the badge.

TREASURER:

I think you might be.  I think I can remember a few comments about you and the ABC.  You join a long line. 

TRIOLI:

Five minutes to nine on 702 ABC Sydney. What’s the best of Don Chipp’s legacy in your view, Peter Costello?

TREASURER:

I dealt with Don with a lot actually, after he left Parliament.  I thought he was a very sincere person.  It takes a lot to found a political party, which he did.  And he was elected to the Senate, he had numbers of Senators that were elected on his ticket.  He was charismatic.  And I think whilst he was there the Democrats had a role.  I think once he left it gradually disintegrated and now it probably is a party whose time has passed.  But even after he left politics he had enormous integrity and I dealt with him quite a bit and I found him enormously engaging.

TRIOLI:

The landscape of that kind of political manoeuvring seems to have changed now for all time.  Can you imagine in this day and age now someone splitting from the Liberal Party as he did and forming their own party?  Has the time for that completely passed now?

TREASURER:

We’ve had people that have left the Liberal Party and sat as independents in the last ten years.

TRIOLI:

Yes, but it is a different prospect to go and try and set up your own party altogether.

TREASURER:

That is an enormous difficulty and the fact that he was actually able to do it, shows really how charismatic he was at the time.  I wonder if in retrospect he thought it was the right thing to do because he was very much a centrist between the Liberal Party and the Labor Party and of course after he left, the Democrats moved much more to the left and then of course they got outflanked on the left by the Greens, so they lost their place.  And I think Don himself realised that there was moment in the seventies where you could hold that position but the landscape moved.

TRIOLI:

Would have he had stood, I know it is probably ridiculous to go through the would have, could have, should have historical stuff, but when someone dies like this, it is interesting to do so, could he have stood a chance of a better or more interesting career if he had stayed with the Liberal Party?

TREASURER:

Well of course he had been a minister in the Liberal Party and he had a terrible falling out, I think with Malcolm Fraser, and I am sure that is one of the reasons why he founded his own political party.  He had been a very successful minister and I think if he had hung in he would have come back as a minister, yes I do.

TRIOLI:

Any further than a minister?

TREASURER:

I don’t think Don would have been a leader in the Liberal Party because the Party had moved past his kind of politics, but he certainly would have been a senior minister and he would have been a great contributor.  I think, I used to talk to him a bit in his retirement, I don’t think he really liked the way the Democrats had moved particularly under the Cheryl Kernot leadership.  You see, she took it to the left and then eventually joined the Labor Party.  And I think that was quite damaging to the Democrats.

TRIOLI:

A couple of minutes left just before the news with Peter Costello. What is your favourite place in Sydney?

TREASURER:

Bondi Beach.

TRIOLI:

When was the last time you swam there?

TREASURER:

Probably about three or four years ago.

TRIOLI:

All right, now see this is something you may have to work on, I caught up with a couple of Sydney…

TREASURER:

A little cold to swim there at the moment, if I may say so.

TRIOLI:

That doesn’t stop some of your Liberal colleagues I might say.

TREASURER:

Oh, really?

TRIOLI:

Oh yes.

TREASURER:

Swimming at Bondi Beach?

TRIOLI:

Oh yes, Bruce Baird is there whenever he can be. 

TREASURER:

Now I know that not to be true because Bruce is a Shire boy and if he swam anywhere he would be swimming at Cronulla Beach.  I take that very seriously as a supporter of the Cronulla Sharks.

TRIOLI:

Oh yes, and when was the last time you were there for a game?

TREASURER:

I was there around three weeks ago, I think.  I saw Cronulla play the Newcastle Knights and lose.

TRIOLI:

I mention this with just a few seconds to go because a Sydney businessman said to me the other day that Peter Costello needs to be here more often, needs to show that he likes Sydney more if he’s ever to get a tilt at the top job and we will leave that to one side, you need to be more in Sydney.  You planning to do that?

TREASURER:

I am probably in Sydney every fortnight.  You know, with sittings in Canberra it is hard to be here more often, but I love coming through and it is a great place to be.

TRIOLI:

Oh well, I’ll see you at a Sharks match sometime maybe.

TREASURER:

Are you a Shark?

TRIOLI:

Absolutely not. 

TREASURER:

Well you won’t see me at a Sharks game then.

TRIOLI:

Peter Costello, good to have you here, thanks very much.

TREASURER:

Thanks very much Virginia.

29 Aug 2006

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 …