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Meet The Press -

View in ParlView

(generated from captions) says he was too drunk to remember.

In the face of a turbulent global

economy this week, Peter Costello

has urged Australians to remain

calm and to stick bt Coalition

government. Good morning Treasurer

and welcome back to the program

Good morning Paul. Going to that

Kevin Rudd report, does it matter, Kevin Rudd report, does it matter,

do Australians care? Look, Paul, I

think this is something that I

really wouldn't want to comment on.

It's a party for Mr Rudd. And I

think I'll leave it there. Has you

ever been taken to Kors New York

when you've been there? No, no, I

can honestly say that neither have

I been there nor has comever

suggested that to me. I find when

I'm in America on official business

that they pack your program pretty

full. I don't think you get much

time for that kind of activity.

Just as well! Well, just going to

the report today that you're going

to call on the States to do

something about low documentation

mortgages, what can be done? Well,

of course, mortgage law is run by

the States as is property law. The

conveyancing, the transfer of land

system, the way you register

2 n s mortgages and all of those sorts of

things. This is a matter for State

law. The States themselves have

been talking about getting more

regulation into this area. The need

to licence mortgage Brockers, to

put on them disclosure obligationings, the things that they m#st

they must disclose to borrowers,

the things they must take into

account. We would want to get a

uniform law throughout Australia.

In 2006 a ministerial council of

the States melt to talk about

getting a uniform law. It's time

that that's brought forward. It's

time that the States enact a

uniform law and I am very concerned

that some of those low doc lenders

maybe pushing money on to people maybe pushing money on to people

who they know are bad risks and I

want to see that ended. Now,

according to one record today,

you're saying if the States don't

act you will, how can you if they

don't? Well we would say to the

States that if they want to refer

powers to us, then we would be

willing to step in and take their

powers and to legislate in this

area. I think it's important that

it be done. Let me make this very

clear - the Australian Government

has responsible of produce dential

regulation of the financial system.

We do that through APRRa but

outside of deposit taking

institutions and financial

institutionings are a whole lot

othose originators who are just

money lenders, basically, under

State law. And if you are going to

licence and regulate them then it's

going to have to be done under

State law or otherwise the States

should refer their powers to the

Commonwealth In the last couple of

days you have repeated your warning

to the banks not to take advantage

of the situation on global markets

and up their interest rates. I'm

joust wondering, these warning are joust wondering, these warning are

coming so regularly from you. Do

you know something that maybe we

don't? Paul, it's a complicated don't? Paul, it's a complicated

iron, if I can just explain. I said

earlier that the Commonwealth has

prudential regulation on the

banking system. The banking system

is well capitalised and highly

profitable. There is no need for

any bank in the wake of what is

happening in the United States to

move its interest rate up. Now,

that's the point I want to make.

Outside - let me just go on if I

may - because outside of the

banking system there are what are

called mortgage originators. These

not banking. These are not

prudentallyly regulated. They have

provided commission, haven't they?

They have, and what they do is that

go out and borrow money on the

money mar-et and they forward it to money market and they forward it to

money market and they forward it to

borrowers. Now, some of these

mortgage originators are actually

raising their money in the United

States, in the United States where

there has been all of this fallout.

Now, in order to continue to raise

that money in the United States

they will have to pay a higher

price. If they have to pay a higher

price, that money may affect their

borrowers here in Australia and borrowers here in Australia and

they may in fact get hit by a

credit crunch. They may North not

be able to borrow it. I I am making

this point. The fallout will come

through some of these originators

but the fallout will not come

through the banks and the banks are

not entitled to use this as a

reason to move their rates On

Friday the Reserve Bank governor

said he was more worried about

containing infligs than stalling

growth and didn't rule out a pre-

election rate rise. Here's what he

said? If it's clear that something

need to be done, I don't know what

explanation we could offter

Australian public for not doing it.

Regardless of when an election

might be due. Treasurer, do you might be due. Treasurer, do you

agree with that sentiment? Well, I

agree with the sentiment that if

it's clear something has to be done

then any public official would

think it their duty to do it. Of

course, I agree with that

proposition just as if it's clear

to me as Treasurer that something

has to be done to keep the economy

strong I can't imagine that I

wouldn't do it. I will do it. But

then to go on and to argue that

this referred to a particular this referred to a particular

course of a I think is stretching

the bar a bit. Was it not a warning

ch Mr Observers saw it as a worner

to both major political parties not

to go on a spending spree. Nor more

daz 6 billion in one campaign

launch. Do you take it as a clear

warning to the campaigning parties

particularly maybe the PM who

you've been worried about in the

past? Well, as Treasurer of course

I carefully adjust our Budget

policy to meet our objectives. And

I think this year's Budget was the

10th surplus Budget I've introduced.

So, Paul, I think that's more than

any other person in the history of

Australia. I think the record is

very strong, and I think as I laid

down in this year's Budget that

it's important that we keep the

Budget in surplus across the ford

estimates. We have a plan to keep

it in surplus by 1% of GDP at least

and that would put us amongst the

strongest Budget positions in the

developed world. When we return

with the panel, the Government's

attack on Labor's low rent scheme

and the gotcha of the week featured

Kevin Rudd leading with his chin? Kevin Rudd leading with his chin?

Thank you Mr Speaker and it's good

to have Gareth back in the this

chamber. A Foreign Minister with

experience. I might previousas my

question by observing its interesting the Leader of the

Opposition places a premium on experience.

You're on Meet the Press with

Treasurer Costello and welcome to

our panel, Allison Carabine from

radio 2UE and Steve Burrell from

the 'Sydney Morning Herald'. The

Labor Party's teams to make the

most of housing affordability as an

election issue have produced a

policy aimed at providing

incentives for investors to build

new housing and to then make it

available at below market rents.

I'm confident this is the vehicle

through which the Commonwealth once

again puts its shoulder to the

wheel in being part of the housing

affordability solution. Rather than

simply saying not our problem, all

over to the States. Mr Costello,

you've been creditical of Labor's

plan. What is the Government

proposing to do about this proposing to do about this problem?

Well of course the point I made

about that plan was that the

promise Kevin Rudd made to rose

Annea Harris was completely false.

Completely and utterly false. He

went to visit somebody in their

home, a lady by the name of

RoseAnnea Harris and told her that

this plan would cut her rent by I

think $50 a week or $60 a week. It

won't cut it by a dollar and the

point I made was that that was a

very callous thing to do, to use

that lady as a prop and to make her

a false promise. Now, what the

Government of course has decided to

do in relation to these matters is

we have a Commonwealth-State

housing agreement which sing $5

billion over the next five years

which is for the construction of

public housing. We have rent

assistance which I think is about

$2 billion which is being paid to

people who are actually renters and

we are currently identifying land

which could be used for

construction of new housing in a

joint audit with Commonwealth,

State and the private sector which

will bring new supply on to the market. Well market. W ll

market. Well of course, apart from

the rental problem you've also got

affordability of housing more

generally. This morning we see new

figures suggesting that mortgage

stress even among middle income

earners will be double what it is

now in 12 months time. This is

obviously a political problem for obviously

the Government, particularly if there'sF&

there's another rate rise? Well,

various people put out their own

definitions and these - there's

nothing magical about these

definitions by the way. They're

definitions which are self-set

generally speaking. The problem

that most people are referring to

in the housing market is high

prices. That's the complaint that's

being made. It's not that interest

rates compared to 10 years or 15

years or so ago are high, it's that

prices have gone up because employment is strong, and more

people are coming into the market.

Whilst I don't like the fact that

prices are rising as against first

home buyers, got to remember this,

it's better to have prices rising

in a housing market than falling,

if you have them falling you've got

a US situation on your hands That

sounds Treasurer like you're

blaming consumers for the problem

of housing affordability at the

moment? I'm not blaming anybody.

I'm saying for most Australians

they would prefer the value of

their house to be rising rather

than falling. The group that would

like housing prices to weaken is like housing prices to weaken is

not the group that's in the market,

it's the group that's out of the

market and wants to come in for the

first time, the first-home buyer

and for those people of course we

have a $7,000 grant, a first home

owners gran grant to assistant them

to get into the market. I would

like the see stamp duty relief for

first home buyers and I I would

like to see the construction of a

lot more housing so that these

people have greater choices to get

into the market. But if there is

another rate rise that would dent

the Government's economic credible, would it lso would it also mean that you would

be kissing the election goodbye?

Could that kill after your

electoral hopes? Well, I think it's

important to hold Emportant,to hold these

important to hold these things in

perspective, the home mortgage

variable interest rate of 8.3% is

lower than at any time under Labor,

even lower than it was when we were

in the worst recession in 60 years.

So to have the mortgage interest

rate at 8.3% when we're not in a

recession but in a strong

employment market, does show how

far we've come since the

Government's policies have been put

if play Does a history lesson help

borrower today,? The If point is

this, Paul, when you're looking at

a mortgage interest rate it's got

to be looked at in the context of

the economy and in a strong economy

you would normally expect rates to

be higher than in a recession. The

fact that they're still lower than 2hey

they were in a recession indicates

how far economic reform has come

and all of this could be put at

risk of course by inexperienced or

weak or mudle headed policy from a

new Government. Mr Costello, the

all important CPI figures come out

October 24, does that mean than

obgts27 election as a second choice

for the election? I wouldn't

speculate on that. Surely you're

advising the PM on this matter?

Well, the election can be held at any time

any time I think till January 19,

some time around then. I don't

think it will be held in January or

over Christmas. So that means that

it's going to be held sometime

between now and the beginning of

December. There are only about 3.5

months I think between now and the

beginning of December so we're in a

pretty narrow field here Labor

seized on the Reserve Bank govern

oor's sanguine views on State bore

yoreing he's say there for a long

overdeuce purpose? We need nor

supply of infrastructure over time

for the economy to you otherwise we

will be capacity constrained. Perm

fenty. Treasurer, the Reserve Bank

governor is confidentable with the

States spending on infrastructure,

doesn't that explode the myth that

the states would be to blame for an

interest rate rise? The point I

make is they should be spended on

infrastructure and balancing their

Budgets. Of course they should be

spending on infrastructure, nobody's ever said they shouldn't

be spending on infrastructure. My

complaint is that they're bore

yoreing. What they ought to be

doing is spending on infrastructure

and balancing their Budgets. You

asked me a question a moment ago

about keeping the Commonwealth

finances tight and I said "We're finances tight and I said "We're

keeping the Budget in surplus by 1%

of GDP." Do you know that that is

being completely undone by State

Budgets? That is, the amount of

money that the Commonwealth is

saving and therefore adding to

savings is the amount of money

which the States propose to borrow

and to defracture from savings over the next our

the next four years. Palm, it's

netting itself out But you're also netting itself out But you're also

bore yoreing, you've got $5.1

billion of bore yoreing in the 07,

08 Budget for bonds? You're out

there in the market? No, no, no,

I'm afraid Paul in net terms, the

Commonwealth has no debt and is not

borrowing and is adding to savings.

When you go to the bond market

you're bore yoreing? No, Paul, the

savings that the Commonwealth makes

outweighs any gross borrowing and outweighs any gross borrowing and

in in net terms we have no doubt.

That's an important point. It's not

an argument. It's a fact. It's a

fact All right. When we come back.

On and off the record in the

national expect, how a dinner

conversation hit the front pages

and from the 'Australian' website,

Nicholson drawing the pick and Paul

Jennings doing the voices there's

this view of the relationship between John Howard and Peter

Costello. Peter, the opinion polls

have are are terrible. The vote rs

think I'm too old and dishonest.

Don't worry John. Awe y you need is

a complete makeover.

It's more serious than I thought.

How do I look?, Like a new man I'm

off to win the election now, see

you later. What do you want us to

do with his old face? I think I'll

take that. It's time to announce my retirement.

You're on Meet the Press. Peter

Costello's now famous dinner with

three Canberra press gallery

journalists ignited a new round of leadership tensions in the Liberal

Party but also put the spotlight on

journalists and their ethics. The

Treasurer was in an expansive mood.

We all still have note of that

discussion, here's mine. Treasurer,

just revisiting this issue we we

dealt with during the week, it is a

problem is it not of credibility if

you've got three people with one

version against you with your

version? Well, look, Paul I'm not

going to go back over it. I think

you would have seen in the weekend

press that most of the commentators

took a view on this. I think I'd

agree with most of the commentators

and what say said. You'll be wary

talking to journalists at dinners

in future? Oh no, I'll speak to

journalists as I have on the same journalists as I have on the same

basis I have for the last 17 years,

as you and I have, Paul. You and I

have a had a lot of dinners over

the years and you know that out of

those dinners you don't report what

I say and I don't report what you

say. I make this point to

journalists - if they're going to journaj journalists - if they're going to

start reporting these dinners, the

much more interesting part of these

dinners is what the journalists say

about their bosses and their

channels, I'm not talking about you

here, I'm talking about others, and

the journalists might not want what

they say to be broadcast. I'll talk

that as a threat. Ha ha, I'm not

talking about you, here. I made

that point. Mr Costello, the PM

describes you as an honest and

forth right man, do you ever tell

fibs? Look, my record's there for

17 years. You've interviewed me on

pretty regular basis. I think every

other journalist has over the last

17 years. I think I've dealt with

the issues, I think the things that

I've added to public policy are

there for all to see. I'll let

others juk judge me You don't think

that you may have damaged your

chances of ever leading the Liberal

Party through these eped soic bouts

of leadership tension? I think reheating the an alleged reheatingfthe an alleged

conversation of 2005 probably shows

it was a slow news week. Mr

Costello, on another issue, the

PM's been intervening very actively

in the state of Queensland on

council amalgamation and poob's

reforms up there and also of course

the Meryy hospital in Tasmania and

virs other issues. Is this the new Federalism we're seeing from the

Government R you happy with this

approach given that it's actually

reversing some of the reforms the

State Governments are trying to

implement? Well, I think Federalism

has failed Australia in many

respects. I think it's led to

dupication, a lack of

accountability, and I would like to

see these problems ironed out. I

would like to see the Australian

Government take responsibility for

the national economy and all of

these those things that are key to

the national economy. the natio(al economy. Now, the national economy. Now, this

includes monetary policy, obviously,

fiscal policy, but we have a

situation where you have major

export ports, which have been

clogged by State bungling,

Dalrymple bay is one of them. The

Australian Government has to take

responsible for Australia's trade

and exports and yet we don't have

any responsibility to resolve

problems like Dalrymple Bay, the

clogging of one of Australia's greatest export industries and I

would like to see the Australian

Government have more responsibility

for key national economic

infrastructure, for pricing, for

access, for investment, because I

think we can't take responsibility

for the overall economy if we don't

have the ability to influence key

national infrastructure and export

arrangements But just on Peter

Beattie in Queensland, I mean,

obviously there's an economic

reform, a tough decision, you and

the PM pride yourself on some of

the tough decisions you've taken

which respect all that popular,

isn't that after all what Peter

Beattie's trying to do with his

amalgamations? Leave aside the

amalgamation question, who's ever

heard of a law that you'll get

sacked if you call a ballot? Don't

you think that's going a little too

far? Why doesn't Mr Beattie say all

right you can call a ballot, have a

refer end yul, I'll do whatever I'm

going to do but I've got to say to

you, if John Howard or I walked

into the parliament and said we're

passing a new law that's going to

mean you lose your job, if you call

a ballot, or vote in a democratic

pleb site, you'd have us up in the

UN. I think Kevin Rudd agrees with

you, it's a bridge too far? I think

that's right. I think some human

rights lawyer would have us up in

the UN or ILO or something. I think he's gone he's "

he's gone far to far. He's got

carried away with himself here, Mr

Beattie and I don't think the

outcome of it will be good for his

Government, and I do think that

it's very important that these

people be given democratic rights.

Mr Costello, finally, when you

stand for the seat of hilgins, are

you standing for the full three

years? Oh yes, when I go to the

electorate, I'm asking them to put

their trust in me andly work for

them as hard as I possibly can.

That's my pitch. Thank you very

much for joining us today,

Treasurer Peter Costello and thanks

to our panel, Allison Carabine and

Steve Burrell. A transcript of this

program will be on the web. Until

next week, goodbye. Supertext

Captions by the Australian Caption

Centre This program is captioned live. Welcome to State Focus, our weekly talk TV program for the ACT as well Wales. Hello its Guy Sweeting. Lots on today's program including Canberra research into Generation Y and separately two far gone generations: Homo habilis and Homo erectus. Comparing the interest rate impact on housing areas in Wollongong and the ACT A Narrabundah student who challenged Foreign minister Alexander Downer And some fun to end with the brilliant off beat musical comedy The Producers coming to Erindale next month. But first up; he got the gig. Interim ACT Chief Police officer Andy Hughes had long been wanting to take up a position with the United Nations and while doing so has been