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Meet The Press -

View in ParlView



18th February 2007


MEET THE PRESS PRESENTER PAUL BONGIORNO: Hello and welcome to Meet The Press. Amid the sound and
fury of the debate over the Iraq war and the US alliance, the Treasurer has raised his voice. It's
the economy, stupid, and Rudd-Labor is squarely in his sights.

TREASURER PETER COSTELLO (Wednesday): Where this motley, ragtag left-wing crew would take this
country if they ever got their hands on the levers of power.

PAUL BONGIORNO: Peter Costello is our guest. But first, what's making news in the nation's papers
this Sunday February 18 - the 'Sunday Age' reports "Hicks coming home." John Howard is bowing to
mounting pressure over the David Hicks debacle and is working to bring him home before this year's
Federal election. And the 'Sunday Herald Sun' says "Dick Smith chips in for Hicks' fight."
Businessman Dick Smith has given $60,000 to suspect the terror suspect's legal defence. The paper
says Mr Smith is angry at the Howard Government's neglect of Hicks. The Brisbane 'Sunday Mail' has
"Single parents told to work." In one of the biggest welfare shake-ups in years, about 233,000
single mums and dads will need to find a job after July 1. The 'Sunday Telegraph' says "Passengers
forced to fly Jetstar." Passengers on Qantas international flights are being bumped to the
airline's low-cost partner without being consulted. The Adelaide 'Sunday Mail' reports "I'm the
victim: Fiennes." Actor Ralph Fiennes considers himself the victim of a sexual aggressor over the
mile high sex scandal on a Qantas flight. Australians still give a big tick to the Government for
economic management. It's the one really bright spot in the recent horror opinion polls, and
veteran Treasurer Peter Costello says now is not the time to hand over to the untried and untested.
Welcome back to the program, Treasurer.

PETER COSTELLO: Good to be with you, Paul.

PAUL BONGIORNO: I think - could we first - I think I'd like to go, I know that, but could we first
go to the David Hicks issue? Is the Government confident of getting Mr Hicks back before the

PETER COSTELLO: The situation with Mr Hicks is that charges have been laid. They're very serious
charges. The Government's position is that they ought to be brought on for hearing as soon as
possible and he should be given the opportunity to answer those charges. Evidence should be led
against him. That cannot be done in Australia. The charges include the fact that he armed himself
and prepared himself to kill coalition soldiers - could easily have been Australian soldiers - that
he was there as a devotee of al-Qa'ida, that he'd been through a terrorist training camp with
al-Qa'ida, and the Government's position is that those charges should be heard.

PAUL BONGIORNO: Well, the Prime Minister says he'll be urging Dick Cheney to expedite things. We've
seen that the Americans have been promising to do that for four of the five years at least. Is
there a point whether - if Mr Hicks has not been brought to trial that the Government will say,
'Well, send him home"?

PETER COSTELLO: Well, I think we all regret that it's taken as long as it has, but you need to bear
in mind that part of the delay - a very large part of the delay - was the fact that constitutional
challenges were taken by parties in relation to this procedure, and that took several years. Now
that the constitutional position has been clarified, there is no reason why the charges can't
proceed forthwith. They should. The Australian Government is making it clear that it expects those
charges to proceed forthwith. If they do proceed forthwith, then he has the chance to have his day
in court and the prosecutors have the chance to lead the case against him. Now, if there were any
undue delay, of course the Government would be concerned about that, and the Government is making
it very clear to the American authorities that we want this matter to be expedited.

PAUL BONGIORNO: Late in the week, former Prime Minister Malcolm Fraser raised the issue of just how
fair a trial this military commission will be, and Dick Smith is very outspoken on this. He just
believes that Hicks will not get a fair trial. Now, you're a former barrister. You understand the
need for habeas corpus, you understand that hearsay evidence shouldn't be admitted and you
understand that evidence under coercion shouldn't be admitted. Isn't this also a problem, that at
face value he's not going to get a fair trial?

PETER COSTELLO: Paul, I actually think the case itself is pretty straightforward. There he was in
Afghanistan. He wasn't on a backpacker tour. There he was...

PAUL BONGIORNO: But it sounds like you're finding him guilty before he's tried.

PETER COSTELLO: No. There he was, he'd undergone training, and provided you've got witnesses, and I
don't even know that he denies it, that can give evidence that, yes, he was training with
al-Qa'ida, yes, he was there in Afghanistan, no, he didn't have the 'Backpackers' Guide to the
Galaxy' with him, I think it's a pretty straightforward case. And I must say if that's the case...

PAUL BONGIORNO: Therefore there'd be nothing to fear from a fair trial; from due process.

PETER COSTELLO: All of those procedural issues I doubt will come into play. So - look, the problem,
Paul, is that it's taken too long. We all acknowledge it's taken too long, but I think it's fair
that he had the chance to answer the charges. I think it's fair that the evidence be led against

PAUL BONGIORNO: Our involvement in the Iraq war has cost us in the vicinity of $2 billion, but US
presidential wannabe Democrat Senator Barack Obama questions our commitment.

SENATOR BARACK OBAMA (Monday): We have close to 140,000 troops on the ground now, and my
understanding is that Mr Howard has deployed 1,400. So if he's ginned up to fight the good fight in
Iraq, I would suggest that he calls up another 20,000 Australians and sends them to Iraq. Otherwise
it's just a bunch of empty rhetoric.

PAUL BONGIORNO: Strong words there from Senator Obama, but can Australia afford to put it's money
and even more troops where it's mouth is?

PETER COSTELLO: Well, Paul, the Australian Defence Force is better funded and better equipped than
it has been probably since the Second World War. And this government has really increased
expenditures including expenditures on major defence acquisition. This is not a resource problem.
This is the question as to what contribution we make and the best contribution that we make. Now,
nobody is suggesting that Australia will be increasing it's commitment to Iraq by 20,000 or
anything like it. Let me make that clear, there's a good debating point from Senator Obama, but it
doesn't actually deal with the situation on the ground. Australia has a responsibility in the
province where it is patrolling. It's doing it well. It will continue to make that contribution,
and there is no suggestion that we'll be going outside of that.

PAUL BONGIORNO: OK, if you were running al-Qa'ida in Iraq, would you put a circle around March 2008
and pray as many times as possible for a victory not only for Obama but also for the Democrats?

PETER COSTELLO: Well, look, if al-Qa'ida knows that there is a lack of will in the west and amongst
the coalition, it will exploit it. That's the point. That's the point. Now, we now have a situation
where al-Qa'ida, which is essentially an international terrorist or mercenary group, is working in
Iraq for the defeat of the coalition partners. It can't do that militarily, but it hopes it can do
it by sapping the will of the West. And if it believes it's being successful that will give it a
great morale boost, and that's the point. That's the point the Prime Minister's made. I thoroughly
agree with that point. What, do we want to boost the morale of terrorists and killers? No. When we
actually come to deal with these people we'd like to deal with them from a position of strength.

PAUL BONGIORNO: OK. Time for a break. When we return with the panel - is the Treasurer getting

PETER COSTELLO (Earlier this week): I'm asked about risk in the Australian economy and the point
I'm making is there's a lot of risk in the Australian economy.

PAUL BONGIORNO: You're on Meet The Press with Treasurer Costello. Welcome to our panel, Steve
Lewis, the 'Australian'. Good morning, Steve.

STEVE LEWIS, THE 'AUSTRALIAN': Good morning, Paul.

PAUL BONGIORNO: And Peter Hartcher, the 'Sydney Morning Herald'. Good morning, Peter.


PAUL BONGIORNO: After praying together at the service to mark the first sitting of parliament this
year, the Treasurer shared a car with Kevin Rudd and his wife back to the House. And last week Mr
Rudd claimed the two shared a basic view on keeping the economy healthy.

OPPOSITION LEADER KEVIN RUDD (Last Sunday): What you can do when it comes to interest rates is a
run a responsible fiscal policy, which means making sure your budget is in balance across the
economic cycle. In fact, we go one better than that. When it comes to budget outlays, the
percentage of tax to GDP should not increase beyond that which currently exists under the Howard

PETER HARTCHER: Mr Costello, you like to say that the economy doesn't run itself. But with an
independent Reserve Bank setting interest rates, with those sort of commitments from the Labor
Party, doesn't it just about come close to running itself?

PETER COSTELLO: Well, what does Mr Rudd say? He'd like to freeze tax to GDP at the place where I've
got it. And he'd like to freeze the monetary policy into position where I took it, and he can do
whatever this Government has put in place. That's what he says. Of course, what he overlooks is (a)
he opposed all of those decisions when they were put in place and (b) being a me-too copycat on
past work doesn't equip you to be an author of future work. You see, there'll be a new challenge in
the future, Peter, and a bloke who says, "Well, I'll just copy what you did in the past" won't rise
to a new challenge. That's the point. And if you've got a bloke who doesn't really understand
economic policy saying, "I'll copy what you did in the past," he'll be fighting the last risk to
the Australian policy not the next one.

PETER HARTCHER: You have made a point of his lack of experience with economic management, but when
you started in your job as Treasurer your experience was as an industrial barrister. You had no
macro-economic experience either. Isn't he coming from a similar sort of point of experience? Isn't
that why there is such a thing as the Treasury Department to make it up for things like that? I
don't understand that he's at any bigger disadvantage than you were when you started as Treasurer.

PETER COSTELLO: Well, Peter, I'd been self-employed, I'd done national wage cases, I'd been
involved in every major industrial dispute that had been going in this country. What's more
important, I'd argued for difficult policy. I was arguing for labour deregulation in the '80s, 20
years ago it wasn't all that popular then. A lot of people say it's not all that popular now. Let
me tell you 20 years ago it was a lot less popular. Now, Mr Rudd may have argued for a major
economic structural change somewhere in his past, but hitherto we have not been able to locate it.

STEVE LEWIS: Peter Costello, you're behind in the polls. Your colleagues are rattled by the success
of Kevin Rudd. There's going to be a very strong temptation for the Government to spend its way out
of trouble in an election year, isn't there?

PETER COSTELLO: Well, the important thing with expenditures is that they are geared to (a)
important objectives and (b) they are consistent with our overall economic settings. Now, our
overall economic settings will be a budget surplus, the Government building savings, as it should
be doing, preparing the country for the great demographic challenge to come. But within that
framework if there if there is room for important key spending on national infrastructure, like the
Murray Darling Basin Commission, it should be done.

PETER HARTCHER: DO you have a guide post for the size of the surplus that you intend to bring down?

PETER COSTELLO: Well, it's important that there be a surplus, that the Government add to saving,
particularly at a time when the private sector is drawing down on savings. That's important to our
overall macro-economic objectives. And the second reason it's important, Peter, is our country,
like every other western industrialised country, is going to hit a crunch in the next couple of
decades, and that crunch is the ageing of the population. My message to the Australian public is
this - we will face it. We either start preparing early or we will be caught out late. I want to
start supporting this very, very early.

STEVE LEWIS: Treasurer, in terms of this budget which you are preparing now, aren't you going to
have to deliver a stronger than expected surplus to rein in the temptation for the Reserve Bank to
lift interest rates again?

PETER COSTELLO: Look it's important that we run a surplus, Steve, and we've had nine surpluses
during the period that I've been Treasurer - nine - and I hope to deliver a 10th.

STEVE LEWIS: We've also had three interest rate rises since the last election - three, or is it
four interest rate ri

PETER COSTELLO: Yeah, but as the Reserve Bank will tell you, and Governor Ian Mcfarlane used to say
this over and over and over again, fiscal policy was not his problem. Fiscal policy might be a
problem for Ben Bernanke in the United States, where you have a big budget deficit, or for Mervin
King in England, where you have a big budget deficit, or France or Germany. These aren't countries
that actually run surpluses let alone nine surpluses. It's important that we have a surplus, and
there will be a surplus, but you don't want to overstate the difficulty in Australia of fiscal
policy. Australia is a model for the rest of the world. That's why Mr Rudd wants to adopt it.

PETER HARTCHER: While we're on the subject of central banking and interest rates, will the
Government have the hide to campaign on interest rates again at the next election?

PETER COSTELLO: Well, the Government will campaign on it's record.

PETER HARTCHER: Which is promising to keep rates at record lows and then watching them go up.

PETER COSTELLO: And it's record is over the course of this Government on average a much, much lower
interest rate than the average over the course of the Labor Party. Of course we'll campaign on our
record. Nobody who lived through it would want to risk their mortgage to the Labor Party again, let
alone to Mr Rudd.

PETER HARTCHER: With those sort of commitments to a independent central bank and the same fiscal
policy you have, how do they pose that risk? Hard to see.

PETER COSTELLO: Look, he says that, Peter, but you know enough about this subject to know that in
his heart he doesn't believe it. You see, they claimed they had a central bank in the last Labor
government. And when I came along and said, "Oh, we'll have an inflation target and we'll have an
agreement between the Governor and the Treasurer of the day," they said that was illegal. They were
going to sue me for doing it.

PAUL BONGIORNO: But didn't the Governor...

PETER COSTELLO: Their understanding of what an independent central bank is and what I've put in
place is quite different. Let me make another point. You say, oh, he's committed to surplus
budgets. Peter, you know this - they said the budget was a surplus in 1996. Pity the fact that it
was $10 billion short. What they say and what they do are completely different, and you know and I
know and anyone who follows these things closely knows that a mouthing of words from the Labor
Party does not mean, in practice, the delivery of an outcome that the Coalition has put in place.

PAUL BONGIORNO: Coming up after the break - is John Howard's $10 billion rivers takeover plan still
credible? And Nicholson's animated cartoon on the 'Australian's' web site has the opinion polls
sending the Government barking mad.

ANIMATED PETER COSTELLO: John, have you seen the latest opinion poll?

ANIMATED JOHN HOWARD: Oh, I never look at the polls.

ANIMATED PETER COSTELLO: Yes, but this one's different. We're losing.

ANIMATED JOHN HOWARD: Oh, that's fantastic, at last I'm the underdog. (Barks like dog). Come on

ANIMATED PETER COSTELLO: (Jumps on desk and barks like dog).

(Security guards walk into room and take Costello away)

ANIMATED JOHN HOWARD: What a shame, he might have made a great Prime Minister.

PAUL BONGIORNO: You're on Meet The Press. During probing in the Senate Estimate earings, the
Government admitted costings for the $10 billion takeover plan of the Murray Darling river system
were given a light lookover by Treasury and Finance, and the biggest change to constitutional
arrangement since federation had not gone to cabinet first.

SENATOR JOHN FAULKNER (Tuesday): $10 billion over 10 years. This is absolutely unprecedented in the
history of the Commonwealth of Australia for this not to happen, and you know it.

FINANCE MINISTER NICK MINCHIN (Tuesday): I'm not sure that's necessarily right.

JOHN FAULKNER: I am certain it's necessarily right.

NICK MINCHIN: $1 billion a year, which is less thanks, you know, half a per cent of Commonwealth
Government expenditure, let's keep it in perspective.

STEVE LEWIS: Treasurer, do the sums stack up on this $10 billion water plan? We've seen the
Premiers already reject the costings and ask for more. Are you confident, and is Treasury more to
the point, confident that this package stacks up financially?

PETER COSTELLO: Oh, very confident about the financials, very confident. I don't think there's a
doubt about that, and I don't think that's what the Premiers are complaining about, by the way. I
think the Premiers are complaining about other issues. They want to know issues like title,
ownership, flows, and that's fair enough. All of those matters will be worked out and they'll come
back to it next Friday. But to be frank, the financials are not a problem here because we decide to
allocate an amount of money for works, and that's it. The money lasts for the works that it buys.
There's no doubt about the financials.

STEVE LEWIS: Well, Victorian Premier Steve Bracks said he wants billions more on top of the $10
billion before he is prepared to sign-off. Premiers come to Canberra next Friday. Are you going to
meet that request? Is there more money for the Premiers?

PETER COSTELLO: No. Here's an interesting...

STEVE LEWIS: Not one cent extra?

PETER COSTELLO: The package has been allocated $10 billion. Now here's an interesting question for
Mr Bracks. How much was he budgeting to put into the Murray Darling Basin Commission over 10 years?

STEVE LEWIS: But this is a Commonwealth takeover. I mean, Victoria will lose it's responsibility
for the Murray Darling.

PETER COSTELLO: Absolutely. How much was - how many billions - here's an interesting question. Ask
him. How many billions was he going to put in over the next 10 years?

STEVE LEWIS: But surely the Commonwealth will be prepared to stump up another $1 billion or $2
billion over a 10-year timeframe if that is what it takes to get the Premiers to sign on the dotted

PETER COSTELLO: Steve, this is $10 billion. If this plan doesn't go ahead, you would be lucky to
get out of the States collectively a 20th of that. So, you know, let's not sit around here and say
- (Laughs) - "Oh, it's only $10 billion." This is the biggest investment we've ever had. The
Commonwealth is offering to take it over. The States will save whatever they were planning to put
in, which was a paltry amount anyway, as a consequence of that. For them it's a saving, for the
Commonwealth it's a cost, but most importantly for Australia it's a win, and that's why it ought to
go ahead.

PETER HARTCHER: Mr Costello, just changing the subject slightly to climate change. Your finance
minister during the week was quoted as saying, on the subject of the connection between human
activity and global warning, "I doubt you could ever say the matter will be settled." Do you agree
with that?

PETER COSTELLO: No, I think the scientific evidence is now accepted, and that is that climate
change is occurring, that human activity is leading to carbon emissions, which is slowly leading to
an increase in temperature. I don't think that's in dispute any more. I think there are two things
that flow from it. One is the rate of change, and there's still a little bit of a disagreement
about that. There are worst case - least worst case. And the second thing is what can be done about
it. I think the debate ought to move on to those two issues. And that's where the Government's

PETER HARTCHER: So on that point between now and the election, what should we expect, what can we
expect, from the Government on climate change and greenhouse?

PETER COSTELLO: Well, I think that the Government will be taking the measures which will ensure
that we do everything we can to meet our Kyoto cap. This will involve a big investment in new
technology. And I, in fact, announced the largest solar-powered plant in the world as part of a new
technology late last year. And the second thing that the Government will be looking at is a system,
a trading system, which may help to allocate the cost in relation to carbon emission.

STEVE LEWIS: Will you give an iron-clad commitment on a trading system before the election? Can we
expect that?

PETER COSTELLO: Well, Steve, I think that the world will move to a trading system, and I think...

STEVE LEWIS: So you're confident we'll have something over the next several months?

PETER COSTELLO: Look, I can't give you a time, but let me say this. I think the world will move to
it, I think Australia should be part of it. We should be part of negotiating the shape of it so
that it suits Australian ambitions and our country, and I think long-term, in allocating the cost,
and there will be a cost, of reducing carbon emissions, a market based system, a trading based
system, is better than a Government intervention based system.

PAUL BONGIORNO: Treasurer, before we go, the 'Bulletin' magazine during the week had an article
entitled 'Peter's putsch', the thesis being that if the opinion polls continue going as badly as
they are that your colleagues will turn to you to save the day. What do you think of that article?

PETER COSTELLO: Well, I thought, um - I thought the author was amusing himself.

PAUL BONGIORNO: Have your colleagues missed the boat? Is that your message?

PETER COSTELLO: Look, I don't - I think that's completely fanciful. It's so fanciful it's hardly
worth worrying about, and that's the way I read the article. I thought it was just a piece of
fanciful conjecture.

PETER HARTCHER: Mr Costello, do you have Kevin Rudd's measure? Could YOU beat him?

PETER COSTELLO: I'm sorry, Peter, you'll have to say that again.

PETER HARTCHER: Do you have Kevin Rudd's measure? Could you beat him?

PETER COSTELLO: Well, I think the Government as a whole can do that, but it'll take a lot of work
and a lot of effort.

PAUL BONGIORNO: OK, (laughs) we're right out of time. Thank you very much for joining us today
Treasurer, Peter Costello, and thanks very much to our panel Steve Lewis and Peter Hartcher. Until
next week, good-bye.