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Doorstop Interview

Parliament House

Canberra

Thursday, 10 May 2007

12 noon

SUBJECTS: April Labour Force figures, Budget, new Queensland Government tax, Labor's economic
credibility, Qantas, BHP & Rio Tinto

TREASURER:

The good news is that in April, unemployment fell to a 32-year low, 4.4 per cent - the lowest since
November 1974 - and we had another 50,000 jobs created in the month of April. Now unemployment
figures bounce around a bit but we have now had unemployment below 5 per cent for 12 months and
over the last year we have had over 300,000 new jobs created in the Australian economy. About 850
new jobs a day. So this shows that this is the best time for people to be getting a job in the last
32 years. Even for teenagers, the unemployment rate has dramatically fallen and I would encourage
anybody who is thinking of coming back into the workforce to do so, we want to build Australia's
economic capacity.

In the month of April we had around 50,000 new jobs created, some of them full time, some of them
part time. There is work available for those who want to work full time and there is work available
for those who want to work part time. And together with the measures which we announced on Tuesday
night's Budget to encourage people back into the workforce with lower income tax rates and more
childcare assistance, I would say to Australians who are thinking about part time work or
increasing part time work there has never been a better chance. Unemployment is now at the lowest
level since November 1974, there are more Australians in work than ever before, this is the
dividend of strong economic policy.

JOURNALIST:

Treasurer, the Budget forecast jobs growth to slow next year, is this sustainable, is it going to
have to slow down?

TREASURER:

Well, the good news is now that we have been under 5 per cent unemployment for 12 months so
although the rate kicks around and it is a bit like a saw, the fact that you have been under 5 per
cent for 12 months is very, very significant. Now, we have some measures which are designed to
encourage more people to look for work coming on stream on the 1st July. And they, we are
anticipating, will affect the unemployment rate. We have always said that, they will affect the
unemployment rate, but to be at a base of 4.4 per cent is a fantastic base to come from.

JOURNALIST:

Is it necessary to increase workforce participation to keep pressure off interest rates and
inflation?

TREASURER:

Well I would like to increase participation. I think participation in these figures is the second
highest, nearly the highest we have ever had in Australia and we would like to increase it further.
And that is what a lot of these Budget measures are about. Cutting tax for people at the lower end
of the income scale, particularly people who might be doing part-time work, increasing childcare
assistance and encouraging people to come and start looking for work. Now is the time to look for
work because there are more jobs going than ever before.

JOURNALIST:

(inaudible) to get unemployment averaging 5 ╝ per cent next year given these trends?

TREASURER:

Well I make the point that a lot of the measures that we are introducing as part of Welfare to Work
are going to require some people who haven't been actively looing for work to do so. And there will
be an effect coming out of those changes which start on the 1st of July.

JOURNALIST:

But that shouldn't slow jobs growth, should it?

TREASURER:

That won't affect jobs growth but it will affect the unemployment rate.

JOURNALIST:

Can I ask you about Peter Beattie's intention to increase royalties on the coal industry to pay for
clean coal, you know, technology research?

TREASURER:

Well, it is just another new tax from a State Labor Government. What would you expect? And you can
dress it up one way, you can dress it up another way but at the end of the day let's face facts:
another State Labor Government is increasing tax.

JOURNALIST:

Mr Costello, what does Kevin Rudd have to do tonight to deliver a credible alternative to your
Budget?

TREASURER:

Well, what you will find with Mr Rudd tonight is there will be a lot of clichés and glib phrases
which they will have researched in focus groups. The Labor Party does a lot of polling, they get
people together and they try out phrases and you will see some of those phrases that he will use
tonight. But it doesn't mean anything because there is no substance behind it. If he doesn't dump
Julia Gillard's IR policy tonight, all of his talk about economic management is just window
dressing. Because that is the policy which has the capacity to do more damage to the Australian
economy than any other. And if he comes out of tonight without dumping Julia Gillard and her
industrial relations policy, the speech will have been worthless.

I think he will change the industrial relations policy tonight. It is obvious that they have been
working on that from some of the emails. It is just a question of how far they can dump that policy
and how far they can move from union domination and union control.

JOURNALIST:

Mr Costello, would you welcome another bid for Qantas prior to the election?

TREASURER:

It is not my place to welcome bids for companies. If a bid is made for a company, then we will
assess it under our foreign investment rules. If it is consistent with our foreign investment
rules, it goes to the shareholders. It is the shareholders who decide. But we will not allow any
bid to go to shareholders unless it proposes majority Australian ownership. If somebody wants to
come along, some majority Australian bid, and they want to make an offer to the shareholders, that
is up to them. I don't welcome, I don't encourage, I don't discourage, I just make sure that these
companies stay, well that company, stays in majority Australian ownership.

JOURNALIST:

Have you had any contact with Airline Partners Australia to suggest to them that it is not in their
interest to re-submit another bid prior to the election?

TREASURER:

Well look, I don't go into who I have contact with but as I said to you, it is not my business.

JOURNALIST:

Treasurer, are you pretty pleased with the week you have had?

TREASURER:

Well, I think this week has been an opportunity to talk about how the Australian economy is now
bringing more benefits to people with jobs, benefits to pensioners, investment in the future,
particularly education. And we are now seeing some of the payoff of hard decisions that have been
taken over a long period of time. It is not an accident, it is not a fluke. This is the culmination
of hard decisions taken over a long period of time. We have got more people in work than ever
before, unemployment at a 32-year low, benefits for pensioners and this Budget week has just been
an opportunity to show the results of good economic management. But it can all be lost. Now, the
last time unemployment was at this rate was during the Whitlam Government in 1974. And by the time
Whitlam had finished a very short period of government he had set us on a track of high inflation
and high unemployment which has taken us a long time to get out of.

JOURNALIST:

Treasurer, is this the best received Budget in the 12 years you have been delivering Budgets? And
is this going to turn around the Government's political fortunes?

TREASURER:

Well, look, it is not for me to mark Budgets.

JOURNALIST:

You deliver them.

TREASURER:

I deliver them. I write them. I try and do what is right for the economy. The public judges these
things.

JOURNALIST:

Mr Costello, is the Government playing catch-up on productivity?

TREASURER:

No.

JOURNALIST:

I mean, it has been mouldering in the low ones for most of this decade and the investments that the
Government was outlining in the Budget seem, mightn't pay off for some years yet. So, has the
Government been behind the eight-ball on productivity?

TREASURER:

No.

JOURNALIST:

Do you see any problems for a BHP bid for Rio?

TREASURER:

Look, if BHP wants to make an offer for any company, and I am not saying whether it will or whether
it won't, it would have to pass a number of tests including competition tests. And that would go
through the appropriate regulatory arrangements.

JOURNALIST:

Just on jobs Mr Costello...

TREASURER:

I am getting stereo.

JOURNALIST:

...can you keep a lid on wages growth with unemployment at 4.4 per cent?

TREASURER:

Well look, we have got to make sure we have an industrial relations system that won't cause a
general wages breakout. Because if you get a general wages breakout in a labour market where
unemployment is as low as 4.4 per cent, that would be inflationary and that would bring our
economic opportunity to an end. That is why you have got to be quite careful at the moment. It
takes a lot of experience and a lot of management to manage an economy at this level. That is why
we work as hard we do to try and make sure that we keep all of these things in balance and that is
why we are going to continue to do so in the future. Thanks.