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Treasurer disputes funding for ALP promises, claiming there is a $2.4 billion black hole in calculations.

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Tuesday 27 January 2004

Treasurer disputes funding for ALP promises, claiming there is a $2.4 billion black hole in calculations


TONY EASTLEY: The holidays must be over. T he roads are busy, schools are preparing for the new term, and politicians are arguing about money. 


Opposition leader Mark Latham is unveiling more spending promises in the lead-up to the Labor Party conference, prompting Treasurer Peter Costello to claim that he's uncovered a $2.4-billion black hole in Labor's election costings. 


Labor insists it's found between five and six billion dollars in savings and that its spending measures will be fully funded. 


Mr Costello has joined us from Melbourne, and he's speaking to Alexandra Kirk. 


ALEXANDRA KIRK: Treasurer, good morning. 


PETER COSTELLO: Good morning, Alex. 


ALEXANDRA KIRK: Now, Labor says that all its election spending promises are fully funded, that the savings are based on your budget figures, much of their savings are based on, in fact, scrapping Government programs, plus not selling the rest of Telstra. So how do you claim to have found a $2.4-billion black hole? 


PETER COSTELLO: Well, the Labor Party has now promised, I think, $6-billion of new funding, and they released a list of how they would pay for it - $2.4-billion of that spending saving just doesn't exist, just does not exist.  


And then we had a… 


ALEXANDRA KIRK: How do you justify that? 


PETER COSTELLO: Well, well, for example they say that they'll save money by not selling Telstra. What they forget is that by selling Telstra and using the money to retire debt doesn't cost you, it saves the taxpayer money. So they say… 


ALEXANDRA KIRK: But in the first instance, actually preparing Telstra for sale does cost money. 


PETER COSTELLO: And that is offset by the interest payments you save from the proceeds. They've just left the other side of the equation out. 


Let me give you another example. They say for example that not by having, by not having choice in the public superannuation scheme they can save money, but the Government's announced that it's not proceeding with that choice. It just doesn't exist. The saving doesn't exist. Another $700 does not exist. 


Let me give you another one. They say that they won't cut the superannuation surcharge and they'll save money. The superannuation surcharge has been cut, it's been cut, it's been introduced. So unless they're going to turn around and say, oh we are going to reintroduce increases in the surcharge, the so-called saving just does not exist. 


ALEXANDRA KIRK: But Labor says it hasn't committed to those super savings that you refer to because the measures actually went through so there are no savings to be had. Now, you still don't know the… 


PETER COSTELLO: Absolutely, there are no savings to be had, and yet superannuation surcharge appears as one of its savings measures - $700-million, $700-million, and there are no savings to be held. That's $700-million that doesn't exist. That's absolutely right. 


ALEXANDRA KIRK: You still don't know the size of the surplus. That'll be available going into the election, for election promises. So who did your analysis of Labor's costings? 


PETER COSTELLO: Oh, well we did them ourselves on the basis of the material we have from the official departments, Treasury and Finance. And, you know, for example, it's pretty obvious, if you claim you can save $700-million from not cutting the superannuation surcharge, when it's been cut, you can't say that. It's obvious. If you say, well we can save money by not introducing choice, and the Government has announced that it won't be introducing choice, you can't save the money. If you say, oh well we won't prepare Telstra for sale, and that'll save us money, but forget about the savings you get from retiring debt. This is basic stuff, you know, this is amateur hour.  


Now, you've read in the paper Mr McMullan today says, he's warned people don't believe what our shadow ministers are saying. He's said all of the promises that they've been making they won't be able to deliver on. That's what he's said. He's said to people, when they put out these press releases, when they claim that this is our policy, don't believe them. Here is a shadow minister essentially saying that his other shadow ministers have no credibility. The truth of it is that none of them have credibility when it comes to money. 


ALEXANDRA KIRK: Well, what he's saying is, isn't he, that only 25 policies have the tick and they're the only ones that count when you're talking about spending measures. So in that case, haven't you jumped the gun? 


PETER COSTELLO: Well, the 25 don't add up because, you know, I've just given you three measures which pull their savings apart absolutely, and then outside the 25, what Mr McMullan is saying is don't believe the shadow ministers. Well, who's to say he's right and the shadow ministers are wrong?  


Let me tell you something, at the ALP conference this week, business will roll up and they will listen to shadow ministers promise them the world in all sorts of areas. I want the Australian public and business to bear in mind that Senator, Mr McMullan has said don't believe those promises. In fact, I'd say don't believe any of the promises you hear coming out of the ALP national conference. It's all done for publicity. There's no basis behind it. Labor hasn't done the work and they can't be trusted with money. 


ALEXANDRA KIRK: But in coming out here before Labor's national conference, are you worried about Mr Latham's profile and momentum since he became leader? 


PETER COSTELLO: You know, I was pretty shocked by the way in which the Labor Party began its conference yesterday by claiming it could save money that didn't exist, and today by claiming that you shouldn't believe its own shadow ministers. So, you know, I've heard of people saying after an election, you shouldn't have believed our promises. I've never heard of anyone saying before an election don't believe our promises. This is a first and I thought that all of those people that go to the conference should bear in mind the words of Mr McMullan - don't believe our promises. 


ALEXANDRA KIRK: Well, you have a healthy surplus, and you expect that continue in the May budget, so much so that you've been talking about a tax cut ahead of the next election. So isn't talking about a black hole at this early stage - nine months out from the election - suggesting that the coffers may not be as full as you've previously indicated? 


PETER COSTELLO: Well, the point I've just made is Labor's promised the world when it can't deliver, and when it says that oh we'll do this, this and this to pay for it, it can't do it. So I'm just saying Mr McMullan's right. You can't believe those promises. 


As for the Government, our position has been that if we can balance our budget and if we can have low debt, and if there is a surplus then the people who've created that, the taxpayers of Australia, should have a call for tax relief. That's what we did in last year's budget. If we had the opportunity, and that's an if, at the time of this year's budget, that would be the approach we'd be taking. 


ALEXANDRA KIRK: Treasurer, thanks very much for joining us.