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Press conference, Exchange Plaza, Perth, 3 October 1996: transcript [Topics: Costello, Tax]


BEAZLEY: Well, yesterday Mr Costello breached a confidence which affected markets in both the United States and in Europe. He did so at precisely at the point of time when we need to have trust and openness and sophistication in our relationship with the United States, and there is evidence now emerging from Washington, that Dr Greenspan at least, one of the most powerful officials in the United States, says he would find Mr Costello's attentions in the future no longer welcome.

The United States will always be friendly with this country, they will always be there ready with a handshake, that's not what we need. What we need, and what's useful to get, is confidence in our mutual dealings and confidence that we can handle difficult and sophisticated problems. Mr Costello has shot that to pieces. Having done so, he chose to fib about it. In doing so he breached the Ministerial Code of conduct which he signed up to. 'Ministers must be honest in their public dealings and should not intentionally mislead the Parliament or the Public'. That is Mr Costello's standard, the Prime Minister demands that of him. He has breached that in his dealing with the public. For both that reason and - as least as significantly, if not more importantly - the impact that he is likely to have had on our economic future, job opportunities for Australians. Mr Costello should go.

JOURNALIST: And yet he maintains that he imparted no more knowledge than was on the public record.

BEAZLEY: You have all heard the tape. That tape referred - as indeed did the story, which was obviously based on the same conversation - referred quite specifically to conversations with Dr Greenspan. Dr Greenspan's views on where interest rates were going, views that Dr Greenspan will share with trusted people privately at Governmental levels. But for the reasons that we subsequently saw emerge in the financial markets shortly after those views were put across, he never does publicly. Every

Australian Treasurer has understood that. Every Australian Treasurer has had that sort of access to the head of the Federal Reserve. Every Australian Treasurer has been able to use that confidence in relationships to ensure that Australia is heard and understands what are serious international economic financial counsels. Mr Costello has put it all in jeopardy in one visit.

JOURNALIST: Do you see this as a simple lapse in concentration or a deliberate attempt to impart information that might have been damaging?

BEAZLEY: Well, I used to be a Finance Minister, not as elevated as a Treasurer, and not dealing with these matters, but we were always strictly enjoined that you're careful how you handle things like interest rate speculation and you might say things like there is enough downward pressure there on interest rates to ensure that over time all those factors might lead to falls or whatever. You always had those euphemisms. What you didn't do was walk out and say we have talked to the most serious central banker in the world, in control of the US Federal Reserve, and he says interest rates aren't going to move over the next months or so and we think that is a terrific thing. That sort of thing we didn't do, and no Minister does and every Minister knows he shouldn't.

JOURNALIST: Do you think he was lucky that it had a positive affect on the world financial markets?

BEAZLEY: It doesn't matter what particular effect it has. People make money on it or lose money on it. That is the effect that that has. They make money or lose money on it and Ministers don't speculate in that way. The consequences in terms of trust for Australia are very poor indeed.

JOURNALIST: What are some of those consequences?

BEAZLEY: There is a story come out of Washington in which somebody who is said to be an assistant of Dr Greenspan - because they would never comment on these things directly, for the obvious reason that they'd have to comment further, if you actually invited their comment on what Mr Costello has had to say - what he did say is that they wouldn't be extending invitations to Mr Costello anytime soon. Now that's very bad. It also reverberates around the administration. You know we have a problem now, for example, with a threat against an Australian manufacturer of leather upholstery for cars, with a very good market in the United States. They are calling the world trade organisation in on us. They are doing that because we have been overly aggressive in bilateralism recently, but nevertheless they will make that case against us. They of course have EEPS and other forms and mechanisms of subsidising their exports which are probably also you put a question mark over if you wanted to go down that road. But what that all indicates is that in order to keep Australian jobs going we need to be able to move away from the megaphone and go into deep consideration around the table. And moving away from the megaphone and going into deep discussion

and consideration around the table in a confidential way demands trust. What sort of trust do they have in Australian Ministers when a Treasurer fouls so spectacularly?

JOURNALIST: Is it as a spectacular foul as you actually say it is, I mean he probably just made a faux pas and confirmed a lot of the speculation in the market place?

BEAZLEY: I don't think an Australian Treasurer has ever before moved the international financial markets. I think that you have got to say that there is something there of an unusual character to have emerged from all of this. I think the problem lies not so much in the money markets, though that is a problem, the problem lies in trust and that's a serious problem. The ability to be regarded as an Australian spokesperson when you visit senior figures in the United States, and elsewhere for that matter, as a person who can be dealt with confidentially and a person who will handle the information competently.

JOURNALIST: Do you think he should be simply demoted or forced to resign?

BEAZLEY: Well he is a fellow who is elevated to new heights world best practice arrogance, political performance in Parliament, and this is all part of it. Mr Costello knows how serious this is. If all it was a slip of the tongue, a sleight of hand. something that you didn't you have to really worry about, he could take it in his stride. The fact that he chooses to fib about it to say that he didn't say what he said, to say that black is white is a pretty fair indication of the extent of the seriousness that he knows the gaff is that he has committed. Now having to take it as far as he is taking it in attempting to draw a smudge screen over it is an indication that his offence in his own mind is serious enough for him to go.

JOURNALIST: Should he resign because of what he said in breaching the confidence or should he resign because he lied about it?

BEAZLEY: Take the lot of it. Take the package. The package of misleading the Australian public and then not correcting it. The package of doing serious damage to Australia's reputation where we least need it damaged. Add to that the fact that he has made money and lost money for a large number of people who take the words of the Federal Reserve Chairman very seriously indeed and that's enough of a package to produce his resignation.

JOURNALIST: John Howard has been very quiet. What's your response to that?

BEAZLEY: He's been quiet on a lot of things these days, John Howard. I would think that John Howard would be ruminating on Mr

Costello's future and so he should be. He's protected Alexander Downer when Alexander Downer should have gone. He now has a Treasurer who should go. These are things that would render most Prime Ministers quite quiet, I would think. But it is time he was heard on the subject because there is a reasonable question that could be put to him. And that reasonable question is: are you going to require Mr Costello's resignation? If not, what do you expect of him?

JOURNALIST: Do you admit, though, there would be pressure on the Prime Minister if the results of the markets had have been the markets went down. Because across the world the markets are at record highs. Which, in the public eye, is good news. I get what your argument is. But if the markets suddenly die it would have been a much more ...

BEAZLEY: Well, no. The points that would send him out is that, of course, people make money and lose money on the markets going up or down dependant on what people say. It's the breach of trust that is absolutely critical there. The markets would move in all sorts of directions all the time and when they move they, generally, move on the analysis of the various advisers of the firms who handle people's interest in the markets. Not on - except, very occasionally, from time to time - authoritative statement. This was a statement that if the head of the Federal Reserve in the United States wanted to make he would have made publicly himself. The fact that he did not want to make it publicly would be a result of a plethora of considerations that he has on where he wants to see the markets going. Whether he wants an overheated, underheated or whatever. And, therefore whatever particular effect it's had on the markets it's not an effect that he would seek. And it was his comments and he is entitled to the privacy of those comments and he would expect that he would have it.

JOURNALIST: If Peter Costello has given you a bit of a free kick on the international stage has Gareth Evans, at home given, done you some damage, done the Opposition some damage with his comments about Australians being under taxed?

BEAZLEY: No. Australians, ordinary Australians, are sufficiently taxed ...

JOURNALIST: Not according to Mr Evans.

BEAZLEY: ... there's not question about that. But, there are some Australians who are not adequately taxed. Those are the Australians who are engaged in what have been pointed out to Mr Costello and to us, too late for us to do anything about it, a large scale tax avoidance. Probably, if you're looking at it realistically, well over a billion dollars to the bad on revenue. Mr Costello has also said that there ought to be an investigation into tax deductions and those sorts of taxation arrangements as to whether or not these things should be cashed out or dealt with in some other fashion. We think that those are two areas in which the Government must act. And on one of those area it is not.

JOURNALIST: Mr Evans' words, though, as I understand it, were that we are undertaxed by any relevant international standards. Now, that seems to suggest that all Australians are undertaxed.

BEAZLEY: No. We are a low taxed nation. This is an objective fact. We are the third lowest taxed nation in the Western world. We are also the lowest public spenders. And that is why you'll find, when you get things like Mr Howard's bogus tax cuts, you pay for it more in lost services than you ever get out of tax changes. That's a simple element of the fact that we are a low taxed nation. The question of whether or not we are a nation in which the ordinary Australian does not pay sufficient taxes in is another matter all together. They do pay enough in tax, in my view and in the view of the Opposition. But there are some Australians who are not and the job of the Government is to pursue that.

JOURNALIST: Is there some damage, though, from the comments about taxation? And, if it wasn't damaging why is Mr Howard campaigning in Lindsay on the basis of Gareth Evans' comments from the ...?

BEAZLEY: Well, Mr Howard does seem to have disappeared quite quickly from campaign in Lindsay in the last 24 hours having made his foray yesterday. What Mr Howard ought to explain to people in Lindsay and why, if he went in to the election promising that there would be no new taxation measures, $7 1/2 billion over the next 4 years in new revenue raising measures is being collected from the Australian people. He also ought to be explaining to people in Lindsay why the average impact of taxation as a percentage of GDP has risen, in a very short time under him, to something like a 1/2 percentage point of GDP above Labor's 13 year average. These are things for Mr Howard to consider. Mr Howard also probably ought to be explaining to people in Lindsay what he meant precisely by saying 'no GST this term'. Emphasise this term. As to what his intentions are with dealing with Jeff Kennett's call for him to put a GST in place.

JOURNALIST: Mr Beazley, just getting back to Mr Costello's remarks, are you confident that under 13 years of Labor there was never an occasion where the Treasurer breached that trust?

BEAZLEY: Well. I don't believe that we did in that sort of spectacular fashion. We were always extremely careful about the discussions that we had with the sorts of people that we dealt with internationally. And we were there to discuss developments in the international economy and the potential effect that it had on us. And the thing that is important to get back to on this, and to understand thoroughly is that there are several levels of relationship you have with the United States: it doesn't matter if it's defence, economics, agriculture, a whole range of them. There are countries which get a shake of the hand and a pat on the back. Because the Americans are polite and decent. There are other countries in which you go quietly and behind doors and the odd brass knuckle session in which we really get benefits, at the end of the day, we're one of those. And that means a lot to us in defence terms and it means a lot to us in economic terms. And if a fella can't get in to see the Treasurer, Finance Minister, or whatever, can't get in to see the head of the Federal Reserve and have a frank conversation that reverberates right throughout the US administration.

JOURNALIST: How do you think you're going to go in Lindsay?

BEAZLEY: Oh, it's difficult for us to win it. I mean, people don't change their minds after you lose a government that's been 13 years in office. You've got to be realistic about that. Their natural tendency would be vote exactly as they had in the previous election plus a bit of bandwaggoning. But what Lindsay does offer us is this: it's an opportunity to say to people 'look, you can't change the Government in this by-election. There is no question about that. But you might change their mind on a few things'. So we're suggesting to the people of Lindsay 'use this as an opportunity to change their minds on persecuting the elderly, on knocking over the students and their education opportunity. on creating additional stress for women in the workforce by what their doing in their industrial relations changes and by what they're doing to child care'.

JOURNALIST: Are you going to talk to the NSW conference about the reason you lost in March?

BEAZLEY: I want to talk to the NSW conference about where we're going now. We've had our analysis of what the mistakes that we have made and we've are in the process, of course, of correcting those. But the world has moved on. The world now has new interests and new concerns and many of those new concerns arise out of this Budget. So we will be talking more at that conference about where Mr Howard is taking us because we think that's an awful lot more interesting for them than the reasons why we lost 6 months ago.

JOURNALIST: How can the Howard Government now repair this relationship, if it is damaged, with the United States?

BEAZLEY: I think the Howard Government has now damaged relations with China, damaged relations with most of South East Asia, damaged relations with the United States. The Howard Government is like a Keystone Cops movie in international affairs. They race out of doors, up hill and down dale and only one thing that you know that that achieve as they race in and out of those doors is damage to Australia's international reputation, damage to jobs. Frankly, I think the Howard Government has got themselves into a situation where they're just going to have to be put down by Australia, as it looks as if the history of its relationship to the rest of the international community as a bad patch. I'm not sure that there is the intellectual heft, the vision and the interest in actually achieving a decent reputation for this country elsewhere. And there are two mechanisms that were available for them to deal with that. If they had sacked Mr Downer when he should have been sacked, that would have helped. If they sack Mr Costello, and he should be sacked, that will help. But short of those two things I can't see what they can do.

JOURNALIST: Are Mr Costello's comments just a gaffe or does it show something more serious about his handling of the portfolio?

BEAZLEY: Oh, it shows that he's an arrogant name dropper. And he's an arrogant name dropper irrespective of the consequences of what he does. It shows he does not comprehend his portfolio. But we had a strong suspicion about that when we saw the Budget.

JOURNALIST: So your not satisfied that he will have learnt from anything from this incident?

BEAZLEY: Well, I think he will learn from this incident but when you're going to Dr Greenspan's office you don't come out and tell people what Dr Greenspan's views are. But, that is a lesson that he maybe doesn't need to learn because what we see emerging from Washington he won't be going back into Dr Greenspan's office again. Or, if he does go back into Dr Greenspan's office again it will be to have a cup of tea and a chat about the American football league. What he won't be getting out of Dr Greenspan is a conversation about anything that matters to this country. And that's one of the reasons why he should go.

JOURNALIST: So, it's not just a teething problem, a mistake on his first international visit?

BEAZLEY: No. We're 6 months into a three year term. I mean the teeth should all have been grown by now. You know, the baby teeth should have been shed and the adult teeth should have been in. If the adult teeth aren't in you don't go to Washington to talk to Dr Greenspan. You ask the Ambassador to have a chat to him.

JOURNALIST: Do you think it will knock a bit of wind of his sails when he returns?

BEAZLEY: I think it's sort of like one of those old 19th century Punch magazines, collapse of stout party. I think in the case of Mr Costello he will never be the same again. He will be the object, in Parliament, of firstly questioning and then derision. We'll see if he's prepared to mislead the Australian Parliament in the way he is the Australian public.

JOURNALIST: So, you think he might even come back a bit chastened?

BEAZLEY: I think you can guarantee it.