The Joe Walker Podcast Australia's last great act of economic courage — Peter Costello
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Nov 2, 2025 Peter Costello, Australia's longest-serving Treasurer, shares fascinating insights from his tenure. He recounts the complex implementation of the Goods and Services Tax (GST) and cleverly locking in state support to pass it. Costello reveals secrets behind his successful cabinet presentations and the extensive stakeholder outreach required to mitigate opposition. He also discusses the impact of the 2004 baby bonus on fertility rates and reflects on why major reforms have become increasingly difficult since 2000.
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State Premiers Turned The First Challenge
- Peter Costello recalls trying to end state wholesale sales tax and being blocked by premiers who then got a side deal with the prime minister.
- That episode taught him to preempt pressure points and later inspired giving GST revenue to states to lock them in.
Lock Revenue To Neutralise Opposition
- Costello gave all GST revenue to the states to neutralise a major centre of opposition and create a durable lock-in.
- The arrangement addressed vertical fiscal imbalance and made the GST more politically stable.
Neutralise Pressure Points First
- Do map and neutralise every potential pressure point before launching major reform, including opponents inside your own party.
- Lock in key stakeholders early to reduce the risk of coordinated attacks when the reform becomes public.