Interview with Lyndal Curtis
ABC Radio AM Program
28 April 2009
SUBJECTS: Budget Methodology; Access Economics Report; Electoral Allowance
EASTLEY:
Our chief political correspondent, Lyndal Curtis, spoke to the Federal Treasurer, Wayne Swan, this morning, and put it to him that the Government's predictions appear to fly in the face of the International Monetary Fund's statements that Australia's recovery will be slow.
TREASURER:
No, absolutely not. It is true we are adopting an extra forecast year, and then we are looking at the projection years. The most important thing we are doing is providing more accurate, more contemporary information. We are in extraordinary times. We're in the middle of a global recession. The forecasts do need to reflect that. We are going to be growing slowly for some time as a consequence of the global recession, but as a recession recedes, then growth picks up, as it does when the recession abates.
CURTIS:
But the Opposition says the projection is ambitious given the level of deficit the Budget will be in, and there won't be the money to bankroll an above trend recovery.
TREASURER:
Well, far from it. Because we're having an extra forecast year, that will be less than trend growth. We are trying to be accurate. We are trying to provide the public with as much information as possible to keep them informed.
CURTIS:
But isn't it a political move to change your assumptions and in this case how it suits your political agenda…
TREASURER:
Not at all.
CURTIS:
…because you can go to an election saying the economy's going to grow above trend?
TREASURER:
No, not at all. In 2011, we will have a forecast year. That year would normally be based on trend growth.
CURTIS:
Access Economics is predicting there'll be a $40 billion fall in revenue because of collapsing commodity prices, and there will be $30 billion budget deficits even after the economy has recovered. Are those predictions in the ballpark of what's possible?
TREASURER:
Well, I think the Access report certainly demonstrates the brutal impact on government revenues, and the consequence of that is a higher temporary deficit. We've already written down revenues between the May Budget and February by $115 billion, and Access Economics is now talking about a further loss to national income of something like $40 billion arising from lower company profits and lower commodity prices. There's no doubt that the outlook for revenue is bleak, and that the global recession is having a very dramatic impact on revenue, which means a higher temporary deficit.
CURTIS:
Will we see in the Budget a mechanism for getting the Budget back into surplus over perhaps five or seven years?
TREASURER:
Well, certainly we are going to apply our medium-term fiscal strategy, but what we must do, and the responsible thing to do in these circumstances, is to run a temporary deficit and to do that to support jobs.
Those who say that we shouldn't have a temporary deficit must outline what they would do to make up for the dramatic loss of revenue that has been caused by this global recession. For example, would Mr Turnbull cut services? What services would he dramatically cut to make up for this loss of revenue? Or what taxes would Mr Turnbull dramatically increase? You see, he is being completely fraudulent when he claims that he would be doing something different with this temporary deficit. The onus is on Mr Turnbull to explain what he would do in these circumstances, because in the past he has admitted that he would have to borrow to fund temporary deficits.
CURTIS:
Given you're the Treasurer, the onus is on you to say how you will get out of deficit. Access Economics says with the cuts in income taxes over the last few years, you can't bank on a swift return to revenue because the revenue won't be there. Are you prepared, do you have the political will to start taking the tough decisions now to avoid years and years of budget deficits?
TREASURER:
We've made it very clear that we will take the tough choices in this Budget. We've had a tremendous decrease in national income imposed upon us by the rest of the world. In these circumstances, what we have to do is two things. One is to support jobs through economic stimulus, and by the way, Access Economics recognises that our stimulus package is one of the best in the world. And secondly, lay out a path for the future to bring the Budget back to surplus as growth returns to trend.
CURTIS:
Does that include doing things that may have been improbable six months ago? Cutting harder into middle class welfare?
TREASURER:
It certainly means taking some very, very tough decisions in this Budget to protect the national economic interest in the short-term, the medium-term and the long-term.
CURTIS:
At a time when people are losing their jobs and the economy's in recession, politicians have got an increase in electoral allowance. If it's not spent, you can pocket the rest. Is it time to consider publishing how the money is spent so the public can see that it's being spent as intended?
TREASURER:
Well, those things are all in the hands of the independent tribunal. These are not decisions that politicians take. We shouldn't take them, and we don't.
CURTIS:
But you could decide to take the decision to publish how the electorate allowance is spent, couldn't you?
TREASURER:
Well, they are decisions for the tribunal. They're not decisions for me. But I am in favour of being as open and transparent about politicians' salaries and allowances as we possibly can, and that's what the tribunal is all about.
CURTIS:
Wayne Swan, thank you very much for your time.
TREASURER:
Thank you.
