Interview with Karl Stefanovic
Today Show, Channel Nine
13 May 2009
SUBJECTS: 2009 Budget
STEFANOVIC:
Good morning to you.
TREASURER:
Good morning, Karl. Good to be with you.
STEFANOVIC:
Did you get much sleep last night?
TREASURER:
No, I didn't get a lot of sleep last night. It's pretty busy and we were up early and out and about.
STEFANOVIC:
A lot on your mind, I'm sure, this morning. This is an eye popping deficit, first of all, and we'll have a million unemployed by 2010. But I hope you don't mind me saying, you seem pretty comfortable with all of that burden.
TREASURER:
Well, this Budget was never going to be easy. It was never going to be popular given the global recession and the write-down of revenues of $210 billion. That's a very substantial hit to our Budget bottom line. So, what we hope to do was to put in place nation building for recovery. That's particularly the case for road, rail, port and education. So, we had to do everything we could to support jobs in the short-term, but to chart the way back to surplus in the long-term. Because what we have to do is we have to borrow to make up for those revenue downgrades. We have to do that to support jobs. And as the recovery comes, we have to move our way back to surplus. So, that's precisely what we outlined last night.
STEFANOVIC:
It seems odd to me, and I'm sure I'm not alone here, in terms of talking about recovery when we haven't even officially entered recession yet. But those estimates by Treasury are predicting significant growth in 2011 and 2012. How can they predict that with any level of accuracy considering the state of the economy at the moment, and considering the state of the world economy at the moment?
TREASURER:
Well, Karl, it's a really complex situation in the middle of an event the likes of which we've not seen for 75 years, but Treasury is very professional. They make their best effort. They've put forward their best forecasts. They've done that on the best advice. I believe the forecasts, by the way, are very conservative, because the fact is that recessions do end. And of course, this recession will end.
STEFANOVIC:
But you wouldn't go on air this morning and guarantee that we're going to see that sort of level of growth, would you?
TREASURER:
I can certainly back the forecasts and projections that have been put forward by the Treasury, because I believe they are very realistic. They're forecasting negative growth this coming year. They're forecasting below trend growth the year after. And after that, they're talking about stronger growth. I certainly believe that those forecasts are realistic, and they're certainly consistent with views elsewhere in the world. But the fact is, Karl, it is such a difficult situation for the global economy at the moment. What we can do with this Budget is to prepare for recovery, and that's what we've done with the infrastructure spend in this Budget, making sure that when the global economy recovers, we can maximise the opportunities for Australia that come from that.
STEFANOVIC:
What I'm saying though is that in light of what has happened in the last year - and no one would have predicted the severity of the downturn - how can you possibly rely with any great certainty on the growth levels that are being predicted?
TREASURER:
Well, Karl, we moved early with our economic stimulus when many people didn't understand the need for us to move, back last October. We moved again in February with further economic stimulus when many people didn't understand just how severe this had become. I think we've been ahead of the game when it's come to dealing with this global recession, and I believe that the plan, the comprehensive plan that we put in place last night, will assist us as we move through a third stage of stimulus through infrastructure investment assist us to maximise all of the opportunities we possibly can in the uncertain global environment.
STEFANOVIC:
Alright, let's have a look at the papers this morning and give you a brief look, although I'm sure you've probably had a little look yourself. Your home paper, The Courier Mail, calls it 'Swan's $58 billion shuffle'. The Daily Telegraph points out you want people to work longer and harder, and the Hobart Mercury calls it 'Wayne's world of pain'. Not great headlines for you.
TREASURER:
Well, some people said we've cut too hard. Some people have said we haven't cut hard enough. I think we've got the balance right. What we've put in place are some changes which will put in place savings for the long-term - because of the ageing of the population - that make that pension increase affordable. And there's a lot of people out there who support that pension increase, but they have to understand it must be paid for. And it's going to be paid for by the long-term savings we've put in this Budget - the tough decisions that we had to take because of the global recession, but also because of the ageing of the population.
STEFANOVIC:
I wonder if you can see that more savings down the track might be needed? And The Australian this morning is referring to you as an optimist: this is an optimist Budget.
TREASURER:
I think it's a realistic Budget.
STEFANOVIC:
But it's optimistic too when you consider those forecasts. Will you concede that there might be more savings that need to be made down the track?
TREASURER:
There's no doubt that we will face a tough environment in the years ahead. The Budget makes that absolutely clear. The mining boom has unwound. We're in the middle of a global recession the likes of which we haven't seen for 75 years. We fully understand the discipline that is required in the years ahead.
STEFANOVIC:
So, is that a yes, that there might be more savings needed down the track?
TREASURER:
Well, certainly we've put in place some pretty tough spending restrictions for the future when growth begins to return: 2 per cent real after growth returns to what's called trend. That's a pretty tough fiscal rule. It's a tough outlook.
STEFANOVIC:
Alright. Tough conditions are lying ahead. I guess we'll leave the door open on that. The good news is I guess that there'll be nothing left in the tank for election promises, electioneering and sweeteners.
TREASURER:
Let me assure you, Karl, the last thing on our mind is electioneering or elections. What's on our mind is the national economic interest - short-term, medium-term and long-term.
STEFANOVIC:
Alright. We've got a lot of emails in this morning, Treasurer, too about carers extremely concerned they're not getting enough in this Budget, they haven't been looked after.
TREASURER:
That's not true. Carers are getting very, very generous support in this Budget. I ask them to look at it very closely. I think the carers will be very happy. I spoke to one of their association's presidents last night, and she came up and personally thanked me for what we were doing for carers.
STEFANOVIC:
What is generous?
TREASURER:
Well, we're putting in place a $600 payment on an annual basis - before it came on a wing and a prayer. It's going to be there permanently. I think they'll be pretty happy.
STEFANOVIC:
One final question. The Liberals are crying out about Labor deficits and how long this is going to take to pay back. There are some estimates of us still having a significant debt in 2020 and beyond. Is that something you're working towards? That sort of timeline you're working towards?
TREASURER:
Well, the pressure's really on the Liberals, because they've got this con job going on deficits and debt. They would have to borrow as much as we are borrowing because of the revenue downgrades. And if they weren't going to borrow that money, what they'd have to do is savagely increase taxes right now or savagely cut services right now, which could deepen and lengthen a recession. It's about time they got real.
STEFANOVIC:
Alright. Treasurer, good to talk to you. It's going to be another busy day and a couple of weeks for you. Thank you.
