Interview with Joe O'Brien
ABC2 Breakfast News
6 April 2009
SUBJECT: Tax Bonus Payments; Prime Minister's RAAF Flight.
O'BRIEN:
Treasurer, good morning and thanks for joining us. What kind of effect are you expecting the cash payments will have on the economy over the next few months?
TREASURER:
I think the Tax Bonus will play a very important and vital role in stimulating demand and therefore stimulating employment particularly in the retail sector. You see, I've just come back from the G20 meeting in London and the globe is experiencing the sharpest contraction in demand in our lifetime. So, this payment, the Tax Bonus, along with our investment in schools, social housing and energy efficiency is arriving precisely at the right time – the time that it is needed to boost demand when demand is contracting so savagely elsewhere in the world.
O'BRIEN:
Can you quantify that expected effect on the economy?
TREASURER:
I can't quantify that absolutely, but we do know that the first Economic Stimulus Strategy announced in October, flowing through in December, certainly had a very substantial influence on retail sales in December and January, and retail sales even in February were higher than November. So, we certainly know that a portion of it was spent. It is also true that some of it was saved, and that's a good thing too, because what that does is bring forward the time at which many people will further consume. That's very important in an economy which is impacted upon so savagely by these external events. Those impacts on the stock market, for example, have an impact on confidence. What this stimulus package will do, the Tax Bonus payments importantly, together with this direct investment in schools, housing and energy efficiency will boost demand in the economy and therefore boost employment. You're seeing in other economies around the world savage contractions in employment, for example, in the retail sector. You're not seeing that in this country and that is because of the direct stimulus that the Australian Government is putting in the system precisely at the time that it is needed.
O'BRIEN:
But how much longer can you keep pumping this money into the economy? How much longer are you prepared to do that?
TREASURER:
Well, what we're doing with the Tax Bonus is filling a gap between now and when the direct investment really flows into schools and housing and energy efficiency. You see, it takes a bit of time to organise that direct investment. That is beginning to flow through. And that will flow through through the rest of this year and into next year. So, the stimulus is staged. First of all, direct support to demand through these payments. Secondly, direct investment out there which will employ people in the construction sector, which will employ apprentices and tradies, which will boost employment in the supply line. All of that is part and parcel of a rounded and effective stimulus package we've put together in the Nation Building and Jobs Plan.
O'BRIEN:
So, it's unlikely we'll see any more cash bonuses handed out later this year, because as you say, the rest of the stimulus package is kicking in then and they won't be necessary?
TREASURER:
I'm not going to speculate about decisions we may take in the Budget. The Government has said from day one, given how savage this global recession has become and the impact it is having on domestic demand, we are constantly evaluating how that is hitting our economy. But we'll be bringing down a Budget which on the one hand deals with the challenges of the here and now, but is also very mindful of what we must do for the long term, what we must do to enhance our productive capacity in the longer term. We're also doing that in this stimulus package through the biggest school modernisation program in Australian history. A very big energy efficiency modernisation program as well. A very big social housing program. That all has long term economic effects, but whatever measures we can put in place for the long term that do leave lasting benefits like our school modernisation program and so on, we will have on the table and we'll do what's responsible.
O'BRIEN:
Speaking of the Budget, the Opposition is making noises about opposing portions of it which it says might be excessive spending. Are you prepared to start negotiations with the cross-benches in the Senate again now?
TREASURER:
The Opposition is just being completely reckless and irresponsible. You know, I think they'd rather see the country fail than see the Rudd Government succeed. Every day they're out there with a negative statement. They don't have positive solutions, and behaving in the most extraordinary way. I think they are just completely irresponsible and reckless. Fancy even raising the prospect of doing something like blocking Budget measures.
O'BRIEN:
Just finally on the issue of the PNG flight with the Prime Minister. You were on that flight. What's your recollection of exactly what the Prime Minister said to this flight attendant?
TREASURER:
The Prime Minister has provided an account of what's occurred there and he said that if anybody was offended he truly apologised and was sorry for that.
O'BRIEN:
Is that a sincere apology, saying if anyone was offended? Isn't that a Clayton's apology?
TREASURER:
I'm not going to go into the detail of it. The Prime Minister has given his account of it. As far as I'm concerned that's the end of the matter.
O'BRIEN:
The Opposition described it as bullying. Is that over the top?
TREASURER:
Everything the Opposition does at the moment is completely over the top, hyper- exaggerated and really irresponsible.
O'BRIEN:
Treasurer Wayne Swan, in Canberra, thanks very much for talking to us this morning.
TREASURER:
Thank you.
