Interview with Steve Price
Melbourne Talk Radio
15 July 2010
SUBJECTS: Economic Update; return to surplus; employment outcomes; MRRT revenues; Liberals opposing business tax cuts, superannuation increase and infrastructure investment; asylum-seekers debate
PRICE:
Wayne Swan, the Deputy Prime Minister and Treasurer yesterday re-released revised Budget forecast figures. He's on the line. Thanks for your time. I'm not sure whether to call you Treasurer or Deputy PM now.
TREASURER:
Just call me Wayne.
PRICE:
I knew you were going to say that. Why did you release the forecasts now? I mean, what was the timing behind that?
TREASURER:
Well, a variety of reasons - principally the debate in the international economy in the last month or so, which has been pretty furious, about Europe; the uncertainty that that has produced in global financial markets and stock markets; and the feedback of that into this country. I thought it was important to provide an update on the economy generally, and as you also know, there's been a debate about the mining tax and revenues and so on. So I thought it was a good opportunity to draw both those threads together and to go through the underlying financial position of the country and our growth outlook, because it's all pretty good. And that's why I put the material out yesterday. We've done this before as well. There's been two other updates outside the formal Budgets we give and the MYEFOs we give.
PRICE:
Unusual to come so close on the heels of a Budget though, isn't it?
TREASURER:
Yes it is, but what has been unusual has been the global economy Steve, and particularly in the last two and a half years. We have provided updates and I think it was pretty important to explain to the Australian people that we're coming back to budget in three years, three years early, a pretty strong position and the job position here very strong – 350,000 jobs created in the past year. There's no other developed economy who can look to a record like that. But I thought it was pretty important to reinforce that.
PRICE:
Is it fair as The Australian has done today to add together the $1.5 billion figure which was the bonus talked about to the miners when you revised the tax and then take your fresh figures from yesterday and come up with a figure of $7. 5 billion?
TREASURER:
Well, they're comparing apples and pears. The fact is that we've got a new tax which raises in total $10.5 [billion]. The old tax that we put forward raised $12 [billion] and there are a couple of reasons for that. Because we've got a completely new tax it does raise less, before you get the commodity prices, than the previous one. But when you throw in updated commodity prices the difference between the two amounts of money is $1.5 [billion]. But if you want to have a hypothetical calculation like they have, you can come up with any number of numbers, and they have.
PRICE:
I think what's important for voters as opposed to miners, they would like to know now, with these revised figures, with commodity prices it appears again on the rise, what impact is that going to have on interest rates? What impact is it likely to have on inflation?
TREASURER:
Well, I think the most important impact is we are able to deliver with this revenue that big tax cut to small business, the $5000 instant write-off. We're able to deliver a cut in the company tax rate. We're able to deliver the boost to superannuation and infrastructure. But when it comes to inflation, what the Government is doing is everything we can to invest in the capacity of the economy to keep downward pressure on inflation. But as you know, the Reserve Bank takes its decisions independently. But those measures I was talking about before Steve, they're measures the Liberals are going to block. They're now saying they don't want any of the revenue from the mining tax and they're going to stand in the way of the tax cuts for small business, for company tax more generally and the boost to super. It's quite incredible that they could take that position.
PRICE:
Well, in an election you'll be reminding everybody of that. You'll also be reminding people that you think that you can get the Budget back to surplus by 2012/2013 by a bigger margin than you said.
TREASURER:
Yes that's right. It's a modest increase in the surplus we forecast at the Budget and it has principally come about because of our spending restraint. It's not principally delivered by increases in terms of revenues from the mining industry, because what we're doing is with the money form the new tax is we're devoting it to those important reforms. What's really delivering the surplus is the fiscal discipline that the Government has put in place and we put in place last year when we had to move to stimulate the economy to keep the economy out of recession. And we're coming back now to surplus in three years, three years early, principally because of that fiscal discipline and the fact that we are able to keep unemployment down.
PRICE:
How rubbery are the figures when you consider that they are so different yesterday than they were a fortnight or a month ago?
TREASURER:
Well, the figures have changed…
PRICE:
Can we have faith in the Treasury?
TREASURER:
I think we can. Look, the figures have changed when it comes to a couple of the big bulk commodities in which there have been substantial increases. The contract negotiations recently were important. We also had new figures out post-Budget from an organisation called ABARE which provided new figures, and there was also discussions with the companies about the outlook. The fact is we are moving into a new era. The global economy is going to be increasingly driven by growth in our region and that is very good news for commodity producers…
PRICE:
It's pretty hard to get a handle on it though because Ross Greenwood was talking to one of the mining industry analysts last night on prices where he said iron ore prices have been down for the last six weeks.
TREASURER:
Yes but that's the last six weeks. We're talking here about a tax beginning in 2012/2013. What we've got to do is get a handle on where they're going over the long-term. So you know that's not a valid comparison at all. What we do, and what the mining companies do, and what other analysts do is they look at the trend and the fact is that in the data we produced yesterday, what's called the terms of trade for Australia are going to be much higher as we go forward than they've been historically. That's the point. That's great for Australia and that's one of the reasons why we needed to put in place this Minerals Resource Rent Tax.
PRICE:
Had those figures altered your thinking on an election – timing wise?
TREASURER:
No they haven't impacted on any of those decisions. I don't take that decision, the Prime Minister takes that decision. What's most important for us is to get the reform program in place because we know that not everybody out there is doing as well as some. And whilst we are in the mining boom mark II, there are many people who aren't doing as well as others. And we've also got to make sure that we can give a boost to small business in that environment, make them more competitive and also build up the super savings of people particularly on lower incomes.
PRICE:
Is Senator Chris Evans right when he says the asylum seeker debate is killing you as a Government?
TREASURER:
Well, I think the Prime Minister acknowledged a week or so ago that this has been a difficult debate, that we needed some plain speaking about it and that's what the Prime Minister has been doing, and I think that's what Chris may have been referring to.
PRICE:
So it's killing you, do you think?
TREASURER:
Look, I believe that what we have to do is to talk plainly to the Australian people about this challenge and other challenges. We spoke very plainly to the Australian people about the challenge of the global recession, what we needed to do about it and the Australian community came together pretty well there, so much to the point that we've got job creation in this country to the tune of 350,000 in the past year, a simply stunning result. And those are difficult challenges, we do need to keep talking to the Australian people.
PRICE:
The President of Nauru says we're open for business, come back.
TREASURER:
Well, I'm not up with the President of Nauru. I will leave that to my colleagues to deal with him.
PRICE:
Alright thanks for your time Deputy Prime Minister, Treasurer, also known as Wayne.
TREASURER:
Good on you.
