Interview with Lyndal Curtis
ABC Radio AM Program
6 May 2009
SUBJECTS: Deficit; Budget Speculation/Superannuation
CURTIS:
Did you ever think you'd go down in history as the Treasurer who delivered Australia a Budget deficit of between $60 billion and $70 billion?
TREASURER:
Well, the global recession has had a dramatic and brutal impact on government revenues, also on growth and also on jobs, and it's my responsibility to deal with that to cushion the Australian economy from the impact of this brutal global recession.
CURTIS:
Is $60-$70 billion about what we can expect come Budget night?
TREASURER:
I'm not going to speculate about the quantities. What we can say is that the revenue write-downs are of the order of over $200 billion – unprecedented in Australian history, forced upon this country by a sharp global contraction. So, what that means is that company tax, capital gains tax, and many other taxes have simply ebbed away, and dramatically.
CURTIS:
Do you think that during your time as Treasurer you will ever get to deliver a Budget surplus?
TREASURER:
It's certainly my objective to bring the Budget back to surplus as quickly as we possibly can when growth returns to trend, and that is dramatically impacted upon by what's occurring globally. But our objective is to return the Budget to surplus as quickly as we can when growth returns to trend.
CURTIS:
Do you think that can be done before 2015?
TREASURER:
I'm not going to speculate about those sorts of forecasts. But what I can put down here very firmly is the Government's absolute determination to return the Budget to surplus. You see, when you have such an impact on government revenues and when you have to make room to deliver for pensions and investment in the future, what you have to have is a plan for the future. You have to have short term economic stimulus but you have to put in place a program which makes savings into the future.
CURTIS:
But the 2015-2016 return to surplus was a figure that came out of the Government, a year that came out of the Government. You're not prepared to confirm that?
TREASURER:
No, I'm not prepared to confirm that. That's speculation in the papers this morning. But we have an absolute determination to return the Budget to surplus in a responsible way. You see, the challenge today is for Mr Turnbull to outline what he would do in these circumstances. He now says he's opposed to deficit and borrowing. Well, what would Mr Turnbull do? Would he savagely cut government services or would he dramatically increase taxation?
CURTIS:
On that question of debt, Lindsay Tanner has said there's a limit to how much debt you can go into. What is that limit?
TREASURER:
Well, what we must do, as I said before, is bring the Budget back to surplus in a responsible way. At the moment the responsible thing to do to support the economy, to support jobs is to run a temporary deficit. But as economic growth returns globally, we bring the Budget back to surplus. But in the short term, what government has to do to support employment, to support jobs and to support business is to run a temporary deficit. That is the responsible thing to do. The irresponsible thing to do in these circumstances would be to savagely cut government services or to dramatically increase taxation overall, and that appears now to be Mr Turnbull's plan.
CURTIS:
But you'll be racking up debt until the Budget returns to surplus. Is it reasonable to think that the level of debt we're going to reach by the time the Budget returns to surplus is upwards of $400 billion?
TREASURER:
Well, what we will make sure is we have sustainable levels of debt over time, and in this Budget, put in place a responsible set of decisions which will make savings out into the future to ensure that we can return to surplus in a responsible way.
CURTIS:
Is $400 billion unreasonable to think that that might be the level of debt?
TREASURER:
I'm not going to speculate about levels of debt. What we will ensure is that we have a sustainable fiscal outcome and that we put in place the settings to support growth and jobs in the economy, but to return the Budget to surplus over time when growth returns to trend.
CURTIS:
You said you need to rein in unsustainable long term spending. Is it unsustainable for anyone who earns over $150,000 a year to expect to get any government benefit at all?
TREASURER:
Well, I think there's going to be some tough decisions in this Budget, given the collapse in government revenues caused by the global recession. There will be tough decisions to make room to meet our commitment to pensioners, but also to make those vital investments for the future.
CURTIS:
You'll be giving higher income earners a tax cut. Should they be prepared to take a hit to pay for things like pensions and paid maternity leave?
TREASURER:
I think everybody is going to have to do their bit in this Budget, everybody.
CURTIS:
Were the generous superannuation concessions introduced by Peter Costello a rort, and should they be unwound?
TREASURER:
Well, as I said before, we will be looking at making long term savings. That's very important. What we've got to do is stimulate the economy in the short term, make room for that commitment to pensioners, make sure we put in place the investments for the future, and to make those long term savings so that Budget outcomes are sustainable for the long term.
CURTIS:
But superannuation is one area where you could find some money, couldn't you?
TREASURER:
I'm not going to speculate about that matter today.
CURTIS:
Do you think you will take a political hit, because you've been selling the temporary nature of the deficit and people may have thought that that temporary may have meant one or two years, not six or seven?
TREASURER:
Well, what has occurred is that there's been a greater than expected write-down of government revenues caused by the…
CURTIS:
Do you think you will take a political hit?
TREASURER:
It doesn't matter whether we take a political hit. What we have to do is the right thing by the country – stimulate the economy now to support jobs and business, put in place vital investments for the future and make sure we make those savings for the future so the Budget is sustainable in the long term. And whether that makes us unpopular or gives a political hit is the last thing on my mind.
CURTIS:
While you say you won't confirm the return to surplus year, the leaks have been very well informed. Are you trying to get all the bad news out of the way so people will focus on good news on Budget night?
TREASURER:
I can't spend all my time dealing with Budget speculation. I'd be talking about nothing else. What I can do is outline the fundamental principles upon which our Budget is based, and I will deliver that next Tuesday night.
CURTIS:
Wayne Swan, thank you for your time.
TREASURER:
Thank you.
