Interview with Kieran Gilbert
Sky News AM Agenda
11 May 2009
SUBJECTS: 2009 Budget, Pension Increase
GILBERT:
It's a good morning and welcome to Treasurer Swan. Thanks for your time. A vote of confidence there from your mother-in-law. That's a good start.
TREASURER:
She keeps me up to the mark, I tell you.
GILBERT:
Onto the serious stuff today, Access Economics is warning that there are going to be budget deficits for as far as the eye can see unless politicians on both sides show courage. Have you got the courage to make the cuts needed for $25 billion that Chris Richardson at Access is talking about?
TREASURER:
Well, there's no doubt that there will be tough decisions in the Budget tomorrow night. And there's no doubt that because of the global recession, the extent to which growth has contracted, and very substantial revenue write-downs in excess of $200 billion over the forward estimates that have been imposed on this country, we have to take tough decisions. And it's a complex situation. We have to stimulate the economy now to support employment. We have to make room for vital investments and also for pensions. But also, we've got to make those longer term savings that bring the Budget back to sustainability over time given the new global circumstances.
GILBERT:
But what Access is talking about is $25 billion a year. I mean, that's some big cuts. Have you got the courage to do that?
TREASURER:
Well, we've got the courage to face up to our responsibilities in this Budget, because there's a situation where we've got a global recession, plus we've got the unwinding of the mining boom all happening simultaneously. Now, the previous government had endless revenue flowing from the mining boom and even in that period they couldn't find room to do something about the base rate of pension, or to do something like make the basic investments in infrastructure. So, we have to take tough decisions in this Budget to make room for those vital nation building investments, but also to make the Budget sustainable for the future given the new global reality. Because you see the mining boom is not coming back, and the global growth that we will see as we come out of this global recession will not be like the global growth that we saw over a year ago.
GILBERT:
Yesterday, talking to Laurie Oakes on the Nine Network, you said the Opposition can't pretend that it's for a pension increase and then turn around and block savings that are going to fund that pension increase. That sounds like, are you going to tie measures like the reining in of the private health insurance rebate to this commitment?
TREASURER:
We'll cross that bridge when we come to it, but I want to make this point: that when you make a commitment to increase pensions and to give single age pensioners a decent standard of living, then that goes on and it's a permanent expenditure from the Budget. And given the context of an ageing of the population, it certainly does impact upon the Budget for a long time, and that means that we have a responsibility to make long-term savings. So, the Opposition on the one hand can't be out there saying they'll support a pension increase, and then knock back the savings that make that pension increase sustainable for the long term. They can't have it both ways.
GILBERT:
But it's not just the Opposition. The Independent, Nick Xenophon, says it's a broken promise if you rein in the private health insurance rebate. He also backed the pension increase. Would it make sense to tie the two things together?
TREASURER:
There will be tough choices for everybody in this Budget, because simply everybody has to do their bit. Everybody has to do their bit in this Budget given the global recession, given the impact it has had on government revenues, and given the commitment that we've got to make room in the Budget to do something for pensioners to give them a fair go and to make that pension sustainable for the long term.
GILBERT:
But you've also got to get it through the Senate, don't you?
TREASURER:
We certainly do, but everybody has got to live up to their responsibilities here. We are in very complex and difficult circumstances imposed on this country by the rest of the world. That does mean tough decisions, and if we are to give pensioners a fair go and to make that expenditure sustainable, it does mean some tough decisions about savings. And everybody has to face up to that – not just the Senate, the whole of the community.
GILBERT:
You announced a parental leave scheme means-tested for the primary care giver for those earning under $150,000 for the primary care giver. But if their husband is on $300,000 a year and the primary care giver is on $100,000, they still get that…
TREASURER:
Well, it's means tested and it's the only way you can do it. It is means-tested on the primary care giver because it is a work-related benefit. That's what it is, and it's the only way to go about it. We think it's a modest scheme. We do recognise the reality of the global recession at the moment and the need to set this up administratively, and that's why we've delayed its introduction until the beginning of 2011.
GILBERT:
Is that a sign of things to come? That you will be delaying any spending increases to 2011 when the economy kicks back into gear?
TREASURER:
I wouldn't read anything into that particular decision. But suffice to say, given the circumstances that we have, that the globe has imposed upon us such a huge revenue write-down, it does mean that everybody has to do their bit, and not everything that everybody wants will necessarily come to them in the way in which they want it.
GILBERT:
Are you concerned that some businesses that might have been considering paid maternity leave will now scrap the plans because you've covered that…
TREASURER:
No, I most certainly am not. Paid maternity leave in the private sector is skewed to generally those on higher incomes. This scheme will be very beneficial for people on low to middle incomes who by and large haven't got, and are unlikely to ever get, paid maternity leave in their course of work.
GILBERT:
So you think businesses will do it anyway?
TREASURER:
I think what we need to do is to put in place a scheme which is principally beneficial for those on low and middle incomes who will never have the prospect of securing this in the private sector.
GILBERT:
We've seen some positive numbers in recent days. The retail trade figures up last week, the jobless rate down. The stock market has climbed in recent months as well. Is there any prospect Australia could stay out of recession?
TREASURER:
Well, certainly in the case of the retail figures they are encouraging, but what they reflect is our economic stimulus and its impact in the community and its support for jobs and for businesses. But as regards the forecasts which will be published tomorrow night, I'm not going to speculate about those.
GILBERT:
Okay, we'll wait for that. We know much of what's in the Budget. There's been a lot of well-sourced leaks. Can we expect any surprises?
TREASURER:
This is a very big Budget. There are big challenges ahead, and there are decisions in this Budget which I think will set the course of the future and put this economy on a sustainable path.
GILBERT:
No surprises?
TREASURER:
Well, we'll have to wait and see.
GILBERT:
What's your message to those on middle-class welfare? People who, you've said everyone's got to do their bit. But do you have any message for those people who've become used to these things as an entitlement, now are going to lose them?
TREASURER:
Well, it is the case that the previous government at the top of the mining boom did spend relatively freely, and we know that because Mr Costello has said that himself in Mr Howard's biography. So, we do have to pull our horns in a bit. We will have to rein in expenditure. Everybody will have to do their bit, and some people will have the capacity to do more than others.
GILBERT:
Treasurer, Wayne Swan, appreciate your time. Thank you.
TREASURER:
Good to be with you.
