Interview with Jon Faine
774 ABC Melbourne
18 May 2009
SUBJECTS: Budget; Peter Costello and Liberal Leadership; Ministerial Travel; Great Southern
FAINE:
Wayne Swan, good morning.
TREASURER:
Good morning, Jon. It's great to be back.
FAINE:
Would you rather see Malcolm Turnbull or Peter Costello on the other side at the next federal election?
TREASURER:
That's completely irrelevant to the Labor Party, Jon. What we're doing is getting on with the job – getting on with the job of nation building, getting on with the job of economic stimulus, getting on with the job of addressing the long-term national economic interests of this country.
FAINE:
So, the Opposition's irrelevant to you?
TREASURER:
They're not irrelevant, but I've got to say that the politics of our situation at the moment is not to the forefront of the Government's considerations. We've got a huge national economic challenge on our hands, the most serious set of circumstances in over 75 years. What we are focused fairly and squarely on is putting in place the economic stimulus that's needed at the moment to support jobs, to get the nation building investment going, to deliver some social justice to pensioners, and to make sure that we put in place the path back to surplus given the global economic challenge that we face.
FAINE:
But the opinion polls you can't ignore, and the latest poll, on the front page of today's Age and Sydney Morning Herald…
TREASURER:
Sure.
FAINE:
…the Age Neilson poll shows that your Budget seems to have been particularly unpopular.
TREASURER:
Well, I said right from the very beginning, and the Prime Minister has said right from the very beginning, there were going to be some tough choices, the choices we made would not be popular. Whatever the opinion polls say, what's most important to us is we get the settings right for the long-term, and I believe we've done that in the Budget. In fact, if you actually have a look at the poll, I think people do see that it's a responsible Budget, but it's not a popular Budget. What we have to do in these circumstances is get the settings right for the long-term, get that nation building infrastructure in place, chart the path back to surplus, and deliver a sustainable pension system for the future.
FAINE:
But it kills off the prospect of an early election, doesn't it? A double dissolution election on last week's figures look a much better proposition than on this week's figures?
TREASURER:
Well, I made the point at the Press Club last week that the last thing that was on the Government's mind was an election.
FAINE:
(Inaudible)
TREASURER:
No, but what we want is the integrity of our Budget preserved. You see, we've taken a very big decision to increase the base rate of pension, and we've put in place some very tough savings to fund that over the next 40 years. One of those is to means-test the private health insurance rebate, and of course that pays in the long-term, partly pays, along with the other structural changes in the Budget, for the age pension. You see, Peter Costello was in here before. He talked a lot about intergenerational issues, and when it was raining gold bars he couldn't find time to increase the base rate of the pension. He couldn't find time to invest in nation building infrastructure. Now it's fallen to us in the middle of a global recession with the mining boom unwinding to deal with that issue of age pensions, to deal with the issues of nation building infrastructure. And part of that is the tough decisions we took in this Budget, to means-test the private health insurance rebate so we can create room in the Budget to support our pensioners on the one hand, and get that vital nation building infrastructure in place for the long-term.
FAINE:
Why not put up the tax on cigarettes?
TREASURER:
Well, if you have a look at it, there's a very big hole, something like a $3 billion hole, in that proposal from Malcolm Turnbull. Because you see, what we're doing to the private health insurance rebate by means-testing it, is we're saying that someone on $60,000 a year is no longer going to pay for private health insurance subsidies for people on very high incomes, and of course, that brings us savings that increase over time. Malcolm Turnbull's proposal in terms of the tobacco tax doesn't do that. So you see, there's a big hole in what he had to say the other night about that. But there's an even bigger hole in the integrity of their reply, and indeed in what Peter Costello had to say here before. Peter Costello was in here pretending that there's no such thing as a global recession, that there hasn't been a revenue…
FAINE:
(Inaudible)
TREASURER:
Well, he did say it because he didn't acknowledge to you in everything that he said about deficit and borrowing, that our revenues have been written down by $210 billion over the forward estimates. And the primary source of the deficits and the borrowing to fund those deficits are those revenue write-downs. Now, if he's not going to engage in that borrowing, either he or Malcolm Turnbull, what they would have to do to make up for that gap in our national revenues is to jack up taxes savagely or slash services savagely. What we are doing is the responsible thing, and the failure of either Peter Costello or indeed Malcolm Turnbull to really acknowledge that I think demonstrates their lack of economic credibility.
FAINE:
But not necessarily putting up tobacco tax as an offset to a subsidy on private health insurance…
TREASURER:
Yes, but the whole…
FAINE:
…just in its own right, what's wrong with putting up the tobacco tax?
TREASURER:
Well, I think a lot of people would be supportive of that, but the private health insurance means-test that we are putting in place is in there to fund the pensions for the long-term, you see Jon.
FAINE:
So why not put up tobacco tax too, and then you've got even more money coming in and it's good for the nation's health as well?
TREASURER:
Let's deal with the intergenerational challenge that Peter Costello never wanted to deal with. The fact is, as we sit here today, there are five workers for every person aged 65 and over. In 2050, it will be two-and-a-half. Now, the reason that we have to put in place that means-testing, if you like, on private health insurance rebates is that that proportion of our Budget is going to grow dramatically over time, precisely at the time that our aged population is growing and our expenditure on health is increasing. So, this measure is an absolutely essential measure to fund that increase in the age pension, by dealing with a cost blow-out in a critical area that is driven by the ageing of the population. Now, if people want to advocate an increase in the taxes on cigarettes, that's an entirely different proposition.
FAINE:
But is it good policy?
TREASURER:
But what is the best policy here…
FAINE:
But is it good policy to put up the tax on cigarettes?
TREASURER:
What is the best policy, that the Liberals have to front up to, is our means-testing of private health insurance. We've said, and I said it the other night…
FAINE:
I'm trying to get you to discuss the cigarette tax in its own right. Is it good policy?
TREASURER:
We are not putting forward a proposal at this stage.
FAINE:
Will you in future? The Henry review of taxation?
TREASURER:
Well, that's what we've said. We've said we'll have a look at it in the context of the Henry review. We are already on the record, unlike Malcolm Turnbull, of supporting changes in taxation when it comes to vital public health issues like alcopops.
FAINE:
So alcopops, to be consistent, your tax on cigarettes would go up too?
TREASURER:
Well, it's not our proposal. What we are trying to do is to structurally change our Budget by making a fundamental change in private health insurance rebates. That's what the issue is that Malcolm Turnbull doesn't want to debate, because he's going to go to the Senate and knock-off the integrity of this measure which is funding the increase in the age pension. So, he wants to have a debate about cigarettes, meanwhile back at the ranch we want to make a fundamental change to the Budget because spending in this area is unsustainable. And of course Peter Costello has acknowledged that spending like this was unsustainable. This is what he had to say to Mr Howard's biographer, you might recall:
I have to foot the bill and that worries me, and then I start thinking about not just footing the bill today, but if we keep building on all these things, footing the bill in five to ten and 15 years.
What we are doing is fixing up Peter Costello's weakness, because he let spending in these areas grow unsustainably. And that's what the debate must be about.
FAINE:
In your own Budget you've conceded that the economy will get worse before it gets better, and that times in precisely with when you need to go to the polls next. So, how do you balance going to the polls with the worst economic news that's to come?
TREASURER:
By taking the right decisions for the long-term for this country and not…
FAINE:
(Inaudible)
TREASURER:
(Inaudible) Peter Costello and John Howard…
FAINE:
Or you bring the election as far forward as you can and trigger a double dissolution.
TREASURER:
We're not focusing on an election. What we want to do, and what we must do for the national economic interest, is get these settings right for the long-term. This is a unique event. We've not had an event like this in the global economy for 75 years. Our responsibility, our sole responsibility, our only responsibility, is to get these settings right for the future.
FAINE:
The Greens, in a by-election in Western Australia, polled 44 per cent of the primary vote in Fremantle on the weekend. Does that spook the Labor Party?
TREASURER:
Not at all. It's a state by-election. There are a whole series of circumstances. I'm not a commentator on the polls or state by-elections, but as I said before…
FAINE:
(Inaudible) this is a trend line and a warning signal surely to the Labor Party?
TREASURER:
Well, you can interpret it however you like, but I'm not going to go into the commentary on it. What I'm focusing on, and what our interview has been about and must be about, is our long-term national economic interest. That's the only focus that I've got. Opinion polls will come and go, state by-elections will come and go, but the most important thing that we have to do in this environment at the moment is get these settings right. And that is what our national Government is absolutely focused on. We're not focused on whether it's going to be Malcolm Turnbull or Peter Costello, or what's going on in the Liberal Party or the opinion polls. What we must do is get in place nation building for recovery – economic stimulus for jobs now and for jobs tomorrow.
FAINE:
Surely what you focus on is getting re-elected, and you do whatever you need to to get re-elected? And that way you can still have your hands on the levers. That's what politics is about.
TREASURER:
No, what we have to do is get these settings right. This is a very, very big challenge for our national economy, and that's what we're focusing on, Jon.
FAINE:
Overseas travel costs exposed over the weekend. This is not the same as what's going on in the UK, but it's got the same flavour to it, which is where the public get sick and tired of seeing politicians jetting around the world, having themselves a wow of a time. $200,000 on an overseas trip for one Minister. What's going on here?
TREASURER:
Jon, I've been overseas this year a number of times. I've been to two G-20 meetings – very important meetings for this country. I've been to Washington. I've been to New York for investor briefings. I've been to Tokyo for investor briefings. All essential work for the country. This is a global recession which requires global responses as well as national responses, and our Government has been very much engaged in those responses. And from time to time that travel is required and indeed demanded, because if we don't have a seat at some of these tables, there are consequences.
FAINE:
But the taxpayers want to know what value we get for it. We don't even know half the time when Ministers go overseas what they're doing, why they're there, or what comes out of it.
TREASURER:
Well, I can speak in my case, Jon, and people do know what I'm doing when I'm overseas, because I'm back talking to people like you all the time on the radio. And every opportunity is provided by myself to ensure that there is full scrutiny of what I've done when I've been overseas, and I'm constantly talking to people about it.
FAINE:
Twenty minutes past nine. I know you've got a plane to catch. One more question. Great Southern have now collapsed. Timber Corp last week. You've got a complete disaster in the agricultural investment area, and you could have huge tracts of agricultural land and forestry land hitting the markets simultaneously at a time when it offers appalling, if any, returns, negligible returns to the original investors.
TREASURER:
These are obviously serious issues. The company is in voluntary [administration], so I don't intend to comment about it or what its administrator should do, but I do acknowledge they are serious issues and partly a consequence of our times. But a sensible government will study what has occurred here, and assess the policy implications of that for the future.
FAINE:
Not just policy, but there's jobs implications too.
TREASURER:
Certainly, all of those things are true. These are really difficult times and these are the issues that the Government is focusing on – all of the long-term issues. We are dealing with a range of them. There's not just the need for economic stimulus, nation building infrastructure. There are issues in the financial sector and we're dealing with all of them.
FAINE:
Do you rule out a rescue package?
TREASURER:
I'm not forecasting anything of that nature. This is a…
FAINE:
Well, what's the difference? If a factory closes there's a scheme to guarantee to the workers that their wages are paid and all the rest of it. Here it's a managed investment scheme in agriculture. There's jobs at stake.
TREASURER:
Jon, this is an issue that has arisen in recent times. I'm looking at all of the implications of it. I'm not forecasting anything in that area, and I wouldn't read that as meaning yes or no to your question. I will take the time to thoroughly assess the implications of it. That's the sensible thing to do. And I shouldn't be making any further public comment about it because we've got an administrator in there looking at the situation.
FAINE:
Twenty one past nine. Wayne Swan, thank you. Just finally, Peter Costello or Malcolm Turnbull?
TREASURER:
Same horse, different jockey.
FAINE:
Thank you for your time this morning. Good to see you in the studio as well.
