Wed, 14th May 2008
Nelson interview with Chris Uhlmann (AM Programme, ABC) - Budget
The Hon Dr Brendan Nelson MP
Leader of the Opposition
E&OE
UHLMANN:
Brendan Nelson, good morning.
DR NELSON:
Good morning Chris.
UHLMANN:
Now the Government has moved to slow the rate of government spending to 1.1 per cent next year in growth; that’s much less than was expected. Is that a good thing?
DR NELSON:
Well obviously we support, the most important thing that we support is a Budget which delivers for Australian families, for family businesses. We want to make sure that we have a Budget which makes sure that Australians are more likely to be able to afford their homes, to put petrol in their car, to buy groceries.
This is a classic Labor Budget: increased taxes, increased spending. They’re targeting groups and individuals that they don’t particularly like, and it’s extraordinary – you’ve got a Labor Budget which is budgeting for 134,000 people to lose their jobs by the end of the year.
And Mr Rudd sounded in that interview, I must say Chris, he sounded like one of those recorded messages you get when you’re actually trying to get real information. The fact is that the Government policy and the forecasts are to slow growth to two and three quarter per cent next year at the same time as increasing taxes and spending.
UHLMANN:
Well, so you don’t sound like a recorded message I’ll ask the first question again. They’re acting to slow the rate of government spending. Do you think that’s a good thing?
DR NELSON:
Well slowing the rate of government spending in the current circumstances is appropriate, however you’re still getting an increase in government expenditure and in fact the year after next it will increase by five and a half per cent.
Over the next five years what Australians have got here is $19 billion more in taxes, $34 billion more in government spending, $16 billion in savings. So, in other words, all of the talk we’ve had about fighting inflation, if you like, in fact our assessment of it is, with the increases in alcohol tax, in car tax and a variety of other taxes, you’ve got about 40 basis points in terms of pressure on the consumer price index.
UHLMANN:
But just to be completely clear about this – was slowing the rate of government spending the right thing to do in the economic circumstances we find ourselves in now? Did they do the right thing this year?
DR NELSON:
Well our argument has been consistently with the tightening of monetary policy, the Reserve Bank putting up interest rates here by 50 basis points, the pressure that’s come from the banks that are borrowing from the bond markets also increasing interest rates, the volatility in terms of the global credit squeeze – our very strong argument is that there should not have been a major fiscal tightening in this Budget. And, however, we’ve always accepted there’s a need to trim the sails if you like in terms of spending. But in the end what Australians have not got here is a Budget which takes action to make sure that you’re more able to get your house mortgage under control, to be able to afford your groceries, your petrol, to feed, clothe and house your children. And, importantly, I mean it’s rather extraordinary, that you’ve got a Government that is budgeting to put 134,000 people out of work.
UHLMANN:
But if you believe that in fact that government spending has to slow this year and there’s a tightening of monetary policy, that’s the natural conclusion of those decisions, so you’re supporting that position aren’t you?
DR NELSON:
Well let’s have a look at it Chris. I mean, Mr Rudd and Mr Swan who have inherited an economy is absolutely first rate condition. I mean Mr Swan would have to be the luckiest Treasurer in Australia when you look at it. And the one piece of sunshine if you like in the Budget as far as everyday Australians are concerned are the tax cuts which as we know are Peter Costello’s tax cuts.
But when you look at it, this is a Labor Government which is proposing to increase the spending of your money by $34 billion over five years, savings of $16 billion, jack up your taxes by $19 billion, and then seek to tell you that in some way they’re going to make life easier for you. There is not any serious economic plan for Australia here. We’ve seen cutbacks, cuts in a whole variety and a myriad of areas which doesn’t relate to any overall strategy for the economic future and security of Australia and of Australians. And we still have major increases in taxes.
UHLMANN:
Brendan Nelson, isn’t it reasonable to apply a means test to a couple on $150,000 a year before getting a baby bonus or a family tax benefit? Would you say that’s a reasonable point at which to apply a means test?
DR NELSON:
Well the first thing is that I think it’s very important that we support families; we support men and women who are trying to raise children. As far as the Government is concerned it’s decided that one of the things that it will do in trying to justify its own quite significant pre-election spending commitments is to target families.
UHLMANN:
Is that reasonable?
DR NELSON:
Of course we…
UHLMANN:
$150,000?
DR NELSON:
Well we’ll just have a look at this. Now…
UHLMANN:
You haven’t got an opinion on that?
DR NELSON:
Well we’ll just have a look at the fine print on this. I mean let’s have a look at this because what this means is that in terms of the baby bonus there are two things. That if you earn a dollar more than $75,000 in the six months after you’ve had a baby Mr Rudd is saying that you should not and are not worthy of getting a baby bonus. The second thing is that he’s also saying to every Australian mother, to every Australian family, that instead of getting the $5,000 as a lump sum payment, that instead you have to get it over a fortnightly basis over 13 fortnights.
UHLMANN:
Just to be clear, Brendan Nelson, how can you on the day after a Budget not have an opinion on where the means test should cut in? The Government has set its mark. It’s $150,000. Is that a reasonable mark?
DR NELSON:
Well, again, as far as we’re concerned what the Government is doing is targeting families and targeting something which we think needs to be encouraged as far as having babies is concerned. We will have a look at the detail of that and we’ll also have a look at the detail of the Family Tax Benefit B, and the means test being applied to that.
We think that a means test on some of these benefits is reasonable but we do not… we are very strongly in favour of supporting families and supporting families having babies and we believe very strongly in encouraging people to get on and work hard.
UHLMANN:
But if you believe there should be a means test you must have a figure on when that would cut in? At what point should government support, should government welfare stop for the wealthy? Is there a number that you can put on it?
DR NELSON:
Well look, Chris, as I say, the key thing in this Budget is that for every Australian you have to ask yourself, whatever your income, you’ve got to say to yourself: is the Budget going to make it easier for me to balance my household budget, to afford my home, put petrol in the car, to buy groceries, to do all the things I need to do to raise a family.
What Mr Rudd is doing is increasing taxes, increasing spending and targeting groups and individuals that he does not like. We are having a serious look at the detail of some of the things because we’ve found with Mr Rudd and Mr Swan they’ll assert something and then you actually have a look at the detail and it’s a little bit different. But as far as we’re concerned we will have a look at the thresholds that are being applied.
UHLMANN:
Well Brendan Nelson what we saw over the last several years, the resources boom with the Coalition Government was that as tax receipts came in they went out straight again by way of election promises or pretty much in tax cuts. Now we’re seeing a Government saving $40 billion on nation building. Isn’t that a good thing to do?
DR NELSON:
Well look let’s keep in mind that Peter Costello and the previous Government delivered this new Government no Commonwealth debt and $60 billion invested in the Future Fund, Higher Education Endowment Fund, and a hospitals infrastructure fund. So in other words what Mr Rudd and Mr Swan are basically doing is chopping and slicing and creating some new funds which are modelled in part on what we had already done in investing in Australia’s future.
However, what they’re also doing – again this is classic Labor for you – is that instead of the capital being maintained in these funds, and the interest only on those funds being distributed for the purpose that they’re established, it’s now the capital and the interest from the funds which is going to be distributed. And in fact what they’re proposing to do is, and it’s very waffly – there’s not much detail at all – this is basically bailing out states that are heavily in debt.
UHLMANN:
Finally, briefly though, isn’t the Building Australia Fund a good idea?
DR NELSON:
The idea of investing in Australia’s future is a good one and that’s why we established the Future Fund and similar funds for it.
What isn’t a good idea is rewarding profligate state governments that are in the process of accumulating almost $100 billion in debt at the same time Mr Rudd is sitting on a $22 billion surplus of Australia’s money.
UHLMANN:
Brendan Nelson, thank you.
DR NELSON:
Thank you.