Wed, 14th May 2008
Turnbull interview (Radio National, ABC) - Budget
The Hon Malcolm Turnbull MP
Shadow Treasurer
E&OE
JOURNALIST:
Malcolm Turnbull good morning.
SHADOW TREASURER:
Good morning Cheryl.
JOURNALIST:
You describe this Budget as an economic con. Why is that?
SHADOW TREASURER:
Well Wayne Swan has been saying for months he was going to make massive cuts in spending to put downward pressure on inflation. He said it was going to be a tough Budget. In fact spending has gone up. It is the biggest spending Budget in our history. Taxes have also gone up. In this time of strong surpluses Wayne Swan is putting up taxes and those taxes are adding to inflationary pressures. There is nothing in this Budget that suggests he is using the opportunities of today to deal with the problems of tomorrow.
JOURNALIST:
But how is that this Budget does deliver $46 billion in income tax cuts over the next four years, that honours an election promise, it is what the Coalition would have done if it won Government. The Government also says every dollar of new spending next year, it has been more than matched by spending cuts - $33 billion in cuts versus $27 billion in spending. So what are you saying? Are you saying these numbers are wrong?
SHADOW TREASURER:
No what I am saying is that over the four years from next year Labor has dropped spending of $15 billion but then added new spending of it’s own of $30 billion. So Labor is actually spending more. Now they are also taxing more. That’s why the surplus is, one of the reasons the surplus remains strong. So this is high taxing, high spending. What people were looking for based on Wayne Swan’s rhetoric and I really wonder whether he knows what’s in the Budget or whether he knew what was in the Budget when he was talking about it in the previous month, what people are looking for was, or expecting at any rate, was a Budget which cut net spending. Now I was concerned he might cut it too much. But in fact he hasn’t cut it at all.
JOURNALIST:
Indeed. What is your alternative though? There does seem to be some mixed messages here because as you say, last week you were warning deep spending cuts in this Budget risk pushing the economy into a hard landing but now you are saying the Government hasn’t cut enough…
SHADOW TREASURER:
No, no. I am not saying Cheryl…
JOURNALIST:
…(inaudible) what exactly should this Budget be doing?
SHADOW TREASURER:
Well Cheryl our Leader Dr Nelson will be giving his Budget Reply tomorrow night so I don’t want to foreshadow that. Just focusing on this Budget, a key element in good economic management is confidence and competence. Wayne Swan has delivered a Budget that is completely at odds with everything he was telling us about for the previous three or four or five months. Now you know the question is does he know what he’s talking about at all? You look at these, at this Budget, it claims to be inflation fighting and yet he’s putting up the price of alcohol, he is putting up the price of cars, he is going to put up the price of private health insurance – all of these feed into the CPI. How can you credibly say you are fighting inflation when you are actually putting up the price of you know things – drinks, cars and most importantly private health insurance. It’s an extraordinary response given his rhetoric.
JOURNALIST:
So what are you saying? Are you saying the Reserve Bank won’t be pleased with this Budget? I mean are you seeing another interest rate hike because of it?
SHADOW TREASURER:
Look I wouldn’t go that far. The Reserve Bank I think will be as puzzled as I am as indeed many of the commentators are. You look at the front page of The Australian today “Swan Lite on Inflation”, you look at Peter Hartcher in The Sydney Morning Herald. There is genuine surprise that all of this tough rhetoric has resulted in a Budget that has increased spending. I don’t think the Reserve Bank will be impressed but look, clearly it is a Budget that is stimulatory but it is not a massive stimulation. Everyone was expecting and you saw this in a lot of the news coverage, a lot of the commentary leading up to the Budget, everyone was expecting a tough Budget along the lines of Peter Costello’s first Budget in 1996. And instead we got nothing of the sort. You know, the investment of money or the transfer of funds into an infrastructure fund for example is really just so much pious talk.
JOURNALIST:
Well let’s turn to that.
SHADOW TREASURER:
Yes let’s do that.
JOURNALIST:
Let’s turn to the surplus you know nearly $22 billion next year. Labor is actually taking a leaf out of the Coalition book isn’t it in that it is investing this money into well three new funds as you said the Building Australia Fund, the Education Investment Fund, the Health and Hospitals Fund, I mean these are all designed to improve infrastructure…
SHADOW TREASURER:
But Cheryl…
JOURNALIST:
…isn’t that a good idea?
SHADOW TREASURER:
But Cheryl it is certainly a good idea to improve infrastructure as long as it is done on the basis that the infrastructure invested in delivers a positive economic return and that it’s a good investment. I mean you can invest in infrastructure and lose a lot of money if you are not careful. But let’s look at that, when the Future Fund was set up Peter Costello said we are going to set aside money to pay for the unfunded pension obligations of public servants which otherwise will be a burden on future generations. He told us what the Fund was going to do. He told us how it was going to be managed, what type of economic return it would deliver. It was all very clear. What Wayne Swan has said, for example with his Building Australia Fund is I am going to put $20 billion into it, I am not going to tell you what type of infrastructure it will invest in, I don’t know what sort of economic return or internal rate of return I am going to be seeking for those investments. In other words all I can tell you is it’s going into an account, it’s got infrastructure written on it, wait for further details. Now that’s just writing a blank cheque to himself.
JOURNALIST:
Look we’re running out of time here. Just finally this Budget does ask the well-off to bear more of the pain because the Government says they’ve done well out of previous Budgets. Now isn’t that fair enough, wouldn’t the electorate agree with that?
SHADOW TREASURER:
Well I think there’s certainly some means testing in the Budget. I think the baby part of the, the social message of the baby bonus was reinforced by the fact that it’s a universal payment. But you know even that’s been, even if you believe the baby bonus should be means tested, it’s been very clumsily designed Cheryl. If a family in the six months after they have a baby earn a dollar more than $75,000 they get not one penny of the $5,000 baby bonus. If they earn $75,000 or less they get the full baby bonus. Now the reality is as you know this will create enormous disincentives to work, it is just a clumsy, blunt way of making a political point. And the amount of money it saves in the scheme of the Budget is very small.
JOURNALIST:
We could talk a lot about that aspect of the Budget but Malcolm Turnbull we will have to leave it there for now. Thanks for your time.
SHADOW TREASURER:
Thank you very much.