Wed, 14th May 2008
Turnbull interview with Alan Jones (2GB) - Budget
The Hon Malcolm Turnbull MP
Shadow Treasurer
E&OE
JONES:
Budget Paper number one reveals that the higher fuel prices are doing great things for the Government’s revenue. Excise duty on refined petroleum products is expected to increased by $580million. So they‘re doing okay. Shadow Treasurer Malcolm Turnbull is on the line.
SHADOW TREASURER:
Good morning.
JONES:
Good morning Malcolm Turnbull. Have you, do you think the Opposition surrendered ground to the Government and surrendered economic credibility by trying to defend fairly massive and unnecessary spending in the latter years of the Howard Government?
SHADOW TREASURER:
Not at all. In fact as far as spending is concerned, Wayne Swan has outdone everybody. This is the biggest spending Budget in Australia’s history. In this financial year alone spending is up $3 billion, it’s up over $1 billion next year, and so on. So this is not a cutting or slashing Budget. This is not a bold inflation-fighting Budget. In fact it’s an inflationary Budget.
JONES:
And yet the growth in Government expenditure nonetheless, I’ve heard you argue that last night. That the growth in Government expenditure according to the budget papers has gone from 2.9 something per cent under the previous Government, the last year it hit, the last Budget, to 1.1 per cent in this. So the Budget papers suggest that there is less increase in Government expenditure, net increase, than under the previous Government.
SHADOW TREASURER:
But Alan how do you know whether that wouldn’t have been the case if we’d won the election? I mean Peter Costello’s increases in spending varied over his time and of course when he became Treasurer he made very big cuts, reductions in net spending, very significant ones.
JONES:
In 1996.
SHADOW TREASURER:
That’s right. And that’s a long time ago. $9 billion was worth a lot more then than it is today. Now Wayne Swan has been on your programme, and all around Australia saying this was going to be a tough Budget ‘we’re all going to hurt’, it’s ‘going to be painful’ and ‘we’re going to be making massive cuts in spending to put downward pressure on inflation’. What he’s done is he’s increased spending, so you have to wonder whether he knew what was in the Budget, and at the same time, he’s put up the price of alcohol, he’s put up the price of cars, he’s done an extraordinary thing and not only caused the price of private health insurance to go up but he’s put more pressure on public hospitals which in NSW, are particularly under enormous stress. Where’s the inflation fighting in that?
JONES:
He’s just indicated to me that there was no reason that private health insurance premiums should go up as a result of that initiative.
SHADOW TREASURER:
Well that is complete and utter nonsense. I mean look, I, you’ve only got to look at the Budget papers. Let me tell you what the maths is there. They say the Government, the Commonwealth, will lose about $600 million in taxes by raising the threshold for the Medicare levy surcharge. But then they say they will save over $900 million because there will be fewer people claiming the private health insurance rebate. So they are going to profit. The Federal Government is going to profit from people going off private health insurance. Now who will they be Alan? They will be younger people, they’ll be healthy people, healthier people that will reduce the pool of insurance premiums available to support private health insurance overall. It means that all Australians on private health insurance, particularly older ones will have to pay a great deal more for private health insurance, and of course those people who go off private health insurance and then get sick or hurt will be lining up at the public hospitals competing with everybody else there. It is one of the most misguided decisions in the whole Budget.
JONES:
Well let me ask you this question, very simple question. Is there then, or are there instruments within this Budget which could lead the Reserve Bank to raise interest rates simply because the Government hasn’t done enough to prevent money washing out into the community at a time when we should be mopping it up.
SHADOW TREASURER:
Alan, any more rate rise from now on, Wayne Swan owns. He started off the year saying to the Reserve Bank the inflation genie is out of the bottle, it’s out of control. He was effectively egging them to put up rates. He then spent the next 4 months saying to everybody, and the Reserve Bank would have been listening very carefully that he was going to make massive cuts in spending to put downward pressure on inflation. No doubt the Reserve Bank like me took him at his word and thought that’s what he was going to do. I thought he was going too far. I was a bit concerned about it. In fact, he’s gone in the other direction, so the Reserve Bank looking at this Budget will be very puzzled. They will be confused by what is Wayne Swan on about. Because what he’s got is a Budget that is stimulatory, it actually adds to inflationary pressures. Now not by an enormous amount, I’m not trying to, going to exaggerate this at all. It is a stimulatory Budget. Peter Hartcher, who’s a writer in the Sydney Morning Herald makes this point very powerfully today. It is a stimulatory Budget. It is the exact reverse of what the Reserve Bank was seeking and what Wayne Swan was promising.
JONES:
How is it that Australia, just changing tack a little bit from Alan, was a period a of unprecedented prosperity over any numbers of years, comes into 2008, with $4 of every $10 of Government spending going on welfare, to support the income of Australians. How could it be that we’ve got so many people on welfare in a time of extraordinary and unprecedented prosperity?
SHADOW TREASURER:
Well Alan that’s a very powerful point. And in fact you know you’ve got, there’s a number of factors. You’ve got an ageing population so the percentage of the population that are claiming aged pensions and making greater use of medical services and pharmaceutical benefits gets larger. We’ve got a disability support pension which Howard was allowed to blow out. There were too many people on the DSP, it couldn’t work. And of course that was one of the reforms that Labor resisted that John Howard introduced to get people back into work and get them back into the habit of working. But nonetheless it’s a fair comment and it’s one of the issues that we have to look at in the years ahead because plainly this is a very prosperous country, not all Australians are doing well. I mean look at pensioners, they’ve been completely forgotten in this Budget. They are the forgotten people in Wayne Swan’s Budget. The older Australians that built the nation that we’ve got today, that group up in a day when there wasn’t so much social welfare, and they don’t get much out of this Budget at all.
JONES:
What is the rationale for shoving a tax on a car that costs $57,000?
SHADOW TREASURER:
Look it’s just the politics of envy. Labor is about dividing and trying to build up resentment. They say that this is a tax on the rich. Alan it’s not a tax on the rich, it’s a tax on a person who wants to buy a car worth more than $57,000. If you’re rich and you get the bus it doesn’t worry you. If you’re rich and you don’t own a car it doesn’t worry you. If you are a battler and you’ve got 4 kids and you need a people mover, or 5 kids, you’re going to be paying this extra tax and you’re going to be saying to yourself “I didn’t think I was a millionaire, why am I paying all this extra tax to Wayne Swan?”
JONES:
And the tax on the ready-to-drinks, see here, that’s going to raise $600… it’s
the biggest so called saving as the heading in Appendix X is major savings, that’s not
a saving that’s a tax…
SHADOW TREASURER:
Alan I’m so glad you said that, that is one of the great cons in this Budget. All these additional taxes being described as savings.
JONES:
Mmm that’s in Appendix X. Well major savings and the biggest of them is the tax on other excisable beverages. But I mean this is only going to turn kids to buy spirits which are cheaper, and mix them themselves, and most probably more lethal content of alcohol than is
in the RTDs.
SHADOW TREASURER:
Well Alan there’s no doubt about that. And like if you put a tax on one part of the alcohol universally, put a tax on one part of the car universally, all other parts of that product group go up. Now when you look at the Budget papers and you look at the way in which they are assuming that revenue from his additional tax will increase over the years, far from assuming that young people will be drinking less of these ready-to-drink products, they’re actually assuming that they’ll be drinking quite a bit more. So Wayne Swan seems to be banking on more binge drinking from the drinkers of ready-to-drinks. It’s extraordinary. $3 billion over the forward estimates, and that as you say will make no impact on young people, or old people drinking if they find those drinks too expensive they’ll more to something else. All it does, it’s just an additional tax.
JONES:
They won a lot of votes at the last election from single mothers who didn’t like the fact that if you were single and your youngest child turned 8 you would have to go off welfare into a job so long as the job left you $25 a week better off. Now they won’t have to participate in the scheme for the first 12 months. Is this a preference for welfare over work?
SHADOW TREASURER:
Oh definitely. Labor has resisted always the Coalition’s efforts to promote a culture of work readiness and to break the culture of joblessness. I mean they, yesterday there was a scare that they were going to leak, that they were going to drop Work for the Dole. Now it turns out that that hasn’t happened. I suspect that they’ve got some plans to water it down in the future. The key focus has always been to encourage people back into the workforce. It is good for people psychologically, it gives them a sense of independence, and as John Howard always used to say “fairness in the workplace begins with a chance of a job”, quoting Tony Blair. And it is jobs this should all be about yet we see in this Budget their forecasting an increase in unemployment. About 134,000 Australians will lose their jobs over the next year or so as forecasted, if you accept the forecast in this Budget.
JONES:
Just on this promise about child care rebate increasing from 30 to 50%, which will go to people who of course use private child care centres, what mechanism is there in place to ensure this is not just another instrument whereby private child care centres can whack up the price of child care?
SHADOW TREASURER:
I don’t see there is any mechanism to stop that.
JONES:
So basically the people using child care could be even worse off because knowing that a 50% rebate would occur, a 50% rebate on say $3000 is different from a 50% rebate on say $5000 isn’t it?
SHADOW TREASURER:
Well that’s right Alan. There is a catch there but you’re right. One of the things that people are going to have to be very alert to is operators of child care centres taking the advantage of putting prices up, it’s where competition is so important.
JONES:
Just on competition, St George, you’re the Shadow Treasurer. Westpac and St George. I mean that will represent a very significant diminution in competition, it would certainly might make them more internationally competitive, but the suspicion it might be worse for customers, should that be approved?
SHADOW TREASURER:
Well it’s really a matter for the ACCC on terms of competition Alan. I think nationally, if you looked at the banking market nationally, it creates less of a problem than it does in NSW. St George and Westpac are both big NSW banks and that’s why in the past, people have always thought the natural merger partner for St George was either ANZ or the NAB, who of course have got a smaller presence in NSW. But the ACCC will have to examine that carefully. You know the reason why St George has succumbed to this offer, and of course there might be a higher offer from one of the other banks yet, but the reason why they’ve succumbed to it is because of the consequences of the sub-prime crisis in the States which has put the cost of all of the banks’ borrowings up, but a bank like St George is lower rated than the Big 4, is now paying significantly more for the money it borrows to lend on to us than is Westpac or Commonwealth or ANZ or NAB. And so the smaller banks are less competitive now than they were a year or so ago, and that’s why their, all of them, are much more vulnerable to takeover.
JONES:
Just one final question. The great wealth that we enjoy as a nation has to be a social dividend and I think it’s fair to say that the Howard Government in the end and indeed for a long period was seen by people who write to me and ring me here, as having failed people. Like carers, the mentally ill, the disabled, the aged people and so on. There is no shift in any of that. It’s just a scene with a budget surplus of $21.7billion, there’s not much for the carers, the mentally ill, the disabled, the retirees and so on. When is Government going to focus on these poor vulnerable minorities who don’t have a voice and don’t, because of their own indisposition, have the capacity to lobby and argue for their benefit?
SHADOW TREASURER:
Well Alan you know if it hadn’t been for the Opposition, for our side of politics raising the Carer’s bonus, the Senior’s bonus some months ago, they would have been cut out of this Budget as well. So the fact, what there is in this Budget is because of the advocacy of the persistence of the Coalition.
JONES:
It’s still inadequate isn’t it?
SHADOW TREASURER:
I understand that Alan and I think these are issues that particularly carers that John Howard had an enormous compassion about. He was extremely focused on providing more support for carers and paid, provided more than they’d ever had in the past.
JONES:
I just think there’s room there for some party to come to the party and say “We can’t afford to have these people continue to be left so far behind”.
SHADOW TREASURER:
Well Alan, as always, you’re advice is going to be very carefully listened to by all of us, certainly on our side of politics. The Labor party has shown indifference and have only looked after these people in the same manner as they were under our Government because of being hauled over the coals in the Parliament.
JONES:
Okay good to talk to you and I thank you for your time.