Wed, 14th May 2008
Turnbull interview with Madonna King (ABC Radio, Brisbane) - Budget
The Hon Malcolm Turnbull MP
Shadow Treasurer
E&OE
JOURNALIST:
Malcolm Turnbull is the Opposition Treasury spokesman. Good morning.
SHADOW TREASURER:
Good morning Madonna.
JOURNALIST:
High-taxing, high-spending, old fashioned, you didn’t hold back did you?
SHADOW TREASURER:
Well Wayne Swan didn’t hold back on the rhetoric in the lead up to the Budget. He said he was going to be putting downward pressure on inflation by cutting spending. I believed him. I thought he was going to cut way too much. In fact he’s increased spending. This is the biggest spending Budget in our history.
JOURNALIST:
You say it’s the first Budget to introduce new taxes. Can you just run me through some of them?
SHADOW TREASURER:
Well, the new taxes, there’s quite a few of them. But the big ones are the tax on the ready-to-drink drinks, that’s going to raise $3 billion over the next four years. You’ve got the tax on cars, additional tax on cars over $57,000. You’ve also got all the changes to FBT which will increase taxes but most disturbingly is this change to the Medicare Levy surcharge which is going to save the Commonwealth Government $960 million in funding private health insurance rebates. So the Government, Wayne Swan, is assuming that thousands of people, tens of thousands of people are going to walk away from private health insurance. That will mean that the cost of private health insurance for everybody else will go up, pressure on public hospitals will go up. It is an incredibly misguided approach when for years, what we’ve been seeking to do is to encourage people to take out private health insurance.
JOURNALIST:
You are so strongly against it. For most of the publicity this morning, certainly by business and unions, seem to be giving it a tick.
SHADOW TREASURER:
Well people generally are generous to Budget, but really, particularly industry, everyone’s going to say “oh, ok, that’s not too bad”. But you’ve got to match this Budget against Wayne Swan’s own rhetoric. This is a guy who said inflation was out of control and he was going to bring in a Budget to put downward pressure on inflation. This Budget, Madonna, is inflationary. It increases spending and increases costs of things that are in the CPI.
JOURNALIST:
But is your objection to it that it will hurt people going through already hard times, or that it will increase interest rates because you say it’s inflationary. What’s your main criticism specifically?
SHADOW TREASURER:
My big concern is that we have a $1 trillion plus, $1.1 trillion economy. And we have a Treasurer in charge of it who doesn’t know what he’s doing. I mean how can you explain Wayne Swan’s rhetoric over the last few months, he would have been on your show, and he’s produced a Budget which is completely different.
JOURNALIST:
All right but given he’s brought down this Budget, what in this Budget do you think will increase interest rates, or send people over the poverty line? Can you give me specific examples?
SHADOW TREASURER:
Well he is certainly adding to inflationary pressures.
JOURNALIST:
And does that mean we will have an interest rate rise do you think? Are you saying that?
SHADOW TREASURER:
Well he has done nothing to help the Reserve Bank. He said that the Budget should help the Reserve Bank by cutting spending. It’s increased spending.
JOURNALIST:
So you’re saying that it’s an inflationary Budget?
SHADOW TREASURER:
Well there’s no question that it is. And in fact you’ve only got to read the economic writers, they, the best they can give it is that it could have been more inflationary. So it should have been going in the other direction if you were serious.
JOURNALIST:
So do you think this will now mean bigger increases in interest rate rises?
SHADOW TREASURER:
Well there are a lot of other factors that impact on interest rates Madonna, a lot of them and we have a slowing global economy and a slowing local economy so it is a complex picture. But Wayne Swan has the opportunity to play his part in keeping prices down. What he’s done is put prices up.
JOURNALIST:
But you’re saying yourself you’re not sure whether interest rates will rise?
SHADOW TREASURER:
Madonna nobody can forecast these things with absolute certainty, because we live in uncertain times. If you want, the question is, has the Budget put downward or upward pressure on inflation, it has put upward pressure on inflation.
JOURNALIST:
So in a year’s time, how do you think our economy will look in terms of inflation, in terms of unemployment, what do you fear?
SHADOW TREASURER:
Well you look at the Budget forecast, they say inflation will be down somewhat, but unemployment will be up. So they are forecasting a slowing economy and there will be more Australians out of work than there are today, and that there will be an inflationary trend down over the next few years. Now, that is consistent with the forecast of the Reserve Bank. Now that’s probably the best estimate you can make at the moment. But Wayne Swan has a lever, a big economic lever in his hands in terms of fiscal policy. He could have pulled it as he said he would, against inflation, in fact he’s pushed it in the other direction and added to price pressure.
JOURNALIST:
Malcolm Turnbull I appreciate your time. Thank you.
SHADOW TREASURER:
Thanks so much Madonna.