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Transcript of joint press conference: Parliament House, Canberra: 8 February 2011: the Coalition's plan to stop Labor's flood tax



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LEADER OF THE OPPOSITION THE HON. TONY ABBOTT MHR FEDERAL MEMBER FOR WARRINGAH

8 February 2011

TRANSCRIPT OF THE HON. TONY ABBOTT MHR JOINT PRESS CONFERENCE WITH THE HON JOE HOCKEY MHR, SHADOW TREASURER PARLIAMENT HOUSE, CANBERRA

Subjects: The Coalition’s plan to stop Labor’s flood tax.

E&OE……………………….…………………………………………………………………

TONY ABBOTT:

Thanks everyone for coming. I’m sorry we’re a little bit late. Joe and I are here to talk about the Coalition’s response to the flood crisis and in particular savings that we will find in order to ensure that we are able to spend what is needed for reconstruction in Queensland, Victoria and elsewhere without the need for a new tax.

Now, I want to make it very clear that the test of a political movement is its ability to take tough decisions. The test of a government or an alternative government is its ability to take tough decisions and by announcing tough decisions today the Coalition is demonstrating that we are a credible alternative, that we are ready for government, whenever such an opportunity might occur.

I don’t think for a moment that everything that we announce today is going to be popular but the test of a political party, the test of a senior politician is not he or she’s ability to win a short term popularity contest, it’s his or her readiness to do what’s right for our country and what’s right for our country is funding flood reconstruction without the need for yet another new tax.

Now, I just want to put what’s happening today in context. We need to find additional savings to fund flood reconstruction because we have a government which has been utterly profligate with taxpayers’ money. If the Government had not been handing out $900 stimulus cheques like confetti we would not need to find these additional savings. If the Government had not wasted so much money on school halls and pink batts we would not need to find this money. If the Government wasn’t blowing $50 billion plus on the National Broadband Network - admittedly most of it off Budget - we would not need to find this money. We only need to find this money because the Rudd-Gillard Government had taken the world’s strongest fiscal position and destroyed it. It’s turned a $20 billion surplus into a $50 billion plus deficit last year and a $40 billion deficit this year.

We have to spend the money to reconstruct Queensland and the other parts of flood and storm devastated Australia. The question is how should that money be raised? The Government thinks it should be raised with a new tax. We think it should be raised through new savings. Essentially we are saying that Prime Minister

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Gillard should be putting her hand into the Government’s pocket, she should not be putting her hand into the people’s pockets. That’s what we are essentially saying.

Now, I want to just briefly take you through the process which has led to the announcements that we are making today. There was a leadership group phone meeting some weeks ago which determined that the Coalition would oppose the flood levy. There was a Shadow Cabinet discussion that started on Friday, continued yesterday, which resolved on these savings. The final details were hammered out by me, by Joe, by Andrew Robb and by our offices. I flagged the savings that we’re about to announce to the Party Room this morning. There was broad understanding in the Party Room of the need to go down this path. So, there has been a proper process undertaken here. I suspect there’s been far more due process here than with the Government’s savings or with recent government decisions such as the appointment of former finance minister Fahey as the de-facto finance minister.

I want to now just take you through some of the savings that we have here. The largest single saving is $600 million in deferrals of water buy-backs. We’re not saying that the money should be spent but we think that the money should be spent at a time when the Government is not faced with the sort of demands that it currently has. There is obviously an abundance of water around right now. That abundance is not going to go away quickly. We also have the Murray-Darling Basin Plan in complete disarray. The buybacks should be part of a sensible plan. They shouldn’t just be random, ad-hoc buybacks. So, we are deferring, in large measure, what’s left of the buyback money.

We are also cutting $500 million worth of automotive assistance. This takes the level of automotive assistance back to the level that the Howard Government thought necessary in 2007. It removes the additional assistance to the motor industry that the Government has provided largely through the stimulus package.

There is $400 odd million of assistance to Indonesia which is being deferred, subject to a full review of the effectiveness of this programme. Yes, the Howard Government did provide significant assistance for Islamic schools in Indonesia. This measure was adopted in the wake of the East Asian tsunami to try to reduce tensions between Christians and Muslims in the province of Aceh. It was a perfectly reasonable decision at the time. Late last year, Prime Minister Gillard renewed this funding and increased this funding. We don’t think that should have been done without a proper evaluation of the impact of the previous funding.

There’s also a deferral of $150 million of BER spending. There are obviously going to be very significant capacity constraints in our economy. The Prime Minister referred to these in her Press Club address. Given all the other rebuilding and building that is taking place right around Australia at the moment, particularly in Queensland, we think it reasonable to defer for two years $150 million worth of BER spending.

There are some other cuts; you’ve got the papers before you. If you want to ask about them you’re welcome to do so. I’ll just finish with the general observations. There is one Government cut that we haven’t proceeded with and that is the cut of some upgrades of the Bruce Highway designed to make it relatively flood-proof. Yes, we accept that the Government has to make savings. We aren’t necessarily wildly enthusiastic about the savings that the Government’s announced and I’m sure that when you look for the victims of the Coalition’s cuts you will also be looking equally assiduously for the victims of the Government’s cuts to things like homeless funding for low income housing and so on. But nevertheless there is one cut there which we don’t think can reasonably go ahead at this time and that is the cut to flood proofing infrastructure on the Bruce Highway.

Now, I’ve been saying for a week or so now that I am very happy to sit down with the Prime Minister in a spirit of bipartisanship to identify savings. In a budget involving $350 billion a year it ought to be possible to find an additional $1.8 billion worth of savings. As a former colleague of mine said on radio the other day, if you’re walking down the street with $350 in your pocket it ought to be possible to find $1.80 at need.

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So we have come up with these savings. I don’t suggest that they are necessarily going to be painless. But these are the savings on the basis of which I would like to sit down with the Prime Minister and talk about how we can respond to the floods without needing a new tax. As I’ve said before, I think Australians have suffered enough over this summer of disaster without needing to suffer through a new tax, particular in a year which is going to mean a carbon tax and a mining tax if the Government gets its way. Joe, over to you.

JOE HOCKEY:

Thanks Tony. Well, this proves that the Coalition is prepared to support the government expenditure particularly in Queensland. We believe that we could not go down the path of opposing the levy unless we were prepared to offer an alternate source of funding. So this is very important because it illustrates our commitment to those people affected by the floods. But at the same time the total cuts here are on top of the $50 billion that we committed to at the last election and out of the total forward estimates of $1.5 trillion this represents 0.1 per cent of expenditure. I could go through all the details as you wish, but the bottom line is from our perspective it is important to cut the cloth. We are at a crucial point in the Australian economy. You have a Treasurer today warning that we could have a period of negative growth, an exceptional thing for a Treasurer to do. If consumer confidence was down he ensured that it could end up at rock bottom with his over-inflated rhetoric. At the same time the Government is planning a mining tax and a carbon tax and on top of that they want a flood tax and this will have an impact on families. From our perspective, if Australian families around the dinner table are cutting their household budgets because of higher interest rates, because of the rising cost of fruit and veggies, we have to do the same with the federal government budget. You have to pull it in and that’s what we are doing. We are delivering on our words.

QUESTION:

You said that the Government threw cheques around like confetti. Wasn’t that part of the first stimulus and you backed that?

TONY ABBOTT:

There were further cheques, the $900 cheques, that went out as part of the second stimulus which we opposed and I have to say we were right to oppose it. We were very right to oppose it because, as we all now know, so much of that second stimulus package was misdirected or wasted such as the pink batts, such as the school halls.

QUESTION:

Most of these cuts were actually deferrals not actual spending cuts. Why did you go down that path? And, second, have you looked at what the impact is on a year by year basis through the forward estimates period?

TONY ABBOTT:

Well look, I’ll ask Joe to respond as well. But over the forward estimates period, and I’m just trying to read this rather small print, it’s I think $2,095 million. We think water buybacks are important but they should be part of a considered plan and we don’t yet have a considered plan. We don’t want to chisel any school community which has rightly not accepted a poor value BER offer from a state government, that’s why we have deferred $150 million of BER funding. Look, if the Indonesian schools programme turns out to be something of high value we’re prepared to look at it again down the track. But with so many schools destroyed or damaged in Australia we do think that charity begins at home and it’s important to appropriately prioritise Australian government spending.

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JOE HOCKEY:

Can I just add some figures there. In 2011-12 it’s $791 million. 2012-13, $731 million. 2013-14, $442 million. 2014-15, $102 million. $2,065 million dollars.

QUESTION:

Just on that question I asked. Why have you left almost $300 million of aid to Africa?

TONY ABBOTT:

Paul, look, a lot of potential savings were put on the table and we had a very vigorous discussion around the shadow cabinet. You’d expect that. We are not a shadow cabinet of yes men and yes women. But we went through an appropriate process and we decided that this was the best and most appropriately prioritised list of savings that we could come up with.

QUESTION:

On a couple of the savings. Firstly on the water buybacks. What do you say of the analysis that at a time of plenty a water buyback now would be at the cheapest end given that if there is plenty to be bought? And secondly, you seem to have just, you’ve swapped aid to African with the Indonesian school programme. What do you say of the analysis of the Indonesian school programme that it was crucial, was a very good way of trying to eliminate fundamentalism in areas that could be subject to it?

TONY ABBOTT:

Well, let’s properly assess the results of the previous funding before we go off and commit hundreds of millions of dollars in additional funding. I have no reason to think that that proper assessment has been done. There is a process in place under Margaret Reid and others to assess our foreign aid budget. Let’s see what that process produces before we make such a substantial commitment.

QUESTION:

And water buybacks?

TONY ABBOTT:

And look, on the water buybacks it seems to us based on our analysis of the available figures that there’s about a billion dollars left in the water buyback pot. So we’re not saying that there can be no buybacks whatsoever in the next couple of years. But the vast bulk of the remaining buybacks should be made in accordance with a plan and at the moment we don’t have a plan.

QUESTION:

Mr Abbott, on Friday the Prime Minister said that Cyclone Larry cost the federal government about half a billion, so there’s a starting point. We don’t know the damage bill yet. If it comes out a billion or two billion extra, are you prepared to go this entire exercise again to find more budget cuts or are you just going to leave it?

TONY ABBOTT:

Well, let’s wait and see what happens. I mean, the Government still doesn’t know the entire cost of meeting the flood damage bill. The Prime Minister was quite upfront about that. She committed to a tax before she

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knew the bill. Now, we don’t think tax first. We think save first. So that’s the difference of approach, the fundamental difference of approach between us and the Government.

QUESTION:

She’s said any excess from the floods or the cyclone will be met by further budget cuts. Will you match them again if…?

TONY ABBOTT:

Let’s wait and see what happens.

QUESTION:

Don’t the number of deferrals that you have in this list confirm the Government’s claim that it is too difficult to find actual cuts?

JOE HOCKEY:

No. No. Bear in mind, the Government is spending $45 billion on interest repayments over the next four years alone because of government debt. $45 billion and this argument about having, you know, levies and setting up funds for ongoing disasters - that’s what the budget is for. You can make further savings and you should make further savings. There is a point you reach where you cannot keep going back to the well because the well might not have any water and under this scenario what we’re doing is laying down a clear plan. No Opposition has had the guts to do this before. They haven’t had the courage to lay down $52 billion of cuts and we’re laying it down because we believe in our word and that is the more the Governments spends the greater the upward pressure on inflation, the greater the upward pressure on interest rates and that’s going to have a profound impact on Australian families.

TONY ABBOTT:

And Malcolm, just on that point. I mean, these are new savings that we have found on top of the $50 billion worth of savings that we found in the election campaign. We haven’t gone back to those savings. We have come up with new ones to meet this new challenge.

QUESTION:

Why have you only got $150 million that you are going to try and take out of BER? The rhetoric has been that the BER is a total disaster; a total waste of money. There is some $480 million still out there that hasn’t been committed and spent. Why don’t you save the lot, not defer it, save it?

TONY ABBOTT:

Because there are some schools that still haven’t had their BER project. Many of those schools haven’t got their BER project because they refused to accept overpriced, inappropriate, unnecessary infrastructure at the hands of dodgy state governments. So we don’t believe that those schools should be made to suffer.

QUESTION:

Surely you’re saying it’s still sufficiently worthy to support it? Fundamentally you’re supporting the BER?

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TONY ABBOTT:

We never said that we were against spending on school infrastructure. We said that it should be reasonable and we should get good value for it and what we said at the election was not that we would cut the BER, but that we would ensure the money would be spent through the school communities, like the Howard Government ‘Investing in our Schools’ money was spent as opposed to through the state bureaucracies. That’s still our position.

JOE HOCKEY:

Can I add to that, Tony? In the year 2011/12, there is $496 million available. Now, we don't because the Government is not transparent about how been committed. So we’ve taken a conservative figure. But the Government is not being honest and open about what's been committed but we are taking a reasonable figure.

QUESTION:

Mr Abbott, you said that you’d like to see the end of this Government as soon as possible and you have presented this as something which I presume you would implement immediately if you were to take government sooner than later. At the same time, Julia Gillard says you are ‘Mr No’, you oppose anything. To what extent is your refusal to cooperate with government proposals an attempt by you to destabilise the Government so you can then get to a position of a fresh election earlier?

TONY ABBOTT:

Matthew, I think we have a bad government getting worse. I don't think anyone would say that the performance of the Rudd-Gillard Government has improved post-election. It had lost its way before the election on the Prime Minister's own estimation and it is still wandering around in the wilderness. Now, I don't know what the future holds. I don’t know when the Prime Minister might be tempted to go to Yarralumla because I don't know what's going on inside her caucus. I don't what the independents might be tempted to do. I just don’t know. All I know is that a good opposition holds the government to account and it acts as a credible alternative would, and I think that a credible alternative government, based on the principles that have always animated the Liberal and National parties in this country would look for savings rather than hit Australians with a new tax at a bad time.

QUESTION:

Mr Hockey, just on your own figures, you say $791 million save in 11-12 versus the Government's $1.6 billion it plans to raise. Haven't you just increased the budget deficit by a billion dollars?

JOE HOCKEY:

No, because you have variations. This is a credible, detailed plan. You know, this is the sort of thing the Labor Party wish they could have done in opposition and what we know is that when the Labor Party wants to stop the waste they appoint a Liberal to do it, as they’ve done now and they are doing it again.

QUESTION:

What, you’ve just increased the budget deficit based on your own figures…

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JOE HOCKEY:

No, we haven’t because you’ve got to look at the total figure of our plan for the last election. And in the last election we had $50 billion of savings…

QUESTION:

What you’re stating, is, your last, your figures, you’ve increased it by a billion dollars based on what you have announced.

JOE HOCKEY:

No. You’re wrong because this is part of our platform for election and it obviously is part of the $50 billion or added to the $50 billion of savings we’ve already announced. So, this is actually real money and it’s part of what we commit to as an opposition. We are not in government. We are not in government. We wish we were and sometimes I think Julia Gillard wishes we were too but I can say to you: we are laying down a detailed plan that no opposition’s ever had the guts to do.

QUESTION:

But Mr Hockey, that $50 billion, that $50 billion was the subject of a lot of debate and findings by Treasury last year. Now, you seem to be standing by the $50 billion figure but surely you’ve got to review all those $50 billion in savings, to reconsider those in the light of the Treasury advice.

JOE HOCKEY:

In the lead up to the next election, but I say to you David, Treasury was so opposed to some of our $50 billion last year that they adopted them themselves in MYEFO.

QUESTION:

Can we get a statement of where you’re at, you’ve got, you know, $50 billion from the election campaign. I’ll just ask one and then I’ll be quiet. So, you’ve got your $50 billion from the campaign plus your, the Government’s cuts that you endorsed, aside from the levy, from the week before last, plus these. Are you going to kind of mount a running review of these? Do we get a, sort of, shadow mini budget once a year or are there going to be more? I mean, how are you going to keep track?

TONY ABBOTT:

Annabel, the Government has come up with a floods response which critically depends on a $1.8 billion new tax. We want to give the same response to the floods without the new tax and without one of their spending cuts and we’ve got to come up with new savings to do it and that’s precisely and simply what we’ve done here. Michelle?

QUESTION:

Mr Abbott, was the Indonesia schools cuts a direct substitute for the earlier proposed Africa aid cut and if that’s also out of the aid budget what does that do to your commitment to reach a certain level of foreign aid by 2015?

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TONY ABBOTT:

Michelle, as I said, there were lots of ideas and proposals put on the table and discussed at Shadow Cabinet last Friday and again yesterday before the final decisions were ultimately taken and I’m just not going to go into the detail of what they might have been and who might have mentioned what and when. In the end, it was a Shadow Cabinet decision to do this.

QUESTION:

But what about the target?

TONY ABBOTT:

And look, as for the millennium goal, we are committed to it. We remain committed to it but obviously that’s a commitment for 2015; it’s not necessarily a commitment for the next couple of years.

JOE HOCKEY:

This is beyond, this is beyond.

TONY ABBOTT:

Thank you so much, really appreciate it. Thank you.

[ends]