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ABC News Breakfast -

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(generated from captions) electricity in this kind of

heat. Ian Yates in Adelaide,

thanks for talking to us. Now

to hear what the opposition

thinks about Wayne Swan's plans

for the economy, Shadow Treasurer Julie Bishop joins us

now from Canberra. Julie

Bishop, good morning. Good

morning. The Federal Treasurer

has confirmed that the budget

now will be going into deficit

with a shortfall of $auto

with a shortfall of $auto

billion and of course

economists here in Australia

and around the world are saying

that's a responsible thing to

do. Does the opposition still

have concerns about the budget

going into deficit? We have

been calling for some time for

the treasurer to update the

budget forecast. Because last

October, the government was

forecasting a budget surplus of

$21 billion. In November, a

budget forecast of $5

budget forecast of $5 billion.

And we have been urging the

government to update its

forecasts so that everybody

understands the current state

of the budget and the economy.

Not only the surplus, but also,

growth and revenues and

expenditures and unemployment

so that we need timely release

of forecast figures. Now, the

treasurer has said that the

now budget is in deficit. The issue

now is: what do they mean by

temporary? And over the weekend

and again today, we've seen

that the government cannot give

any idea to the Australian

people of what they mean by the

term a temporary deficit.

That's what we will be focusing

on: what does the government

mean by temporary? The

treasurer now he grease with us

he has to have a plan to pay off the

off the deficit to get the

budget back into balance at

some point. We'd like to know

when and how and the Australian

taxpayers would also like to

know his plan as well. Just

before we go into some detail

about how long the opposition

would see as reasonable for it to stay in deficit before it

goes into surplus, can I just

clarify, then, the opposition

has no concerns, no qualms, no

criticisms to make about the

budget now going into

budget now going into

deficit? I didn't say that.

I'm asking you that. Did you do have any concerns or qualms

about that? The point is, 12

months ago, the government

inherited zero government debt,

with a budget surplus of $21

billion. Billions of dollars in

the bank. We now find that 12

months later, they are in

deficit. Do you not accept

that these are extraordinarily

that these are extraordinarily

different economic times? I

extraordinarily different accept that Australia is in an

position than that of many

other countries around the

world and our responses to the economic slowdown should not

just mirror those of the United

States or the UK or Europe.

Because our economic

fundamentals were vastly

different from those of the

United States, where of course, they're facing something like a

$1.2 trillion or maybe even a

$2 trillion deficit.

$2 trillion deficit. They have got banks on the verge of

collapse and of course a huge

subprime problem in the United

States. So the economic

fundamentals in Australia were

vastly different, which calls

for different responses in this

country. Now, it's a

hypothetical debate. The

treasurer now says the budget's

in deficit, so the point that

we need to concentrate on is

how long they intend to be in

deficit, how much they intend

to borrow, and for

to borrow, and for what

purpose, and when they intend

to return the budget to a

balanced position, to a

surplus, because the treasurer

has now agreed with the

coalition that he needs to

produce a plan to do so. On

this program and in other

places, the treasurer has said

on many occasions that it's not

just a problem going into

deficit, as long as your budget

stays in surplus over the

period of the economic cycle.

the treasurer didn't During our last conversation,

the treasurer didn't put a time

frame on that. Do you know what

that means when it comes to

your perception and understanding of the economic

cycle, what does that

entail? Who knows what's going

through Wayne Swan's mind when

he talks about the economic

cycle, because he certainly

hasn't shared it with the

haven't explained what they Australian people and they

meant by temporary deficit. The

last time Labor talked about a

six or temporary deficit it lasted for

six or seven years until they

lost office and the coalition government came in and set

about paying off the government

debt. The treasurer should come clean and explain to the people

what he means by a temporary

deficit or what he means by the

economic cycle. Does he mean

three years, five years, seven

years, does he mean until the

coalition gets back into government? It's a matter for

the treasurer to be upfront

with the Australian people. He

says he has a plan. He agrees

with the coalition that he has

with the coalition that he has

to have a plan to pay off the

debt, and after all, this is

taxpayers' money. The

government doesn't have any

money of its own. All the money that the government has comes

from the earnings and the

efforts of individuals and

businesses. So when the

government talks about paying

off the debt, it will be

taxpayers who are paying off

debt and they're entitled to

know what is the government's

thinking in this regard, particularly when the treasurer

let's talk about says he has a plan. Well,

let's talk about it though from

the point of view of the

opposition and you represent

the alternative view when it

comes to the running of this

country and also alternative

economic theories. So when the

government admits that it will

have a shortfall of $50 billion

when it comes to its own tax

receipts, what will be your

plan to turn that around? How,

during a time an economic

downturn, how would you then

restimulate the economy to get more money back in the

coffers? As I've been saying more money back in the

since last December, one way of

stimulating the economy is to

provide tax relief to

individuals and business,

because that boosts

productivity and if you boost

productivity, you're ensuring

that people are working, are investing, pursuing

opportunities, under taking

entrepreneurial activity. Just

to jump in there, if I can -

the IMF doesn't agree with you. That's not

you. That's not correct. That's

not correct. The IMF is saying

they would ask governments to eschew talks cuts in favour of direct spending to build up

infrastructure projects and the

like? No, you're choosing one

line from one economist at the

IMF. In fact last week the

deputy director of the IMF was

saying it has to be a

combination. We've not ever

said it's either/or. We've

always said it should be a

combination of stimulatory measures

measures to ensure the economy

can be boost and can keep

growing. We've said tax cuts.

You asked me what are our

alternative policies. The fact

that the treasurer has ruled

out tax cuts is the reason I'm

putting it forward. It's not

the only stimulatory package

that you can put forward, but

if you were going, to you would

include tax cults in it. That

would ruin your budget bottom

line even further, wouldn't

it? That's not right. That's

not right. We can get into the

not right. We can get into the

economic theory about how you

boost productivity, which

boosts jobs and output, which

of course increases revenues.

Whether or not it becomes

revenue neutral is a matter of

determining what sort of tax

cuts and the state of the

economy. But point we're making

is you have to take away

disincentives for work, for

investment, for growing

businesses, for expanding, for

offering new jobs and

offering new jobs and one

disincentive is higher taxes.

This is a very clear divide.

The Labor Party stands for

higher taxes; the coalition

stands for lower taxes. Just

finally, before we let you go

this morning, I'm wondering

your reflections on the essay

that Wayne Swan has penned for

the monthly where he has called

for a discussion on the role

that neo-liberalism has played

in bringing about the global financial crisis. Do you think

there's some questions to be answered there

answered there from that

ideological divide? I don't

think the hypocrisy of Kevin

Rudd's position will be lost on

anyone. The Prime Minister went

to the last election campaigning heavily on his

economic conservative

credentials. He took out a very

expensive PR campaign to

convince the Australian public

that he was an economic conservative that believed in

budget surpluses, that believed

in smaller government, that

believed in a market economy, and now he has

and now he has shown he's just

an old-style Labor socialist.

And I don't think the hypocrisy

is lost on anyone. Good to

talk to you, Julie