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DAVID SPEERS: Well, joining us now to look at what's in tonight's budget and to explain some of
these details a bit further is the Treasurer Wayne Swan who's just delivered his third budget as we
saw earlier live here on Sky News, Treasurer welcome.

WAYNE SWAN: Good to be with you, David.

DAVID SPEERS: Now, you've boasted tonight about getting the budget back into surplus three years
earlier but we still have a debt burden that will go on for years after that. Don't the figures in
tonight's budget show that you didn't necessarily need to spend as much as you did to keep, when
the global financial crisis hit, that we could've avoided spending the billions of dollars that we

WAYNE SWAN: No, they don't at all, David. In fact what we did was put in place one of the most
effective stimuluses in the western world, much more effective than arrangements entered into by
many other advanced economies and the consequence of that ...

DAVID SPEERS: And it's still being spent.

WAYNE SWAN: Well the tail of it is but we're currently engaged in a very big fiscal consolidation,
the biggest since the 1960s, but I'll come back to that. It is because our stimulus was so
effective, because of the way in which employers and employees worked together that we achieved a
very special outcome in Australia to be the fastest growing economy in calendar year 09 and the
consequence of that is lower unemployment and that is a good thing. But if you go through all of
the finances the country is still missing $110 billion in revenue that we had prior to the global
financial crisis. So, the impact of that still lingers but what we've managed to do here,
particularly in terms of keeping businesses open, keeping people employed, was quite special and
what that means is that we, as we grow and because we are in the Asian region, which is growing
faster than other parts of the world, we are moving into an economy which is getting closer to
capacity that anybody could've thought of a year ago ...

DAVID SPEERS: Well the economy is going to grow to four per cent according to tonight's budget
papers, and unemployment going to go below five per cent ...

WAYNE SWAN: It's a remarkable outcome ...

DAVID SPEERS: Well, it ...

WAYNE SWAN: ... for Australia.

DAVID SPEERS: What's it going to mean for interest rates though?

WAYNE SWAN: Well, that's why we put in place this very sizable fiscal consolidation. That's why the
application of our two per cent spending cap is so important, to see if the economy is growing at
three per cent, when the economy is growing at four per cent, and we've got a cap of two per cent
on our spending then we are consolidating government finances, we are pulling back. That is why we
have such a very big consolidation in the system and also, David, it's why we have said we will
continue our two per cent rule as we go forward because previously when we put that in place last
year we didn't intend to take it beyond the return to surplus. We're now saying we will take it all
the way through until we get a surplus of one per cent of GDP, because we do understand the
importance of paying off debt and of having a very good set of arrangements in terms of fiscal

DAVID SPEERS: Let me ask you a few specifics. The renewable energy future fund you've announced
tonight, how does that differ to Tony Abbott's direct action climate fund?

WAYNE SWAN: Well, it's going to have two aspects, it could deal with large scale renewable energy
projects as they come along or it could deal with individual initiatives as people operate in their
communities (inaudible) ...

DAVID SPEERS: Sounds like a copy of Tony Abbott's plan.

WAYNE SWAN: Oh I don't know that it's a copy of Tony Abbott's plan. Can I just make this point?
What we did is we put in the 20 per cent renewable energy target and we moved there very quickly
but we've always said and we still believe, as I said in the speech tonight, that we do need
emissions trading, we do need a CPRS given that that has been denied us ...

DAVID SPEERS: (inaudible) you're going to have to pick winners to fund aren't you? And that was the
big criticism of the Liberals (inaudible) ...

WAYNE SWAN: Can I just make this point? Given that we have been denied a CPRS by the Liberals we
have to go for as much action, individual and collective, as we can until we can get in place a
more comprehensive set of arrangements. There are few other alternatives.

DAVID SPEERS: But who's going to pick who gets the money?

WAYNE SWAN: Well, we'll go through a very public and accountable process of outlining all of that.
What we've announced tonight is the funding.

DAVID SPEERS: Now, you're saving a billion dollars on foreign aid. There's been criticism tonight
from senators and from others. Explain to us ...


DAVID SPEERS: ... what this means?

WAYNE SWAN: Well, at the end of last year the Australian Bureau of Stats basically re did all it's
figures and declared our economy was about 4 per cent bigger than anybody thought it was. And
because we have a commitment to a fixed percentage of gross national income to pay in foreign aid,
that delivered a bonus in terms of that percentage of $1 billion extra, over and above the extra we
were already going to give them because we've been increasing our aid commitment. Two points about
that: in this environment would not have been responsible to deliver a billion dollars and secondly
it could not have been sensibly used.

DAVID SPEERS: And a final question. You will still get back into surplus even without the mining
tax, you'll still get back ...

WAYNE SWAN: The mining tax is nothing to do with whether we're in surplus or not.

DAVID SPEERS: But, if you don't get this through parliament in the outer years we're going to see
some trouble? And also the second round affects ...

WAYNE SWAN: Not at all.

DAVID SPEERS: ... well the second round affects are also supposed, through to what the mining tax
pays for the increase in super contributions, the lower company tax rates, they're meant to improve
productivity in the economy ...

WAYNE SWAN: Certainly. What we said when we announced the RSPT was that we would use all the
revenue to fund capacity enhancing reform in the economy, precisely because of the fact we're
getting to commodity mark two. But we made it very clear if the Liberals are not going to pass this
legislation then we can't give the company tax cut, we can't give the payments to worker's
superannuation accounts and we can't necessarily fund the infrastructure. It's a package dealing
with a critical economic challenge in our economy as we move forward.

DAVID SPEERS: So, do you think you'll get it through?

WAYNE SWAN: Well, it's going to take some time. God knows what the Liberals could get up to; I mean
they're still over the place aren't they? I mean, they really are risk because they just don't know
whether they're Arthur or Martha when it comes to the deficit, what they're doing on savings
measures, anything at all.

DAVID SPEERS: Treasurer Wayne Swan thank you very much for joining us.