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PM hints high earners could pay for pension r -

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PM hints high earners could pay for pension reforms

The World Today - Friday, 24 April , 2009 12:10:00

Reporter: Sabra Lane

PETER CAVE: The Federal Government has confirmed that next month's Budget will include forecasts
going well beyond the usual four year period.

The Acting Treasurer Lindsay Tanner says that while the longer term predictions won't be as
detailed as those given for the next four years, he says it's important that the Government should
chart a course to return the budget to reasonable health.

While the Prime Minister says he doesn't want to speculate about what's in and what's out of the
budget, he does say he's committed to pension reform but he's indicated that it might be high
income earners who are the ones who'll help to pay for it.

Mr Rudd says people who earn more than $150,000 a year could, over time, be in a position to
provide greater support to the nation.

From Canberra, Sabra Lane reports.

SABRA LANE: The Government significantly increased the first home buyers' grant last October in its
first stimulus package. The Prime Minister says it helped 36,000 people buy homes and it boosted
the building sector, but -

KEVIN RUDD: All good things must come to an end.

SABRA LANE: On Fairfax Radio in Melbourne, Mr Rudd wouldn't confirm the additional boost would come
to an end this June, but it's the biggest hint yet the scheme will modified.

INTERVIEWER: You extended it. I am assuming when you say all good things come to an end, you are
talking about extension. You wouldn't do away entirely with the first home buyers' grant?

KEVIN RUDD: You are right to point that out. The continuing grant which is $7,000 has been the case
in the past and will be the case in the future. What we are talking about is the boost.

SABRA LANE: Mr Rudd won't rule out extending the Government's debt borrowings beyond the current
$200-billion limit, saying government revenues have collapsed.

KEVIN RUDD: We don't see the need for that at this stage but we are very concerned about what
happens in the future, about further collapses in taxation revenue.

You've got two alternatives under those circumstances. Either you completely slash and burn
everything government does and throw of tens of thousands of extra people onto the unemployment
queues and cut funding to hospitals and schools, or you engage in temporary borrowing.

SABRA LANE: Pension reform is guaranteed but Mr Rudd says someone has to pay.

KEVIN RUDD: If you are going to engage in a fundamental pension reform where the rule of thumb we
have used in the past is between every $10 a week you increase the pension, that's about $1-billion
to $2-billion a year by way of extra funds which has to be found in the budget.

It doesn't grow on trees. You either achieve it through savings or you achieve it by other means.

SABRA LANE: And it could be those earning more than $150,000 a year might find themselves in the
Government's sights as it toys with means testing rebates for private health insurance, child care
and the first home buyers' grant.

INTERVIEWER: So if I am earning over $150,000 I could be a target?

KEVIN RUDD: We think that Australia is all about fairness. People who are at the upper end, over
time perhaps could be in a position to provide greater support - perhaps. And I again make no
specific comment in relation to the upcoming Budget.

SABRA LANE: What it will do in next month's Budget is give long term revenue and spending forecasts
beyond the usual four years.

Acting Treasurer Lindsay Tanner:

LINDSAY TANNER: Certainly we intend to map out a broad approach to returning the budget into
reasonable health. That's something that we take very seriously. We can live with large deficits in
the short term but we can't live with them indefinitely. It's really crucial that we lay the
foundations for returning the budget to surplus now.

We are in a very difficult position economically in Australia; not as bad as many other countries
but nonetheless very challenging because we have to stimulate the economy in the short term but we
also have to chart a path to returning the budget to surplus in the medium term.

SABRA LANE: On government debt there are some suggestions in the papers this morning that the
Government may be planning to borrow up to $300-billion. That's a pretty horrifying prospect for
many Australians. Is the Government planning to do that?

LINDSAY TANNER: I think these speculations are entirely misconceived. Clearly the deficits that are
projected in the Budget coming up in a couple of weeks will be significantly higher than those that
were projected in February because the global downturn has turned out to be more severe than was
anticipated at that time. That will mean that borrowing will be higher than was anticipated at that
point.

SABRA LANE: Last night the IMF's chief economist advised against further cash stimulus measures,
saying they weren't a good way to stimulate an economy out of a recession, saying people save the
money rather than spend it.

Opposition leader Malcolm Turnbull says that vindicates his stance.

MALCOLM TURNBULL: Mr Rudd has been running up a lot of debt, borrowing a huge amount of money,
$23-billion in fact, and handing it out over four months in cash handouts. And it hasn't created a
job; it hasn't prevented the economy from going backwards and the IMF is here validating the very
criticism we've been making for the best part of six months.

SABRA LANE: If the Government does need to increase its debt borrowings beyond $200-billion, will
you approve it?

MALCOLME TURNBULL: We'll see what they present us with. I mean we have to deal with the economic
circumstance of the time. One of the problems that we're facing at the moment Sabra is that the
Government is reducing every day our options for an effective recovery from this recession because
what they are doing is they are saddling us with more and more and more debt.

You see, this is the recklessness of the Rudd Government. They have borrowed and spent money for
little or no economic effect in terms of a stimulus and the IMF has confirmed that very criticism
we've been making for months. But the one thing they have certainly done is put a higher and higher
debt burden on us and our children in years to come.

I mean just consider this; it took John Howard 10 years to pay off $96-billion of Labor debt. How
long will it take us to pay off $300-billion of Kevin Rudd's debt?

PETER CAVE: The Federal Opposition leader Malcolm Turnbull speaking to Sabra Lane in Canberra.