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Opposition stimulates debate on economy -

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Opposition stimulates debate on economy

Lyndal Curtis reported this story on Monday, August 31, 2009 12:10:00

ELEANOR HALL: The Federal Opposition is today deriding the Treasurer's commitment to continue the
Government's stimulus program.

Leaked Treasury advice warns that withdrawing the spending early could cause the economy to stall
and the Treasurer says the stimulus packages have kept thousands of Australians in jobs. He also
says the unemployment rate may peak "somewhat lower" than the Government had been predicting.

But the Shadow Treasurer Joe Hockey told our chief political correspondent Lyndal Curtis that if
the Government has updated its economic forecasts it should release them.

JOE HOCKEY: It is not good enough that he goes down this path of selectively leaking new Treasury
forecasts without telling the Australian people exactly what the Treasury is now forecasting for
the economy.

And secondly if it's good enough for the Government to realign and adjust their expenditure
programs then it's good enough for the Government to pull back on the 40 per cent of its new
expenditure which kicks in after the 1st of July next year.

LYNDAL CURTIS: The Treasurer says that he now expects unemployment to be somewhat less than
forecast in the Budget. He's also saying that Australia is avoiding a recession. Is that good news
for the economy but maybe not so good news for the Opposition because it cuts into your argument
that the Government is not managing the economy well?

JOE HOCKEY: Well the Government has spent too much money and we have consistently said that. The
Government has spent too much money. The bill hasn't come to the Australian people yet. The bill
will come in the form of higher interest rates, higher unemployment and of course higher taxes.

LYNDAL CURTIS: But interest rates, even if they do rise, they are coming off a very low base aren't
they?

JOE HOCKEY: Well compared to the rest of the world they are certainly not. And the fact of the
matter is that interest rates will be higher than they need to be because this Government is
continuing with its political expenditure program not its economic expenditure program.

It's not as if all this money which is being spent on Julia Gillard memorial halls is actually
going to help with exports or is going to help with manufacturing.

LYNDAL CURTIS: But if you're putting money into schools aren't you then saying that there is a
possibility of getting children better quality education, better places to learn in and then that
then feeds into Australia's productive capacity doesn't it?

JOE HOCKEY: No, actually no economist would support that argument that building a new school hall
other than during the construction phase improves the productivity of the economy.

The fact of the matter is they are not building one new port. They are not building one new railway
line. They are not giving small business any advantageous that is going to help small business to
employ people over the years ahead.

And the money the Government is spending now is a sugar hit and when that sugar hit wears off there
will be nothing to show for it that is going to build the capacity of the Australian economy.

LYNDAL CURTIS: If the economy does end up escaping a recession, if unemployment is lower than
forecast, if a renewed private sector demand does mean that the Government gets more tax revenue
then the debt and deficit is lower, can't the Government rightly claim credit and say it acted when
things were in crisis and things did not turn out as badly as expected?

JOE HOCKEY: Well if the answer to too much debt in the world was the Government handing out cheques
for $900 then their argument might have some substance. But the fact of the matter is that the
cheques handed out for $900 and so much of the money that they have chosen to spend is not going to
deliver a stronger, more profitable, more expansive Australia.

LYNDAL CURTIS: But it's kept Australia's head above water, hasn't it at the time where things could
have been really very bad?

JOE HOCKEY: Well it may have helped to avoid the technical definition of a recession but
unemployment was 4 per cent before this Government came in. It's now heading towards 7, 8 and still
forecasts 8.5 per cent which means that there are 300,000 to 400,000 Australians who have lost
their jobs. And I say to the Government go and tell those people that there has been no recession.

LYNDAL CURTIS: Where should the Government begin its withdrawal of the stimulus in your view? What
programs should it not go ahead with?

JOE HOCKEY: Well the fact of the matter is as we pointed out previously they were spending too much
on school halls. They were spending way too much on pink batts. They have recognised themselves
that the pink batt program was flawed.

They should be spending money on railways and coal ports and various other facilities that build
the infrastructure, build the capacity of the nation to take advantage of growth. But at the moment
the money that is being spent is being spent on political outcomes and not economic ones.

LYNDAL CURTIS: So should they spend the same amount but spend it on different things?

JOE HOCKEY: No they should spend less. They should spend less because this is now the biggest
spending government since World War II and they don't know how to pull back on spending.