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eve. Four more sleeps to go!!
Back in surplus in 2012-13.Surplus in 2012-13.As promisedAs promised. Welcome back to the show. We have heard it time and time again. The government will be in surplus in 2012-13. But the Treasurer yesterday has admitted what economists have been saying for a long time that a surplus is highly unlikely. Wayne Swan said it would be irresponsible to make further spending cuts after a fiscal sledge hammer hit revenue, with tax receipts down nearly $4 billion. The Treasurer and Acting Prime Minister joins me now from Brisbane. Good morning to you, Mr Swan.Good morning, Lisa.Now, as recently as last week you were still standing by your promised surplus. When did you finally start to agree with what economists have been saying for a long time, that a surplus was just never going to happen?Well, when the revenue figures came in it made it very clear that we had copped a very big hit over the past four months. Equivalent to the downgrade we had put in the midyear update for the whole year. That was a sledge hammer to the revenue. I made the point yesterday that given the hole in the revenue this year, it would simply be irresponsible to make very signature cuts now because - significant cuts now because that would endanger jobs and growth. Our job is to get these big economic calls right and that is the call we have made. People should be aware we are making very significant progress in terms of our Budget and in terms of the consolidation and our economy is still quite resilient. Unemployment at 5.2, strong investment pipeline, contained inflation, interest rate cuts, but this revenue downgrade is a consequence of some very unusual factors in the global economy. Lower commodity prices on the one hand, but a higher dollar on the other. That is very rare for that to happen. This is weighed very heavily on business profitability and that is what we have seen in the figures which have come in in the last two weeks.And, yet, for all of the good numbers that you just gave us you have always said that delivering a surplus was a measure of the government's reputation as economic managers. By your reckoning this means you have failed.I think government has got the big economic calls right and we are bringing this Budget back to surplus because, you see, we move to support our economy at the time of the global financial crisis and the global recession and we said that when growth returns we should gradually bring our Budget back to surplus. We are still making substantial progress in terms of the fiscal consolidation, but if we were to take additional action right now because of this revenue hole, what that would do, it would hit growth and cause higher unemployment. We don't think that is responsible. That is the responsibility economic approach, and of course well for the politics, that is not the point. What we are on about is getting the big economic decisions right for jobs and growth.But economists are morning are basically saying, "I told you so."Well, economists today I think have very clearly supported the government's decision and there has been a debate emerge, particularly since the national accounts came out three weeks ago, it has been about the softness in what is called nominal income, nominal GDP. Of course that softness has now reflected itself in the revenue figures the hard data, if you like, that comes to the government from the Tax Office. When we saw that data, we said that this was a very big hit to our revenue. We saw very clearly if we were going to have to make surplus this year we would have to take action which would hit growth and hit jobs. We are a Labor government. The most important things for us are in our economy and in our community, is to secure jobs and job securityty.But those soft numbers came out three weeks ago and you have now made this announcement five days before Christmas. You would have to understand that people are feeling a little bit cynical about the timing of the announcement and with the Prime Minister on holidays as well.Well, could I just make a couple of points about that, Lisa. These figures that have come to us always come to us at this time of the year. The GDP data I was talking about, it was a few weeks ago but the hard data, the revenue data, has been with us for about a couple of weeks and we have been analysing that data. It is always published at this time of year under the previous government as well as under this government. There is nothing unusual whatsoever. I thought it was my responsibility, give ten data that had come in, to go out and clearly analyse where we were and why we had take then decision.Alright, we spoke to shadow Treasurer Joe Hockey this morning. Here is a little bit of what he had to say.Revenue this year is 6% higher than last year. Last year was 12% higher tax revenue than the year before. So, the Labor Party is getting the revenue in. The problem is they are wasting money. Now, they have committed $15 billion of expenditure against a mining tax that hardly raises $1. That is completely irresponsible. Iron ore prices are now $130 a tonne, which is pretty much near the highs, and terms of trade are still near record highs. So, no more excuses from the government. They just can't control their expenditure. Your response, Mr Swan?Well, I think like his leader Mr Hockey is at war with the facts. What he hasn't said there is that the revenue increases that beare getting don't match that those that we forecast. He hasn't said that. Once again he is just twisting the facts and playing politics. What we have done is the responsible thing here. What Mr Hockey is saying he would do if he was in this position is that he would cut and he would cut really hard. He would do what the Newman government has done in Queensland and put tens oh thousands of people out of work. That is not our approach the Budget or economic growth.One of the problems you have, the federal election is just around the corner next year, we don't know exactly when that will be, but what it means is that the government has now reversed its position on the carbon tax, on offshore processing and now this which has been your economic centerpiece. How do you expect the Australian public to value your word after this?Well, what our economic centerpiece is the outcomes that we have. Unemployment - at 5.2, contained inflation. Interest rates down 175 basis poins. A really strong investment -- points, a really strong investment pipeline in resources. The fact is like we have a strong Budget, the best employment growth that you can see just about anywhere in the developed world and we have created 800,000 jobs in the time we have been in office. That is the economic record. What we are doing is the responsibility thing here, once again, like we did during the global financial crisis. We supported our economy then, that was opposed by Mr Hockey and Mr Abbott at that time. They simply don't understand the importance of getting these big economic decisions right. I believe the Australian people will understand that.But your economic record also says that all five of your Budgets will have returned deficits and that the last time a Labor Party government returned a surplus was the hawk/Keating government in 1990. Yes, and we have had the most turbulent and uncertain global conditions in 80 years and this government has taken the correct economic decisions to counter those conditions. We have the big tick from all of the international organisations and most economists acknowledge that the actions we took responsibly to support our economy have put us in the position that unlike so many other developed economies, we have low unemployment and we have low public debt and we have growth that many other economies can only dream of, that is our economic record and it is one that I am really proud of. Alright, Mr Swan, we will have to leave it there. I know you have a very busy couple of weeks coming up as Acting Prime Minister but in the meantime I hope you have a very