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Early Agenda -

View in ParlView

Interview with Kieran Gilbert

Sky News

27 June 2011

SUBJECTS: Carbon Price Assistance; Battlers' Buffer; Liberal Unfunded Tax Policies; European Debt
Concerns; Global Economic Outlook

GILBERT:

Treasurer, thanks for your time.

TREASURER:

Good to be with you.

GILBERT:

The Government has confirmed a buffer for low-income earners in terms of the compensation for the
carbon tax. Isn't all of this diminished though because we still don't know the starting price for
that said tax?

TREASURER:

Well, we've been going through quite a methodical process. We've put the framework out there. We're
talking about the principles on which we're going to operate. Household assistance is very
important, particularly when it comes to low-income earners or households on low incomes. We think
it is very important there is a 20 per cent buffer for those households because they don't have a
lot of room to move when price increases occur. It can have a dramatic impact when you're on a low
income. So we think a 20 per cent buffer is a pretty important thing to do.

GILBERT:

So what sort of dollar amount are you talking in that sense?

TREASURER:

Well, all of that will be available when we finalise the package. We just think it's really
important to say to low-income households that there will be a 20 per cent buffer there just to
ensure that if it's a particularly cold winter and they use a bit more power than they normally do,
that they do have some room to move.

GILBERT:

But the more the compensation, the less the impact though in terms of the policy as a whole. Isn't
that fair to say? It's not going to change people's behaviour.

TREASURER:

Well I think people's behaviour does change because relative prices change. Some people have less
capacity to change their behaviour than others and that is generally true of people on lower
incomes, but if people can change their behaviour then of course they can save some of the
additional assistance. So it does change behaviour when relative prices change.

GILBERT:

The compensation though is a one-off. The tax, the way it's designed, and once it's an emissions
trading scheme it's going to be moving all over the place.

TREASURER:

Well, I know that's the scare campaign that Mr Abbott is running at the moment but the fact is we
are putting in additional assistance. That additional assistance will be ongoing. It will be
delivered in a variety of ways either by tax cuts or by changes in family assistance or by changes
in family assistance as well or some combination of all of those.

GILBERT:

So they will be flexible?

TREASURER:

Well, you'll have to see the final detail when it's published, but we understand that people will
need ongoing assistance and of course that will be provided.

GILBERT:

Okay. The tax cuts that Mr Abbott has offered without a carbon tax. It sounds quite appealing in
terms of the politics...

TREASURER:

Well, I don't think it does.

GILBERT:

You're offering the Treasury, but isn't offering the Treasury a political stunt in your own tent?

TREASURER:

I don't believe so. I'm going to write to Mr Abbott and Mr Hockey today offering the resources of
Treasury because you can't be fair dinkum about tax cuts unless you say how you're going to fund
them. Now we've already had a recent experience of Mr Hockey and Mr Abbott refusing to actually
detail how they are going to fund their promises, and of course during the election campaign they
refused to submit their costings to the Treasury. After the campaign we found out from the
Department of Treasury and Finance there was an $11 billion hole.

The fact is that you can't promise tax cuts unless you say how you are going to fund them. They'll
either be unfunded, in which case the Budget will be a sea of red ink, or if they're going to fund
them by spending cuts they'll need to tell us where they're going to be because last time they were
in health and they were in education particularly.

GILBERT:

Two last questions I want to ask you. Bob Brown says that it's going to be weeks before this deal
is done. It sounds like there are a few hurdles to overcome and that the June 30 target that you've
set for releasing the detail won't be honoured.

TREASURER:

I think we're getting there. The discussions are going well but they're complex. I'm pretty
confident and happy with the progress of those discussions but we'll just have to wait a little
while yet.

GILBERT:

Alright, and finally the Bank for International Settlements warning of another global financial
crisis because of the high levels of debt and low interest rates that many countries, particularly
in Europe, still have in place.

TREASURER:

There is no doubt that there are great challenges in Europe and there were great challenges in
Europe this time last year as well, and of course the US economy has been a little softer, but
fortunately we're in the right part of the world at the right time. The Asia Pacific is relatively
strong. Our economy is strong and of course we are quite resilient here and also in the region.

GILBERT:

So you're confident regardless, even if there is a second GFC that Australia...

TREASURER:

I don't like that sort of talk about a second GFC. Yes, there are challenges in Europe. Yes, the
economy is soft in the United States, but our region remains strong. There is strong growth and
there are strong fundamentals here. People can be confident they're in the best place in the world
here at the moment.

GILBERT:

Mr Swan, thanks for your time.

TREASURER:

Thank you.