Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Transcript of press conference: Parliament House, Canberra, ACT: 24 May 2016: Bill Shorten's budget black hole



Download PDFDownload PDF

24 May 2016

TRANSCRIPT OF THE HON. SCOTT MORRISON MP, TREASURER AND SENATOR THE HON. MATHIAS CORMANN, MINISTER FOR FINANCE, JOINT PRESS CONFERENCE, PARLIAMENT HOUSE, CANBERRA

Subject: Bill Shorten’s budget black hole.

E&OE………………………………………………………………………………………………………………………………………

TREASURER:

The Australian people have every right to know where the money is coming from and what a close analysis of the Opposition’s figures show is that there is a $67 billion black hole in Labor’s spending and Budget commitments that show that Labor simply can’t pay for the promises they are making to the Australian people at this election. It is the same old Labor. We’ve seen it all before. We saw it before 2007. They were elected, they turned a $20 billion surplus into a $54 billion deficit in just two years - in just two years they did that. They took a $44 billion positive balance sheet, money in the bank, and they turned that into a net debt of more than $200 billion over their time in Government.

The Australian people have seen how Labor spends this money. Now, what matters is the future and what is going to happen in the future. The only reason I make mention of that is to simply say there is form here when it comes to how Labor manages finances in Government. We in Government have been dealing with the way that they deal with the finances over their six years in Government in what we have been seeking to do over the last two and a half years.

Labor is making promises to spend money that simply isn’t there which will mean they will either fail to deliver on the commitments they are making or they will just impose even higher taxes on the Australian people over and above what they are already telling people before the election. They will just simply increase the debt and they will increase the deficit as we have seen them do on so many other occasions in the past. As every day passes in this election Bill Shorten is digging an even deeper hole as he makes even further commitments adding to the ‘spend-o-meter’ that he ridicules that the Australian people understand is necessary to understand just how much of their money he wants to spend.

Over the next four years and the chart sets it out here, over the next four years using consistent methodologies that are used in the Budget, Labor have identified $16 billion in

Budget improvements, $16 billion, which comprises $14 billion in higher taxes and $2 billion in savings measures. So, more than seven times what they're raising in taxes over what they're doing in spending. Those higher taxes, that $14 billion, that includes them not proceeding with the tax cuts for small and medium sized businesses over the next four years, it includes their houses tax changes on negative gearing and capital gains tax, it also includes their other measure on superannuation and multinational some of which are similar to what the Government proposes.

None of these additional taxes are being used to reduce the deficit. All of these additional taxes are being used to chase higher and higher levels of public spending. The problem for Labor is that these measures don't even make up for all the Budget improvement measures that they have been blocking or they have said they will oppose. What that means is it takes us to the next line. There are $18 billion in blocked measures in the Budget and before the Parliament and in measures that Labor says that they will oppose. Before Labor can spend a cent on any new commitments out of that $16 billion in Budget measures that they have identified, they have to make up for the $18 billion in measures they have either blocked in the Senate or they have said they will oppose because all of those measures are included in the Budget and the forward estimates. If you don't want to proceed with those, as Labor says they don't, then you have got to make them up and that means before Labor even starts they are down $18 billion which means they are down $2 billion in net terms before they have made one commitment in this election.

I note that the $18 billion figure referred to here, in measures that are unlegislated and that Labor either are opposing or said they will oppose, that measure is referred to in the PEFO document identified by Treasury and the Finance Ministry just last week. In addition to obviously the $18 billion they need to catch up on there are now some $30 billion in the cost of Labor promises so far. Now, that includes more than $8 billion in measures they've announced so far in this election, but it goes back over the measures that they've already publicly announced over the last 18 months or so when they've been out there spending money, making commitments to either spend money or not proceed with other measures that the Government has put in place. So, that's an extra $30 billion that you add to the $2 billion.

Now, on top of that, there is some $35 billion in measures that the Government have been successful in taking through the parliament which the Labor Party opposed and they have run around the country leading people to believe that they will reverse those measures. Now, there are measures in there that Labor may choose to dispute. If that's the case, well they should come out and say that they no longer oppose those measures and they won't be reversing them if they are elected to Government. When you put all these measures together you get to $67 billion in a black hole or a higher deficit over the Budget and forward estimates over what's currently presented in those documents. Now, over ten years which is a number

that the Labor Party likes to talk about, that extrapolates out to almost $200 billion and that's before Bill Shorten has spent any more money which I'm sure he will spend between now and the election.

But the key issue here is this; of all the additional tax revenue that they have identified, it's already all spent, it's all spent on the measures they are already opposing and that they have to make up for if they're not choosing to proceed with those measures. He doesn't get to spend the money twice or three times or four times as he's proposing to do. He only gets to spend it once and he has to spend it on the other measures which he says he doesn't want to proceed with and the cost of that is $18 billion.

Going forward, as I've said all along, as long as Bill Shorten's lips are moving he's spending more money and that means he has to tax you more because the taxes he's already identified can't keep up with the spending commitments he's already made. That's no way to drive jobs and growth in an economy, it’s no way to manage the finances of the nation, that's just the same old Labor. It's what Australians are used to. By contrast we have a strong plan for jobs and growth for a transitioning economy that will ensure that people can rely on the job that they have and they can look forward to the jobs that their children will have because we have a strong national plan for jobs and growth that is supporting those outcomes.

I'll ask Mathias to make a few comments and then we're happy to take questions.

FINANCE MINISTER:

Thank you Treasurer. Bill Shorten and the Labor Party are making unfunded spending promise after unfunded spending promise. An unfunded promise before an election cannot be delivered after the election, or it will lead to higher taxes or higher debt and deficits which will hurt jobs and growth and take the country backwards. Bill Shorten thinks that all of this is a bit of fun and in a very flippant and cavalier manner says that he's going to put it on to his ‘spend-o-meter’, but any additional unfunded spending commitments that Bill Shorten puts onto his ‘spend-o-meter’ will ultimately lead to higher taxes or higher debt and deficits which will hurt jobs and growth. There is actually an alternative approach. There is a different approach if you look at the way the Coalition approached these matters from Opposition. We started with the same Budget position as Labor when we went into the last election. That is because in our last Budget reply address in the Parliament before the election, we adopted all of the savings and revenue measures that the Government put forward, even if we didn’t like them. We started from the same Budget bottom line position that was reflected in the Pre-Election Economic and Fiscal Outlook where, as the Treasurer is saying, Labor is starting $18 billion behind because of the measures that they have opposed in the Parliament, or they've said they would oppose, measures that we are proposing to legislate if we're successful at this election.

The Coalition has a plan for jobs and growth. The Coalition has a plan to ensure that the Budget is on a sustainable foundation for the future, where funding, increased funding for health and education and roads, is paid for by savings in other parts of the Budget. Labor has no plan for the economy - they just have a plan for higher taxes and more spending which hurts jobs and growth.

TREASURER:

So, just the key numbers again; $16 billion is what they've identified to pay for things. They have got to spend that money on $18 billion in measures they're opposing, they have got to spend it on an additional $30 billion in new commitments that they're proposing and they've got to spend it on an additional $35 billion on top of that on measures that they have led the Australian people to believe that they will reverse which gets us to $67 billion. Now, I'll be debating Chris Bowen on Friday. I'm happy for him to take issue with any one of those three figures there, the $18 billion, the $30 billion or $35 billion. We've outlined in this document in some detail with every single line item that we put into those figures identified with public commitments made by a Shadow Minister or their leader.

So, it's all in there. He can run through them. If there's something that he no longer wants to continue with, if there's a savings measure he wants to support or there is a spending measure he wants to crab walk away from he can set it out between now and Friday and then we can have a fair dinkum debate about what they're really spending.

QUESTION:

On the $35 billion Labor says the Government must restore, $19 billion of that according to a sheet put out by Mr Cormann is foreign aid cuts. Tanya Plibersek announced on the weekend the foreign aid policy which is $800 million over the forward estimates. Aren’t you out already by $18.4 billion on that number? Did you not check what they announced on the weekend?

TREASURER:

I’ll let Mathias comment on that but at the same time Labor have not walked away from what they say is their commitment to a 0.5 per cent of GNI commitment on foreign aid. Now, if Labor are walking away from their 0.5 per cent commitment of Gross National Income on foreign aid, well, they should say so and if they haven't done that then I assume they’re still committed to it. Labor can’t have it both ways and remember they're also talking about

commitments over ten years on those issues as well. Mathias might want to comment further.

FINANCE MINISTER:

Labor is fudging the numbers on foreign aid and that is quite deliberate, because Labor is in a contest with the Greens in this election. We all know that. Labor wants the Green constituency to think that they will not proceed with the Government's savings on foreign aid while at the same time not having to account on their Budget bottom line for an expense item of just under $20 billion. The statements that have been made... interrupted

QUESTION:

So are they lying? Was Tanya Plibersek lying on the weekend when she... interrupted

FINANCE MINISTER:

If I may, firstly the statement that Tanya Plibersek has made in the past very clearly is that Labor, a re-elected Labor Government would not proceed with our foreign aid cuts, as she described them. That represents a cost of just under $20 billion over the forward estimates, the 16-17 forward estimates. The other day Tanya Plibersek made some announcements about some additional spending. That did not in any way contradict her previous statements. Just because you make an announcement in relation to one part of a policy area doesn't mean that you have walked away from all of the commitments that you have made in the past. Just because you make an announcement in relation to a specific item in the health budget doesn't mean that all of a sudden you no longer are committed to any of the other funding commitments you have made in the health budget. Labor can clarify this as the Treasurer is saying. We're quite happy for Labor to come out and say very clearly that they support our efforts to put foreign aid funding on a more sustainable and more affordable trajectory and foundation for the future. We have ensured that foreign aid funding is affordable, is realistic, is sustainable, is effective. We're committed to effective foreign aid funding. But Labor has criticised us every single day about these things and Tanya Plibersek has made firm commitments in relation to foreign aid funding in the past. She can come out and very clearly state that she no longer is committed to what she said when she asserts that Labor would go back to foreign aid funding of 0.5 percent of Gross National Income without putting a timetable on it in her statements. The timetable she has put on it in the past is that she would not proceed with our cuts. Well, if between now and Friday when the Treasurer and the Shadow Treasurer are debating, Labor wants to clarify this point, we would welcome that.

TREASURER:

Before we even get to that $35 billion they are already $32 billion dollars in the hole. They've already spent all the money that Bill Shorten says they can spend on not going ahead with the

tax cuts for small and medium sized business, he's spent it all before we even get talking about what Tanya Plibersek is saying on foreign aid.

QUESTION:

Could I clarify this particular point? A5, revised higher education reforms is $3.27 billion and in C10 is Labor's fairer plan for universities which is $2.5 billion. Is that a double counting of the same thing?

FINANCE MINISTER:

No, it's not. Because one reflects the measure that is our policy in the Budget and the other reflects Labor commitments that go over and above that. So the numbers are netted out appropriately, based on what our policy commitment is as reflected in the Budget and what Labor has said since then. The sources are all there, they're all reflected.

QUESTION:

The other numbers you have got, for example the tax measures, have you measured out in your costings things that you've taken up?

TREASURER:

Yes we have.

QUESTION:

So that is your estimate of what they would additionally get if they introduced the tobacco excise, for example, as opposed to you introducing the tobacco excise?

TREASURER:

They are netted out, but obviously we've used the accurate figures.

FINANCE MINISTER:

Essentially what is reflected here is where the policy position of the Labor Party is different from the policy position of the Government. The policy position in relation to the tobacco excise measure is the same, except that we have an accurate costing whereas Labor had a $20 billion Budget black hole.

QUESTION:

And who’s done the 10 year figures?

FINANCE MINISTER:

All the costings that are reflected in the Budget were done, as appropriately, by Treasury and Finance as you as you would expect them to be done.

QUESTION:

You’ve put in the 10 year costs as well as the four year costs.

TREASURER:

This just relates to four year figures.

FINANCE MINISTER:

I can explain that to you. The Government in various Budgets and Budget updates has made decisions to improve the Budget bottom line. During the earlier part of this year we asked Finance to provide us a medium term assessment of the positive impact on the Budget bottom line from the savings measures that we have put forward in the Budget. Many of them have been legislated and implemented, some of them haven't. That has enabled us to provide an accurate assessment of the medium term impact of those Budget improvement measures that have been put forward by the Government, but have not been legislated so far because Labor is opposing them.

TREASURER:

The point about that is again, before Labor even starts, they have to come up with $18 billion, as was confirmed in PEFO, before they can spend a cent of what they are raising in taxes on these other commitments. So when Bill Shorten goes around and says ‘I'm using the not going ahead with company tax cuts to pay for this.’ Well he’s already spent it. The money is already gone. You've done it Bill, it's done. You don't get to spend it twice.

QUESTION:

Treasurer, in your Budget and in PEFO there is $2 billion worth of savings in 2019-20 that have not been announced. You have just said Labor must fess up to what they are doing. What are you doing that would deliver a $2 billion saving in the forward estimates?

FINANCE MINISTER:

It's not true to say that there are savings that have not been announced. A feature of the Pre- Election Economic and Fiscal Outlook is that everything that is in the ‘decisions taken but not yet announced’ line is released. That is all reflected in the Pre Election... interrupted

QUESTION:

But in the Budget there is the ‘decisions taken not announced’, there is about $1.5 in spend out to 18-19 and then there is $2 billion save in 19-20. What is it?

FINANCE MINISTER:

Essentially what is reflected in the Budget bottom line is the net effect of decisions that have been taken in the past versus decisions that have been taken this time around. These are the numbers and in the Pre-Election Economic and Fiscal Outlook, as is always the case, unless it is something that is national security sensitive, these measures are published and they are published in this Pre-Election Economic and Fiscal Outlook.

QUESTION:

So you haven’t got a saving coming that you haven’t announced?

FINANCE MINISTER:

No we don’t.

TREASURER:

It's a netting out of previous measures that were in previous statements.

QUESTION:

Treasurer, did you in your discussions with Greg Paramor... interrupted

TREASURER:

Before we move to other issues, why don't we stay on the matters of today's press conference. But I'm happy to cover that later James.

QUESTION:

Why is it that your list of unlegislated measures includes the Family Tax Benefit changes, but I don't think includes the childcare package that they are intended to finance?

TREASURER:

First of all, they are opposing the changes to Family Tax Benefits. They are not opposing the Jobs for Families package. The Jobs for Families package is included in the Budget and it’s funded in the Budget. It has been put back a year and the reason we have had to put it back a year is because Labor are not supporting the revenue measures, the savings measures I should say, that are designed to fund that change.

QUESTION:

But you don't have that spending listed amongst your unlegislated measures.

TREASURER:

It's in the Budget, so what we're saying here is it is $67 billion over and above what is in the Budget. The Jobs for Families package is in the Budget as an expense item. Labor have never said anything to oppose the Jobs for Families package. I know that having been the former Minister in that area, they have always supported the changes we want to make to childcare. What they have never supported is actually paying for them, which is actually the point here. Labor won't support savings measures that help you pay for important investments in these areas, whether it's in schools, whether it’s in hospitals, indeed whether it’s in child care. So Labor do not support that change. But that means to fund their commitments they have got to come up with an equivalent saving, or other revenue measures that can pay for that. In our Budget we haven't paid for additional spending with higher taxes. What we’ve done, is ensured that the revenue measures we have in our Budget are designed to lower taxes in other areas. I think everybody appreciates that from the discussions we had around the Budget. And where we have made savings, that has freed up the space for a one third increase in public school education around the country for example. Or the increase of $2.9 billion for health. These things are funded for by savings. Where Labor doesn't support those savings, they have to make up for them and that's what that $18 billion there is.

QUESTION:

Does the $18 billion include the backpacker tax?

TREASURER:

What we have done, well yes it does in terms of the loss of revenue that the Labor party have now committed to, because they have said they are going to abolish the whole thing. All we have done is we've deferred its implementation to January of next year and in the meantime, we are conducting a further policy exercise through an interdepartmental group which is working across that issue. If and when our further measures are introduced to alter that arrangement, then that would be reflected in any changes that were taken in MYEFO later in the year. So, yes it does include that because Joel Fitzgibbon said he was abolishing it.

QUESTION:

The size of the yawning black chasm seems to have actually diminished a little bit in the last couple of days. The figures you put out on Sunday showed that item B was $37.72 billion and now it seems to be 35?

TREASURER:

This is the point. Where they change something, where they actually fess up to something and decide that something is a commitment or they walk away from something, then the figures will change. But I tell you what won’t change, that $18 billion is not going to change because they remain opposed to all of those measures. And that $18 billion there means that Bill Shorten has spent all the taxes that he's announced that he's going to raise. The other measures here, I suspect, and I hope frankly by Friday if Chris Bowen wants to clarify what's in this basket here of $35 billion some of it may go into the $30 billion as a new commitment. Some of it may go off the agenda all together, because they decide no, no we're not going to go ahead with it.

QUESTION:

Yes but you've taken almost $3 billion off spending and I’m just wondering what that might be?

TREASURER:

Some has gone into here and some has actually gone out.

QUESTION:

And can I just clarify also what the Coalition's position is? I thought your position on foreign aid was still to eventually go to a half per cent commitment?

TREASURER:

Our position is set out in the Budget. That’s what our figures are and that’s what we’re committed to.

QUESTION:

Which is? What’s the commitment in the budget?

FINANCE MINISTER:

The numbers are reflected in the Budget. The commitment is as is reflected in the Budget.

TREASURER:

We've committed to the four years of funding. That's what we've committed to.

QUESTION:

But your criticism of Labor is that they've made a four year commitment and they’re still committed to half a per cent of GNI. So have you committed to half a percent of GNI?

TREASURER:

They committed, Tanya Plibersek committed to reverse the changes that we were making.

QUESTION:

Not on Saturday.

TREASURER:

She’s made one comment about one year. One comment about one year, she renounced the changes to the UNHCR funding of some $450 million…

QUESTION:

Are you saying you’re not committed to half a percent of GNI?

TREASURER:

I'm happy for them to clarify it Phil.

QUESTION:

Didn’t they?

TREASURER:

No I don't think they did Phil. Chris can come out and explain it happily. Then we can make the adjustment. Again Phil, you're missing the key point. Even before we get to that debate which people are keen to have, you seem to be ignoring the fact that there's $32 billion they're down the hole for before we even get to talking about foreign aid.

QUESTION:

Can I ask about the $32 billion they’re down the hole for. The update you put out last week Senator Cormann, they were about $18 billion down the hole for, table C, you had $17.8 billion. Since then they've announced Medicare and the PBS, where’s the other $10 billion?

TREASURER:

There’s also revenue measures to take into account and those have been combined in that figure of 30. Previously they were set out over four different items.

FINANCE MINISTER:

The whole list is there. The whole detail is there.

QUESTION:

It’s gone up by about $10 billion in a week.

TREASURER:

No it hasn't gone up by $10 billion. There were four items that were listed there before and two of those items have been combined because that $30 billion includes things like, as the question was before about the changes to the backpacker tax, that was previously listed separately as a revenue measure and the other items were listed as spending measures. So

we've combined the spending and revenue measures together and that's what the $30 billion is.

QUESTION:

It is still unclear if the Government is committed to half a percent of GNI in foreign aid. Is that a commitment of the Government or not?

TREASURER:

The Government hasn't walked away from the long-term commitment on those issues. But the trajectory of our spending over the next four years is exactly as we've set it out. If Labor does not want to reverse the changes that Tanya Plibersek previously said she wanted to reverse, then she simply needs to say so.

QUESTION:

So you are committed to 0.5 per cent of GNI but is that in... interrupted

TREASURER:

At the moment the progression towards that timetable has to be affordable and what we believe is affordable is where we set it out in the Budget. We’re not proposing any additional increases above and beyond that.

QUESTION:

Treasurer, given the review of the backpacker tax, is there any room for a review of any aspect of your superannuation proposals? Particularly the $500,000 cap?

TREASURER:

These are the measures we put forward in the Budget. There'll be the normal legislative process if we’re re-elected to go through, to bring those measures into being. We are not proposing any reviews of the nature that we have on the backpacker issue. But the legislation will follow its normal course.

QUESTION:

But you reviewed the backpacker tax after public reaction. Are you leaving room for public reaction on superannuation?

TREASURER:

We have no proposals along the lines you’re suggesting.

QUESTION:

Back on the foreign aid stuff. Labor’s release on Saturday said over the next four years Labor will provide around $800 million more for overseas aid than the Liberals. Where do you get $19.2 from?

FINANCE MINISTER:

A very explicit statement that Tanya Plibersek made which was, and I go back to the page... interrupted

QUESTION:

But this was their policy announcement on the weekend.

FINANCE MINISTER:

She didn't rule out her previous commitments. This is what she is saying now she'll spend so far. We haven't come to the end of the election. She's previously said, and I refer you back to her public statement, when she was asked what would Labor do if re-elected next year in relation to the foreign aid funding, ‘well we certainly wouldn't continue with the aid cuts that are scheduled by this Government’. Now what she said on the weekend was very vague. Labor is deliberately being very vague. Because they want to continue to keep the impression out there that they will restore the funding that we removed, because they are competing with the Greens and they do not want to be seen to be doing less than the Greens when it comes to foreign aid funding that we removed because they are competing with the Greens and they do not want to be seen to be doing less than the Greens when it comes to foreign aid funding.

TREASURER:

Again, these figures here, of the $30 billion that's hard promises that have been made, commitments that have been made either to pursue or not pursue revenue measures, commitments on expenditure, that’s all there. The $18 billion is what they've opposed and blocked. The $35 billion Mathias and I are quite open about the fact is up for discussion and we would like the Labor party to clarify what's in that $35 billion. Because you don't get to run around the country and say that you didn't like the changes that were made in social

services for example, on the pension changes of last year and pretend to everybody you're going to change them and then not. There are significant measures that are in here that they have criticised, that they have opposed and we’re simply posing the question; tell us, how many of those no longer stand. If you're walking away from it, or you going to support the expenditure, or are you going to support the savings that are being made, well say so. We can the deal with $35 billion straight away. But you know what the net outcome of that is - a $32 billion black hole. The point that we've made today remains, Bill Shorten has spent every cent of every tax increase that he's announced. Every cent and every cent of every tax change that he says he won't proceed with. He has no money to spend on any of the commitments that he’s made in this election campaign and indeed before them.

QUESTION:

Treasurer, just to be clear, that $35 billion, that’s where you are guessing that Labor will spend money, not what they’ve committed to spend?

TREASURER

No, read the document. These are specific commitments and statements that have been made by Labor shadow ministers and their leader talking about their opposition to those measures. We are simply saying, clarify those comments.

QUESTION:

So there may be a black hole in your black hole then?

TREASURER:

No, not at all. These are measures that Labor have said they oppose. Until they say they support them, it's for Labor to clarify. The worst case scenario is $67 billion. Best case scenario is a $32 billion black hole. Either way Australians will pay more for what Labor is claiming at this election. They'll pay it more in higher taxes than what Labor will admit to. They'll pay more in terms of higher deficits and higher debt. We have seen this all before from Labor. I think the Australian people understand that. They took a $20 billion surplus and turned it into a $54 billion deficit in just two years. That is extraordinary. Australians know that before an election Labor say ‘it will be all right, we're really good with money’ and then they know what happens after that. And they are asking the question Bill, where is the money coming from? Well at least $32 billion and as much as $67 billion they are well behind.

QUESTION:

On Greg Paramor if I may.

TREASURER:

Sure.

QUESTION:

Are you expecting still to receive a report from him in the next week?

TREASURER:

I would have no idea.

QUESTION:

Why do these emails that I've obtained say that?

TREASURER:

I don't know. You would have to talk to the people that sent them to you. I don't know.

QUESTION:

Treasurer, just on the backpacker tax, a number of your backbenchers are under the impression that this review will result in it being completely scrapped. Are you booking $500 million in extra revenue that will not eventuate?

TREASURER:

I'm not prejudging those outcomes. The measure is being deferred to the 1st of January and there is a proper policy process that will precede that. The outcomes of that process will be factored into subsequent estimates. If there are offsets that are then required to deal with any changes made then offsets would have to be made. The way we do Budgets is if you want

to spend more, then you've got to make savings first, before you spend money. If there is to be a reduction in revenue in one area, then you need to deal with those revenue offsets in other areas. That's why in this Budget we did not spend more than we saved. In this Budget,

the additional revenue we raised, we put back into lowering the tax burden on Australians. Labor is going to impose $100 billion and more in higher taxes on Australians. What we have told you today says that will just be the start. We're only in week three of the campaign and

Bill is up to $30 billion. And that's with $30 billion he doesn't even have in the first place. That ‘spend-o-meter’ will keep ticking away Bill. You can make fun of it, you can ridicule it, you can ignore it, but every time your lips move Bill, we know you're spending more and the Australian people know that you can't afford it.

Thanks very much.

[ends]