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Transcript of interview with Hugh Riminton: Meet the Press, Network Ten: 1 May 2011: Budget 2011:



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TRANSCRIPT of

THE HON WAYNE SWAN MP Acting Prime Minister Treasurer

INTERVIEW WITH HUGH RIMINTON Meet The Press, Network Ten

1 May 2011

E&OE SUBJECTS: Budget 2011

RIMINTON: Treasurer Wayne Swan, good morning.

TREASURER: Good morning, Hugh.

RIMINTON: You have got the Budget coming, you have told us many times this would be a tough Budget, let's talk this morning about the winners? Who’s going to come out of this okay?

TREASURER: Well, the first thing we’ve got to do in the Budget is get it back in the black. The other thing we are going to do is get more Australians into work and we are going to spread the opportunities of the boom. What that requires is balanced economic management, strong economic management and what I can say about the Budget is that we will see the creation of an additional 500,000 jobs in the next couple of years, with an unemployment rate coming down to 4.5 per cent.

I make that point about jobs because that is absolutely fundamental to the peace of mind and the living standards of average Australian families. Secure employment is the first responsibility of a Federal Government, and that is the central emphasis of this Budget. Of course, in addition to that, we will continue to put in place all of the settings and policy changes required to ensure that Australians have access to adequate, affordable health and education.

RIMINTON: Are these real jobs, or is this a further casualisation of the workforce? If you’re going to bring the unemployment rate down that far, is it going to be, sort of one days' work a fortnight?

TREASURER: The thing I am most proud of as Treasurer is the job creation record of our economy in the past four years - something like 750,000 jobs created, 300,000 jobs in the past year alone, and 98% of those have been full-time. And now we are forecasting an additional 500,000 jobs in the next couple of years with an

unemployment rate of 4.5 per cent. A rate that is not equalled by just about any other developed economy -

RIMINTON: If you are creating jobs, how many jobs to make this tough Budget make the numbers work, how many jobs are you going to cut in the public sector?

TREASURER: Well, what we will put in place and the Finance Minister has already announced this, is the appropriate settings that will cover the growth of the public service in the years ahead. We are putting in place an efficiency dividend because savings will be required in this Budget across the board. And of course, they will be made of course in the public service. But we do not necessarily expect any forced job losses in the public sector.

RIMINTON: You are obviously determined to get back in the black; you’ve said that often enough, but how much is that ambition going to be hostage to the Greens in the Senate?

TREASURER: Well, what we have to do is get the economic settings right for the country and right for the economy and that is what we will be doing. We will need to make savings in this Budget, it is absolutely imperative. We have got short-term softness in the economy caused by natural disasters and a patchwork economy -

RIMINTON: Yes, but the question is about the Greens. You have got to get this through the Senate, and the Greens will have their own agenda and they will claim they have got their own mandate. So, how much is getting back into the black hostage to the Greens?

TREASURER: It is imperative first and foremost we come back into surplus in ’12-13 because the economy will then be growing very strongly then and there will be capacity pressures in the economy and there will be price pressures in the economy. So, we will need the support of the Greens to make savings to achieve the job security that flows from that just as we will need the support of the Opposition and Mr Abbott. You see, Mr Abbott slipped out quietly a couple of days ago and said he was not going to provide any additional savings in his Budget Reply. He is going to set about wrecking the surplus, and of course, wrecking the opportunity for Australia to have sustainable growth. That's not acceptable. The weight is not only on the Greens, but Mr Abbott to be responsible in response to this Budget.

RIMINTON: Shadow Treasurer Joe Hockey held a news conference this week to talk about inflation. Listen to this.

[Hockey grab]

RIMINTON: You get the feeling you're out of touch, Treasurer?

TREASURER: That comes from an Opposition spokesman who opposed the measures we took to support employment in the Australian economy during the global recession. They would’ve seen if they were in charge 200,000 plus people out of work, Australia would have gone into recession, and we would not be in a position of strength now to deal with the mining boom Mark II, if it hadn’t of been for the Government during that period. We proved we were in touch, and they proved they were out of touch.

RIMINTON: But if everything you say is absolutely dead true, the perception appears to be building, in focus groups and also in published polls from people like ‘Essential’ out this week, this government is divided that it is out of touch and will do anything to win votes. You are only breaking even on the ‘Essential’ poll on looking after the interests of working people - this is a Labor Government. What has gone so wrong in selling what your Government is trying to do, that people are just not going on a ride with you on this one?

TREASURER: I certainly do not accept that characterisation. We are absolutely in touch with the needs of working families and small business of this country. We have an outstanding record of retaining jobs and of creating jobs and of putting in place the economic settings that are required for future prosperity. An outstanding record. And an outstanding record too when it comes to dealing with the tough decisions that we must put in place if we are going to continue that prosperity, like pricing carbon, like putting in place the mining tax so we can fund tax cuts to small business and invest in infrastructure, so we can build the superannuation pool of working Australia. We have an outstanding record when it comes to jobs and looking after average Australian working families, who get up, take their kids to school, go to work, come home, cook the tea, get up the next day and do it again. They’re the people we are looking after.

RIMINTON: Let’s see how much you are looking after people on the minimum wage. The unions are seeking a $28 a week wage rise for people on the minimum wage from July. Are they asking too much?

TREASURER: We have made a submission to the wage case and we have said those who take this decision through Fair Work Australia must take into account the rise in living costs in recent times. That is a decision for the industrial umpire and we will abide by that decision.

RIMINTON: But you are not supporting, you are not endorsing, that claim for $28 a week, at a time of 3.3 per cent inflation. As you say, fruit and vegies is going up steeply, it is hurting people out there and you're not going to stand up to say ‘we back this claim for a $28 per week rise’?

TREASURER: We are not endorsing any claim which is being made by both the employers or the employees and the unions. We have never done that before. We actually have a fundamental commitment to an industrial umpire, something the Liberals and the National parties have never had and they set out to wreck the wages and working

conditions of Australian families. We have set out to rebuild fair and decent conditions for Australian working families through that process.

[advertisement break]

DODSON: Treasurer, you have talked about 500,000 jobs being created in the Budget. I presume this is through lifting workforce participation. Will employers get incentives to employ more people who might have trouble getting jobs ordinarily, like maybe older Australians?

TREASURER: Well Louise, we are looking at a range of initiatives to lift workforce participation. You see, with an unemployment rate coming down to 4.5 per cent we do not have a person to waste. And it is the case that there are parts of the country where unemployment levels are still unacceptably high. I was in Cairns, for example, over Easter and it has been very high there for some time because there are particular problems in their economy. But elsewhere in the country, there are pockets of disadvantaged areas, high unemployment. Elsewhere in the country there may be particular groups of people, maybe mature aged workers, who want to work more hours. There are a whole variety of groups who will have the capacity to put in a few more hours or perhaps take a full-time job if the appropriate levels of work experience or training are available. We are have a look at all of those issues, the performance of the job search network as well as a range of incentives and so on and other assistance which may be appropriate to lift workforce participation and get more people participating in the opportunities which will flow from mining book Mark II.

DODSON: Will employers get money for training or maybe incentives to employ older Australians, for instance?

TREASURER: Louise, we will be talking about all the initiatives we are putting forward on Budget night but you will be aware that we are working with Mr Compton, who has been a strong advocate for the mature age workforce in this country. He is

currently conducting a consultation across the Community as to how we can better to tap into the enormous experience and the enormous commitment of older Australians, not just in terms of the workforce but in other areas of activity in our community. But these are all things we are considering in a Budget context but also as we go through the year, having a broader consultation with older Australians about.

FARR: Treasurer, Australia did not go into recession when many of our major trading partners did, but we haven't recovered from the GFC yet completely. The stock market has not reached the levels of pre-GST. Some sectors cannot get credit, some

sectors of the economy find it very difficult to get credit. Consumers are still very skittish, they are paying off debt rather than buy things which is hurting the retail sector. And here you are very proudly ready to throw another wet blanket on the economy. Now, that doesn't make sense, does it?

TREASURER: Well, let me just take you through a few facts. The fact is we are still living with the after effects of a global recession and that means consumers are spending less and saving more. And it is also the case that the economy has short-term softness caused principally by the natural disasters that we have seen in Queensland, Victoria and elsewhere, as well as international uncertainty particularly flowing particularly from Japan. What we are going to see in the years ahead is a very strong investment pipeline. While we have short-term softness in the economy now, the Budget needs to come back into surplus in 2012-13, unemployment is continuing to go down, job-creation is strong and that investment pipeline is huge. And we can't the mistake the previous government made at a height of mining boom mark [one], which is go on and to continue to spend at an unsustainable rate. We have got to come back to surplus to make room for that mining boom so we douse the price pressures that come with the capacity constraints that come from that investment pipeline.

FARR: You say you are going to be tough this Budget and you will make tough decisions, but in fact the move you have made to increase the efficiency dividend on the public service to 1.5 per cent, that really means you want a public service to make the tough decisions doesn’t it? You are going to do a fair bit of spending in this Budget?

TREASURER: No, what we are going to do is put in place is a very responsible fiscal policy and the efficiency dividend is part of that, the public service will have to pay its fair share in that restraint. But there will be restraint that will be needed across the board, and that will be seen in the Budget on Budget night.

FARR: So you, the Government will be in a position to attach itself to significant spending cuts?

TREASURER: What we are saying is we do need to bring our Budget back to surplus in 2012-13, bringing it back to surplus then will still make us one of the best-performing advanced economies in the world. Very few other advanced economies have got the capacity to do that. But we have got to do it in a measured way over the forward estimates, and that is what we will be doing. We will be applying our fiscal rules, which have a 2 per cent expenditure cap, a commitment to bank upward revisions of revenue, all of those rules will be followed and the outcome of that is bringing the Budget back to surplus in 2012-13 and building surpluses after that. That will be really important if we are going to avoid some of the extreme price pressures which will come with this investment boom and that we are seeing in the mining sector.

DODSON: Treasurer, you are starting from quite a way behind. Are you confirming reports that the deficit for the present financial year will be around $50 billion, instead of $41 billion?

TREASURER: Louise, I won't be confirming any figure that will be done on Budget Night, but we saw the financial aggregates published on Friday which show that revenue is down this year by $6.5 billion so that certainly will hit out bottom line in this

year. There's a real softness in the economy at the moment, plus the impact of the Global Financial Crisis which still lingers. We have had to write down revenues for this year already by $30 billion directly related to the Global Financial Crisis. But this softness in revenue which now flows from the natural disasters and continuing uncertainty and the accumulated losses is $6.5 billion this year, and that will go on to the bottom line.

DODSON: And in terms of your strategy, because of this sort-of lumpiness, will you be deferring and redirecting funding rather than really cutting it, so we’ll see some more spending down the track when the economy improves?

TREASURER: Well Louise, we will be doing a variety of things in the Budget, they will be there for all to see on Budget Night but the most important thing is that we, in a methodical way, come back to surplus in ‘12-13, start to build surpluses after that because of the implications of the mining boom and the strength of that investment pipeline. That is absolutely imperative for working families that we achieve that surplus. We have got to do that in a methodical way.

RIMINTON: Treasurer Wayne Swan, we had better let you get back to your pencils and pencil sharpeners, nine days to go to the Budget. Thank you very much for your time this morning.

TREASURER: Thank you.

(Ends)