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Transcript of doorstop interview: 1 February 2009: Tax cuts; budget deficit; economic management...



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Sun, 1st February 2009

TURNBULL DOORSTOP - TAX CUTS, BUDGET DEFICIT, ECONOMIC MANAGEMENT... The Hon Malcolm Turnbull MP Leader of the Opposition

E&OE

MALCOLM TURNBULL:

Well we’ve had a day of confusion from the Government. The Prime Minister doesn’t seem to know whether he’s an economic conservative or a reborn socialist or perhaps he was never an economic conservative at all.

And as for the Treasurer, a few days ago he was castigating us for suggesting that tax cuts would play an important role in any fiscal stimulus. He said that was out of the question and today he’s proposing that tax cuts should be part of the stimulus. Well, all we can say is: will the real Kevin Rudd please stand up? What is it - economic conservative or reborn socialist?

And as for Mr Swan he better decide what’s in his fiscal stimulus. We believe that tax cuts will play an important role in giving Australians the stimulus, the incentive to invest, to hire, to keep employees on the payroll.

QUESTION:

So I assume you’d be pretty pleased about these proposed tax cuts then?

MALCOLM TURNBULL:

Well we’ll see what they are. We have proposed some tax breaks ourselves of course in the last week which will have a very direct impact on employment, promoting employment and promoting investment - these are the tax breaks we proposed to encourage people to invest in energy efficiency measures and water efficiency measures in buildings. That’s a very good example of a well targeted tax break.

QUESTION:

Should the focus be on the business tax cuts?

MALCOLM TURNBULL:

I think you’ve got to look at the most effective tax cuts, the best targeted ones and tax breaks, tax concessions, right across the board. Clearly there’s got to be a business element in it, but obviously households - and every business ultimately is owned by families - and families need to be part of that tax break policy.

QUESTION:

Will tax cuts have an immediate effect or a long term effect in stimulating the

economy?

MALCOLM TURNBULL:

Tax cuts provide a permanent increase in income and the one thing that we’ve learned, and Mr Rudd should have learned, is that one-off handouts do not provide an effective fiscal stimulus because in uncertain times if you give somebody a pile of cash, they are more likely to save it or use it to reduce debt. That was the experience in the United States in the middle of last year - all of the numbers are in on that; there’s no doubt about that - and the early signs are that’s what happened to the cash splash in December.

The people that received the money appreciated it - and I have no doubt the vast majority used it wisely - but was it an effective economic policy to stimulate economic activity? And this is really the key - Mr Rudd has to ensure that every dollar of tax payers’ money that he spends is effective and well targeted to get the result and to pursue those three key goals for 2009, which are jobs, jobs, jobs.

QUESTION:

(Inaudible) with tax cuts for individuals, just for pensioners and low wage earners, what would your response be to that?

MALCOLM TURNBULL:

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I’m sorry, I couldn’t hear that question….

QUESTION:

...tax cuts for pensioners and low wage earners. If the Government went ahead with such a plan for such a (inaudible) your response?

MALCOLM TURNBULL:

Well we will look at the proposal. Tax cuts that effect lower and middle income earners are particularly effective because they improve the incentives, they add to the incentives for people to work, and that is what we need, and add to the incentives of course for small businesses to employ people and keep them on the payroll.

QUESTION:

The Government has said a temporary deficit might be the necessary medicine for the nation. Do you agree?

MALCOLM TURNBULL:

There’s no doubt that we are seeing great pressure on revenues at the moment but the Government has said that it plans to run a deficit. What they have to do - and they say its temporary deficit - what they should do is explain how they propose to make sure it is temporary. What we need to see is not a leave pass, a blank cheque to Mr Rudd to run as big a deficit as he likes. He’s going to have to make very tough decisions, very careful decisions and make sure that every dollar he spends is well targeted and cost effective - that is the key.

We know that the cash splash before December was not effective as an economic stimulus. We know his plan to put $30 billion of your taxes at risk to prop up commercial property values for the benefit of the big four banks is equally not a wise decision. That is a bad policy and he should abandon it. And we know that his unlimited guarantee on bank deposits did a great deal of harm.

So Mr Rudd has made a number of big errors in responding to the financial challenges we face. We need now to see Mr Rudd carefully assess every new step along the way and make sure that it is cost effective and well targeted - that he gets the best and the biggest bang for the tax payers’ buck.

QUESTION:

So running a budget deficit at this time, what’s you opinion, is it a good move given the current economic circumstances?

MALCOLM TURNBULL:

The critical thing is the quality of the spending. I get back to that point. You just think about it, it’s no different to a household, to a family or to a business. Every dollar that is spent by the Government, every dollar of revenue that is forgone through tax breaks or tax cuts must be well targeted - jobs, jobs, jobs.

That’s the ruler we’ll be running over every element of Government policy. Is it going to promote employment? Is it going to be effective to deliver on those three priorities for 2009 - jobs, jobs, jobs.

Thanks very much.

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