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Transcript of doorstop interview of the Shadow Treasurer: Parliament House, Canberra: 22 March 2005: Federal-state financial relations; household debt; Tony Abbott.

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Wayne Swan MP Federal Labor Shadow Treasurer



SUBJECT: Federal-state financial relations, household debt, Abbott

SWAN: Well, we’re going to hear a lot of Costellonomics in the next 24 hours. We’ll have the highest taxing Treasurer in our history out there pointing the finger of blame at the states. The Treasurer is going to say the states have got plenty of money - an extra $2 billion - since the GST came in. But his dirty little secret is that he has an additional $12 billion. It’s about time the Treasurer practiced what he preached. A couple of weeks ago he was saying to the states; spend more on infrastructure. Last week and today he’s saying to the states; cut taxes. When is the Treasurer going to take his own advice and either spend more on infrastructure or cut taxes. This is the Treasurer that sat by while the Prime Minister spent $66 billion during the last election campaign. We’ve got a Treasurer here who is playing the blame game, not getting down to the hard questions of getting economic policy right in his own backyard.

Journalist: What’s his motive for ... (inaudible) … into the states?

SWAN: Playing politics. He’s the highest taxing Treasurer in Australian history. He doesn’t want the Australian people to notice that he’s taking $12 billion more in the period he’s talking about than the states have received; $2 billion. He’s the highest taxing Treasurer in our history so he wants to put the finger at the states because he’s not actually engaged in some genuine reform. He went on a spending spree -$66 billion - he’s the $66 billion man. So now he’s trying to point the finger at the states, but he’s not prepared to take his own advice.

Journalist: (Inaudible.)

SWAN: Exactly, that’s the decision that they have to take. But Treasurer Costello is responsible for the Commonwealth, and he has rivers of gold flowing to the Commonwealth. When are we going to see from Treasurer Costello what he’s going to do in his own backyard and not have all this finger pointing and blame shifting that

the Treasurer is engaged in. He can sit down and negotiate with the states the future of their agreement and the states can then take decisions about their own budgets. But Treasurer Costello’s on about blame shifting. He doesn’t want people to look in Treasurer Costello’s backyard.

Journalist: Mr Swan, as a father and as a politician, do you have sympathy for Tony Abbott’s situation that he’s found himself in.

SWAN: Well of course, and I have sympathy for everyone that’s involved. It’s becoming more complex by the day.

Journalist: Is it a case, perhaps, for compulsory DNA testing for adopted children finding birth parents and birth parents finding children?

SWAN: Look, I’m not going to buy into that. I’m not an expert on that. I’m just a father, and I can understand the anguish that all involved have gone through.

Journalist: (Inaudible.)

SWAN: The RBA has again pointed to the very high levels of personal indebtedness in this community. And really that’s why small interest rate rises have such a very big impact on households. For example, if you’ve got a $300,000 loan, that’s about an extra $50 a month. We are swimming in debt, that’s why the RBA is very concerned with the levels of personal indebtedness in the society. They’re right to be concerned and they’re pointing rightly to some strengths and weaknesses in the system.

Journalist: (Inaudible.)

SWAN: Well, we absolutely need a healthy surplus, there’s no doubt about that. But why is there a problem? Because the Prime Minister and the Treasurer went on a $66 billion spending spree - putting upward pressure on inflation and upward pressure on interest rates - during the last election campaign. That’s the problem, and that’s why the Reserve Bank has now been backed into a corner by the Government on interest rates. So yes we do need a healthy surplus, there’s no doubt about that.

Journalist: Which elements of the $66 billion should we cut back?

SWAN: The Reserve Bank has pointed to areas where reform is required. They’ve pointed to the need for incentive in the tax system that rewards effort; they’ve pointed to the need for that. They’ve pointed to the need to solve our skills crisis. And they’ve pointed to the need to solve the infrastructure bottlenecks. We don’t necessarily need to be cutting, it just depends on how the Government decides to rearrange its own priorities. It’s entirely up to the Government. I’m not privy to their budget considerations or what their projections are. What we do know is that the reason there’s a problem, is because of their spending spree during the last election campaign.

Journalist: (Inaudible.)

SWAN: That’s up to the Government. It’s not up to me to nominate where we cut or where we don’t cut. The Government has all the projections. They’ve sat down with the Governor of the Reserve Bank, they’ve sat down with the Treasury officials. It’s not up to me to indicate where the Government ought to be going except to point out that we do need to solve our skills crisis, put downward pressure on interest rates.

We do need to do something, importantly, very quickly, on infrastructure bottlenecks to put downward pressure on inflation. And we need to put some incentive in the tax system. All of those things can take pressure off interest rates. It’s entirely up to the

Government to sort that out.

Journalist: What’s your view as Shadow Treasurer on the uranium policy?

SWAN: I’m not buying into it because I’m not the spokesman for minerals and energy.

Journalist: But it’s an important export industry.

SWAN: It is. But today we’re dealing with federal-state financial relations and today we’ve got a Treasurer running around trying to avoid the fact that he’s got a dirty little secret of $12 billion extra in revenue compared to the states $2 billion extra in revenue. That’s what I’m concentrating on today. I’ll deal with that another day.

Journalist: Would you like to see the states cut their land taxes?

SWAN: It’s entirely up to the states. The states have additional revenue, they also have priorities. The Treasurer’s been out there, on the one hand saying states should spend more on infrastructure, then this week he’s saying they should be cutting taxes. He’s out there walking both sides of the street. Why doesn’t he actually apply the same logic to his own budget? But he’s walking both sides of the street.


Tuesday 22 March Contact Jim Chalmers 0417 141 676