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Budget 1997: comments by Shadow Treasurer.

JOHN HIGHFIELD: The Opposition has already declared the test of this Budget will be jobs. We're joined now in the Budget 97 studio by Shadow Treasurer, Gareth Evans; to speak with him, Fran Kelly.

FRAN KELLY: Gareth Evans, is that 8 per cent unemployment forecast believable, achievable?

GARETH EVANS: Well, the forecast 8.25 for this year has turned out at 8.75, and the truth of the matter is that unless we get growth up over 4 per cent, and sustained at over 4 per cent, you're just not going to be able to make significant reductions. You can support that by a whole variety of other things government can do - spending money on regional programs, industry support programs, labour market programs to replace the savagery of last year. But none of that is in this year's budget. So we'll be very lucky indeed to even get down to as high as 8 per cent.

FRAN KELLY: There is some regional infrastructure program spending, isn't there? There's the Federation foundation. Isn't that what ....

GARETH EVANS: Well, the Federation slush fund is due to come into play in 18 months time. That will probably be a job creation program for Coalition MPs, I think, rather than other people in the community, because there's every indication that that's going to be a very nice little slush fund indeed to spread around key marginal seats, or also to spend simply on infrastructure projects like the museum which the Government should be spending money on anyway.

There's only a handful of construction jobs involved in that. What we need is obviously hundreds of thousands of jobs, and we're not going to get them with this complacent, directionless budget.

FRAN KELLY: Well, growth at 3.75 per cent, the combination of that level with the industrial relations reforms the Government's brought in, if they can keep low inflation, if they can boost the level of national savings, couldn't that particular combination get things moving and the jobs coming?

GARETH EVANS: Well, I genuinely don't believe it will. There's no evidence that anyone believes, apart from a few Government Ministers with their rhetoric, that the industrial relations measures by themselves will create the kind of flexibility that will generate jobs on the American scale by clearing the labour market at poverty wages. If it does have that result, the social consequences are so appalling I don't thing we should be contemplating that as sensible policy anyway.

The truth of the matter is you can only generate jobs in this country if you have a high level of growth, a high level of locking in effectively to external demand through good trade policy - which is again thrown out the window in this Budget - if you've got the kind of industry support and regional development programs systematically being applied to translate that demand into job opportunities in specific locations, specific industries, and if you've got the education and training and job-readiness programs in place and the job creation programs for others in more difficulty that will actually ensure that you've got the skill base and the jobs there to mop up the degree of unemployment that there is.

Now, none of that is missing. This Government has failed on all those counts. Costello mentions the word 'unemployment' once in his televised speech.

FRAN KELLY: It's not a nasty budget though, is it? There's only $300,000-odd in new cuts for next year, negligible compared to last time. Even Robert FitzGerald from ACOSS has just said there's some good measures in it for the disadvantaged. This is a saleable budget, isn't it?

GARETH EVANS: There's some very nasty measures in it for families and particularly the needy - the pharmaceutical benefits scheme, the new drugs tax is going to make drugs much more expensive not only for pensioners but for ordinary households.

FRAN KELLY: In the short term. Over the long term that could have a benefit, couldn't it?

GARETH EVANS: You can't take $700 million out of a pharmaceutical benefits scheme without hurting people, and that's what that's going to do. On top of the money that was taken out last year, you've again got another $300 million out of childcare, which is going to mean less places and much less affordability for many people. You've got public housing having $400 million taken out of that over the next four years, which has got all sorts of implications for new houses and deterioration in maintenance. You've got new funding for the disabled and aged care, but much less than was necessary to compensate for the slashes in funding last year.

It's very bad on that set of family measures, as well as on jobs and as well as on savings.

FRAN KELLY: You criticised the savings measure, but people will get 15 per cent tax break on their interest that they don't get now. I mean, that's a benefit, isn't it?

GARETH EVANS: Yes, but you can only get advantage of up to $450, when this is fully in place, if you've got an investment of about $60,000. Not many Australians can afford that. And can I just make one other point. You can get $450 if you make $3,000 worth of superannuation contributions, but Mr Costello and I will get the $450 because we do that, but our cleaners of our offices are only paying at most $1,000 and they only get $150 back in the rebate.

If our tax contribution, the co-contribution had been in place, for every $1,000 paid in superannuation contributions by individuals there'd be $1,000, not $150, coming back.

FRAN KELLY: But at least your superannuation strategy ... in the policy that was there under Labor it was a superannuation benefit that would go to workers. Under this measure it's a tax interest saving for everybody, anybody who has those levels of savings. I mean, it's fairer, isn't it?

GARETH EVANS: It's a trivial saving for non-workers. It won't be an incentive for anybody to do anything very much. The crucial need is that workers have retirement incomes a few years down the track, that they will be able to live comfortably on. And what's happened by the breach of this co-contribution promise is that workers now on average weekly earnings, in their mid-30s, will lose $110,000 in a retirement income package which they would otherwise have had.

FRAN KELLY: But retirees will benefit from this.

GARETH EVANS: Well, only trivially, and only if they've got a sufficient amount invested to get an income rebate of up to $450, which is not going to make a breathtaking difference. The Government is saving $3,700 million over the next four years of money that would otherwise be going into your and my pockets, ordinary workers.

FRAN KELLY: Isn't the problem for you, the Opposition though, that this Budget turns around in the life of one parliamentary term, a three-year term, a budget deficit left by you in government of $10 billion or more into a $1.6 billion surplus. Now, that's an achievement that you couldn't get close to.

GARETH EVANS: Balances and surpluses only mean anything if they have some objective at the end of the day. This is not a budget for accountants, this is not government for accountants, it's supposed to be government for people. And the crucial need in the Australian economy at the moment is to get nearly 9 per cent of Australians back to work. There is nothing in this budget which addresses that. It's the most shapeless, directionless, complacent budget I've seen in 20 years in this Parliament. It's absolutely non-responsive to the central economic need of the country, and it ought to stand condemned for that reason.

FRAN KELLY: Gareth Evans, thank you.

JOHN HIGHFIELD: And the Shadow Treasurer there, Gareth Evans, with our chief political correspondent, Fran Kelly.