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Budget 1997: views of the Leader of the Australian Democrats.

JOHN HIGHFIELD: We're joined now by the Leader of the Australian Democrats, Cheryl Kernot; to speak with her, Catherine Job.

CATHERINE JOB: Well, Senator Kernot, as the Treasurer says, from a $10 billion deficit to an underlying surplus in just one Parliament. That's got to be a good thing, hasn't it?

CHERYL KERNOT: Well, it's a pretty clever thing, but don't forget how we paid for it. This is the proceeds from the biggest asset sales in Australia's history - $10 billion in one year's worth - let's not forget that, and the dumped L-A-W tax cuts.

CATHERINE JOB: Nothing more than that?

CHERYL KERNOT: No, nothing more than that. And it's good luck. It's cyclical and good luck more than good management. But I don't want to say that it's not all negative. There are quite a few small good things in there.

CATHERINE JOB: Well, with the balance of power in the Senate having shifted back to the Democrats, and Senator Mal Colston has declared the Government's lost his vote, you're back in the key role you once were. What can you see in this budget that you'd have trouble with in the Senate?

CHERYL KERNOT: The design of the savings packages. I mean, the Treasurer led us to believe that this was to get ordinary Australians saving. Now, to get the full benefit, if you're going to save through superannuation, you have to be saving about $58 a week - that's 10 per cent of the income of a worker on average wage of $30,000. Now, what Australian families can afford that? To get the full benefit, if you decide to save through the bank, you need to have about $60,000 squirrelled away in an account. And 43 per cent of Australians earning below $35,000 now have no savings at all. I mean, where's the incentive here for ordinary Australians to save. It's too tilted towards high-income earners.

I understood that was not the purpose of the savings vehicle. I think they should have stuck to their election platform which had a means-tested package. It was means tested above $35,000. All this means is that the rich get the opportunity to switch savings, not necessarily create more savings.

CATHERINE JOB: Are they going to do that for a grand total of, say, $450 for $60,000 worth of savings?

CHERYL KERNOT: You never know, do you?

CATHERINE JOB: Every little bit counts, eh?

CHERYL KERNOT: You never know what they're getting elsewhere.

CATHERINE JOB: Just the same, you say what incentive is there for low-income people. Psychologically - the Treasurer says this is the first ever tax break on savings - psychologically isn't that a good message to people no matter what their income?

CHERYL KERNOT: Good message, but don't you want to actually raise national savings at the end of it? And we still believe that one of the best ways to raise national savings is to reduce unemployment, because for every one per cent that you can reduce unemployment you can add $1.5 billion to the national savings. That's worth doing.

CATHERINE JOB: Well, the Treasurer says if we pay off Government debt now as he's planning to do we can achieve a faster rate of sustainable growth, and that means real jobs.

CHERYL KERNOT: Well look, we've had 24 consecutive quarters of growth. It hasn't done the job with creating employment. I'm not prepared to rely on that. I think that they should have brought their Federation fund forward. They could have had an infrastructure stimulus here, should have started it next year.

CATHERINE JOB: Do you see a political circuit breaker in this budget that the Prime Minister was looking for to clear through the fog of Wik and Pauline Hanson? Is there something in this for the disaffected regions of Australia?

CHERYL KERNOT: I think they totally overstate what they said they're going to deliver to regions, although there could be more to come in the unspecified detail about what's going to happen with their Natural Heritage Fund. It may be not the political circuit breaker that they hope, because I think it's going to be another one-day wonder and we'll be back looking at Wik and other matters, you know, by the end this week.

CATHERINE JOB: Senator Kernot, thanks for your time.

CHERYL KERNOT: Thank you.

JOHN HIGHFIELD: And there it was, the Leader of the Australian Democrats, Senator Cheryl Kernot, with Catherine Job.