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Budget 2000: Opposition Leader discusses the surplus, taxes and public debt.



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Kim Beazley - Interview with Julie Flynn, John Stanley and Bruce Jacques Subject: Budget 2000

Transcript - Radio 2UE, Sydney - 9 May 2000

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JOURNALIST: Kim Beazley, not a lot here that would have surprised you?

BEAZLEY: Well, it's not an election Budget, I suppose, when you take a look at it. What it means is these things for Australian people: higher taxes, higher prices, higher interest rates. That's basically what the Budget means.

There were a couple of surprises in it for us on the higher taxes front. Within a year income tax cuts, or the reduced revenue from income tax cuts is all back there again. And two years out, you're effectively paying - the average Australian taxpayer - on these figures, an extra $600 a year in income taxes. So, that is, effectively, income tax cuts gone in one to two years but the GST rocking on nicely with a spike in inflation from the GST of 6¾ per cent, and, through the year, of 5¾ per cent. That's the GST inflationary impact. When have we heard those figures from the Government who always talks about a 1.9 per cent effect?

And in terms of perhaps reducing pressure for increased interest rates, I think you've probably been sitting down going through how bogus the actual surplus really is. And they've basically done three shifts, three fiddles; they've effectively borrowed from the year after by turning part of the States' top-up money for their GST compensation into a loan. They've borrowed from the year past by getting the Reserve Bank to push back some of its payment of its dividend and then they've got the spectrum that the gentleman was talking about when I came in, at 2.6, which is almost the whole 2.8 anyway.

If you actually added all those things together you would come out with a minus 2 figure. But that's lost opportunity. That's what that is. What's happened is every cent they saved, and Costello was at it again today, blaming us for an $8 billion so-called black hole, but every cent they saved to fill that hole they've spent on the GST - every cent - and then some. And what that's meant is that the old French tax, the GST, has become the enemy of the new Australia. Not a cent, effectively, for education in this. Not a cent, effectively - new money - for infrastructure in this. Not a cent in new communications policy in this. Now, basically, the new Australia, the new economy, gets short shrift in this particular exercise. This whole tax business has ended up being an exercise in sending us backwards.

JOURNALIST: Mr Beazley, you, then, would have preferred a deficit Budget at this time?

BEAZLEY: No, look, they're stuck with the consequences of what they've done with the money they cut. They went and savaged universities. They went and savaged R&D expenditure in business. They went and savaged savings and people's superannuation arrangements. They went and savaged, you know, family support and support for the elderly in those $8 billion cuts. Those $8 billion aren't there any more. If you were spending, if you were looking at what you would do with $8 billion if you decided you'd take

$8 billion of the surplus, which is what they've effectively done, and spent it, you'd want to see a bit of a balance of tax cuts, perhaps a bit more on savings and something there for education and something there for investment in our future. But there's none of it.

JOURNALIST: The Treasurer said today that they have, in fact, paid off another $9 billion worth of debt this year, they've reduced Labor's $80 billion debt by $50 billion, unemployment is going to come down to 6¼ per cent and the Commonwealth debt to GDP ratio is down to 7 per cent, one of the lowest in the Western world. Isn't that a good track record?

BEAZLEY: Where were we, do you know, when Labor left office in terms of our relationship to the rest of the world on public debt? Do you know?

JOURNALIST: Not off the top of my head. No.

BEAZLEY: We were the fourth lowest. We have gone from being the fourth lowest to the second lowest. And in the process of going from the fourth lowest to the second lowest, we've slashed education spending, in particular, and incentives for investment by business, in particular, we've slashed all that and we've handed out the product of that slashing in GST compo. We have gone, in terms of percentage of GDP, we continue our unique status, if you want to do comparisons with the rest of the world, we continue our unique status as the only industrialised country spending less on education. We've gone down from 2.2 per cent of GDP to 1.8 per cent and we continue to soldier on to the bottom.

JOURNALIST: OK. Can I ask you, then, just in relation to what you've seen here tonight, and you've only had a couple of hours looking at this, how much flexibility does this give you, as a Government, to roll back parts of the GST?

BEAZLEY: Well, it depends whether you believe the outyear figures in relation to the surpluses that they're talking about. The surplus next year isn't substantial. The surplus the year after that is quite substantial. But you'd have to say this, and this is why we're being so cautious, two years ago, three years ago, Costello was talking about a surplus this year of $11 billion. In old-fashioned terms of determining what surpluses are. If you took that old fashioned term, instead of it being $11 billion, it's a deficit of $2 billion. So, I have to be very wary of the figures that are there for two years out. But I've said it before, and I'll say it again, there'll be no doubt about our commitment to roll back, nor will there be any doubt about our commitment to a new economy and new economy investment, like education. But the pace of it, the pace at which we do this, will be determined by our budgetary circumstances. We're not going to blow the bank.

JOURNALIST: Can you do both?

BEAZLEY: Well, as I said, the pace of it….well, you know, you can always pace your starter. That's no problem. And, as I said, we will be responsible about the way we handle that.

JOURNALIST: All right, Mr Beazley. We'll leave it there.

Ends

Authorised by Geoff Walsh, 19 National Circuit, Barton ACT 2600.