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Prime Minister says low consumer savings are not a great problem; Shadow Treasurer says low household savings rates are caused by the GST.



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Simon Crean - ABC Radio, AM - Household Savings, GST http://www.alp.org.au//media/0601/scivamsm070601.html Friday, 08 June 2001

Simon Crean - Shadow Treasurer

Interview with Shane McLeod

Subjects: Household Savings, GST

Transcript - ABC Radio, AM - 7 June 2001

E & OE - PROOF ONLY

MCLEOD: Well Simon Crean, John Howard says you have to look at aggregate savings. Does he have a point?

CREAN: John Howard in 1995 said household savings were "not a bad indicator, you know this is the money that people have got left over after they've put bread on the sideboard and the table, and food on the table. That's what they've got left over." If in 1995 it was appropriate to measure household savings as an indicator of how families are fairing, then they're performing disastrously at the moment. When Labor left office, households were saving at the rate of $5 in every $100. Today it's 70 cents. People are having to go into debt to survive the impact of this GST.

MCLEOD: The Prime Minister's response would be though, that in 1995 there was a far higher level of national debt.

CREAN: What we've not only got is household savings being run down, we've got national savings being run down. This is a Government that in the last six months has deteriorated the cumulative surpluses by 90% in a buying spree to try and shore up their own base and in a buying spree to justify the GST. But it's not only run down household savings, they've run down national savings and they've got no plan to lift national savings. We've been calling for the Government to actually join with us in a bipartisan way in a strategy to lift savings. This is a Government that's run downs its own savings and it's a Government that's now forced households to go into heavier debt. And why? Because of the GST.

MCLEOD: Aren't you looking for the black cloud here though? Because the overall picture is things not looking too bad. 1.1% growth in GDP.

CREAN: 1.1% in one quarter. How many times have you heard the Government say you just can't look at one quarter? Do you realise that despite that quarter this is the slowest annual growth that Australia has

had in 9 years? Now one would expect - and we welcome the figures yesterday, you'd welcome figures that come off two previous dreadful quarters. The fact remains that since the GST has come in the growth rate in the economy has been 0.9%. The budget itself shows the GST has halved the growth rate of the economy. The GST has mugged the economy and forced families into debt and John Howard this morning wants you to believe that salad days are here now. He says that it's all behind us. Well tell that to the manufacturers of the country who have just had three negative quarters of growth. Tell it to the businesses of the country who are struggling under a mountain of paperwork. Tell it to the families who have been forced into debt and tell it to the unemployed who have got no prospects of improved job opportunity in the next year. And the budget says, that unemployment is going to rise.

MCLEOD: The Treasurer said yesterday that if, I think actually it was the Prime Minister who said, if the GST has mugged the economy, then wouldn't you expect to see an impact in the services sector where there's been actually a big jump in economic growth. You're in a sector there that had no indirect taxes before which now has a 10% GST. Wouldn't you expect to see a sign there if it is mugging the economy?

CREAN: And don't you think that if people are forced to pay 10% more to the Government that growth should happen in it? I mean a sector that had no tax in it and people having to pay 10% additional on everything, you'd expect it to grow wouldn't you? I mean this is a Government that's deluding itself. It's a Government that wants to wish away the GST. It wants to pretend it's not even their tax and it wants to claim credit for growth in the services sector, when all it's doing is taxing it. But have a look at the manufacturing sector. Have a look at exports. Exports have only grown 0.5%, this quarter despite a record low dollar and despite the argument that the Government says the taxes have been lifted off exports. And where's the contribution in the future in investment? Investment is still very sluggish. And this is a Government that has got a growth in this quarter, essentially out of consumption and people going into debt and out of their own big Government spending. It's the wrong balance in growth and we need to get back to a more sustainable growth path. But the GST has mugged the economy. It's halved the growth rate and nothing the Prime Minister says can get away from that fact.

MCLEOD: Simon Crean we'll have to leave it there. Thanks for your time.

CREAN: My Pleasure.

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

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