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Finance Minister discusses the forthcoming Government Budget, the Opposition's credibility and tax reform.

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HAMISH ROBERTSON:  Next week’s Federal budget promises to be a steady as she goes budget, with leaked details in today’s Financial Review newspaper revealing no major new spending splurges, other than those for aged and health care, and a range of increased taxes and levies on business.  Increases in expenditure on Medicare, chemist, offices and World Heritage management, for example, will be matched by a further crackdown on so-called dole cheats and welfare payments to New Zealanders in Australia.


In the meantime, Finance Minister, John Fahey has condemned Shadow Treasurer, Gareth Evans’ statement at the weekend that the only promises the Labor Party was firmly committed to funding so far, should it win government, are money for aged care and some specific promises made by Cheryl Kernot.


Well, the Finance Minister joins us on the line now, and he’s speaking to a chief political correspondent, Matt Peacock.


MATT PEACOCK:   Minister, can we still expect a $2.5 billion surplus, as forecast in next week’s budget?


JOHN FAHEY: There will be a surplus and that will be revealed by the Treasurer next week in the budget.


MATT PEACOCK:   But the Treasurer also says it will be much harder to comply with the forecasts because of Asia.


JOHN FAHEY: It’s been a very difficult period, and we’ve worked through the process but we’ve been determined to ensure that we maintain fiscal responsibility and that we do produce a surplus.  That is important for Australia at this point in time.


MATT PEACOCK:   Are you disappointed about the impact that the Asian crisis has had?


JOHN FAHEY: We’ve always acknowledged since the mid-year review and through the last several months that there will be an impact on Australia from the Asian crisis.  That is being assessed and the details of our current assessment will be revealed by the Treasurer next week.


MATT PEACOCK:   The Financial Review describes it as a nickel and dime budget now, with new taxes for business - for example aviation, communications industry and a crackdown on welfare cheats.  Is that the kind of budget that you were hoping for?


JOHN FAHEY: The Financial Review seems to have got hold of some working papers.  There are thousands ….


MATT PEACOCK:   Quite recent, though, Minister.


JOHN FAHEY: There are thousands of those documents floating around Canberra.  I note that they say 6 April;  I can say that there was a lot of work done in the final weeks leading up past 6 April in putting the budget to bed.


MATT PEACOCK:   So you’re denying the details in this leak?


JOHN FAHEY: Look, the details will be revealed in the budget.  All other documents are simply speculation.  There is no point in dealing with anything that has been suggested as being part of the budget at this stage, giving it any veracity whatsoever.  As I say, it was 6 April;  a lot of work was done various aspects, most aspects of the budget after that date.


MATT PEACOCK:   You’ve been critical of the Opposition for saying that it’s not going to sign off on a lot off on a lot of the policies that its abdicated in Shadow Cabinet until they know the final details of how much money there is.  Now, surely that’s simply a responsible attitude by an Opposition if they don’t want to spend money that’s not there.


JOHN FAHEY: Well, the issue with the Opposition is who can you believe?  We’ve had the Leader of the Opposition himself talking about reforming indirect business taxes to link them to export performance;  we’ve had Martin Ferguson making promises on training programs, Simon Crean on R&D syndication, and yesterday Gareth Evans said:  look, the only thing that we will do is what Shadow Cabinet approves.  So they have no credibility;  they do have a record ….


MATT PEACOCK:   He said they’ll do it once they know how much money is there, hasn’t he?


JOHN FAHEY: They are making promises depending upon the audience.  They’ve been doing that for a long, long time.  Now the question of credibility arises.  The credibility of Labor in the past is to run up debt.  We saw $70 billion of debt run up by Labor and it’s a question of will the public believe them?  Why should they?  They’ve been irresponsible in their record in the past.


MATT PEACOCK:   But Minister, I thought you’d fixed all this with the new charter of budget honesty?  Doesn’t that compel them to cost their promises?


JOHN FAHEY: The charter of budget honesty will compel Treasury and Finance to release accurate details during the campaign.  That is something which will allow the Australian people to know exactly what the position is with regard to the budget and what the promises of either side will be.


MATT PEACOCK:   So doesn’t that obviate the problem of uncosted promises?


JOHN FAHEY: Again, the issue is why run round Australia speaking to various audiences, trying to soothe them, making promises, when it’s quite clear that they really don’t know what they propose to do.  There’s no truth in any of the statements that spokespeople for the Opposition are making.


MATT PEACOCK:   At the weekend business appears to have given up its united front on a goods and services tax.  Does that concern you?


JOHN FAHEY: The tax package will released for the Australian people to make a decision.  The simple fact is - and business and every other section of the community recognise - that the current system is not serving Australia properly.  We need reform.  That reform will be put to the Australian people for them to decide before the next election.


MATT PEACOCK:   But does that include, for example, the Full Monty, a tax on all services, as the Shadow Treasurer would have it?


JOHN FAHEY: Well again, the tax package will be released by the Treasurer at an appropriate time to allow the Australian people an opportunity to see what the changes will be, and I can assure you those changes will be based upon equity, fairness.  They will be based upon incentive to invest and they will address the system that is currently in a state of disrepair.


MATT PEACOCK:   But it will be harder, will it not, to engineer now that business no longer has a united front?


JOHN FAHEY: Well, I don’t believe that is the fact.  Business has constantly been telling us that we need change.  Business recognises that the current system is not any incentive for them to invest, to expand their businesses to create employment.  That is what is motivating the Government to change the system, to bring about reform, to bring those ingredients back into our system because that’s in our nation interest.


MATT PEACOCK:   Minister, thanks for joining AM.


HAMISH ROBERTSON: Finance Minister, John Fahey, speaking in Canberra to Matt Peacock.