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Transcript of interview with Fran Kelly: ABC Radio National: 21 August 2012: two years since 2010 election; Newspoll; Slater and Gordon; Nauru and Manus Island; tax reform

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THE HON WAYNE SWAN MP Deputy Prime Minister Treasurer


21 August 2012


SUBJECTS: Two years since 2010 election, Newspoll, Slater and Gordon, Nauru and Manus Island, tax reform

KELLY: The Treasurer and Deputy Prime Minister, Wayne Swan is in our Parliament House studios. Treasurer, good morning. Welcome to Breakfast.

TREASURER: Good morning Fran. It’s great to be with you.

KELLY: Wayne Swan, two years on from the last election and what does Labor have to show for it? A primary vote of 35 points, which is a better result for Labor. But a long way from winning the next election. Why haven’t you impressed the voters?

TREASURER: Well I think first of all an enormous amount has been achieved. Our economy is the stand out developed economy in the world. What we’ve got is strong growth, we’ve got low unemployment, we’ve got a huge investment pipeline, we’ve got lower interest rates, we’ve got contained inflation.

On top of all of that some very, very big reforms for the future which will strengthen the resilience of our economy. We’ve got carbon pricing, we’ve got some very substantial reforms when it comes to the tripling of the tax-free threshold.

But also look at social policy. Last year a very big mental health package, aged care reform, and of course two very big reforms coming in terms of disability and education.

That’s an enormous amount to have achieved particularly in the circumstances of minority government.

I’m very proud of the record of the Government of the past couple of years.

KELLY: And you can make that pitch to voters but it seems as though they’re not giving you the marks for it. I mean here you are on a primary vote now of 35 per cent and that’s hailed as a good result for Labor. That’s three and a half per cent nearly below what you managed to get at the last election and that was only enough to deliver a hung Parliament.

TREASURER: Well Fran, the big reforms in Australian politics are always hard fought and that’s been the case particularly with carbon pricing.

All of the lies that Tony Abbott has told about carbon pricing have now been disproved since 1 July. The world hasn't ended, the sky hasn't fallen in.

And the fact is that we’ve put in place a very significant reform which is going to build the resilience of our economy and protect our environment for generations to come. I for one couldn't look my children or grandchildren in the eye in 10 or 20 years’ time if I turned around and said we weren’t game to put in place these very big reforms because there were bad opinion polls around.

KELLY: This Newspoll also shows that the Prime Minister’s popularity hasn't lifted and that’s already been disturbing some Labor MPs. Caucus will meet this morning. Some backbenchers are getting uneasy about the Slater and Gordon affair which continues to dog the Prime Minister and there’s new information on that again this morning - a statement by Peter Gordon, who was a principal partner at the firm when the Prime Minister was working there. Does this now require a response from the Prime Minister?

TREASURER: Well Fran let’s just pull some of that apart. Let’s just start with the opinion polls. The opinion polls go up, they go down. I don't focus on opinion polls and neither does the Prime Minister. What we focus on is performance.

I’ve just run through what I think is a pretty impressive set of outcomes for Australia and when it comes to our economy as I said before that’s an effort that all Australians have contributed to and that hasn't been easy given the difficult global environment, but that’s a pretty important achievement.

And at the end of the day when we get to the next election Australians will see a leader in our Prime Minister who is one of the most determined and committed leaders the Labor Party’s ever had.

What she has demonstrated, not just through carbon pricing but also through the big social reforms, is how committed she is not just at creating prosperity but to spreading

opportunity and making sure that all Australians get the best start in life and are able to achieve by getting access to important policies or policy reforms which give them the chance to improve their life.

That’s what these reforms are about. You don't do those sorts of reforms in six months or 12 months, they take a term of Parliament. And we’ve been working our way through these reforms and we’ve been putting them in place.

When we go to the people at the next election there’ll be a very clear distinction between our program of creating prosperity and spreading opportunity and the slash and burn approach of Tony Abbott who yesterday demonstrated yet again his determination to take the axe to public school funding. I think they’ll be a very clear contrast, not just in terms of policies but in terms of values.

KELLY: Isn’t it the problem for the Prime Minister and for the Labor Party, that while she wants to talk about policy issues now, the big reforms as you say; school funding, National Disability Insurance Scheme, electricity prices. Again this issue of the Slater and Gordon affair is rearing up to cloud that out. Peter Gordon’s statement confirms tension between Julia Gillard and her colleagues at the firm over the alleged corruption by then partner Bruce Wilson. If I can quote from that statement ‘proper vigilance had not been observed and Julia Gillard’s duties of utmost good faith to her partners, especially as to timely closure had not been met. The partnership considered terminating Ms Gillard, it’s fair to say Ms Gillard also developed considerable antipathy towards the other partners, and made that unhappiness clear. It was clear the relationship had broken down irretrievably’. Now importantly he also stressed he, Peter Gordon, didn't believe it was likely or in character for Julia Gillard to have knowingly participated in the alleged fraud of her client. There was no sufficient basis to dismiss Julia Gillard for misconduct.

TREASURER: Fran, you’ve just concluded the quote from Peter Gordon.

KELLY: I thought that was important.

TREASURER: Well I think it’s important too because you ran through a whole lot of muck-racking before that has been thrown around by the Liberal Party.

KELLY: Treasurer, to be fair it’s not muck-racking. This is a quote in the newspaper today from a statement from Peter Gordon who was the Senior Principal Partner at Slater and Gordon at the time.

TREASURER: And you said at the end that he accepted the explanation. So end of story Fran. That’s the whole point. The fact is that the Liberal Party in particular has associated itself with an enormous amount of muck-racking, much of it on the internet and some of it on the airwaves and that muck-racking has no justification in fact and has been used to mount a political campaign against the Prime Minister and the Government

for the purposes of the Liberal Party. That’s what much of this is about. That statement today from Peter Gordon should be the end of the matter.

KELLY: The Prime Minister’s in no pressure in your view to make any kind of public comment on it?

TREASURER: Fran, I don't know whether your listeners have had a look around the internet for example and seen some of the sick material that has been circulated and then regurgitated through the airwaves, particularly by some people on radio.

This is a very determined campaign of mudslinging against the Prime Minister with which the Liberal Party has associated itself. I believe Australians see right through that campaign.

KELLY: Treasurer, Immigration Minister, Chris Bowen told us last week that Nauru will cost $2 billion over four years, Manus Island $900 million. These are operating costs, then there’s the costs of getting the facilities ready. Almost $3 billion of the forward estimates, money spent even if the boats don't stop coming. How do you pay for that?

TREASURER: These matters will be dealt with in the normal way through our mid-year budget update. The initial team went to Nauru and Manus over the past week and we’ll be sitting down looking at the recommendations they’re making and doing our costings appropriately. We have a very good record of putting in place our budget priorities within a strict fiscal framework.

KELLY: How are you going to commit to the Gonski spending - that’s $3 billion. The NDIS - that’s $8 billion. The Nauru spending, and still come in within budget without pushing the budget into the red or putting up taxes?

TREASURER: Fran, we have demonstrated over a long period of time our capacity to make savings in the budget. Thirty-odd billion dollars’ worth of savings in the last budget, $100 billion worth of savings in the budget before that. We will make room for our priorities within the budget and within the context of bringing this budget back to surplus on time as promised.

KELLY: Last week the head of Treasury, your Department, Martin Parkinson said the days of big budget surpluses are over. Quote ‘we will not be able to meet demands for new spending by increasing the efficiency and effectiveness of existing government spending alone. Nor can we rely solely on our existing tax bases. What will be required to meet the demands for new spending will be more revenue or significant savings in other areas.’ Will the Government’s only option be to raise taxes?

TREASURER: I’ve been making similar points to the head of Treasury. I’ve just made a similar point to you in my comments that we will need to make very substantial savings.

The Government has done that in the past and we will do it again in the future. Because we’re very serious about fiscal discipline in contrast to our political opponents who have a $70 billion crater in their budget bottom line.

Will they make any further commitments? Mr Abbott will be out there as we go to the next election trying to hide the fact that he’s got this $70 billion crater. We had his Finance Spokesman at Hayman Island the weekend before last tell the business community they weren’t going to make the mistake of ‘Fightback’ and outline their detailed cuts prior to the election.

But what you’ll see from us is how we’re going to fund our programs within our fiscal framework. On the other side of politics, who admitted on breakfast television, Mr Hockey, that he has a $70 billion crater, they’re the one with the very big budget challenge and there should be as much scrutiny on what they’re doing as there is on what the Government is doing.

KELLY: In terms of advice to the Government, your current Treasury head and your past Treasury head, Ken Henry. He now says you need to tax us more. He said yesterday the current tax system won’t be able to fund the infrastructure needs forecast by 2050 and we face a budget crisis unless we address the shrinking tax base

TREASURER: That’s why we’ve put in place the MRRT. There’s been an enormous amount of debate about the Resource Rent Taxes, we’ve done it.

KELLY: There’s questions if that will bring in the money its forecast to?

TREASURER: Fran we put it in place. Secondly, we’ve tripled the tax-free threshold. Plus we’ve made a whole raft of tax reforms which will enhance labour force participation. So tax reform has been happening, it’s been happening through some very substantial initiatives the Government has taken and we’ll continue to do that as we move


KELLY: Treasurer, thanks very much for joining us on Breakfast.

TREASURER: Good to be with you Fran.