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Transcript of joint press conference: Parliament House, Canberra: 2 September 2010: Election policy costings; Parliamentary Budget Office; negotiations with independents.



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LEADER OF THE OPPOSITION THE HON. TONY ABBOTT MHR FEDERAL MEMBER FOR WARRINGAH

2 September 2010

TRANSCRIPT OF THE HON. TONY ABBOTT MHR JOINT PRESS CONFERENCE WITH THE HON. JOE HOCKEY MHR, SHADOW TREASURER THE HON. ANDREW ROBB MHR, SHADOW MINISTER FOR FINANCE & DEBT

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PARLIAMENT HOUSE, CANBERRA

Subjects: Election policy costings; Parliamentary Budget Office; negotiations with independents.

E&OE……………………….………………………………………………………………………………..

TONY ABBOTT:

Thanks everyone for being here. Obviously, there is a discussion going on about costings and the bottom line of that discussion is that the Coalition will deliver substantially larger surpluses than the Labor Party. That is the bottom line of this discussion. We can and will deliver substantially larger surpluses than the Labor Party. The Treasury has confirmed that we can do this. The Treasury accepts that there are decisions that can be made in government that will give a much bigger surplus to the Coalition than to Labor. So that is the bottom line.

Certainly, there is absolutely nothing in any of the to-ing and fro-ing over the last 12 hours or so that compromises our ability to continue to engage in good faith discussions with the independents about forming a stable and competent government for the next three years and the bottom line is that there are two competing economic records here that are fundamental to these discussions. There’s the Labor Party’s record of waste and mismanagement, exemplified by the pink batts tragedy and the school hall rip-offs. There’s the Labor Party’s record of debt and deficit, exemplified by their turning a $20 billion surplus into a $57 billion deficit in just two years, exemplified by their turning $60 billion worth of net assets into $90 billion worth of net debts in five years, versus our record of responsible economic management and of paying off debt. So that’s enough from me. I’m now going to ask Joe to say a few words and then over to questions.

JOE HOCKEY:

Thanks very much, Tony. This debate is about the size of the surplus funds available over the next four years. All of our policies are properly costed and accounted for. In fact, Treasury said in the note that I understand you now have, that the vast majority of our policies were ticked off. We submitted more than 300 policies, totalling in excess of $90 billion. So, the number of policies is nearly three times what Labor submitted and that is because we have an agenda for the next three years. Labor’s agenda is limited to the last Budget.

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From our perspective, there are decisions that we are have a difference of opinion with Treasury about. Even Treasury concedes that as an incoming government, a number of those areas could be addressed and in fact, it’s close to around $5 billion of the difference of opinion, relies on us actually getting into government and our policies were framed as if we were in government. The most obvious example of that is the contingency reserve and in 2009/10 Budget papers, the Government adjusted the contingency reserve. We did the same, the view of the Treasury was that if you’re in government you could do it, but because you’re not in government, you can’t do it. Well, quite obviously, that is a significant difference of opinion.

From our perspective, we emphatically stand behind our numbers. We emphatically stand behind the fact that we will deliver surpluses in excess of Labor of $11.5 billion over four years and obviously, on coming into government, we’d set about doing that immediately.

QUESTION:

There is nothing in these documents that actually substantiates those opening remarks that you’ve made, Mr Abbott, or your assertion of a $7 billion better figure than Labor. I mean, the Treasury documents say, that they don’t say that Treasury accepts that your figures are better. It doesn’t accept that the Budget bottom line is better and I can’t work out where you’re getting this $7 billion better figure from. They’re saying you’re at least $7 billion worse off.

TONY ABBOTT:

But Laura, the point I make, this is not an argument about deficits, this is an argument about surpluses. That’s the point I’m making and our bottom line will be substantially stronger, even on Treasury’s worst case scenario than it will be under Labor.

QUESTION:

(Inaudible) …out by a billion dollars. Less than what PEFO has and that’s excluding the change on your, the investment funds, if you even take that out, if you include those, you’re worse off.

JOE HOCKEY:

Over the four years, as you can see...

QUESTION:

(Inaudible) …the surplus in 12/13, 13/14, you’re only in two years of surpluses.

JOE HOCKEY:

Over the four years we are, on the worst scenario, $863 million ahead of the total PEFO numbers for the four years. $863 million. As I understand, Labor was just over $100 million.

QUESTION:

Isn’t the lesson here that if you’re going to go your own way, do your own costings and not stick to an agreed process that applies to both parties, you’re going to have these discrepancies and these arguments and shouldn’t the same process apply to both to avoid this and you’re saying, Treasury says you can make these decisions in government on the conservative bias and stuff and pump another five billion in, what’s to stop Labor saying, ok, we’ll make the same decision now, pump in this by five years?

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ANDREW ROBB:

They did it last year.

QUESTION:

My point is though, why don’t you both agree to stick to the same process.

ANDREW ROBB:

Well, we did.

TONY ABBOTT:

Phil, one of the reasons why we need a Parliamentary Budget Office is to try to ensure that these sorts of arguments don’t happen in the future and the interesting thing is we committed to a Parliamentary Budget Office a long time ago. Malcolm Turnbull first made the commitment to his great credit in his Budget reply of 2009. I recommitted us to a Parliamentary Budget Office in my speech to CEDA a couple of weeks before the election campaign was called and I have to say that the caretaker Prime Minister is very much a latecomer to this particular cause, but it is very important that we have a Parliamentary Budget Office that means that these sorts of issues are avoided in the future.

QUESTION:

Would you stick to the protocol, would you insist both parties have to be costed in the same way by this, as they used to be by Treasury or would you be free to go your own way again if you didn’t agree with it?

TONY ABBOTT:

I think that if both parties have access to the same kind of resources, well then both parties should be costed and judged on the same kinds of basis.

QUESTION:

Wasn’t that the whole argument that was running in 1996 about the Charter of Budget Honesty by the Coalition?

ANDREW ROBB:

That’s very true, Michelle. The Charter of Budget Honesty really grew out of the fact that when we took over in 1996 there was a $10 billion deficit which the community nor ourselves were aware of during the campaign. So, the motivation for the Charter of Budget Honesty was to ensure that any government, if during a campaign there was a set of numbers about the state of the economy. In addition to that we offered through the Charter of Budget Honesty the opportunity, not mandated, the opportunity for oppositions to have their policies costed by Treasury. So, it’s never been mandated, it’s to save money for the Opposition and we did submit 52 policies which amounted to $30 billion worth of programmes, a third of our programmes, until such time as someone committed a criminal act and leaked data.

QUESTION:

Are you happy with the way that the Treasury and Finance officials have dealt with this process over the last couple of days?

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TONY ABBOTT:

Lenore, the carriage of this has been largely in the hands of Joe and Andrew. But look, I am very happy with the way that Treasury and Finance officials have dealt with this. I think it’s been a very constructive and professional exchange and I’ve got to say that this has been a far better process than anything that would have been possible in the heat of an election campaign, when we wouldn’t have been able to go backwards and forwards to Treasury and Finance with the sort of discussions that we’ve had. I should just make this point about the Charter of Budget Honesty. The Charter of Budget Honesty was designed to keep governments honest, it was never designed to be a weapon for governments to use against the Opposition, which is what in fact this Government has tried to do with it.

QUESTION:

Did the backwards and forwards significantly change their initial estimates on your policies? Did that have a bearing?

ANDREW ROBB:

What the backwards and forwards did was to give us confidence to stand here today and say that we stand 100 per cent behind our costings. What it established was there was not an error of costing, there was a difference of opinion in one case or two cases, government being able to make the decision which they conceded but they still ran their proposition and it’s in the document. They conceded that. With the rest of the policies they said, and again it’s their words not mine, that the differences with the remainder of policies reflect different models and data and we could give you endless examples.

When we went through each one of those policies it became clear that we had either different data. I’ll give you one example. One example. The NBN Co, the interest payments on NBN Co. We said $2.4 billion, they said $1.6 billion. We’ve said what’s the difference, in the morning we said what’s the difference? They said the difference is explained by different interest rates. We’ve said we’ve used the ten year bond rate, the average of the ten year bond rate over the last six months. We’ve said what did you use? They’ve said can’t tell you. They’re not telling you, right. Later that afternoon they came back, we had more discussions, we said this is ridiculous. Let’s get to the bottom of this, we’ve got the ten year bond rate, 5.5 per cent. What is it? They said it’s 4.9 we used. We said how did you get that? They said a weighted average. We said a weighted average of what? We can’t tell you, right. So that’s where we finished up and that explained $900 million. Now, you tell me with a Treasury that is forecasting four years of the greatest growth in terms of trade in our history, you tell me interest rates are going to go backwards? That confirmed our assumption being in our view, very legitimate using the market rate of 5.5…

QUESTION:

Mr Robb, the story you’ve just told is of them saying ‘oh, you know, we can’t tell you, we can’t tell you’. Mr Abbott just said he has confidence about the way that they’ve operated throughout this process.

ANDREW ROBB:

Well, they weren’t able to tell us but we had a good, professional discussion. What came out at the end of it was they said yes we had used what could be considered a legitimate assumption and they used another assumption and we stand by our assumptions.

QUESTION:

Does that mean, because Treasury if you’re in government will be doing your Budgets, are you going to sort of sit there with them and advise or quibble on those things? Or are you going to trust them to…

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JOE HOCKEY:

We’ve worked with them before. I was a Minister in the Treasury Department for three years. We have a professional relationship. As they indicated yesterday there have been disagreements between themselves and the current Government, particularly on the CBA, the contingency reserve issue, they said it was a government decision, obviously not their decision. So, to will there be differences from time to time of any government with any Treasury as there should be. But it will be a relationship based on respect.

Now, Andrew said there was one revelation. There was another revelation to us about the Medibank Private dividends and it worked in our favour. But we said where is the dividend to Medibank Private. They said it’s in PEFO. We said we could not see it in PEFO. They said they did not disclose it in PEFO. We said well how can we count something that we cannot see? And they accepted that and they said well here are the numbers that we believe to be the dividend from Medibank Private. Now, if there wasn’t that discussion, good natured helpful discussions, then we wouldn’t have been able to have confidence today in saying absolutely, as we have been all along, that our numbers are emphatically right. We stand by them and we will deliver them if we get into government.

QUESTION:

The Treasury says that they, that is the Opposition, didn’t provide any detail on cancellations or deferrals of existing projects. Do you have a secret hit list?

JOE HOCKEY:

The answer is no. This was another interesting area of discussion. In the Budget there was $5.5 billion available in the funds that we understood. Now, as it turned out we could not identify, despite writing to Minister Albanese repeatedly, we could not identify what promises were being made by Labor and what contracts had been signed by Labor in the lead-up to the election. So we said ok, we will use $3.3 billion of the $5.5 billion in the fund, there’ll be money left over and as it turns out Treasury said to us the Government had spent this hollow log, some of it, a large part of it, and we asked them to tell us what projects and they said to us they couldn’t because they didn’t know and that was to us a little bizarre that Treasury and Finance themselves didn’t know and that was 3 o’clock yesterday. At 5 o’clock yesterday they came back to us and they said they now had a list. We asked to see the list. They said they could not disclose the list to us and we said well, this is not a constructive, easy way to deal with this issue and they said well, we will put it in and we said, well, of course, from our perspective, we will re-prioritise projects to deliver on our numbers and they accepted that to be the case.

QUESTION:

I was saying, how are you going in your argument to convince the independents when it’s a difference of opinion between you and the Treasury? How are you going in convincing them of your argument?

TONY ABBOTT:

Well, there are a whole lot of issues in play here and at times an arcane argument about costings is by no means the most important. I mean, economic credibility is important, very important, but economic credibility does not turn on whether you use 4.9 per cent or 5.5 per cent as your interest rate for estimating savings from one particular proposal. So look, I think that the discussions with the independents are going reasonably well. I’m talking to them in good faith. I have no reason to think that they’re not talking to me in good faith. Basically, this afternoon involves wall-to-wall discussions between me and my senior shadows on various issues and the independents and I expect that those discussions will go ahead and I hope that those discussions will make the independents feel more confident about forming a stable and competent government with the Coalition.

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QUESTION:

Will you consider raising agricultural tariffs to secure Mr Katter’s support? It’s something that is dear to his heart.

TONY ABBOTT:

Sure, and look I appreciate Bob’s position. I’ve known him for a long time, I’ve listened to his positions in the Parliament and elsewhere for a long time and Bob, quite rightly, wants to do the right thing by the rural industries in North Queensland. Now, I want to do the right thing by the rural industries of North Queensland too. I don’t think we can turn back the clock but supporting and helping rural industries is part of the Coalition’s DNA and that will never change.

QUESTION:

Where are you up to with Mr Wilkie?

TONY ABBOTT:

Well, I had what I think was a very good and constructive discussion with Andrew yesterday. He indicated that he might want to have further discussions today and obviously I’m open to further discussions.

QUESTION:

Are you disappointed that Mr Windsor has described your costings as being a black hole and said that he’s not sure whether there’s enough trust? He’s used the word black hole and he’s talked today about trust.

TONY ABBOTT:

Well, I certainly offered, and Joe and Andrew offered to sit down with Tony Windsor last night immediately after his briefing with Treasury and Finance closed to discuss these issues and I’m sorry that it was a bit too late in the evening for that discussion to go ahead but we certainly offered to have it with him then and, as I said, we’ve got wall-to-wall discussions this afternoon on a whole range of issues and if Tony or Rob or Bob want to kick off the discussions by talking about costings, I’m very, very happy to do that because as far as I am concerned what this exercise proves is that we have absolutely nothing to hide and we are entering into these discussions in the fullest spirit of candour because we want them to know what they are doing and we are confident that when they do, they will know that only the Coalition can form a stable government.

QUESTION:

In a sprit of openness, what have you offered Andrew Wilkie on poker machine reforms?

TONY ABBOTT:

Well, I have said to him that, well, let me start again. I’m not going to talk about what I have discussed with Andrew because that would be unfair to him. I’m not going to, as it were, negotiate through the media but I take his concerns in this area very seriously. I’m very conscious of the recommendations of the Productivity Commission that almost 100,000 regular users of poker machines are problem gamblers and I think that over time, in a spirit of fairness to the sector, conscious of the reliance of state governments on gambling revenue, we nevertheless do need to address this issue.

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QUESTION:

Are you right in saying that this argument may not turn on some arcane point in Treasury, but perceptions are important things and do you think that today is a bad look?

TONY ABBOTT:

Well, you know, I’m not going to debate perceptions, Chris, because in the end perceptions are in the eye of the beholder and I’m just one of 22 million Australians. But, as I said, this is not an argument about spending blow-outs, this is an argument about the size of the surplus and the bottom line is that the Coalition will deliver a healthier, stronger fiscal position over the forward estimates than the ALP and I think that’s a good look. The confirmation that we will deliver a stronger fiscal position over the forward estimates period, that is a very good look and I want to say in conclusion that how proud I am of the work that Joe and Andrew have done throughout this period. They’ve been assisted by a good team but I think that no opposition has been as rigorous or as upfront or as transparent with its costings as we have and I’m very proud of both of them.

Thanks so much.

[ends]