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Transcript of Interview with Michael Brissendon: "AM" Program: 18 August 1993: Budget



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Leader of the Opposition

18 August 1993 REF: TRANSCR\SC\DT\0021

TRANSCRIPT OF RADIO INTERVIEW DR JOHN HEWSON MP 'AM', ABC RADIO

E & Ο E - PROOF COPY ONLY

SUBJECTS: Budget

Brissendon:

Well Dr Hewson if we can just put politics aside just for the moment. You earn more than $20,000 a year and your car presumably runs on unleaded fuel, personally you'll do quite well out this Budget w ont you?

I think that's true. I mean I think the tragedy of this Budget is that it really does hit the people the Labor Party claim that they represent and that they care about and that's the low income earners, the poor in Australia and they are hit to leg where higher income earners are actually significantly better off.

Brissendon:

But if things had been different this could well have been the morning after your first budget and that budget would have hit people even harder wouldn't it?

No look we actually had a package which went out deliberately to target the benefits to the low to middle income earners and they would have been significantly better off. And I mean one of the tragedies is that there is this myth that the Labor Party's a compassionate party, that they care about average Australians and the fact is as this

Budget proves beyond question, they don't. And just take an obvious example. They were obviously stung by the criticism that the tax cuts that they announced in One Nation wouldn't go to anybody who earnt less than $20,700 a year. That was about 40 per cent of workers I think and 60 per cent of women in the work force. So they

Hewson:

Hewson:

Parliament House, Canberra, A.C.T. 2600 Phone 277 4022 .COMMONWEALTH parliamentary library MIC AH J

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have a sop for them. They give them $2 a week. A $100 a year. Which is the best they get out of it and then of course they have to go and pay ail the increases in wholesale sales tax, every time they fill up their car which they're probably low income earners who have got older cars using unleaded petrol. It's about five bucks every time they fill up the car. They go visibly backwards.

Brissendon:

You would have slugged them with a GST though?

Hewson:

We gave them massive increases in their benefits. It didn't matter what it was either in terms of tax cuts, in terms of increases in pensions or increases in allowances. We set out consciously to make sure that the low to middle income earners were better off, they were better off beyond question. In this Budget the Government has actually just hit them to leg and as I say it explodes the myth that they care and that they are

a compassionate government. They are not.

Brissendon:

Well you would have certainly cut further into outlays though wouldn't you? And Mr Keating says anybody, at this morning has told us that anybody who says we should cut outlays further would be an extremist. Do you believe they should have cut more?

Hewson:

Look I think most people in Australia will be appalled when they see the detail of this budget. The fact that the Government doesn't do anything about trimming outlays. And there's fat and inefficiency in the public sector.

Brissendon:

Where would they cut more?

Hewson:

Well look we took details to the last election. There's not much point debating what we would have done. But I mean people have heard in recent days that he's just had a carport extended at The Lodge for $200,000. The Attorney-General's Department just got a new barbeque at $160,000. Gareth Evans is proceeding with building his Taj Mahal, the new building for the Department of Foreign Affairs at $170,000 million.

I mean people know that there's fat and inefficiency in government. This government has got massive...

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Brissendon:

They're small bickies though aren't they, I mean?

Hewson:

It adds up.

Brissendon:

What areas, I mean health?

Hewson:

The point is it adds up. In this Budget there's a 4 per cent increase in real terms. That is after you allow for inflation, expenditure's going up by 4 per cent. I mean some of the, some of the individual areas are going up phenomenally. I think health is going up by about 9 per cent. Social security is going up by about 8 per cent. They are very very big real increases. I think some of the Departments like Admin Services got significantly higher increases. People, and what's going to happen? I mean that just means even more tax down the track. And we see in this Budget that the

Government's going to raise something like $32 billion more in revenue in the course of the next four years. $32b - now that's a 36 per cent increase and to set that in context over the last four years the government tax revenue went up only by $5.4

billion or about 6 per cent. So you're going to get a $32 billion increase in tax revenue and that is a massive tax slug. And that's really what they're doing. I mean I just heard the Prime Minister talking about bringing the deficit down. Well he's pinned his hopes on growth and he's pinned his hopes on a massive tax slug and notice he didn't spend any time talking about that. He's just boasting about the one per cent. We probably w ont live long enough to see it go down to one per cent because the spending commitments they've entered into will, they'll expand to one year to the next? You start an expenditure item get's a life of its own.

Brissendon:

But you cant look at it, it is true that you cant look at it just as a one year budget though. It is a three to four year budget and if it does bring it into one per cent that's a good thing. They've increased some of the essential services, money to some of the essential services.

Hewson:

You know you've just, it would be a good thing if you could bring it under control. I d o n t this document really demonstrates that that can be done. I mean as I say...

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Brissendon:

Are you saying it cant?

Hewson:

On the numbers, I mean they've got very optimistic growth numbers as you go out there. The One Nation forecasts for example have been criticised extensively for being pie in the sky. Well then you get out to '95-'96 the growth they're forecasting in this

Budget is higher than it was in One Nation. I mean it's pie in the sky stuff until we see any sense of direction from this Government. And when you look at the document from the point of view of business, from the point of view of building an investment climate and the point of view of solving our basic problems it doesn't do it. It puts a

lot of money, there's a lot of build up in debt over this next four year period. I think the total deficits for '91 -'92 through to '96-'97 will be over $70 billion. I think there's a huge increase in the public sector debt interest that's paid on that. A massive increase in the number of government bonds that are going to be issued over that

period. I mean sure, I mean they're running up huge debts and they've got a massive tax slug and all of that has its bottom line. It impacts back on the environment in Australia in which business is trying to, is trying to work it. Quite frankly, you aren't going to see business pick up, you aren't going to see business investment lift the way we need it to lift.

Brissendon:

But if the economy does pick up though we'll be very well placed.

Hewson:

If. I mean it's all if. We've been promised they were going to bring home the bacon for years and as every year goes by we use different rationalisation sometimes the same, mostly different rationalisations, about why things didn't quite work out the way they thought and why, you know. If you step back from it debt has blown out

dramatically, our international debts have blown out about five times to around $200 billion now. And we're seeing, we're going to see more. Interest rates yes have come down. But real interest rates are still about as high as they were at the time, at the end of the recession. Inflation's down yes but at what price? The worst recession in sixty years, the highest level of unemployment since the Great Depression. I mean this is, this is staggering stuff. They selectively pick a series of numbers that are

designed to make you feel better about the place. If you step back and have a look at it we're sliding, we're sliding badly. And there's nothing in this Budget that addresses the basic problem. And as I say look, they start out the Budget document by talking about unemployment the dominant issue. There isn't a job in this budget. And in fact the Prime Minister just admitted that as far as the public sector goes he's going to continue shedding labour. Great stuff.

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Brissendon:

All right you don't like it, you don't like it. What are you going to do about it? I mean if you're true to your word we can expect you'll oppose most of it, if not all of it, in the Senate w on t you?

Hewson:

What we've said is that we will wait till we see the legislation that they bring in and that's a responsible thing to do but I've got to tell you my position's hardened. I mean I have been running a hard line against it. It's hardened now since I've seen the

document. And I think when you see the public reaction to things like the petrol tax slug. I mean ten cents per litre on unleaded petrol which is going to really slug the poor and low income earners of Australia. I mean I think they'll be a massive public reaction against it. So at this stage we're going to wait to see the legislation but you

know don't be surprised if the public reaction is enormous over some of these things.

Brissendon:

So what are you going to do about it though?

Hewson:

Well we'll wait and see.

Brissendon:

You're going to, obviously, obviously you're going to oppose the petrol taxes?

Hewson:

We are going to wait till we see the legislation. There's no point debating it. All I can say is that my position has hardened a lot. But I mean we've said we'll do the responsible thing and look at the legislation but I tell you what some of these items in here are going to get a massive adverse public reaction which will put the

Government under real pressure in the course of the next few weeks. And I'd be surprised if the backbench stays with them. I mean some of the people on their backbench have got to be pretty teed off right now that they're going to have to go out and explain why taxes are going up when they argued all the time during the election campaign they werent. And you know I think he'll have pressure within his own camp on this.

Brissendon:

But how have you hardened? How has your position hardened?

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Hewson:

Just my assessment. I mean it's much, we feared the worst, we feared a massive tax slug. This is bigger. I mean $32 billion over the next four years is a...

Brissendon:

But the Government's actually giving the tax cuts.

Hewson:

Well look it's, I mean they're giving tax cuts and then they're taking it back and more. I mean even if you just look at this year the tax cuts are worth $1.6 billion this year. What happens if the deficit goes out by one and half billion?

Brissendon:

So is it just the petrol tax that's hardened?

Hewson:

No it hasn't, the Government hasn't addressed any of the problems. And it hasn't, you know, it went to the election saying 'We could deliver the tax cuts, the One Nation tax cuts on time, we put them in legislation, they were law - 1 a w, law', and you know they certainly didn't promise any increases in tax or any new taxes. Now people are being told well you get your tax cuts but boy are you going to pay for it over and over again.

Brissendon:

All right John Hewson we'll have to leave it there. Thank you very much.

Hewson:

Thank you.