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Transcript of interview with Marius Benson: ABC Newsradio: 24 October 2012: MYEFO; GDP forecasts; PAYG company tax

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David Bradbury MP Assistant Treasurer

Minister Assisting for Deregulation

Transcript of interview with Marius Benson

ABC Newsradio

24 October 2012


Topics: MYEFO, GDP forecasts, PAYG company tax

HOST: To look at the Government’s economic outlook I’m joined by the Assistant Treasurer David Bradbury. David Bradbury, good morning.

BRADBURY: Good morning Marius, how are you?

HOST: I’m well. Now, how confident are you of this three per cent? The NAB says the growth outlook is for 2.25 per cent and Macroeconomics, a modelling agency, is talking about 2.6 per cent.

BRADBURY: Well look Marius, we can always get into a contest of duelling market economists on these matters. I did note that when MYEFO was released the almost instantaneous reaction from a number of market commentators that indicated that their forecasts were broadly similar to the government’s, but can I make this point, that the Reserve Bank and the IMF, if you look at the forecasts that they have put forward in relation to the Australian economy, they are very much consistent with the approach of the mid-year update and certainly the advice that’s been provided by Treasury. We continue to believe that strong growth is ahead of us. We have slightly revised down anticipated growth from three and one quarter per cent down to three per cent for the coming year, but as the IMF suggests and points to, the Australian economy will continue to out-perform, in terms of growth, all of our major competitors, not just this year but moving into next year as well.

HOST: But as you say it’s duelling economists, you can find a range of forecasts, and they are just educated guesses, and it matters because the point being made in the Financial Review about the Macroeconomics modelling is that if it’s right, at 2.6 per cent rather than three per cent, you’re facing not a surplus of $1.1 billion but a deficit of $7.6 billion. It matters.

BRADBURY: Well we can engage with all of the ifs, buts and maybes that we choose to but the point is, it’s the Treasury, it’s the Reserve Bank that have the most comprehensive information available to them when they form their forecasts. By and large, and this has been the record over a number of years, the Treasury are more likely to get it right than others and I simply make the point that there is no shortage of market economists out there that make these forecasts and predictions but unlike the Treasury they are never subjected to the same degree of accountability because if in a years’ time it shows their forecasts were well and truly out of whack then no one remembers that at that point in time. Ultimately these are the best estimates, the forecasts based on the most information available to Treasury, they are broadly consistent, indeed they are very much consistent with the forecasts of the IMF and the Reserve Bank and it’s on the basis of the strength of those figures that we’ve made our forecasts.

HOST: Of course you’re not simply victims of whatever the figures turn out to be, it’s what you do with those figures. Tony Abbott is saying the surplus is the highest priority in economic planning. Is that the view of the government, that come hell or high water you’ll bring in a surplus?

BRADBURY: I think that most people looking at what we’ve done through the mid-year update would understand that delivering a surplus is very much a priority of this government. We are determined to return the budget to surplus; by delivering a surplus we will give the Reserve Bank all of the room that it needs to continue to cut rates. We know that cutting rates is beneficial to households, to families to businesses. We’ve seen, over the last year, a family with a mortgage of over $300,000 just in the last year delivered rate cuts that have put an additional $2,500 in their pockets. This is very much central to the government’s strategy. Obviously we’ve had to make some hard decisions. If Mr Abbott has said that he supports returning the budget to surplus, then as opposed to his ongoing negativity he might actually stick his hand up and support some of these important savings measures that we’ve announced.

HOST: Just quickly, in a word are you worried about the business anger over the changes to company tax?

BRADBURY: We understand there was always going to be some concern from the business community on these matters. I simply make the point that these changes reflect the next step in the process of evolution in the way in which company tax receipts have been collected over a series of several decades now. There was a time when companies weren’t required to pay their tax during the tax year in which the income was earned and they were given the liberty of being able to repay in instalments over the following year. Over time, the Hawke/Keating government, the Howard/Costello government, they moved closer and closer to the position that we’re now announcing, which is monthly instalments and I make the point that monthly instalments is the way in which GST is currently paid by the companies that would be affected. We’ve given the most profitable companies, those with turnovers of $1 billion or more14 months before these measures come into effect and of course we will consult very closely with those affected to make sure that the legislation is as workable as it can be in the circumstances for those companies.

HOST: David Bradbury, thank you very much.

BRADBURY: Good to talk to you Marius.