Swan defends upping borrowing limits


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12-05-2011 08:04 AM


ABC Canberra 666

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ABC Canberra 666


12-05-2011 08:04 AM



12-05-2011 08:39 AM

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2011-05-12 08:04:20

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CAVE, Peter


LANE, Sabra

SWAN, Wayne, MP


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Swan defends upping borrowing limits -

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Swan defends upping borrowing limits

Sabra Lane reported this story on Thursday, May 12, 2011 08:03:00


PETER CAVE: Well the Deputy Prime Minister and Treasurer Wayne Swan has dismissed the Coalition's
attack on its debt.

He spoke to our political correspondent Sabra Lane.

SABRA LANE: Treasurer, welcome to AM.

WAYNE SWAN: Good to be with you, Sabra.

SABRA LANE: Treasurer you made much in Tuesday's of the need to curtail family welfare payments.
The Opposition says you're engaged in a class warfare. Many newspapers around the country have
concluded that too with headlines like, "Work hard, pay more", "Welcome to Wayne's World of new

WAYNE SWAN: Let's take a deep breath here, Sabra. The fact is that I am a strong supporter of the
family payment system, always have been and always will. But yes, we do have to make savings in
this budget to bring it back to surplus and to build surpluses thereafter. And why are we doing
that? We're doing that because we don't want to add to the cost living pressures.

So the first thing I want to say is that today is D-day for Tony Abbott. He can either support the
surplus or if he wrecks it, he will put pressure on the cost of living an on families. Now why are
we making these saving? We're making them in a broad range of areas, something like 2 per cent of
people who receive family tax benefit part B will be affected by these savings.

So we're better targeting our family payments but all those people on family payments will still
receive their normal indexation. We're a strong supporter of the family payment system. I mean,
I've read the papers today. One paper has a family on the front page who are not even affected by
this measure, it affects 2 per cent of families.

SABRA LANE: So, but if you earn $150,000 or more and you have a family, you will be worse off under
your budget.

WAYNE SWAN: Well certainly there will be an impact there and the Government said that on the night,
we've got the make $22 billion worth of savings to come back to surplus in 2012-13, to build the
surpluses after that, and the reason we are doing that is so that we don't add to cost of living
pressures in the economy. That's why the surplus is important.

Joe Hockey said the Coalition could bring the budget back to surplus next year. Well today is D-day
for Tony Abbott. He should tell the Australian people how they're going to do that because if he
sets out tonight to wreck that surplus, to oppose those savings, he will be responsible for cost of
living pressures in the Australian economy.

SABRA LANE: How many families are you talking about? You say that 2 per cent for family tax benefit
part B, but all up, with all the freezing of the indexation, how many families?

WAYNE SWAN: We're talking about 40,000 families there would be some impact.

SABRA LANE: These cut off points aren't new are they?

WAYNE SWAN: No, they're not and they are...

SABRA LANE: ...And in the main case you've extended the decision.

WAYNE SWAN: Well, exactly, and they are cut off points that existed under the Coalition, but let's
be very clear about what we're doing here. All we are doing is pausing the indexation of the top
income threshold. All normal increases and indexation proceed in the system.

SABRA LANE: Tony Abbott says though that a policeman married to a nurse or a teacher falls into
this category. Do you agree with him here?

WAYNE SWAN: Well certainly there will be combined incomes greater than $150,000 in our community
and those people work hard and they deserve the reward for their efforts. But we have always
targeted our family payments system and means testing is not new, it existed under the Coalition.

What we have to do is tighten the system at the top. What we put in place is a pause; it will
effect 2 per cent of people receiving family tax benefit part A.

SABRA LANE: On Tuesday, on budget night, the Government introduced into Parliament a bill to
increase the amount of money that you can borrow from $200 billion to $250 billion. Why?

WAYNE SWAN: Well there should be no surprise about this at all. We are increasing our borrowing
requirement. This has been flagged, it was flagged in the mid-term review which we put out at the
end of last year, what's known as the MYEFO (Mid-Year Economic and Fiscal Outlook).

These facts have been on the AOFM (Australian Office of Financial Management) website for some
time. The reason that we are doing it is because of the impact on the budget of the natural
disasters and the more substantial revenue write-downs that have occurred in the first part of this

But we have low net debt, 7.2 per cent, and of course we will pay that debt off over time. Our net
debt is one-tenth of the net debt of other major advanced economies. All of the rating agencies
rate Australia highly, it is eminently affordable and I'm just a little surprised that the
Coalition have suddenly discovered this fact because it was in the appropriation bill on Tuesday
night, that is the way that is normally done. It has been flagged for some time.

SABRA LANE: Liberal MP Wyatt Roy pointed out yesterday that he turns 21 soon and that Labor has
never delivered a surplus budget in his lifetime. When did Labor last deliver a surplus budget?

WAYNE SWAN: Well, we'd have to go back to the 1980s I should think, but Labor wasn't in power when
that great growth spurt came through in the late 80s and in the late 90s and the early 2000s.

SABRA LANE: You can't nominate a date?

WAYNE SWAN: I can't nominate a date.

SABRA LANE: Tony Abbott delivers his budget report reply tonight. He says he'll offer a clear

WAYNE SWAN: We'll need to see a very, very clear alternative tonight. We'll need to see Tony
Abbott's savings or otherwise he'll have to admit he's going to be irresponsible and wreck the

SABRA LANE: Mr Swan, thanks for your time.

PETER CAVE: The Treasurer speaking there to Sabra Lane.