The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

2 May 2008

Doorstop Interview

Parliament House, Canberra

2 May 2008

SUBJECTS: Budget; Inflation; Global Economic Conditions

TREASURER:

I just thought I’d take a couple of minutes to come out from Budget preparations and make a few comments about the Budget.  There’s a fair bit of speculation around today.  I just wanted to make this point.  A central objective of this Budget is to tackle inflationary pressures in the economy.  Price rises are hitting working families, they’re hurting working families.  That’s why we’ve got to cut spending.  That’s why we’ve got to build a responsible surplus otherwise we’ll have further price rises, higher inflation and higher interest rates.  So, a central objective here is to tackle inflation, and to tackle that inflation by cutting irresponsible spending.

JOURNALIST:

Mr Swan, Kevin Rudd, on radio this morning, was being asked about, you know, working families versus the rest.  And he said people at the upper end of the income spectrum don’t actually need direct support from government much.  Is it too much to read into that that there’ll be means testing of certain things?

TREASURER:

Well, I wouldn’t read anything into that except to say this will be a Budget which will be delivered for working families who are under tremendous financial pressure from price rises – price rises at the supermarket, price rises at the petrol bowser. We’ve got the highest underlying inflation in 16 years.

JOURNALIST:

(inaudible)

TREASURER:

Let me come to it.  It’s no accident that in the last 16 years, the last four years of that 16 years we’ve seen an outbreak of irresponsible spending.  And that irresponsible spending has put upward pressure on inflation, upward pressure on interest rates.  That’s why in this Budget we will be targeting our assistance to those people who are on modest incomes.  We’ve made that very, very clear.

JOURNALIST:

In delivering for those people, though, do you rule out taking away from high-income earners through means testing?     

TREASURER:

I’m not ruling anything in or anything out.  We’ve got a Budget to bring down on the 13th and bring it down we will.  And it will be targeted at delivering for working families, people who’ve worked hard to make the economy strong, people who’ve been hit by prices rises out there, people who’ve been hit by high underlying inflation.  That’s our objective.

JOURNALIST:

Are you saying that overall spending will be cut, not increased?

TREASURER:

We are going to rein in overall spending.  We are going to rein in spending and there will be expenditure cuts and they will be tough.  It’s going to be a tough Budget.

JOURNALIST:

Will the overall level of spending go up or down?

TREASURER:

We’ll see the figures on the night.  But I’m making it very clear that we will be cutting spending in this Budget.  You see, in the last four years we’ve had the highest increase in spending of any four-year period in the last decade and a half.  That’s not sustainable. And when the government spends too much it puts upward pressure on prices and upward pressure on interest rates – and we’re going to rein that in.

JOURNALIST:

(inaudible)

TREASURER:

Let me just say a couple of things about our position at the moment.  Because the previous government went on a spending spree, it falls to us to rein that in.  And of course what we did inherit was the highest underlying inflation in 16 years and now what we have is the fallout from the US sub-prime crisis which is producing a dramatically slowing US economy, and that is having impacts on this economy.  So, some of the speculation that’s around today about revenue windfalls is simply inaccurate.       

JOURNALIST:

(inaudible)

TREASURER:

I want to make one thing very clear.  Our fiscal position in this year’s Budget is dramatically different from what it has been in past Budgets because of the fallout from the US sub-prime crisis, because of its impact upon share markets, and it will impact upon government revenue.  What the previous government did was they simply relied on increases in revenue to fund their spending Budget after Budget.  We don’t have that luxury in this Budget.

JOURNALIST:

(inaudible)

TREASURER:

Oh no, we absolutely have to tackle inflation.  It’s been a central objective of this Government from day one.  We put our hand up and accepted responsibility for tackling the inflation problem that we inherited.  It has been our central objective and it remains our central objective.

JOURNALIST:

Mr Swan, the figures that came out – I think they were put out on Anzac Day –said that the surplus, the latest Treasury figures, confirmed that it was already around the sort of $17 billion - $18 billion…        

TREASURER:

They didn’t say that.  They were some figures from the Finance Department and they weren’t from the Treasury and the figures that I’m seeing look nothing like that.  You’ll see all of that on Budget night.

JOURNALIST:

Are you saying the Budget surplus will not be in the vicinity of $17 billion to (inaudible)?

TREASURER:

What I’m saying is we need to cut back on spending and we need to build a responsible surplus to put downward pressure on inflation, downward pressure on prices, and downward pressure on interest rates.    

JOURNALIST:

Will the surplus exceed 1.5 per cent of GDP?

TREASURER:

You’ll just have to wait until Budget night.

JOURNALIST:

You talk about the problems of the sub-prime but you haven’t mentioned the windfall that’s coming from the commodities side.  Some people are talking up to $5 billion, $6 billion coming from that directly.

TREASURER:

Yes there will be a windfall from the increase in commodity prices but there is a substantial downside from the fallout of what’s happening on share markets and in other areas of business activity.  You see, the US sub-prime crisis has had a huge knock-on effect in terms of business confidence around the world and in terms of consumer confidence here and abroad.

JOURNALIST:

Is that a bit of a concern, the Finance Department’s got it all wrong?

TREASURER:

I didn’t say that.  The figures didn’t say what you said they said.

JOURNALIST:

Are working families, as you use guys that word all the time, although it’s going to be a tough Budget, are you telling us that working families are going to be pretty happy on Budget night?

TREASURER:

What we’ve said consistently is that we will deliver the tax cuts because they will be directed primarily at working families – the childcare assistance, the education tax rebate because they’ve been hit with price rises.  They’re doing it really tough and they’re our priority in the Budget.         

JOURNALIST:

Mr Rudd gave a commitment before and after the election the baby bonus wasn’t going to be touched.  Can you…       

TREASURER:

I’m not speculating about any particular initiative in the Budget.

JOURNALIST:

He said it would be, you know, tickety-boo.

TREASURER:

I don’t think that he did speculate along those lines.

JOURNALIST:

Working families in Canberra in particular have their own worries to do with the public service.  The ACT Budget is coming out next week, one week ahead of yours.  So, in a sense, they’ll be working in the dark.  Now, have you liaised with them at all about what’s in yours?

TREASURER:

I’ve got a good relationship with the Government here in Canberra.  That’s all I’ve got to say.

JOURNALIST:

Have you liaised with them?     

TREASURER:

I’ve got a good relationship with them and I liaise with all of my State and Territory colleagues.

JOURNALIST:

How important is this as a political document?  Is this going to set the tone for the Rudd three-year term?

TREASURER:

The central purpose of this document is to look after the long-term national interest of the country and build a strong economy for working families.

Thanks.