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

5 May 2008

Doorstop Interview

Parliament House
Canberra

5 May 2008

SUBJECTS: Inflation, Budget, NSW Electricity Privatisation

TREASURER:

I've just ducked out from a Cabinet meeting just to give you a few words because, as you know, we do attach a lot of importance to providing a post-Cabinet briefing.

Today we've had a discussion about the war on inflation, about the importance of tackling inflation in the forthcoming Budget, and about the importance of reining in spending, because excessive spending has put upward pressure on prices, upward pressure on interest rates. So, a central task of this Budget is to rein in spending, to bring it under control.

Of course, high prices erode the living standards of average families and we've had another example today which points to high underlying inflation. We've had the inflation gauge out today from a private sector organisation pointing to high underlying inflation. And underlying inflation, when it's that high, is a problem for families – puts up the price of living, and it erodes the capacity of families to get by. So, that's why tackling inflation in this Budget is so important.

I'm pretty stunned that the Opposition doesn't think that fighting inflation is important and doesn't think that cutting spending is a very important part of fighting inflation. I think Brendan Nelson today ought to say whether he agrees with his Treasury spokesman, Mr Turnbull, that there shouldn't be any cuts to spending and that inflation isn't a problem, because high prices, high inflation produces higher interest rates and that savages the living standards of working families. If the Liberal Party hasn't got an economic policy then Brendan Nelson should tell us what their way ahead is.

JOURNALIST:

[Inaudible]

TREASURER:

There certainly is a balance. We need to cut spending, build a strong surplus so that we put downward pressure on inflation and downward pressure on interest rates. But nothing could be guaranteed more to attack the living standards of the Australian people and erode growth in the economy than high inflation and high interest rates, because inflation is a cancer. It eats away at prosperity. That's why it must be dealt with. This Government is determined to be economically responsible. The Opposition is being economically irresponsible. Malcolm Turnbull doesn't understand that rising prices really attack family living standards. He's so out of touch. He hasn't got a clue what life is like around the kitchen table. The Labor Party understands what life is like around the kitchen table, which is why we are so determined to deal with the inflationary challenge.

JOURNALIST:

Do you have a figure of government spending as a proportion of GDP that you'd feel comfortable with in this inflationary [inaudible]?

TREASURER:

All of these figures will be revealed on Budget night.

JOURNALIST:

There's a philosophical argument though, isn't there, in relation to what is the test of the inflation-fighting properties of this Budget, that it's more about how much you're able to curtail spending than it is about the size of the surplus per se. What's your view on that?

TREASURER:

It's about cutting spending, it's about building a strong surplus, it's about delivering for working families, and it's about investing in the future. That's what this Budget's about.

JOURNALIST:

Does that mean there are areas that are completely off limits? Does that mean that infrastructure investment could well be something [inaudible]?

TREASURER:

What it means is that we will bring down a responsible Budget which reins in spending and which invests in the future, but most importantly, delivers for those working families who are being attacked, if you like, by rising prices. And that's why dealing with the inflationary pressures is so central to this Budget.

JOURNALIST:

Can you give us three examples of where spending has been excessive?

TREASURER:

Just take all of the rorts that the previous government pulled when they were spending out there in some of their Regional Partnership Programs. That's one. Advertising – absolutely another. And all of the money they spent on WorkChoices – there's three, and I could keep going, because we have outlined $10 billion worth of savings prior to the election and we are looking for more and have found more in this Budget process.

JOURNALIST:

[inaudible] … mentioned tax and tax expenditures. I think they're going to be $50 billion this year, rising to $60 billion by 2009-10. Is that acceptable, that level of tax expenditures?

TREASURER:

You'll have to wait until Budget night.

JOURNALIST:

Will the war on inflation be won on May 13 or do you expect further cuts in the out years?

TREASURER:

Inflation took a long time to build. Underlying inflation hit a 16-year high in October, November and December, and again through the March quarter. It's taken a long time to build; it'll take some time to deal with. But tackle it we will because we are determined to protect the living standards of Australian families and the prosperity of our economy for the long term.

JOURNALIST:

[inaudible]

TREASURER:

That's what a strong surplus is about.

JOURNALIST:

Mr Swan, what's your message to unions in NSW in relation to the electricity privatisation?

TREASURER:

These are matters to be sorted out in NSW by the NSW Labor caucus.

JOURNALIST:

But how damaging would it be to the economy?

TREASURER:

I've made my view about this clear months ago. I was a supporter of Premier Iemma's proposal.

JOURNALIST:

Is it a good policy?

TREASURER:

I'm a supporter of his proposals and I always support good policy.

JOURNALIST:

[Inaudible] … all of the spending involved in delivering Labor's election promises in the Budget?

TREASURER:

A central feature of this Budget will be the full delivery of our election commitments. We place a very high importance on the delivery of our election commitments. Thanks.