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

19 May 2008

Interview with
Mike Carlton and Sandy Aloisi

Radio 2UE, Sydney

19 May 2008

SUBJECTS: 2008 Budget, Pensions and Utilities Allowance, Alcopops, Liberal Leadership Split, Private Health Insurance, State of Origin

ALOISI:

Treasurer Wayne Swan is on the line from Canberra. Good morning.

TREASURER:

Good morning, how are you going?

ALOISI:

Very well, thank you.  So, has the Budget perhaps missed it’s mark?  All these families don’t seem to think they’ll be better off.

TREASURER:

We didn’t frame the Budget with our eye on opinion polls.  We framed the Budget with our eye on the next decade and beyond.  It’s an inflation fighting Budget that does invest in the future and it does deliver for working families, particularly through the tax cuts, the Education Tax Rebate, and of course, the additional assistance with childcare.

ALOISI:

Why don’t families seem to feel that that’s right then?

TREASURER:

Well, I don’t tend to focus on opinion polls.  What’s most important is that we get the settings right.

ALOISI:

But Treasurer, with great respect, if the opinion poll has polled Australians and they don’t believe that they’re going to be better off, do you not take any note of that?

TREASURER:

I certainly read the opinion polls but what I take most notice of is putting a responsible Budget in place so we can tackle inflation and, above all, meet our commitments to working families that we promised during the campaign.  Those tax cuts will arrive on the 1st of July.  The additional assistance will be there for childcare and the Education Tax Rebate will be put in place over the next year.  We recognise that families, after eight interest rate rises in three years caused by high inflation, are doing it tough.  We understand that.  Just as we understand that pensioners are doing it tough.  That’s what high inflation does.

CARLTON:

You don’t do anything for pensioners in the Budget much, though, did you?

TREASURER:

Well, we did give them a $500 bonus.

CARLTON:

You didn’t give them a pension increase.

TREASURER:

Well, I’ll come to that in a minute, Mike.  We gave them a $500 bonus.  We also gave them an increase in the Utilities Allowance of $400, and made that permanent.  But we recognise that pensioners are doing it tough, that there is a problem.

CARLTON:

You might recognise it, but you haven’t done anything for them.  Now, we got a hell of a lot of calls, we have a lot of older people who listen to this radio program, and they’re very upset and they really felt that you’d dudded them.

TREASURER:

Well, I understand that, but first of all, they need to know that the bonus was delivered.  The previous government didn’t commit to deliver it and it wasn’t in their Budget figuring.  So, we delivered that.  We delivered the increase in the Utilities Allowance as well.  But I understand how tough they’re doing it and that’s why we also announced, on Budget night, a review of pensions and retirement incomes.

CARLTON:

How long’s that going to be?

TREASURER:

That will report in the first quarter of next year.  That’s why we put in place the additional assistance now.  Mike, can I just say to every pensioner and to every senior that’s listening to this program, that we do understand the problem with the pension, that we will address it in a responsible and a sustainable way.  One of the reasons I entered politics, Mike, was to stand up for people on modest incomes, to stand up for those people on low and fixed incomes who do it tough.  That’s why we’ve got to, on the one hand, deal with inflation, but also responsibly deal with this issue of the rate of the pension.

CARLTON:

You’re asking them to wait till next year, aren’t you, the first quarter of next year?

TREASURER:

That’s why we put in place…

CARLTON:

Next financial year or next year?

TREASURER:

No, next year, but that’s why we…

CARLTON:

March?

TREASURER:

Mike, that’s why we paid the bonus and will be paying the bonus before the 30th of June - $500.  That’s why we increased, permanently the Utilities Allowance by $400 to $500 in the year, precisely for those reasons.  But over and above all of that, my responsibility is to put in place a set of economic settings that are responsible for the long term.  That means dealing with the inflation problem that eats away at the living standards of people on low and fixed incomes.  Inflation is the enemy of everyone on a low income.  We have to deal with that as well.

ALOISI:

Mr Swan, the calls we were getting from pensioners would suggest that while they’re grateful for the $500 one-off payment, they’re still struggling, and some of the singles on $273 a week.  Can you imagine living on that amount of money?

TREASURER:

It’s terribly hard, particularly given what’s going on with rents out there, particularly what’s going on with food prices.  That’s why we brought in the change to the Utilities Allowance before the Budget.  That’s why the change in the Utilities Allowance is now paid quarterly.  We absolutely do recognise that they’re doing it really tough.  Many people on low and fixed incomes are really hurting at the moment.  The Government recognises that and we want to deal with it in a sustainable way.  This is the first six months of a new government.  We are determined to deal with this issue, but we’re determined to do it in a responsible, sustainable way for the long term.  No more short term-ism from this Government.  What you will get from this Government is long term responsible policy.  The previous government was paying a bonus every now and then.  We’ve paid the bonus, put a permanent payment in place and we are addressing the long term issue.

CARLTON:

The tax on alcopops which will rake in, what, $3.1 billion over the next few years or so, is that really a health measure?  Is that really designed to stop kids binge drinking or is it really just a money raiser?

TREASURER:

No, it’s most certainly a health issue, Mike, because, you see, when the government opened up this loophole back in 2000, binge drinking amongst teenagers, particularly women, went right through the roof.

CARLTON:

You’re expecting to raise $3.1 billion, you’re still expecting people to buy the stuff.

TREASURER:

Well, let’s just think of it like this, Mike.  If you’re sitting around watching the State of Origin on Wednesday night and you’ve got your bottle of Bundy Rum there, you’re paying, or were paying 70 per cent more in tax than someone who was drinking an alcopop.  Now, we’ve redressed that balance.  We’ve redressed that balance and put them…

CARLTON:

(inaudible)

TREASURER:

I happen to like a Bundy…

CARLTON:

You’re a bloody Queenslander…

TREASURER:

I happen to like a Bundy Rum and Coke and if you were sitting at home prior to this change, you were paying 70 per cent more tax than someone drinking one of the slush-puppies.

CARLTON:

So, it’s a fairness issue?

TREASURER:

Well, it’s a loophole in the system that led to an explosion in binge drinking – and all of the evidence from the health experts, the Police Commissioners, and everybody else who knows this inside out says that people are responsive to price changes, and that’s why we put it in place.

ALOISI:

But you’ve targeted the underage drinkers, or young girls who are over 18, that drink these so-called alcopops.  Isn’t it the case, though, that much of these drinks actually is consumed by the over 50s?

TREASURER:

Well, certainly the over 50s are consuming some of these drinks but there has…

ALOISI:

But you’ve targeted, specifically, these younger people.

TREASURER:

Well, I’m a parent.  I’m aware of what actually happens out there in the club scene.  Yes, and well you’d know, if you know the club scene, that what is going on with some of these alcopops is dangerous stuff and we are determined to deal with it, and we have dealt with it.

ALOISI:

The scary part is, though, there are reports this morning that drinkers, or people who would have drunk alcopops, are actually turning to the harder spirits which they’ll mix themselves.

TREASURER:

No, they’re going back to their own pre-mixed arrangements because the price is now the same.  This is the point that I just made to Mike before.  The price is now going to be the same whether it is premixed by yourself or it comes in a can.  We have eliminated the difference between the two.

ALOISI:

You’re talking about buying a bottle of hard liquor and then mixing it yourself…

TREASURER:

Well, if you look at some of these alcopops, there’s a lot of hard liquor in them.  The problem is that the people consuming them can’t taste the alcohol because it is all filled up with a whole lot of sweeteners…

ALOISI:

I know, I’m with you, I’ve tasted them at home when the kids have had them.  They’re awful.

TREASURER:

Sure.  That’s right.  But they’re not only awful, they are dangerous.

CARLTON:

I’ll give you a free kick if you like.  There seems to be some confusion amongst the Liberals at the moment about this five cent cut proposed in the petrol excise?

TREASURER:

Well, they’ve just completely lost their way and lost the plot.  They tried to blow a $22 billion hole in our surplus, and then turn around and said that our Budget was inflationary.  How inflationary would that have been if they would have had their way on Budget night?  They would have sent inflation through the roof.  I mean, they simply have lost any economic credibility whatsoever and, of course, the reason is, they’re so divided.

CARLTON:

So, who’s right?  Brendan Nelson wants a five cent cut in petrol excise.  Malcolm Turnbull doesn’t.  So, Turnbull’s right and Brendan’s wrong?

TREASURER:

No, I think they’ve just both lost the plot.

CARLTON:

Okay.  I told you it was a free kick.  It is a little confusing.  How many people are going to drop out of private health insurance?

TREASURER:

Well, certainly not the number that was claimed in the research that was issued yesterday by the private health insurance industry.

CARLTON:

900,000 plus?

TREASURER:

But of course, the work they issued yesterday has been partially repudiated by the people they claimed had done an independent audit.  They wrote to me yesterday afternoon suggesting that what had been issued was not necessarily an accurate reflection of the material that had their name on it and was claimed to be an independent audit by PriceWaterhouse. 

So, the figures that we put in the Budget, Mike, are ones that we stand by.  The figures in the Budget were of the order 480,000 not joining or perhaps dropping out.  And all of the claims that are being made by the private health industry that somehow this then produces an automatic uplift in rates of private health insurance do not necessarily follow at all.

CARLTON:

It is basically the equivalent of removing a tax on about 500,000 people.

TREASURER:

What we have done is remove an unfair tax slug of one per cent from people on modest incomes.  When this was introduced in 1997, it was supposed to apply to high income earners who were then defined as $50,000 and over.  Of course, now, these days, $50,000 isn’t high.  The Liberals left this in place and slugged a whole lot of people on modest incomes for a decade with an additional tax and we’re proud to say we’re taking it off.

CARLTON:

Okay, but then you’ve then got to pump more money into public hospitals to take up the slack, haven’t you?

TREASURER:

Yes, but we are pumping more money into public hospitals.

CARLTON:

Will it be enough?

TREASURER:

Well, we will be putting more in.  We’ve already stumped up $1 billion in the Budget plus an additional $600 million over four years to reduce elective surgery waiting lists, plus we are sitting down with the States to negotiate over the course of this year a new Health Agreement.  Plus we’ve got in place our new Health and Hospitals Fund.  We are determined, as we said during the campaign, to end the blame game and to put in place a substantial reform of the health system in this country, and that’s what we’re working our way through.

CARLTON:

Alright.  Now, as the former captain of the Nambour High Rugby League team, who’s going to win the game on Wednesday night?

TREASURER:

Oh, well you’ve got to go for the Queenslanders.  I mean, I’m a very big fan of Cameron Smith.  I think he’s the best footballer in the country and with him leading the Queenslanders, I reckon we’re a good show.

CARLTON:

Are you and the Prime Minister going to be there for it?

TREASURER:

Well, we certainly are.

CARLTON:

Good to talk to you.