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

30 June 2008

Interview with Kathy Bowlen

ABC Radio 774
Melbourne

30 June 2008

SUBJECT: Tax Cuts, Cost of Living, Pensioners, Gippsland and Kororoit By-Elections, Community Cabinet

BOWLEN:

It's the end of the financial year and with me is the Treasurer, Wayne Swan. Good morning.

TREASURER:

Good morning, Kathy. How are you going?

BOWLEN:

Good thanks. The new tax cuts come into force tomorrow.

TREASURER:

Yes, they certainly do and I think for the first time in a long time they do tip the scales in favour of working families, those on low and modest incomes and I think, together with the new Child Care Tax Rebate which also starts on the 1st July and also the Education Tax Refund, there will be some substantial benefits for a lot of working families who have been knocked around by increases in the cost of living.

BOWLEN:

Well, inflation's up, petrol's up, as you say, the cost of living is knocking people around. For the average family, what sort of benefits would you say that combined measures you've just described, will deliver?

TREASURER:

Well, if you took a family, say, with a principal bread winner of around say $60,000 and maybe a part-time income or $20,000-odd thousand, they could be $52 a week better off when you throw in a tax cut of around $20, increased childcare assistance and the Education Tax Rebate. It varies from family to family but I do understand and the government does understand that they are entitled to some relief, which is one of the reasons why we fought so hard to keep the tax cuts in what was otherwise a very tough Budget, because of the inflationary outlook that we inherited.

BOWLEN:

Well, that's good for working families, what about pensioners?

TREASURER:

Well, the $500 bonus, Kathy, is being paid now. I think most will have received that. I think also next week there will be the next instalment in the Utilities Allowance because we increased that to $500 as well. We recognise that people on the pension, particularly the single pensioner, is doing it really tough in this environment and that's why we've undertaken to have a thorough look at all of the issues of pension adequacy and come back and consider those issues in the context of next year's Budget. There's only so much you can do, we've only been there six months, and dealing with this issue of pension adequacy is very serious and has very big budget implications, but it is one that we will do thoroughly and in an economically responsible way.

BOWLEN:

But there's a view that you're not doing enough and that it's going to take too long for the reviews to come through.

TREASURER:

Well, that's why we paid the bonus. The bonus wasn't budgeted for by the previous government and that's why we did increase the Utilities Allowance and made the Utilities Allowance a permanent payment paid on a quarterly basis. I understand that many out there are doing it really tough on low and fixed incomes, but to deal with this sustainably and to deal with it in affordable way, does require a serious look at all these issues, and that's what we're doing, that's what we undertook to do in the Budget and that's what we're doing.

BOWLEN:

Can't you expedite that? Do you think the message isn't getting through?

TREASURER:

Well, I think a lot of people out there are understandably very pressed. The Government has to respond in an economically responsible way and very substantial increases in pension rates have very, very big budgetary implications.

BOWLEN:

Does it surprise you, Wayne Swan, to hear that Victorian charities are being inundated? Just for example, we're hearing reports today the Lord Mayor's Charitable Trust, they've had applications doubled in the past year for assistance. They really are doing it tough.

TREASURER:

It doesn't surprise me because when inflation hits a 16-year high, as it has in the past year, that was a legacy we inherited. And now on top of a very high domestic inflation rate, we've now got this global oil shock and rising food prices internationally. That all impacts on people. So, I absolutely understand that people are really stretched in that environment. I mean, petrol alone, I think, has gone up something like 30 cents a litre since the beginning of the year. That's why we fought so hard to make room in the Budget to deliver the tax cuts and additional seniors' bonuses. We've also had the task to rein in spending because of the domestic inflationary pressures and we've also got the task of putting in place the long-term investment we need to expand the productive capacity of the economy. So, it's a very complex environment, particularly internationally. International forces are buffeting the economy and that's why it's important to have good, disciplined economic management domestically.

BOWLEN:

Wayne Swan, there was a seven per cent swing against Labor in the Gippsland by-election, were you surprised by the size of that swing?

TREASURER:

No, I wasn't really surprised about it, given the cost of living pressures out there, but also it's been a difficult seat for Labor. Labor hasn't held Gippsland in 86 years and it's rare that Oppositions lose by-elections, I think it's only ever happened three times in history. So, I wasn't surprised by any of those things. But I understand that people are certainly hurting, that's why we're so serious about maintaining disciplined economic management to deal with the inflationary problem which is the core of the cost pressures on average families. If we don't do that interest rates will be higher for longer. So, we've really got to bear down on that inflation and that does mean some tough decisions such as some of the ones that we took in our recent Budget.

BOWLEN:

But is the severity of the Budget being blamed for such a major swing against the Rudd Government in the by-election?

TREASURER:

I don't necessarily know which of those factors dominated in the by-election, but in a sense our job is to get the settings right for the long-term, to take the tough and hard decisions which position the county for the future. And whether there's an opinion poll or a by-election, shouldn't be the predominant influence on our thinking, and it won't be.

BOWLEN:

Are you the reason the honeymoon's over?

TREASURER:

I'll leave that up to others. But what I do know is that this country has great opportunities ahead of it. We do need some very disciplined economic management. We are in difficult international times. We've had international financial market turbulence, now a global oil shock, all of these things are swirling around, that just does reinforce the need for very strong and disciplined economic management at the domestic level.

BOWLEN:

Well, Labor was also belted in the Kororoit by-election this weekend here in Melbourne. Is there some soul searching going on today within the Party?

TREASURER:

I don't know about the State by-election, I haven't been through all of the issues involved there, but of course you always look at these issues. We're constantly out and about. I'm in Mackay at the moment in a Community Cabinet. We've had a number of these around the country in the last six months. We are serious about being out and about and doing that soul searching on a routine basis, and that's what we do when we're out and about at the Community Cabinets, speaking to the people directly and hear their concerns and take that back to our policy making.

BOWLEN:

And what are the main concerns you're hearing at the Community Cabinet?

TREASURER: Well, up here it is housing particularly, affordability of housing, availability of rental housing, the difficulty that people on low and fixed incomes are finding not only to live, but also not only to get by, but also to find somewhere to live. The need for critical economic infrastructure to free up our exports, these are themes up here and I think they're very familiar themes down in Melbourne as well.

BOWLEN:

Wayne Swan, thanks very much for your time today.

TREASURER:

Good to talk to you.