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

10 December 2008

Doorstop Interview

Farrer Place, Sydney

10 December 2008

SUBJECTS: Review of the Tax System Discussion Paper; Consumer Confidence; Global Financial Crisis; Chinese Economy

TREASURER:

I just wanted to welcome the publication by the Henry Review of the Tax System of this discussion paper today. The Government is determined to deal with the long-term reform of the Australian economy, and part and parcel of that is creating a modern, simple and fair tax system. So, this paper today is an important contribution to that debate, and we certainly look forward to an informed discussion about all of the issues that have been raised. The Government is determined to ensure that our tax system is internationally competitive, one that rewards hard work, one that is simple, and one that provides certainty and stability for pensioners and retirees.

They're the objectives that we set for our tax system and I'm sure there'll be a variety of views about the principles raised in this discussion paper today, and that is reform for the long-term. Absolutely essential. Despite the global financial crisis, we must put in place essential reforms for the future that increase the productive capacity of the Australian economy and strengthen it for the long term. And of course for the immediate term, the Government is doing everything it possibly can to strengthen our economy in the face of the global financial crisis.

And therefore, it's pleasing today to see consumer sentiment figures which certainly do reflect an uplift in consumer confidence in the Australian economy. We can't read too much into one set of figures but certainly these figures show that Australians are backing the economy.

The figures today referred to increased consumer sentiment when it comes to household purchases, purchase of a house. Those are figures which are encouraging and heartening, given the global financial environment at the moment.

Over to you.

JOURNALIST:

Do you think that the economic stimulus package has contributed to the revival in consumer sentiment?

TREASURER:

Well, there's no doubt that both the Government and the Reserve Bank are doing everything we possibly can to strengthen our economy and to support jobs in our economy. We do face a very challenging set of circumstances. But the one advantage Australia has is we have a lot more flexibility to respond to the global financial crisis than many other countries in the world. We've got capacity when it comes to fiscal policy. And the Economic Security Strategy is timely and it's targeted. Along with that, the Reserve Bank is loosening monetary policy. They're two big stimuluses to our economy at a time when it needs them most.

JOURNALIST:

Mr Swan, Glenn Stevens said last night that China had slowed more quickly than forecast. How worried are you about that?

TREASURER:

Well, there's no doubt that global conditions have taken a turn for the worse even in the last few weeks. There is a debate about the extent to which the Chinese economy has slowed and there will be continuing debate about that. But we've seen in the World Bank report overnight in terms of their forecast, that they're forecasting a weaker global economy. That's why it's so important that domestically here in Australia both the Government and the Reserve Bank act decisively in the face of these global conditions to strengthen our economy and to support jobs in our economy.

JOURNALIST:

Are you expecting to be able to take a tax package of reforms to the next election arising from the Henry Review?

TREASURER:

David, I'm not going to speculate about the outcomes of the Henry Review today. We're really interested in having a discussion with the Australian people, Australian businesses and Australian households about a tax system which is both internationally competitive, rewards the hard work both of individuals and businesses, and one that's much simpler. For example, a decade or so ago only a small proportion of Australian households used a tax professional to put in place their tax returns. It's now something like 80 per cent that use a tax professional. What that indicates is that the system is very complex. I think the Tax Act is something like 6000 pages. We need to make it simpler, but we also need to make it more internationally competitive, and the one thing we have to do is to reward hard work. The intersection, for example, between the personal tax system on the one hand, and the transfer payment system on the other, is absolutely critical in the 21st century.

And of course, over and above that, we need to review the tax system because times have changed. Technology is different, the whole climate change debate, the fact that we live in a globalised world all mean that we need a modern, competitive tax system which is fair. So, we think it's timely. This is the most fundamental review of our tax system in 50 years, and we're serious about it. We don't intend to put this in the too-hard basket. We want to put in place a blueprint for the next 25 years. That's our objective.

JOURNALIST:

Do you expect that'll be a one-big-bang reform or would you expect it to be an incremental process?

TREASURER:

I don't think it could ever be one big reform because it is far too complex. It needs to be put in place over time. What we need, David, is a road map for the future and that's what we're serious about and that's why we appointed the Henry Review.

JOURNALIST:

Glenn Stevens also said that he won't be far from the office in January. Do you think this means that Australians could expect an exceptional meeting on interest rates during that period?

TREASURER:

No I don't think any of our decision-makers will be too far from the office in January. I recall last January I wasn't too far from the office, because when you're in a global environment that has all of the challenges that this global environment has at the moment, really, key decision-makers have to be on hand 24 hours a day, to be frank, and that's what our senior officials have been doing from the Treasury down, and I know, in our regulators, working all of the time. And I would pay tribute to the hard work of many out there in our regulators who are dealing with what has really been a very challenging international environment.

JOURNALIST:

If China slows, as the Reserve Bank now concedes it will, the Treasury and RBA forecasts now are looking shaky, is that right?

TREASURER:

No, I wouldn't describe them that way at all. I think it would be fair to say that the forecasts from everybody in the world that is forecasting growth globally and growth domestically across all countries in the world have been revising their forecasts frequently, including the World Bank again just overnight. What that indicates is just how challenging the global environment has become. That's all it indicates.

JOURNALIST:

But they're revising them downwards so surely the Treasury and the RBA forecasts must come down along...

TREASURER:

As I just said, there are regular times when the Reserve Bank and the Government do revise their forecasts. We put out revised forecasts in the mid-year economic review some time ago, but we do those at set time points. We don't do them weekly or fortnightly. It's not wise and it's not good policy. But revisions are not unusual and revisions are occurring around the world. That's why we have been talking with the Australian people about how dynamic this environment is and how challenging it is.

JOURNALIST:

Do you think the outlook for Australia has deteriorated in the last month?

TREASURER:

I think the global outlook has become more challenging in the last month, which is why it's so heartening to see these figures today on consumer confidence. It would be wrong to draw any firm conclusions from one set of figures. But it's just great to see the Australian people backing in the Australian economy.

Thanks.