The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Chris Bowen

Chris Bowen

Assistant Treasurer and Minister for Competition Policy and Consumer Affairs

3 December 2007 - 8 June 2009

Transcript of 04/02/2008

Interview with Deb Cameron

ABC Sydney

Wednesday, 4 February 2009

SUBJECTS: Nation Building and Jobs Plan

DEB CAMERON:

The Assistant Treasurer Chris Bowen, he is my guest this morning. Good morning Mr Bowen.

CHRIS BOWEN:

Good morning Deborah.

CAMERON:

The emphasis in this package is on saving jobs, unemployment is still forecast to rise to 7%. Now how do you know that it will stop there?

BOWEN:

Well this is the modelling done by Treasury, the best estimate, and what we know is that if we didn't do this package, all the advice from Treasury is that growth would be stagnant and unemployment would be higher.

So as you say, this is a very significant package and we are trying everything that it takes, every policy lever at our disposal, to ensure that Australia continues to be one of the few countries in the world that can get through this crisis as best we can with growth as high as we can and unemployment as low as can be.

CAMERON:

Now you can buy three kitchen sinks for $950, if you shop around, how did you arrive at $950?

BOWEN:

These things are always a matter of balance, you work out where you need to target it, you work out the quantum, and then you work out how much that provides to people. There is no magic figure there's no magic solution to this, you just do the sums and the figure comes out.

This is a very significant opportunity, for every dollar we are spending on direct payments to families and individuals, which is very important, there is two dollars going on long-term investment, whether it be schools or climate change for level crossings across the country.

CAMERON:

Confidence is crucial in the economy, it has fallen in recent months as employees, community expectations are low; four in ten expect that they will be doing less work by the end of this year. There is a balance to be struck between alarming people so much that they are kind of frozen in a spot as an economic unit, and giving them confidence that all will actually be well.

When you were putting together this package how much of a worry was that?

BOWEN:

Look you are dead right in your analysis. In that there are a real balance to be struck, we need to be honest with people and say 'look half of our major trading partners are in recession, two of our three largest trading partners are in recession, China has halved its growth rate to the lowest growth rate in seven years, which are all going to have any impact on Australia' and you know we are not King Canute, we can't stop the tide coming in, but we can make a difference, we can cushion the blow on Australia.

So these days, it's not like previous changes in economic cycles, these days the flow of information is so much greater; people have cable television, access to international information, they know about this international crisis and they are worried about it. We see our role as being upfront and saying 'yes it is there, it is real, it is having an impact on Australia'. But also pointing out that the fundamental soundness of the Australian economy, that you would rather have our set of circumstances at the moment than the United States, United Kingdom or basically anywhere else, and we do have a lot going for us. But nevertheless it will be difficult.

CAMERON:

The Assistant Treasurer is Chris Bowen, if you have a question or a comment - the number here is 1300 222 702. Jim has the question, Chris Bowen, it is about self-funded retirees; they have received nothing, the value of super is falling and as well is that the return on other investment is falling. Some have been wiped out in the stock market, what why have you excluded them?

BOWEN:

The first point to make is that there are five different bonuses that we announced yesterday. The most significant one if you like is the tax bonus, that goes to anybody that goes to anyone who take tax, had a tax liability, in 2007-08, the last full financial year.

That applies regardless of the source of income came from, and that will apply in many cases to self funded retirees if they pay tax last year. Look you got a target this, and with self-funded retirees there is no doubt have suffered through the downturn in world downturn in stock markets and anybody in that situation, who did pay tax, will receive the bonus, and there is a range of other mechanisms that we have in place with Centrelink to assist people who have found their situations changed.

CAMERON:

So in other words you will scoop them up with the old age pension, and other side benefits?

BOWEN:

There are a significant number of people who have moved all to the old age pension, the age pension, in recent times but as I stress some people may not be aware that they should explore that tax bonus, because it will apply to people who filled in a tax return last financial year.

CAMERON:

Malcolm Turnbull and Joe hockey today saying the Federal Opposition hasn't decided whether it will support the package or not, part of what they are worried about, and also what the Greens are worried about, is the speed of this passage - your saying a rapid timetable is essential. Why is it so necessary when some of this spending is reasonably long term, like can't be done within six months?

BOWEN:

The vast majority will start immediately, I mean the process begins immediately. Centrelink as you understand has a range of mechanisms they need in place to deliver money to a very significant number of people, and they require legislative backing. They have made it clear that they would obviously prefer the legislation to pass the Parliament, so they are confident in what they are doing.

Yesterday was the first sitting day of the Parliament this year, and is we don't have time to muck around here, this is a very big and important package, and Centrelink needs the imprimatur of the Parliament to confidently make those payments.

CAMERON:

Now I would like you to have a listen to something Peter Costello said last night on late line:

COSTELLO:

'This deficit is driven by policy decisions. $28 billion of policy decisions. What the Government is saying is that this financial year the revenues are going to drop by about $9 billion. So it is not going to go from a surplus into deficit because of dropping revenues, it is going to go from a surplus into deficit because Kevin Rudd decided to to put out $10 billion before Christmas, is going to insulate homes, he is going to do all sorts of things, and it's a low quality spend.'

CAMERON:

Now that's a man who paid off debts, and ran surpluses for years and years. Mr Bowen how can you ignore his criticism?

BOWEN:

Well I saw him last night on Lateline and I thought it was a very confused performance I have to say, in all honesty, without wanting to be overly political. I mean he said it is a low quality spend, and all it did was increase sales. He said why would you want to increase sales at Woolworths?

Now if you're increasing sales of businesses around the country and Australia, all the evidence is as one of the few countries actually showing an increase in spending in December that our stimulus package worked. Then those businesses aren't laying people off. This is about protecting jobs; this is about saying to people we will keep the economy robust in the face of a worldwide recession.

That's what the stimulus package is about. Now we have seen a collapse in revenue that would have taken us into a deficit this year, and we make no apologies. We are stimulating the economy. That means the right thing to do, the sensible thing to do, the only responsible thing to do, in this situation, is go into deficit.

CAMERON:

Fiona from Belrose has texted in asking you to explain how the stimulus helps ordinary people in the economy, and why this is so much money has gone to infrastructure spending, how does that help she asks.

BOWEN:

Well two things, we have taken the opportunity, we do need to help people who are doing it tough so there are direct payments. But also you have this opportunity to invest, so you have the largest school rebuilding program in the nation's history, for example, new libraries and halls for every primary schools, if they don't want libraries and halls they can talk to us about new classrooms, getting rid of demountables etc.

That is a great investment for schools, but it means a massive stimulus to the economy and the construction industry doing it tough, it means jobs as they build those halls and libraries and new classrooms, new science labs, new language labs in high schools and money for every school to upgrade smaller facilities. So it creates jobs.

Likewise for example the smaller infrastructure programs. We looked at infrastructure and said we need to spend this money soon, let's do things which have needed to be done for a long time. We all see the tragic level crossing accidents - there are 100 accidents at level crossings every year - everyone knows has to be fixed. But no one's ever has the money. We going to do it in this package; 200 level crossings will receive boom gates as part of this package. So taking the opportunity to do things as part of the package, at the same time creating work and protecting jobs.

CAMERON:

It raises an interesting question that has also come up in the US Congress. The 'buy America' clause in the package is that Barack Obama is trying to get through, says that where procurements are going to be made under the infrastructure program they should be made in America. This helps the American steel industry.

A couple of days ago here on Mornings, Paul Howes, the national secretary of the Australian Workers Union said he thinks that protection should be written in to arrangements around these infrastructure bills for exactly the same reason. What do you say about a 'buy Australia' clause in some of this, when an infrastructure funds are being spent.

BOWEN:

Sure a couple of points. Firstly, obviously, we are objecting to the American clause, and Simon Crean has made our objections very clear, so it would be hypocritical to object their clause, and then do it ourselves.

Look some of the stimulus package will go on imports; there is no doubt about it. Direct payments to families, some of it will be spent on imports, some of the building materials will be imported, and there is no doubt about that. It is still stimulating the economy, it is still creating jobs as it goes through the system, they still gets sold in Australian shops and sold through Australian wholesalers and retailers, it does create work nevertheless.

We're not a protectionist government, we do not agree with those types of clauses. There will be obviously high demand for a lot of products arising out of this package, a lot will come from Australia, some will come from imports.

CAMERON:

We have Lyn on the line, good morning Lyn.

LYN:

Hi how are you? Good morning Mr Bowen. I just wanted to ask, as I have been trying to find out over the last couple of days, where long term unemployed people stands with the stimulus package.

BOWEN:

There are as I say five bonuses, one of the bonuses is the Training and Learning Bonus, which will go to people who want to undertake re-training. It might be on the different unemployment allowances at the moment if they undertake retraining that will qualify her for hat bonus. But we do have a considerable amount of work going on in our labour market programs, Julia Gillard and Brendan O'Connor the two ministers responsible we who have been working up a package and talking to the Cabinet about it, and the Prime Minister has made it clear that he will have more to say about that in the coming period.

CAMERON:

I've had another text 'as a middle income earning single parent with a child at school, and family tax A and B, do I get the $950 three times?'

BOWEN:

Yes. Let's just spend a quick minute going through the bonuses because it is important to people.

There is a tax bonus for Working Australians, that goes to people who take tax in the financial year 2007-08 who earned less than $100,000. That's 8.7 million Australians.

Then there's the single income family bonus, that goes to people who get family tax benefit B, that's about 1.5 million families, and most people would know whether they get family tax benefit be or not. And that's $950 paid in the fortnight commencing the 11th of March.

There is the farmer's hardship bonus for your rural listeners, that goes to farmers receiving the exceptional circumstances and other payments, that's $950.

Then there is the back-to-school bonus, that goes to an families receiving Family Tax Benefit A, again people would normally know whether they get that or not, and it goes to children aged between four as of yesterday, eighteen, and that is $950 per child.

As I say, there is the Training and Learning Bonus which goes to people moving on to training and it also goes to people who receive youth allowance or Austudy.

CAMERON:

Alright, so in other words that texter would receive three times the $950?

BOWEN:

If they are on Family Tax Benefit A, and they have three kids aged between 4 and 18, as of yesterday, then they get one payment per child.

CAMERON:

Now let's just move onto some questions regarding NSW. Mr Rudd is meeting the Premiers, but the NSW housing Minister David Borger is already said that where the public housing funds are available they should be distributed on a per capita basis, and on that basis NSW would receive a third of the $6.5 billion that's been set aside. Do you like the sound of his formula?

BOWEN:

There will be discussions with the states, the Housing Minister, Tanya Plibersek has done a lot of work on where the need is, and where the funds need to go. I am sure that they would be happy to have discussions with the states, but at the end of the day it will go where the money is needed.

CAMERON:

And when Mr Rudd said last night that he would come after states that shirked their responsibilities, does that mean that NSW cannot move money from the education budget into, for example, the transport budget?

BOWEN:

The Prime Minister was very clear, not only in the press conference but also with his personal views, this is not designed to allow states to replace money that they would have spent anyway with our money, and we will be doing an audit of state expenditure and where it was going to go, and will be expecting all of their money to be spent as they said they would, plus our money. And he has made it very clear, he has a very hard line on it, if there is any shifting going on, then we will just reduce the allocation elsewhere.

CAMERON:

Chris Bowen, thanks

BOWEN:

My pleasure.