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

20 February 2011

Interview with Paul Bongiorno

Meet the Press,
Channel Ten

20 February 2011

SUBJECTS: MRRT; BHP Billiton's profits; G20 Meeting; Flood Levy

BONGIORNO:

And welcome back, Wayne Swan, from Paris this morning. It looks, Mr Swan, like it is evening. So,  good evening.

TREASURER:

Good to be with you.

BONGIORNO:

What have the G20 finance ministers come up with in their overview of the world economy? Is the world economy out of the woods?

TREASURER:

Well certainly there is a patchy global outlook and, of course, in our region, growth is strong but, and also in emerging economies, but here in Europe, growth is weak. You only have to compare the Australia unemployment rate of 5% to a 10% unemployment rate in the Euro zone to see the vast differences in the global economy. So, what we were talking about today was a set of indicators which will be used to guide policy development, to strengthen the global economy for the long-term, because what we can't have is a return to the global economic imbalances that lead to the global financial crisis and the global recession.

BONGIORNO:

There are reports that it was hard for the G20 ministers to actually reach agreement. Has the agreement today set a real framework for going forward or is it a weak compromise?

TREASURER:

No. It has set the framework to go forward. We have agreed on a number of indicators, the state of public finances, the state of private finances, the current account deficit, exchange rates and so on, will all be used as signposts, if you like, to guide policy development so we can deal with the economic imbalances. You see, you've got a country like the United States, which has high unemployment and certainly a very high budget deficit. You've got a country like China, which has very big surpluses. These imbalances have to work themselves out over time and using these indicators will guide policy developers to do just that.

BONGIORNO:

So by the sound of it, you can say that the G20 has not outlived its usefulness. It is still needed?

TREASURER:

Most certainly, it is very much needed. But I tell you what, sitting around the table there today, there is just such a vast difference between what goes on in the Australian economy and what is happening in many other developed economies. There were plenty of ministers there who would have liked to swap seats with me.

BONGIORNO:

On Wednesday, BHP Billiton announced a super profit like we have never seen before, a first-half net profit of $10.5 billion. The Shadow Treasurer was lamenting Labor's loss when the government gave up its super profits tax. Here he is.

HOCKEY:

Julia Gillard gave up $60 billion to win the election and stop the miners from advertising against Labor.

BONGIORNO:

Well Joe Hockey had a big week this week. He is lamenting the fact that you do not go ahead with your super profits tax.

TREASURER:

Joe Hockey actually thinks the miners have been paying too much tax and that's why he is opposing our mineral resources rent tax. He is opposing the tax in circumstances where the miners are making record [profits]. It is only fair that the miners' pay a resource rent tax to reflect the value of the resources that the Australian people own 100% and which can only be dug up once. The fact that Mr Hockey and the Liberal Party continue to oppose this tax shows just how reckless they are and irresponsible they are and how they do not understand what must be done to strengthen the Australian economy for the long term.

BONGIORNO:

But in light of this super profit, $10.5 billion, and that is only half a year, do you think the government should listen to the Greens and Wilkie, the Independent, who believe that if you do not go back to the super profits tax, you should certainly raised the rate. It looks like you would have support in the parliament to do that.

TREASURER:

No we reached a fair agreement with the mining companies on the rate. It is very important that we have certainty in this area. It is very important to have certainty so that we can make the investments, particularly in the superannuation of low-income workers, to invest in infrastructure, and to bring down company taxes over time and to give small business a tax cut. That is very important. It is important that that agreement is honoured. But the contrast here is with the Liberal Party. They think the miners should get a tax cut. We think the Australian people should get a fair return. It just demonstrates how irresponsible and clueless Mr Hockey and the Liberals are when it comes to economic policy.

BONGIORNO:

Treasurer, Rio Tinto was one of the companies that benefited from the compromise that Julia Gillard reached on the tax. Do you believe that monkeys can do a better job of running Rio Tinto than the current board?

TREASURER:

Well when I was at the AWU conference during the week, I made a very strong point of saying that what we needed was negotiation and cooperation between employers and employees. That is going to be very important to ensure strength in our economy as we go forward. But I do not sit around and referee fights between unions or employers. We have in industrial relations system to do that.

BONGIORNO:

So you disagree with the AWU in their attack on Rio Tinto?

TREASURER:

Well they've got some issues with Rio Tinto. I am a proud unionist. I think they've got a very important role to get fair pay and working conditions for their members but they have to adhere to the industrial relations frameworks that are put in place and of course, it is always better that we have a civil discourse.

BONGIORNO:

OK. So they are not thugs like Kevin Rudd thinks they are?

TREASURER:

Well I'm not sure what Kevin Rudd thinks of the AWU but the most important thing is that we get on with the job of creating wealth, have a decent industrial relations system and get in place good public policies.

BONGIORNO:

Time for a break. When we return with the panel, we ask is the flood levy taking water? And Julia Gillard tried very hard to make our Kiwi cousins feel loved after Kevin Rudd ignored them. She proved she had a nose for Maori language and culture.

BONGIORNO:

You are on 'Meet The Press' with Treasurer Wayne Swan direct from Paris. And welcome to the panel, Steve Lewis, from News Limited, and Jessica Irvine, 'The Sydney Morning Herald'. Good morning, Steve and Jessica. The government's proposed flood levy will be debated this week. It went under the scrutiny of the House Economics Committee on Wednesday. The Opposition asked Treasury why a levy was needed this time when it has never been used before to fund a disaster recovery.

NIGEL RAY, TREASURY OFFICIAL (WEDNESDAY):

The magnitude of the fiscal cost of the bushfires in 2009, tragic as they were, or Cyclone Larry, are much smaller.

BONGIORNO:

But Economist and Reserve Bank board member Warrick McKibbin rejected any need for a levy.

WARRICK MCKIBBIN ECONOMIST (WEDNESDAY):

I think the decision was of a political nature, not of an economic nature, because the simple economic argument is to borrow.

JESSICA IRVINE:

Hello, Treasurer. You have explicitly ruled out borrowing now because that would take your return to surplus, it will push that out by years. Let's talk about that. Let's talk about the opportunity cost of not borrowing. What are the things that we are not going to be able to do that we would have, if you were able to be a little bit flexible on the borrowing?

TREASURER:

The government believes the right thing to do is to pay as we go. This event is unprecedented in terms of its impact, in terms of its cost. We are meeting two-thirds of the cost from savings in the Budget but we thought it appropriate to meet a third of the cost from a very, very temporary and modest levy. It is the right thing to do for Australia to make sure that our public finances are in good shape just in case other adverse events come along later on. So we took a decision, I think a balanced decision, and it is one, which I think, has the support of people who understand the importance of fiscal discipline, given that as a country, we are going to be growing quite strongly through the next couple of years. We've got a mining boom, we have a huge investment pipeline, and in those circumstances the right thing to do is to bring the Budget back into surplus in 12/13. That is what we are doing.

JESSICA IRVINE:

And you have, as you say, already identified a few budget spending measures, which a few of them you have had to back down on to get support from the Greens for the flood levy. How confident are you that there are other little itty bitty programs that you can cut to save money, or how much are you really looking at the entire structure of the budget and things that you can really get your teeth into that we are going to have to cut deeper than just these small programs?

TREASURER:

We have said all along the line that we would have to find further savings as we went through to the Budget and the government will do that in the way in which we always do, in the normal budget process. We just thought it was very important that we responded very quickly, put this package in place to send a very clear message to the people of Queensland, that the people of Australia were behind them in this very important rebuilding phase. It is very important to get that into place. And, of course, as you have been aware, since then, we have had the impact of Cyclone Yasi as well which has added to the cost.

JESSICA IRVINE:

There are other things that you are going to need to cut. One of the things that people have talked about is middle class welfare. Do you think it is fair that families earning up to $150,000 a year are still receiving income support from the government?

TREASURER:

Well, as you would be aware, Jessica, we have already put in place means tests on a variety of payments. I don't intend to speculate about what will be in the Budget in any particular area. But I do, and have always been, a very strong supporter of our family payments system. I don't describe our family payments system as middle class welfare.

STEVE LEWIS:

Treasurer, you need to get Nick Xenophon over the line in terms of the flood levy. Are you confident of doing that and are you prepared to soften some of the impact of the flood levy in order to get his support?

TREASURER:

Well we've have made some modest changes to the proposals that we put out a couple of weeks ago. We will continue to speak to the Senator. I believe that this measure is in the national interest. I hope it has his support. You see you've just got chaos, for example, in the Liberal Party. They cannot say what they would do or how they will fund the recovery in Queensland at all. Instead, they are falling over each other to exploit the politics of race. Of course, if Mr Abbott has approved that approach, then he is unfit to lead the Liberal Party.

STEVE LEWIS:

Can I just talk quickly about the G20. The financial transactions tax is very much on the agenda. There's been, obviously Treasury in Australia has been doing work in October on a super profits tax and other ways of extracting greater taxation out of the banking system. Can you just provide, can you clarify exactly what the government's position is in respect to this?

TREASURER:

I most certainly can and our position is very clear. We are not looking at any such tax in the banking system. There is a world of difference between the banking system and mining. Mining uses the resources owned by the Australian people for which a fair fee or royalty or rent should be paid. That is why we have put in place our resource rent tax. We are not moving in that direction in the banking system. And when it comes to a transaction tax, that was floated and discussed in the G20, but there is no action flowing from that.

BONGIORNO:

Brisbane's Liberal Lord Mayor, Campbell Newman, is accusing you of snubbing your hometown in the flood recovery. He cannot get agreement in principle for some major infrastructure funding. Here he is.

CAMPBELL NEWMAN, BRISBANE LORD MAYOR (THUESDAY):

Which jersey are you wearing these days? I mean, whose side are you on? Canberra's or Queensland's?

STEVE LEWIS:

Treasurer, do you accept the criticism from the Brisbane Lord Mayor and do you also accept that there is a need of greater flexibility in respect to these guidelines?

TREASURER:

I am a Queenslander born and bred. That is why we moved so swiftly to put this very big package in place and why we need the flood levy which Mr Newman opposes. He is just not fair dinkum on this question. He was out in public attacking the Federal Government before he had even provided a list of additional projects, which he wanted funded. Basically, there are billions of dollars being spent on infrastructure in Queensland and a lot will be spent in Brisbane and that is already guaranteed. The Federal Government will pay 75% of that. The councils do have a legitimate request for us to look at additional measures. We are doing that and working with the Queensland government in a cooperative way. I would just ask Mr Newman to put aside the politics that he has been playing, perhaps he has budget problems and he's trying to obscure those budget problems, put aside the politics and work co-operatively with the Commonwealth Government and the State Government.

JESSICA IRVINE:

Treasurer, Senator Nick Xenophon, who you will need the support for from your flood levy, has said that he would like the Queensland government to have mandatory state insurance scheme. Do you think that is appropriate?

TREASURER:

I think there is a legitimate question which has being raised by many people about what the states have done by way of insurance. I think it is probably timely for us to evaluate all of those questions, to have a good hard look at them to see what the implications are for the future. I think that's perfectly reasonable.

BONGIORNO:

Thank you very much for being with us this morning in Australia, this evening in Paris and safe trip home, Wayne Swan.

TREASURER:

Thank you.