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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

29 April 2011

Interview with Madonna King

ABC Radio, Brisbane

29 April 2011

SUBJECTS: Budget; Employment; Medical Research; Family Payments

KING:

Wayne Swan is the man in the hot seat, the Federal Treasurer and at the moment also the Acting Prime Minister of Australia, good morning.

TREASURER:

Good morning Madonna, great to be here.

KING:

Good to be home is Brissie?

TREASURER:

It certainly is. It was a great run in this morning.

KING:

Are we going to like this Budget?

TREASURER:

Well, the Budget is going to get the finances back in the black. We're going to get more Australians into jobs and we're going to spread the opportunities from Mining Boom Mark II. So that's what we're aiming to do with the Budget. We've created over 300,000 jobs in Australia in the past year, Madonna, 98 per cent of them have been full time and, of course we've got some very big challenges for the future. We've got this very big investment pipeline coming through which is going to stretch the capacity of our economy in the longer term and, of course in the short term we've had all of the natural disasters, the impact of that on the economy, the impact of that on government revenues.

So we've got a complicated picture to deal with and we're going to deal with it in a way in which we always deal with it which is to be upfront with Australians. We've got short-term softness in the economy, long-term strength. That demands a variety of responses both short term and long term.

KING:

You're going to be upfront with voters - and I'm not asking you what' s in the Budget - but when we pick it up, when we read about it the next morning, when we hear you speak that night, is it going to be something that hurts most Australians? Is it a necessary evil?

TREASURER:

Well, certainly I don't think it's going to be popular because making savings is never popular and we will have to make some savings in the Budget to put it on a sustainable path for the future. That's very important given the strength in the private sector that we're going to see in the years ahead and given the investment boom that we are going to experience.

So some Australians will sit back and say: `well they're talking about a mining boom but in my household there's cost of living pressures, it's tough right now, the cost of fruit and vegies at the checkout is up, the inflation rate is up - why do we have to be making savings? ' And what I'll be saying to Australians on Budget night is we've got to bring our budget back into the black. That's the consequence of the fact that over the past few years we've experienced a global recession. That has had a very big impact on Government revenues. It's important we bring the Budget back to the black in 2012-13 when we said we would because we've got this strength in the economy coming down the track and we don't want to exacerbate price pressures in the economy during that period.

KING:

So when you sit down and work out the priorities there's a limited pot of money. Is your number one priority bringing the Budget back into the black or is it saying the people of Australia are doing it hard, as you've just admitted, we need to give them a bit of a leg up.

TREASURER:

Well, first of all what we've got to ensure is that for the long term our growth is sustainable and we've got to ensure that we contain inflationary pressures. At the moment we've got the short-term impact of the natural disasters which have certainly pushed up the inflation rate. Now that's a temporary impact and that will unwind over future quarters but I certainly understand that Australians are doing it tough from those price increases and they've done it tough in increases in electricity prices in recent years which is why the Government in our past three Budgets has put in place tax cuts, it's why we've increased the child care cash rebate and other allowances to assist people with education costs. It's why we've done all of those things, but in this Budget we definitely have to tighten. We have to tighten because the economy is coming back to capacity and that's why we must bring the Budget back to surplus in 2012-13.

KING:

In talking about that tightening, one thing you have signalled is a crack down on some welfare payments. How do you balance that between helping the people that genuinely need that welfare and taking it off those who are maybe rorting the system?

TREASURER:

Well, first of all we don't tolerate rorting of the system at any stage. But what we do need to do because unemployment now is relatively low. Unemployment has a four in front of it and we are going to have in the years ahead a demand for more workers. So all Australians who have the capacity to do some work should be engaging in paid work, but sadly in parts of our country there is a patchwork economy, some parts of the country don't have low unemployment, they have high unemployment. Some parts of the country have larger numbers of people who are dependent upon welfare benefits some of whom do have the capacity to work. Our job is to put in place a range of policies which give them the opportunity to participate in the workforce, have the dignity of work, and set themselves up for the future through a secure income stream.

KING:

Are some of those people lazy or there's not the system there now for them to be able to work?

TREASURER:

Well, certainly in parts of the country we do have very high concentrations of people who are dependent upon welfare and in many cases this will be for a variety of circumstances, misfortune in life, a number of other influences here. What we've got to do is to make sure we have the range of policies that build the bridge to work and that means for those people making the opportunities available in terms of work experience or in terms of training. Now in some cases they are available. In some cases they are not. In some cases people experience complex problems and in some cases people may not have the will to work. So there is a responsibility on the individual to participate and a responsibility on the part of Government to provide the opportunities for those people.

KING:

You mentioned unemployment has a four in front of it, certainly outside Queensland. I think Queensland might still have a five in front of it. National Retail Association is warning the surge towards internet shopping will strip Australia of about 50,000 jobs over the next five years. They say 2,000 jobs have already gone and that's certainly not helped by the increased value of the Australian dollar. We've seen Borders close its doors. Do Australian businesses need to try harder to compete with internet prices or is this a serious problem you have to help address?

TREASURER:

Well, first of all we have a patchwork economy. Whilst we have relatively strong growth - although it is now weaker in the short term because of the impact of the natural disasters and events in Japan - in the medium term it is going to be strong, but that growth doesn't necessarily go to every postcode or to every part of the country. For example, I spent Easter in Cairns. Unemployment is high in Cairns and it's high in Cairns for a variety of reasons. Some are to do with the tourist industry, some to do with the value of the dollar. What we have to do is to make sure in all different parts of the country we've got a set of policies that make opportunities available.

KING:

But that's not answering this question, 50,000 jobs.

TREASURER:

Well, I don't accept those figures. There's been a vigorous debate about this. It is being investigated at length by a variety of bodies. There is no doubt that business models in retail are changing.

KING:

And do you think business models have to change more to compete with the internet prices?

TREASURER:

Well, of course they will have to change. There are issues involved in the claims that they make but I don't accept the bottom line there, but what I do accept is that retail across the board is weaker now and it's weaker because we are still living with the hangover of the global recession. The hangover of the global recession has produced a cautious consumer. What occurred during the global recession was that people lost income, people lost money from their investments. We had a wealth effect and an income effect and people are responding in a cautious way. They're not spending as much at the shops as they used to and they're saving more and that is certainly impacting on the retail sector.

KING:

When you take a step back, what do you see as the biggest challenge facing Australia?

TREASURER:

The biggest challenge facing Australia is to maximise the opportunities that can flow from what I call Mining Boom Mark II, which is a feature of what is the Asian century that we are living in. Fantastic opportunities can come our way given the investment in resources and the growth of the middle classes in Asia, but what we must do is make sure that that prosperity is spread across the whole of our country and to do that that demands a range of policies. A range of policies in employment, a range of policies in health and education and so on, but the most important thing we've got to do is that when we're maximising the benefit that flows from that prosperity that we've got a strong fiscal policy in place and that with that strong fiscal policy we build on what I call the essential elements of the Australian way, giving average Australian families access to affordable health, education and housing and opportunities for their kids so we can build prosperity into the future.

KING:

Some people listening say well that's great rhetoric, that's great motherhood statements. Let's take public housing. I think there's almost 30,000 people in Queensland currently on public housing. Tonight 270 Brisbane people will sleep out, crisis housing. How does the Government address public housing?

TREASURER:

Well, I'm pleased you've chosen that example because during the global recession when we moved to stimulate the economy and to support employment, particularly in small business in the construction industry, there was a very significant investment Australia-wide including in Queensland, in public housing and in fact the biggest investment in public housing absent the post war investment of Ben Chifley. That was a very big investment and it is certainly -

KING:

But has it worked if there's 30,000 people still on the waiting list?

TREASURER:

Well, certainly it's substantially increased the supply of public housing in Australia just as we move to also renovate school buildings in schools which hadn't seen construction in over 50 years. We took the opportunity of the global financial crisis to avoid going into recession buy fundamentally investing in these public assets such as schools and public housing.

KING:

But you can't say there's not a crisis in public housing when 30,000 Queenslanders are waiting?

TREASURER:

No, but what I can say proudly, is that we chose public housing as one of those areas we would make the investment to support employment and leave a legacy for the future, namely providing more public housing for people who are doing it tough.

KING:

Alright, just on that, a question from Chris, a listener, who sent - several people sent me emails overnight knowing that you were coming on - Chris says, why would you contemplate budget cuts to vital areas like the National Health and Medical Research Council when countless Government programs - and Chris mentions home insulation and the Building the Education Revolution - were wasteful?

TREASURER:

Well, first of all, can I just say about our stimulus, our stimulus saved Australia from recession and there are tens of thousands of people who are now in jobs and tens of thousands of small businesses that would have hit the fence if it hadn't been for that fundamental investment. So I don't accept that characterisation that the stimulus was wasteful. It's the reason why our economy is strong and it's one of the reasons why we can maximise the opportunities that flow from the boom.

KING:

But what about Chris' question about the National Health and Medical Research Council?

TREASURER:

Sure, I'll come to that because we have made, as a Government over the past three years, very substantial investment in medical research and we will continue to do so. I personally have a fundamental commitment to that investment. I wouldn't be sitting here now if it wasn't for the wonders of modern medical research. So I understand its importance and I met with the sector in Canberra last week and had a discussion with them about the Government's commitment to medical research, a very productive discussion. I can't today say what is or isn't in the Budget. What I can say is that the Government's commitment to medical research will continue and that elements of the campaign that were run over the last couple of weeks were simply not justified by the facts.

KING:

Alright, Warren is a listener, he sent me this email: `Could you please ask Wayne why we're paying $1.45 for petrol and Americans are paying $4 per gallon which equates to 89 cents a litre even though the Australian dollar is bordering on $1.10 American?'

TREASURER:

Well, certainly the price of petrol has gone up internationally. That's why it's high. It would be much higher if it wasn't for the fact that the dollar was at the levels that it's at at the moment. It just reflects the international price, nothing more, nothing less.

KING:

On milk you've backed -

TREASURER:

And I know how tough it is when you go down there to fill up.

KING:

But do you?

TREASURER:

Of course I do.

KING:

Because your petrol would be paid for.

TREASURER:

Well, I have a Government car but I also have a private car. I drive my private car from time to time and I go and fill up my private car from time to time. And I understand what a really big slug filling up the petrol tank is at the moment, but it's a feature of the international petroleum market and has been the subject of much discussion of many of the international meetings I've been to in recent times.

KING:

So while we're talking about those cost of living issues - milk. You've backed robust supermarket competition saying the milk war has been welcomed by millions of consumers. Is there a threat here though to the viability of the dairy industry?

TREASURER:

Potentially, and I've had these discussions with the industry, and certainly I welcome the vigorous competition, not just on this item but on other items, that's now occurring between our major supermarkets. That's pretty important when people are facing the sorts of costs that they're facing at the supermarket but if this were to go to a point where it were to ultimately threaten the survivability of the dairy industry then I think there would be other issues which would come into play.

KING:

So how do you balance that? How do you work out what to do here?

TREASURER:

Well, I'm keeping a very watchful eye on it. I've spoken to the dairy industry, I've spoken to processors and I've spoken to the major supermarkets and I've made it very clear that the Government's bottom line is that we will not tolerate a threat to the essential viability of farmers.

KING:

Nick Xenophon, the independent senator, says consumers could be forced to buy heat treated, long life, imported milk if this practice continues. Is that a possibility or do you think that's scare mongering?

TREASURER:

Well, that would be the end point if, in fact, all this was transferred down the supply chain and the adjustment was forced solely on the farmers, but I don't believe it's reached that point at the moment but I'm keeping a watchful eye on what's going on.

KING:

So what would have to happen for you to act on that watchful eye?

TREASURER:

Well, we have regulators who are active in this area and the ACCC is one of those regulators and I, as I've said I'm keeping this under supervision at the moment and just mindful of the fact that if it were to go too far it could have some of those consequences. I don't believe it is there at the moment.

KING:

The Anglican Synod yesterday said they wanted the baby bonus cut because of population levels. Are you comfortable with the population growth as it is? Or do you support Dick Smith in wanting a reduction in levels?

TREASURER:

Well, the net overseas migration to Australia has come down dramatically in the last couple of years, dramatically, and the Government has refocussed the migration program on skills. That focus was lost under the previous Government and there was simply a flood of people, not necessarily in the skilled categories that we required as a nation to meet our needs. What I do say is that what's important is that we have a good distribution of population across the country including population growth, and including new migrants, that we will adjust those levels from time to time depending upon economic need. But our focus must be solely on skills, and that's skills after we've done the maximum amount possible we can to train Australians for the jobs that are emerging here.

KING:

Has the baby bonus led to an increase in our growth rate?

TREASURER:

I don't accept the statement that came from the Anglican Church the other day on the baby bonus. We means tested the baby bonus when we came to power and we made changes in the way in which it was paid to people over time rather than in a lump sum. I'm a strong supporter of family payments. I'm a strong supporter of paid parental leave and I'm a strong supporter of parents who perform the most important job in our country just bringing up the next generation of young Australians.

KING:

So can I take from that all parental payments, all payments to single families will not be cut on May 10?

TREASURER:

No, what you can take from that is I'm a strong supporter of a social safety net which supports people in work and which provides payments to them to assist them with raising their children. Some people run around the country railing against family payments claiming they're all middle class welfare. That is not my view. Yes, they have to be properly targeted. Yes, we shouldn't be paying them to people with lots of money, but Australians who work hard, who get up every day, send their kids to school, come home, cook the tea, get up and do it again, whether they're running a small business or working for wages, are deserving of some support for their children when they're performing that vital role of bringing up the next generation of young Australians.

KING:

And will there be added support for them on May 10?

TREASURER:

Well, I've just made the point that we're bringing our Budget back to the black. That's very important.

KING:

So even though they're doing a really good job, they're still going to suffer on May 10?

TREASURER:

Well, what's most important is that Australians are in secure employment. That is fundamentally important. That they have decent working conditions and that they have a good expectation that the economy will continue to grow and to grow strongly. My most fundamental responsibility is to ensure our economy remains prosperous, it generates jobs which provides parents the wherewithal to support their families and that's the most fundamental thing you can do to support a family in terms of all of those cost of living pressures that are out there.

KING:

All right, given that you must be concerned about the fate or where the tourism industry is, given the permanent value of the Australian dollar at the moment?

TREASURER:

The Australian dollar, it does have an impact on those types of industries - tourism, educational exports and so on - and that makes life pretty difficult for those industries but the Australian dollar and its level is a reflection of how strong the Australian economy is. It's a reflection of the strong state of our public finances. It's a reflection of the fact that we're generating jobs and it's a reflection of the fact that commodity prices are high. That's why it's really important in this Budget that we get the economic settings right so we can continue to grow in a sustainable way.

KING:

What's the biggest change to your life since taking on this gig, since taking on this job?

TREASURER:

Oh, I think the biggest change to my life is just being absolutely aware of the enormous responsibility that I have. I've felt that profoundly. For example, during the global financial crisis I used to wake up in the middle of the night wondering, wondering about where we were going and what we ought to be doing. Now, during that period we got the settings right. They were difficult choices that we made. We made a very big choice to stimulate our economy. Fortunately we made it at the right time and the outcome for Australia was an outcome that was the envy of the developed world but in the early stages of taking those decisions, of putting in place the bank guarantees, putting in place the first stimulus in November '08 and the second stimulus in February '09, they were nights that I lost a lot of sleep I've got to tell you.

KING:

When was the last time you went surfing?

TREASURER:

A long time ago! A long time ago and particularly last Christmas I went up the coast and we were only going to have four or five days and, as you know, it rained and rained and rained and rained, and I didn't even get in the water. So a couple of years now, so that's a big change to life.

KING:

Are you, between friends, you got any eye on the big job? I see that was floated earlier in the week.

TREASURER:

Absolutely not.

KING:

Watching the wedding or the Broncos tonight?

TREASURER:

Maybe I'll have to watch both! I'm certainly going to be watching the Broncos but like all Australians I've got an interest in the wedding. I'm a lifelong Republican but I wish them well. You know, the wedding day for all of us is a very, very big thing in our life and we all appreciate that.

KING:

And I'm going to ask every politician walks in here today, but can you just describe your wife's wedding dress?

TREASURER:

I can actually. It wasn't traditional. In fact, our wedding was far from traditional. It was in the back yard of friend's in Sydney back in 1984 and it was a steamy day.

KING:

Back to the dress.

TREASURER:

Yeah, I'm getting to the dress. So it wasn't traditional. So there was no train. It was a really funky red number.

KING:

Was it? It wasn't white, it was red?

TREASURER:

No, no, it was red.

KING:

Short, long?

TREASURER:

Short.

KING:

Well, I am impressed that you can describe that. I'm wondering if your colleagues lining up outside will be able to do the same. Don't let Stephen Conroy know that I will ask the same question later.

TREASURER:

I'll bet he can't beat a funky red number.

KING:

All right. Wayne Swan, thank you.