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

6 May 2011

Doorstop Interview

The Treasury, Canberra

6 May 2011

SUBJECTS: Budget; Statement on Monetary Policy; Regional Processing Centre

TREASURER:

First of all I'd like to start off by thanking all the hard working Treasury officials for what they've done to bring this year's Budget together. We've worked pretty closely. This will be my fourth Budget, but through that period the hard work of the Treasury has served our country very well. They performed with great distinction during the global financial crisis and the global recession, and now they're here again working hard, many of them around the clock, to make our country a better place. So I think it's really appropriate to pay tribute to our hard working public servants who are serving our country.

Secondly, I want to say a few things today about the Statement of Monetary Policy from the Reserve Bank because I think it does demonstrate the twin challenges that we see in the Budget. We've got the short-term economic softness which is the result of the natural disasters and the global uncertainty, and particularly the events in Japan, but of course we've got the medium term and the long-term strength of the Australian economy. And despite the severe impact of the natural disasters and despite the devastating impact it had on local communities we still have a very strong economy in the medium term and that's why in this Budget we've got to come back to the black in 2012-13.

Get the Budget back into surplus because what we've got is a very strong investment pipeline. We've got strong job creation. We've got a low rate of unemployment which will go lower and of course we've got this massive mining boom and very high terms of trade. To maximise all of the opportunities that are going to flow from that in this Budget we've got to make sure we spread the opportunities form the boom right around the country, and in particular that means that we need a bigger and better workforce and we need to put an emphasis upon participation and training and skills.

These are the objectives of the Budget. I think as you go through and read what the Reserve Bank have had to say you'll see those to challenges demonstrated pretty starkly in the work today of the Reserve Bank.

JOURNALIST:

Treasurer, the Reserve Bank has really flagged the need for more interest rate rises and possibly faster than the markets are currently pricing. (inaudible) ?

TREASURER:

Well, the first point is that the Reserve Bank makes the point that we are coming back to surplus. They make that point very strongly and we are coming back to surplus for the very reason that I've already outlined, and that reason is that we've got a strong mining boom, strong investment saves, and that means we need to come back to the black in 2012-13. Our fiscal rules are being applied very strictly so we are playing our role in making sure that we don't add to the pressures of the mining boom and the investment that we are seeing across the community and they make that point.

JOURNALIST:

Does it take the short-term part of your economic stories are a little more difficult and you're cutting the Budget (inaudible) inflation might be going up and interest rates are going up. So people are seeing bad news and bad news –

TREASURER:

Well, I don't think you should be jumping to conclusions about future decisions. The Reserve Bank takes its decisions independently of the Government, but the Government is playing its role in bringing our Budget back to surplus in 2012-13 and reducing our (inaudible) and building those surpluses over time, to make sure we make room for the investment boom that is taking place in our economy. But there's another task in the middle of all that as well, it is to attend to the capacity pressures in our economy. That's why we are putting such an emphasis upon skills. [It's] very important that we have a bigger and better trained workforce to go into the jobs which are being created. So we've got to attend to those capacity pressures. We've got to bring the Budget back to the black and back to surplus.

I noticed today Mr Hockey was out there saying that he was going to bring the Budget back to surplus next year. I bet all his colleagues that were watching morning TV would have chocked on their Weeties when he said that this morning. It's now absolutely incumbent upon Mr Abbott next week to demonstrate how he could bring a Budget back to surplus next year because there has been very significant short-term revenue weakness flowing firstly from the natural disasters in Queensland, and the cyclones, and the floods elsewhere in the country. And of course we are still living with the hangover, if you like, of the global recession and its impact on our revenues.

The global recession took away something like $30 billion worth of Government revenue for this year alone. Sometimes when I listen to Mr Hockey and Mr Abbott it's like they slept through the global financial crisis, they slept through the global recession and then they slept through the natural disasters that have occurred. We have short-term softness in our economy, but we have medium-term strength which is the envy of the developed world and what we will put in place on Tuesday night is a set of economic forecasts and settings which deliver for Australia. Bring the Budget back to the black, get more Australians in work and spread the opportunities of the boom to every corner of our nation.

JOURNALIST:

(Inaudible)?

TREASURER:

Well, we've been involved in a very substantial savings exercise but Minister Smith has made some announcements today. Mr Smith has outlined his plans for the future today but what we are doing is bringing our Budget back to surplus through a wide range of savings measures across a broad range of policy areas and everybody is going to do a bit of belt tightening.

JOURNALIST:

Will there be more money for the Immigration Department and the possible re-opening of the detention centre on Manus Island?

TREASURER:

Well, matters to do with regional processing have been addressed extensively by the Prime Minister this morning. I don't intend to add to her comments or to speculate about what may or may not be in the Budget in terms of numbers on Tuesday night.

JOURNALIST:

Will the Budget do enough to ease the Reserve Bank's concerns about inflation?

JOURNALIST:

Have you given up –

TREASURER:

Sorry one at a time.

JOURNALIST:

Has –

TREASURER:

Sorry this gentleman over here first and then I'm more than happy to come to you. The Reserve Bank makes the point that our fiscal policy is contractionary at the moment. It makes that point that we are coming back to surplus. We are doing our bit when it comes to reducing our call on public resources.

JOURNALIST:

One thing that hasn't been announced is whether the Government has given up on East Timor for a regional processing centre. Has your Government given up on East Timor?

TREASURER:

No the Government is pursuing a regional solution within the framework of the Bali process. Over and above that, I don't intend to say anymore.

JOURNALIST:

Should there be more money allocated to deal with the processing of asylum seekers?

TREASURER:

We will make all of our allocations in the way in which we normally do it within our Budget rules on Tuesday night and it will be there for everybody to see.

JOURNALIST:

Treasurer, what do you say to homeowners who have seen the value of their homes fall? Like in Perth you're looking at a 3 per cent fall and a larger fall in Brisbane over the last 12 months. What do you say to those people? That now is the time to be tough while they are seeing the value of their most important asset go backwards.

TREASURER:

The most important thing that we can do is provide secure employment for Australians. Security and a job is the most important thing that you can have and pursue in public policy. We've seen something like 750,000 jobs created in Australia during the period of this Government which has given a security to Australians that few other workers in other countries have had and, of course, we're going to build on that. So secure employment is absolutely fundamental for the security of the economy and to the peace of mind and security of families who are buying a home.
So first of all our most important priority is pursuing jobs, jobs, and jobs, and more secure jobs and that's why we are so intent on bringing the Budget back to surplus, because that enables us to have sustainable growth with a mining boom which delivers opportunities to a broader range of our people.

JOURNALIST:

What do you make of (inaudible) that people are actually better off on these cost of living terms. Does that not concur with the people –

TREASURER:

Well, there's a lot of people doing it tough and we have a patchwork economy. That's why the Government in the Budget is putting so much emphasis upon spreading opportunity to the whole of the country. Many people aren't living in the fast lane. To many people it's a bit surreal to hear talk about a boom. Not all areas of the country have low rates of unemployment so it is very important to recognise that we do have a patchwork economy.

But the Government recognises that people are under pressure from rising prices, in a variety of areas. That's why we delivered, three years in a row of reasonably substantial tax cuts. A very big emphasis on tax cuts to low and middle income earners by this Government over three years. A very substantial increase for example in the low income tax offset. It's why we delivered our commitment to increase the childcare cash rebate from 30 to 50 per cent. It's why we've delivered the Education Tax Rebate as well and included school uniforms. It's why we pursued the biggest single increase in the age pension in our history and it's why we are now pursuing our election commitment to give a substantial increase in Family Tax Benefit Part A to those families with teenagers who stay at school.

We recognise there are a lot of people who are doing it tough and we'll do what we can but the most fundamental thing we've got to do is bring the Budget back to the black, back to surplus in 2012-13, so that we take and ease pressures, if you like, or don't contribute to any of the pressures that are coming from the mining boom.

TREASURER:

As you know the RBA is talking about an unemployment rate getting down to 4.25 per cent by the end of 2013. Doesn't that require the Government to do more to increase participation –

JOURNALIST:

Well, the Government have made it absolutely clear that we are committed to do a lot more in the area of participation, to put in place fundamental welfare reform, to make sure that we train and skill our workforce. From day one – not just in the last little while – from day one when this Government was first elected we had a fundamental commitment to building the capacity of our economy, particularly when it came to the skills and education of our workforce and particularly our young people and you'll see that emphasis reflected again on Tuesday night.