Assistant Treasurer, Minister Assisting for Financial Services & Superannuation and Minister for Competition Policy & Consumer Affairs
5 March 2012 - 18 September 2013
Interview with David Lipson
Sky AM Agenda
19 April 2012
SUBJECTS: Budget surplus, Joe Hockey, foreign aid
Welcome back. Joining me now, the Assistant Treasurer David Bradbury and Shadow Small Business Minister Bruce Billson, thank you very much for your time this morning. I want to go first to the Budget surplus and the Prime Minister today will aggressively link the surplus goal to lower interest rates. David Bradbury, quantitatively how much impact on rates does a surplus have?
Well the first thing I should say to people is that they should wait until the Prime Minister delivers the speech before they start forming judgements about what the message underpinning the speech might be. But in relation to the Government's commitment to returning the Budget to surplus, we have always maintained the argument that it is important that we do that for a number of reasons. First and foremost it is important that we give the Government in a fiscal sense the opportunity to prepare for any future shocks that the global economy might thrust upon us.
But equally it is important to restore fiscal policy to a tightening bias and in doing so, that of course will ensure that there is maximum flexibility for the Reserve Bank as they make the decision whether or not to adjust the cash rate. I emphasise the point, and this is a very consistent point that the Government has put, and that is that the Reserve Bank is independent from the Government, it makes its decisions independently. Plenty of people have a view out there of what should and shouldn't happen and that is to be expected in a democracy but in the end the Reserve Bank is independent and will take its views from information before it. But, clearly to the extent that we return the Budget to surplus and tighten fiscal policy that does provide maximum flexibility.
Yeah and one of the quotes in this morning's papers is that the Prime Minister will say that the Reserve Bank has plenty of room to move on interest rates. Some reporters say that this really borders on pressuring the Reserve Bank, Bruce Billson what do you think?
Well it certainly sounds like jaw-boning to me. I mean the Reserve Bank will certainly be getting the message from the Prime Minister and isn't it hypocritical how a couple of weeks ago you can't say anything about Fair Work getting on with its work in investigating the Craig Thomson saga and that was a front to good governance and democracy but here we've got the Prime Minister telling the Reserve Bank what it should do and ignoring what really needs to be done. This is a picture of where the budget has gone under Labor; this is the trajectory under the Howard Government.
All of these Budget deficits, the accumulated $167bn of them, this debt escalation that has happened under this Government and that is what is putting upward pressure on interest rates and the currency. Now at last the Government seems to have recognised the connection and this speech sounds like the longest admission note that the Government has got it wrong, that it's spending and debt and deficit binge has got to stop. A message the Coalition has been putting forward and at last it seems to have not only gotten to the Prime Minister but David Bradbury sounds like he is interested in fiscal responsibility and bring that on, that should be very welcome for everybody.
Bruce can you show us on that chart where the big X is that says this is where the Global Financial Crisis hit? Can you show us where you put that because unfortunately when you look at the massive write-down in revenues that the Government faced, you recognised that the impact of the Global Financial Crisis not just on this Government and in fact if you want to get into a discussion about the relative strengths of the economy, have a look at what the IMF said. The IMF clearly said that we are a standout performer when it comes to the economy. David can I just address the premise of the question that you asked...
Yeah I would like you to address that please, is the Prime Minister jaw-boning the Reserve Bank?
David I'm not sure where you are quoting that from but I did see quotes in the paper this morning that were along the lines of what you've said and at the end of the quote it said if they choose to do so. I'm not sure if that existed in the quote that you've just quoted but that does provide the context in which these statements are being made.
But can I just make what I think is a self evident point, and that has been made by the Government previously, let's wait and see what the Prime Minister has to say but I expect it will be along the lines of what we've consistently said and that is at a time where we have low unemployment, growth returning to trend, we have a record pipeline of investment, we're a standout performer of the advanced economy, now is the time for us to return the Budget to surplus.
It is alright to go into deficit when you need to, to support jobs in times such as the Global Financial Crisis, but now that we've been through that period it is time for us to return the budget to surplus and that is what we intend to do.
Okay a very quick response Bruce.
*Inaudible* happens to coincide apparently with every day Labor has been in office. If the GFC response is what has caused this debt and deficit, why has it never stopped? Why has every year since this Government has been elected a $40bn uplift every year since this Government has been elected in the expenditure of the Commonwealth? Why are we borrowing $100m a day to create this debt ski-slope *inaudible*.
Okay guys I do want to move on, we've got a few topics to get through and you've both had a good crack at that one. I want to ask about Joe Hockey's comments from London overnight. He delivered a speech the theme of which was ending the age of entitlements. He says a Coalition Government will review the whole range of welfare payments and that we need to compare ourselves with our Asian neighbours. Let's have a quick listen to Joe Hockey.
HOCKEY (LATELINE): Western nations are in financial trouble and they're in financial trouble because like a bad parent over the years they've always said to voters 'you can have what you want' and sooner or later it comes to an end when the burden of debt starts to cripple their economy.
Bruce Billson that sounds like a prelude to cuts or at least an aggressive campaign to welfare cuts.
Well David even some of your media colleagues have come out this morning saying that this was a speech in London about what is happening in Europe and North America and there are some good lessons for those governments about how you can better target expenditure to make sure that you don't build in an insatiable demand in the government's purse when revenues might not be able to sustain it.
But what about the review to welfare?
Well if you read the speech there is actually nothing in the speech that says that. It actually talks to its North Atlantic audience and makes the point that in Australia a number of measures have been taken, admittedly over a number of governments over many years that put us in a less vulnerable situation than the North Atlantic economies face now. So to suggest that it was somehow an announcement to run over every government program where there is a payment made in Australia is a complete overstatement.
The speech was measured, it was thoughtful, and it was targeted to North American and European audiences, it pointed to some useful measures that have been put in place in Australia that support fiscal sustainability, made the point that you need to keep doing it and the message that came out of it for our domestic audience was look what can happen to Australia if you get on this debt and deficit and overspending binge that you see on the other side of the globe. So nothing of the sort is being suggested and the scare campaign of some within the Government are trying to raise.
David if I can just respond to that, I'm not sure of when Joe Hockey gave the speech but when he went on Lateline last night he was talking directly to the Australian audience. What I found extraordinary about what he had to say yesterday, there were a couple of things. The first thing is that he is out there saying that it is important we have government support being well targeted. Here I am scratching my head why on those numerous occasions that this Government has taken some difficult but appropriate decisions to target entitlements and welfare, think about baby bonus, think about private health insurance just to name two and there have been others, we couldn't rely on the support of the Opposition when it came to those matters.
But I think the more troubling aspect of what Joe Hockey had to say, speaking to a domestic Australian audience on Lateline last night, not an international one, was that he is now setting up as the benchmark for comparison for an appropriate support network in this country, those of our Asian neighbours. Frankly in some of these countries they do not have a social support system in place. If what Joe Hockey talks about is matching them on competing with them on these terms that is about a race to the bottom when it comes to providing support and assistance to struggling families right around this country. Can I make this point, that if that is where Joe Hockey wants to take us on our social support system, that is exactly where the Liberals want to take us when it comes to labour standards. Because Work Choices was all about delivering lower standards to match with those countries that have standards that are far inferior to what we have.
If it is an age of entitlement under the Liberals, that is only for the big billionaires with the tax cuts that they get, when it comes to working people Joe Hockey says he wants to strip away government support.
Okay I'll get a response that was quite a long answer there.
It was wasn't it? Sounded like he was auditioning for Scary Spice for a reformation of the Spice Girls. What utter nonsense David...
You could be Posh.
I wouldn't be, I would be listening to something like The Eagles with a little more soul but that is a discussion for another day. But what Joe was pointing to were the book ends to an approach to welfare contrasting to what happens in some countries with what challenges are faced in North America and Europe. For you to suggest that that is somehow now what the Coalition plans to do here, that is utter utter nonsense...
Well what about what he said on Lateline?
Hang on, you just had a great run at it David let me have a small crack at it. To go the issue of private health, an issue that was directly addressed was your idea of being fair was push everybody on to waiting lists and not put an incentive in front of people to provide for their own health requirements and to transfer costs to the state, that just shows you how shallow and out of ideas the Labor Government is and why they're now photocopying Coalition policies.
We've only got a minute left or less but I just want to get your thoughts very quickly in 20 seconds or less the story about foreign aid and the boost to foreign aid potentially being delayed to make up some Budget savings. Is that a good idea David Bradbury?
Well there is a lot of budget speculation out there at the moment, not just on this issue but other issues and it's not going to surprise you to hear that I'm not going to engage in any of that speculation.
Okay, Bruce Billson?
David that just shows you why the Government is untrustworthy. They don't want to engage in Budget speculation unless it is their own, unless it's helpful speculation they've activated. We've seen this with the incentive for mature age people, this is why people look at this Labor Government and think they can't trust them.
That's just a cheap shot.
We're out of time gentlemen, I'll have to leave it there but thank you very much for your company.