Interview with Marius Benson
19 April 2012
SUBJECTS: Budget surplus, Joe Hockey call to end age of entitlement
David Bradbury, the Prime Minister said there's plenty of room for the Reserve Bank now to cut cash rates below 4.25 per cent because the surplus is being delivered in the Budget. Is it appropriate for the Prime Minister to be leaning on the Reserve Bank publicly like that?
Well, look obviously the Government has always consistently maintained the position that the Reserve Bank is independent in its judgments on the cash rate and there's nothing in the comments from the Prime Minister that would suggest any departure from that position. In fact the point that the Prime Minister is making, I think, is really self-evident and that is that to the extent that we are able to tighten the bias on fiscal policy, and that is return the Budget to surplus, we are providing more flexibility when it comes to monetary policy. Now that's a matter obviously for the Reserve Bank in terms of any future decisions they take on the cash rate.
Given how wafer thin the expected surplus is expected to be, is it likely to have any effect on the Reserve's thinking?
Well, look, getting the Budget back into balance and indeed back into surplus is about trajectory, it's about direction, it's about momentum. It's about ensuring that we hold good and deliver on the commitment that we have made. Not a political commitment but an economic commitment. Financial markets all around the world will be focusing in on the Budget as we hand it down. And, as the IMF has consistently said, that governments who have the capacity to do so should be returning their budgets to surplus. We're in a position where that is possible. The IMF just yesterday indicated that we are one of the leading economies, in fact the standout performer when it comes to advanced economies, and we are committed to getting the Budget back into surplus.
Joe Hockey, the Shadow Treasurer, has been giving his views on some aspects of economic policy overnight in a speech in London. He says it's time to reduce the size of the state and end the age of entitlement. Do you agree with those broad sentiments?
Well look, can I say there are two broad issues here that arise from Joe Hockey's comments. The first one is that, of course, as a Government we support targeted measures when it comes to providing support and assistance to families, individuals and to those that need support throughout the community. And that's what we have delivered. In fact, there are many examples of where we have ensured there has been a better targeting of that support. The irony is that on most of those fronts, Mr Hockey and the Liberals have opposed the measures that we've introduced for purely populist political reasons, they've done that. We saw the means testing of the private health insurance rebate, even when it came to the means testing of the baby bonus and rolling that into a system where payments were made over time. Many of these measures were opposed by the Liberals. That's the first point. The second point that arises, and this goes to the philosophy of Mr Hockey's comments, what I think most Australians would be disturbed by is this suggestion that somehow we should be measuring the success of our social safety net against the benchmark of what's happening in other countries within the Asian region. Now this seems to me very much about being a race to the bottom when it comes to cutting away and stripping away some of the basic support structures that we have in the Australian social safety net. Now Mr Hockey is suggesting that that's the direction we should be taking, but I think it's incumbent upon him to set out exactly what he's talking about here. What are the entitlements and the support structures that are in place that he wants to rip away? Because we can go and have a look at some of the countries that he's identified in Asia, Hong Kong, Indonesia, we can look at these countries and have a look at the social safety net they have in place. If Mr Hockey doesn't fill in the blanks, I think we are all left to conclude that that's the sort of vision that he has in place for the type of social safety net that we should have in the future and frankly that makes a very, very desperate race to the bottom.
David Bradbury, thank you very much.
Good to talk to you Marius.