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 2012

Interview with Laurie Oakes

Today on Sunday

SUBJECTS: The importance of returning to surplus, the new Loss Carry Back scheme to benefit small business, the Schoolkids Bonus, dental health package, welfare reform, Labor Government's achievements

OAKES:

Mr Swan, welcome to the program.

TREASURER:

Good to be with you Laurie.

OAKES:

Is the future of the government on the line with this budget. Is it that important?

TREASURER:

I think it's a very important budget for the country Laurie, for the future of our economy and for our economic prosperity. Getting the budget back in the black is critical, particularly because of economic uncertainty in the global economy. It's a very important buffer but also it gives maximum flexibility to the Reserve Bank to cut interest rates if they independently decide to do so and they did so this week. So an important budget for the economy because our economy walks tall in the world. If you look at what's going on, you've got unemployment in Spain at 25 per cent, the British economy has gone back into recession. Here we have unemployment at 5.2 per cent. We've got a very strong investment pipeline, we've got contained inflation. What we've got to do through this budget is to make sure we keep those economic fundamentals strong so we can continue to deliver for working families in Australia.

OAKES:

I noticed the Reserve Bank on Friday actually gave a tick to your argument that you have made room for interest rate cuts. Will the Budget create more room for more cuts?

TREASURER:

Well, the whole point of coming back to surplus and building surpluses is to implement a strict fiscal policy and we said we would do this back in 2009, back in 2009 when we moved to protect our economy from the global financial crisis and the global recession we outlined our fiscal strategy.

OAKES:

But everything's changed since 2009 and you are sticking to the same strategy.

TREASURER:

That's right because here growth has returned. The global economy has recovered but there are aftershocks in the global economy. But here, we have an economy which is the strongest growing economy of any major developed economy and the conditions appropriate for us here are quite different to elsewhere in the world. So we must come back to surplus. We must make sure that inflation is contained and in doing that, and in delivering that strong economic management, that provides room for the Reserve Bank to cut rates. So for example Laurie, if you've got a $300,000 mortgage at the moment you are paying $3,000 a year less than you were paying when the Liberals left office.

OAKES:

Are we talking about a token surplus or will it be something more substantial?

TREASURER:

It will be a modest surplus but the surplus will build over time because as you would be aware the aftershocks of the global financial crisis have hit our revenues. Our revenues are down something like $150 billion and that has meant for this budget we've had to make very significant savings. Very significant savings because of those revenue write downs, but we've also had to make savings so we can make room for our new priority particularly to assist families and struggling small businesses.

OAKES:

I got a tweet this morning from a business person who said you get money from the Government if you give birth to a child. What about the people who give birth to businesses? Are you going to be doing anything to help those businesses that are losing out in the patchwork economy?

TREASURER:

Well, too right. I mean, we do have a patchwork economy and while our economy is returning to trend growth, not everybody is in the fast lane of the resources sector, for example. So many small businesses out there are doing it tough. For example, we've already got a commitment to give the $6,500 a year instant asset write off, a huge boon for up to 2.7 million small businesses. That's starting on 1 July.

OAKES:

That's not a budget announcement.

TREASURER:

That's right, but in this budget we will have a new initiative for small businesses that are doing it tough called Loss Carry-back. Now, this was recommended to us by the Business Tax Working Group. It's a very important measure because at the moment small businesses can only carry their losses forward to be offset against future income and future profits. They can't carry their loss back and offset it against past profits. So what we're going to do in this budget is we're going to implement that recommendation from 1 July. That's going to be really important for any businesses from 1 July that strike choppy water and want to have the certainty to be able to invest, to carry on their business into the future. They can carry that loss backwards. That will be capped at $1 million worth of losses. The maximum benefit to any firm of $300,000. But a huge benefit to many struggling small businesses.

OAKES:

What will it cost?

TREASURER:

These matters will all be outlined on budget night. It's a modest cost but it's an important cost over the forward estimates to assist small business.

OAKES:

So will it be in the hundreds of millions?

TREASURER:

Yes, certainly. It's a significant initiative to help those struggling small businesses out there to get through tough times in the patchwork economy. I think it will be welcomed by small business because along with the instant asset write off, this will be a significant package for small businesses across Australia that aren't in the fast lane. They're wealth creators that do employ a lot of Australians.

OAKES:

We've seen the phrase Robin Hood appearing in descriptions of this budget. Is that an accurate description of what you've got in mind for Tuesday night, a Robin Hood budget?

TREASURER:

No, I think we have to make a range of savings across our budget and the principle that I've adhered to because I'm a Labor Member of Parliament and I'm a Labor Treasurer, is that in making those savings, and the savings across this budget are quite significant, that we've done everything we possibly can to protect low and middle income earners and assist them with the cost of living. When low and middle income earners have jobs and are doing well, and have cash in the pocket, well that's good for business too.

OAKES:

There are a couple of leaks or in fact they're announcements in today's paper about budget measures. For example there's one headline: ‘$820 Gillard's gift for school kids'. Tell us about that.

TREASURER:

Well, this Schoolkids Bonus is a measure which builds on the Education Tax Refund which we implemented in our first budget. Up until now too many families have not been getting the full benefit of the Education Tax Refund. So what we decided to do is, if you like, change the Education Tax Refund, make it immediately available, and make it payable in full to families. That's what we've decided to do in this budget. That will be, not just be good for families, because the cost of education tends to really hit the family budget, that will be good for business too.

OAKES:

I've heard that something like one million families aren't claiming the amount they're entitled to. That's extraordinary. Why doesn't the Government just tell them they're entitled to it?

TREASURER:

Well, we have done all of that, but the original design asked families to put forward their receipts on a yearly basis and a large number of people did not even apply and many who did didn't necessarily get the get the full amount.

OAKES:

So this way it will just go into their bank account automatically.

TREASURER:

That's right, absolutely because I think it will be welcomed by families who do it tough, you know, at various stages through the school year. It gets pretty hard when you're going out there and buying all of the kit and the gear. This will be there for them when they need it.

OAKES:

And half a billion for dentistry. What's the detail of that?

TREASURER:

This is a blitz on public dental waiting lists. It's something that we as a Labor Government are very keen to implement. We have to do this with the states but we decided to make the provision because the numbers on public dental waiting lists are extraordinarily high, something like 400,000 people. So we're pretty keen on making room in the budget to have this one-off blitz to get those numbers down. There's a lot of people out there who are suffering.

OAKES:

Now, the Greens have attacked your proposed cuts and single parent payments. They claim that you're actually being harsher than the Howard Government was. In fact you opposed the Howard Government when it tried to make cuts in this area. How do you respond to that?

TREASURER:

Well, in our last budget we implemented a number of changes to make sure it was possible, particularly for people who were supporting children, to get off benefits and into work. Very significant initiatives in that budget when it came to reducing taper rate on private income that was earned by people who were on these benefits, very significant increases in childcare. What we want to do is to make sure that those people that can work, do work. What we want to do is provide the support to enable them to go to work.

OAKES:

But wasn't this what the Howard Government said in 2006 and you opposed it?

TREASURER:

Yes, a number of us did oppose what they did in 2006, but in our last budget we put in place a very substantial number of welfare reforms including those changes to the taper rate I was talking about before, and what we are determined to do is to make sure that we deal with intergenerational welfare dependence. Those measures that were put in place in the last budget are working and we're building on those measures in this budget. The precise nature of those measures will be there for people to see on budget night.

OAKES:

How big of a concern is it for you that the Greens and some of the Independents, they don't accept your argument for the surplus. They call it a political surplus and they're talking about opposing individual budget measures.

TREASURER:

Look we've had a good working relationship with the crossbenchers in this Parliament and we will continue to work with them to get all of our budget measures passed because the surplus is really important. It's just not some theoretical measure. It matters to people around the kitchen table if we get good fiscal policy in place, and if the Reserve Bank can cut interest rates that matters around the kitchen table. So the surplus is something that people have got to see in its wider economic context. I believe that they will responsibly see it that way. The only people who won't responsibly see it that way are the Liberals, who are starting this process $70 billion behind. Every time Tony Abbott sticks his hand up to oppose one of the saves that we announce on Tuesday night he will be sending his budget further into the red.

OAKES:

But if the Greens and the Independents knock back some of your main savings measures, that makes the Government look weak and ineffectual.

TREASURER:

Well, we'll be out there arguing the economic case for our savings and the economic case for the surplus because it's important and critical for our future economic prosperity.

OAKES:

Are you depending on Tony Abbott to get the budget through for you?

TREASURER: No I'm not. What I want to do is have a discussion with the Australian people about the importance of these measures, how we can lock in our prosperity, how our economy can continue to walk tall in the world if we lock in our strong economic fundamentals.

OAKES:

You're trying to produce and sell a budget, but in the papers today we've still got stories about the Labor leadership, about frontbench panic over the carbon tax. Even a quote attributed a left-wing powerbroker, unnamed, that both you and Julia Gillard should hand in your commissions. Now, are there days when you don't feel like getting out of bed?

TREASURER:

I don't pay any attention to that sort of commentary in the papers. I've heard it all before. What the Prime Minister and I are doing is getting on and getting the job done. Whether it's the Schoolkids bonus, whether it's paid parental leave, whether it's what we're doing in terms of the dental blitz or whether it's what we're doing for small business. We've got the runs on the board Laurie, and we're getting on with doing that job. This Prime Minister is as tough as nails and she ain't going anywhere.

OAKES:

That doesn't alter the fact that a large part of your caucus is panicking and they are saying the carbon tax is killing them. What can you do about that? You can't reserve it but can you do something to counter the cost of living impact of the carbon tax more than you've done, which obviously isn't enough to quieten people's concerns?

TREASURER:

Well, Laurie, it hasn't been designed in this context but the measure that we announced in terms of the school kids bonus is a very important cost of living measure. We've taken the existing measure that we've got in place, we've redesigned it and we've put the cash in the hands of parents when they need it. That's pretty important and that's what Labor governments do irrespective of any particular story which appears from time to time in any newspaper anywhere in the country. The Prime Minister and I do not get deflected in any way by those sort of stories.

OAKES:

But is the cost of living problem real? The survey produced by the Social Economic Modelling Unit the other day that actually said that in 2010, the average family is $224 better off than theywere in 1984. Do you accept that?

TREASURER:

Well, it depends on where you are and how you measure it. I haven't seen those figures Laurie, but what we have done from day one is put in place a range of measures which have helped parents bringing up the next generation of young Australians with the cost of living. Just go through the full list of them. What we have done in terms of childcare: the 50 per cent rebate for childcare, very, very important for working families. What we've done to redesign the family tax benefit system, very important for working families. Paid Parental Leave for the first time in the history of this country, the Education Tax Rebate, now the School Kids Bonus redesigned. These are all very important cost of living measures for low and middle income families in this country. Beneficiaries of Family Tax Benefit Part A will be getting the School Kids bonus. A very important addition to the benefits they receive because if you are bringing up kids in this country, it's an expensive business. We understand how important the cost of living is, which is why we put this wide range of measures in over a long period of time.

OAKES:

Final question. Do you feel you are wasting your time? Do you accept that the public is no longer listening to Julia Gillard and by extension are not listening to you?

TREASURER:

I don't accept that for one second Laurie. I mean, when we moved to protect this country from the global financial crisis we put in place a range of measures which were extraordinarily effective. What we did was we kept Australians in jobs. Sitting here with an unemployment rate of 5.2 per cent in Australia when unemployment in Spain is 25 per cent, when the UK is going back into recession, when we still see challenges in the United States economy. I'm very proud of what Australia has achieved over the past five years and I know Australians understand just how well we do compared to the rest of the world. It doesn't mean to say that everyone in this country is doing well. It doesn't mean to say that everybody is in the fast lane in the resources boom. What we've got to do is to make sure more Australians all have a stake in our prosperity and a say in our future. I think that will be what counts at the next election.

OAKES:

Mr Swan, thank you and we'll do it all again on Tuesday night.

TREASURER:

Thank you.