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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

5 November 2012

Interview with Sabra Lane

ABC Radio, AM Program

SUBJECTS: G20 Finance Ministers' Meeting in Mexico; Global economy; US fiscal cliff; Deloitte Access Economics prediction; GST.

EASTLEY:

The Federal Treasurer Wayne Swan is in Mexico this morning for a meeting of the G20 Finance Ministers, where they'll discuss the difficult recovery of the global economy. The Treasurer joins us now from Mexico to speak with AM's Chief Political Correspondent Sabra Lane.

LANE:

Mr Swan, good morning, welcome to AM. We'll get to your overseas trip shortly, first though that prediction from Deloitte Access Economics - a deficit of $4 billion and the Commonwealth only pocketing $500,000 from the Resource Rent Tax. Is that a more realistic snapshot than the budget update a fortnight ago?

TREASURER:

No, I certainly don't believe that it is and of course Access Economics doesn't always get it right. The mid-year review shows that the Government's on track to return the budget to surplus, but of course we know we had to write-down revenues substantially in the mid-year review and we wrote them down by probably $22 billion.

LANE:

The former Liberal premier Nick Greiner who reviewed the carve-up of the GST for you and handed you the final report on Friday, says it's stupid not to have a discussion about broadening the base of the GST or lifting the rate. Is it stupid?

TREASURER:

Well I don't agree with Mr Greiner about either lifting or broadening the base of the GST - that's a very firm position of the Government. What we have done since we've been in power is put in place a series of changes in the tax system which reward incentives in the tax system, I think, and importantly, provide that incentive for growth in the economy.

We believe that the GST, by lifting it and broadening the base will hit people, particularly battlers, really hard and that's not a priority of this Government. We support working families in Australia to ensure that they have a fair go in the tax system.

LANE:

Every budget update you've delivered since the Global Financial Crisis, you've acknowledged, the Government's revenue base has collapsed and won't return to what it used to be.

TREASURER:

What I said is that revenues have been written down by about $160 billion over five years as a consequence of the Global Financial Crisis and the global recession. What the Government has done has been to make very substantial savings in a structural way in the budget so we can bring the budget back to surplus, because we've got growth around trend, a really strong investment pipeline, contained inflation and strong public finances. With that we've had room in the system to put in place very big Labor reforms, such as Paid Parental Leave and that very big increase in the base rate of Age Pension.

LANE:

Is the Government looking to lower the threshold for goods bought online overseas? Things currently worth $1,000 or less are GST free, dropping that threshold could help fill your coffers.

TREASURER:

Well I've seen the comments from Mr Greiner. I only received that report in my office on Friday. I will take time to consider that report and I'll publish it in due course, and of course I'll have a discussion with the state treasurers about that when we meet later in the year.

LANE:

Your official G20 meeting starts in a few hours, you've already have a couple of bilateral meetings there in Mexico. The situation with Greece and the Eurozone will dominate, is this going to be another world talk-fest with little result?

TREASURER:

It's a regular meeting of G20 Finance Ministers, it's a great opportunity to get an update and a first-hand assessment of what is going on in the global economy and I'll also be meeting with Ben Bernanke the Chairman of the Federal Reserve, Christine Lagarde from the IMF and also Treasury Secretary Tim Geithner. It's a very important opportunity to get an update, but also to talk about what we must do to reinvigorate global growth because global growth with a 3 in front of it simply doesn't cut the mustard.

LANE:

What can you really hope to achieve though? You're flying into Washington tomorrow; you'll be there for the Presidential election. Given that most attention will be on that can you really achieve much while you're there?

TREASURER:

I think we can achieve a lot. Talking with G20 Finance Ministers, firstly there's a recognition of the fundamental strength of the Australian economy and what I hope to achieve is to get more recognition of the need for reform in the global economy to reinvigorate global growth. I think that's a really important discussion for Australia. We're already seeing the consequences of lower global growth, particularly in Asia and the consequence of these events in Europe and the United States. It's really important to have that conversation.

LANE:

What will your message be to the US Reserve Bank Governor and the Treasury Secretary about that looming fiscal cliff?

TREASURER:

I think everybody understands in the United States and from both sides of the political spectrum that it's really important that that is dealt with swiftly.

LANE:

Mr Swan, thanks for your time.

TREASURER:

Thank you.