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

24 January 2013

Doorstop Interview

Brisbane

SUBJECTS: IMF World Economic Outlook; Queensland Government's misinformation on health funding; Infrastructure; MRRT; inappropriate comments; Budget 2013

TREASURER:

I wanted to say a few things about the World Economic Outlook which has been released by the IMF overnight. They have expressed cautious optimism about future growth in the global economy and certainly cautious optimism is justified if policy makers get the big decisions right over the next 12 months. And in particular, policy makers in the United States when it comes to the conclusion of the negotiations surrounding the debt cap there and the other issues associated with the fiscal cliff.

I think everybody can see what a dramatic impact there was on the Australian economy, and particularly on revenues, from the global volatility in the global economy last year. And whilst our economy is quite resilient, whilst we have solid growth, we're not immune from those events in the global economy and events in the second half of last year led to very significant revenue write-downs. And indeed we lost in the first four months of the financial year the entire write-down that we put in our mid-year budget update. And that was a consequence of volatility in global markets and it was a consequence of the impact upon commodity prices. So I think what events last year demonstrate is that we're not immune from all these events but thankfully in Australia we have low unemployment and we have strong public finances. We have low debt and we have lower interest rates. But naturally as we go through the beginning of this year we'll all be keenly looking at events in the global economy and certainly we'll all be hoping that policy makers do get the big decisions right because they do have significant implications for growth and for revenues in the Australian economy .

I also want to say a few words about health funding because regrettably we've seen today the Queensland Government use taxpayers' money to run a political campaign of misinformation and propaganda. The facts are these. The Queensland Government in its Budget last year cut health funding by $3 billion. What we have here is basically the State Budget 2012-13, if you go through it you can see the $3 billion worth of cuts in the State Government's own Budget papers. For example, on the portfolio overview here on page 1: 'staffing reductions across the system will deliver $1.646 billion over four years and will see a reduction in 2,754 full-time staff equivalents.'Now it goes on and on to detail really savage cuts which were the decisions of the LNP and the Premier, Mr Newman, cuts which have had a really savage impact across the State but particularly here in our local community on the Northside where there's a far higher proportion of health workers living in the area because of the Royal Brisbane Hospital, Prince Charles Hospital, Eventide Nursing home and so on.  I've just come from a meeting with workers who are in the gun over at Prince Charles Hospital this morning because in addition now it appears to the 4,000 staff that the minister fessed up to sacking in health last year, they're now talking about a further 1,000 staff reductions, or sackings, within the northern region itself. And to try to shift the blame for this decision on the Newman LNP Government they're somehow trying to blame the Federal Government – and that is simply untrue, and it is nothing more than a political attempt to try to escape responsibility for decisions that they took and were proud to own when they bought down this Budget last year. You didn't hear from them then about 'this is all the Federal Government's fault', and I'll tell you why. Because we signed with the States a very comprehensive deal which gives very generous increases in health funding, including generous increases in health funding to the Queensland Government. Health funding from the Commonwealth to Queensland goes from $3.1 to $3.7 billion over 4 years - a $600 million increase. So at the same time as the Queensland Government is pulling out their $3 billion, we're putting in increased funding, yet they're going out and trying to claim that somehow there is a reduction in federal funding to Queensland.

Now, their claim rests on the fact that there is an indexation clause in our federal arrangements with the States. The State Treasurers and myself signed an agreement in 2011 about that indexation clause which gives very generous increases in money. That indexation clause is impacted upon by various data which comes to the Commonwealth and we are required by law to implement indexation as it is outlined in that agreement. For example, if the indexation were to change and there were to be funds over and above what were expected we would pay it, and if the indexation changes the other way it changes - I'm required by law to do that. So for the Queensland Government to somehow claim that there have been federal cuts to their funding is simply wrong, dead wrong. They are a signatory to the agreement, to the process and to the formula.

So at the time that the Federal Government is putting increased funds into Queensland the Queensland Government is pulling out those funds, sacking workers, putting a dark cloud - as one of the workers expressed to me this morning - over the lives of thousands of people. But worse than that, what I am now beginning to hear from people right at the coal face in our hospital system, these cuts have the potential to endanger lives and that is how irresponsible the Queensland Government has become. They are simply cutting indiscriminately in a cruel way, in a cold-hearted way, and it is going to impact on frontline services and they are now so, if you like, scared of the public view of what they're doing they're seeking to deflect political attention from the savagery of the cuts that they have put in place over the last six to nine months. So with those few words, I'm happy to take questions.

JOURNALIST:

Does the indexation agreement result in less funds flowing to the States?

TREASURER:

The indexation agreement kicked in and it's seen a change over a number of States but is not a reduction in funding at all. The increase in Queensland is $600 million. The indexation arrangements will change from time to time as per the formula. These indexation clauses exist in just about all of our agreements and they click in automatically and there's generally nothing said about them. The only reason the indexation issue is being raised here is entirely political by the Queensland Government seeking to hide their responsibility for the savage cuts outlined in their Budget to health services right across the State.

JOURNALIST:

(inaudible)  the agreement doesn't affect the $600 million, and they're still getting $600 million -

TREASURER:

Yeah, absolutely. Absolutely they are, too right.

JOURNALIST:

It's not just Queensland though that is making this argument, is it?

TREASURER:

No, it's not just Queensland because the Baillieu Government in Victoria is also so embarrassed about the health cuts it is putting in place, it's seeking to deflect their responsibility. You see, if this indexation clause had been different there could have been a situation where more came on top of the $600 million here - we would have paid it, because that's what the indexation clause says. These clauses operate independently for a good reason, that there is certainty based on objective criteria and that's what the Commonwealth Government has done. But because the Liberals in Australia have got this slash and burn mentality when it comes to public health, they've never been life-long supporters of Medicare, they've never really been believers in universal public health and that's what you're seeing happening here. The old Liberal agenda of ripping away universal public health which goes to the very core of Medicare and in this State has been here a lot longer. One of the great decisions taken by Labor governments in this State very early on was the free public hospital system. That's what Labor stands for and that's what the LNP is actually opposed to.

JOURNALIST:

Mr Swan, what's your response to Premier Newman's claim that he's the most reformist premier since Jeff Kennett in the mid-90s? And secondly, admitting that there'll be more than 14,000 job cuts, but it would be the Federal Government's fault he said (inaudible)

TREASURER:

Well, he is the most destructive Premier I think in our history and he's the most out of touch Premier in our history, given he's only been there a relatively short period of time. This slash and burn mentality, however, is only a foretaste of what Queenslanders would see if Tony Abbott became Prime Minister. Tony Abbott has been here on numerous occasions, he's never said one critical word - one critical word - about the slash and burn approach of the Queensland Government. It has his full support and it's precisely the sort of program Tony Abbott will put into operation if he were ever to become Prime Minister of Australia.

JOURNALIST:

Treasurer, Heather Ridout and John Edwards have called for more infrastructure spending. Have they spoken out of turn to the newspapers, or do they have merit in what they're saying?

TREASURER:

No look, this Government is big on infrastructure, and we have been very big investors in infrastructure and we have increased substantially the investment in infrastructure in our period in office.  Building the NBN for example is one of the biggest infrastructure projects in our history with enormous potential, a huge microeconomic reform, one which is going to lift the productivity not only of businesses but households. We have done so much more when it comes to road funding, doubled it I think. When it comes to rail funding, and I think it has increased by a factor of eight or nine or ten. If you look right across this State for example, I mean there's an enormous amount of investment in the State of Queensland under the Gillard Government. Let's just run through: in Queensland $8.7 billion as part of our six year nation-building program, we've doubled infrastructure spending in Queensland from $143 per Queenslander to $314 per Queenslander. So, big investors in infrastructure, and a big agenda for the future.  Now, we established Infrastructure Australia because we know there has been, particularly left to us by the Liberals, a huge infrastructure deficit. 

So Infrastructure Australia is doing good work. They've also got a report before the Government at the moment on future infrastructure financing which the government is taking very seriously. This government has been a big investor in infrastructure and it welcomes the sort of debate we're seeing in the papers today.

JOURNALIST:

 It's also suggested that State and Federal Governments should actually go into more debt to fund infrastructure  -

TREASURER:

As I said, we have a report before us on infrastructure financing, which has come through Infrastructure Australia. The Government's giving it very serious consideration. When we're finished that serious consideration we'll announce our conclusions.

JOURNALIST:

 Treasurer, why don't you want to say how much revenue the mining tax has raised?

TREASURER:

Well let's be very clear, we get monthly data on resource rent taxes and I think the last lot of monthly data had resource rent taxes raising around $500 million. But the tax office has said, because of confidentiality provisions, that it can't give information on the origin of that revenue and that's their decision, not mine.

JOURNALIST:

 But the Greens don't accept that argument, the Opposition doesn't and neither does the Tax Institute?

TREASURER:

The Tax Office accepts that position, because that is their position, and I would have thought that everyone out there that was concerned about good public administration would see the common sense in observing what the Tax Office says about confidentiality provisions because they are important to every Australian and it's not a decision of the Government, it's the decision of the Tax Office.

JOURNALIST:

 Are you hiding behind that advice because the figures aren't good. Even Kevin Rudd said they're not?

TREASURER:

Well, there is $500 million in the published data from resource rent taxes, so I think that blows the premise of that question away all together.

JOURNALIST:

 Homophobic comments have been made by members of the Katter Australia Party, how do you think they should be dealt with?

TREASURER:

Well, I don't think, or anybody can, condone those sorts of comments wherever they come from and I think the last time I heard Bob Katter on this subject he said the same.

JOURNALIST:

Are you contemplating any changes to superannuation in this Budget, in particular change to lump sums because it's still quite generous?

TREASURER:

I don't speculate in the lead up to Budgets about what is or isn't in Budgets, or under consideration.

Thanks very much.