HOST:
Let's find out what the Government makes of it. David Bradbury is the Assistant Treasurer in Julia Gillard's Government, it's kind of like the junior portfolio to Wayne Swan, he's also an MP in Western Sydney. David Bradbury, good afternoon.
BRADBURY:
Good afternoon Raf, good to be with you.
HOST:
Thanks for joining us. Ah, look, this is not good for you in a significant sense, it's marking down the economy. You only need to cut rates when the economy's not doing too well. Isn't that the case?
BRADBURY:
Well, I don't think that's the proper charaterisation to put on this. Obviously the Reserve Bank has been mindful of international economic developments in cutting rates today, but let's put this in its proper context. We've been running a tight fiscal policy, we are determined to return the Budget to surplus. That occurs against a backdrop of solid growth, contained inflation, unemployment still relatively low and we have a record pipeline of investment coming into the country. These are the sorts of conditions that most economies in the world, most governments in the world, would be sticking their right arm up straight away and requesting. Obviously the economy is facing some challenges as far as international economies are concerned, but this will deliver real and significant relief to families and businesses all around the country. For a family on an average mortgage of around $300,000, you are paying $4,500 a year less in your repayments today than you were when our Government came to office in 2007. So that's significant and obviously that will mean that there will be a little bit more money in the pockets of families and businesses to make their spending decisions that hopefully will continue to drive more growth and employment opportunities for all.
HOST:
Does it make it harder? It clearly does make it harder to deliver a surplus, doesn't it, if this interest rate cut goes down because that does mean the international outlook is poor?
BRADBURY:
All of those factors, they contribute to the overall economic picture against which we frame the Budget and any decisions between Budgets in the lead up to MYEFO, but -
HOST:
I should say MYEFO's kind of like the mid-financial year update.
BRADBURY:
We call it the Mid-Year Fiscal and Economic Outlook, it's like the mid-year update and we're approaching that in the coming months. These are the decisions that we take but obviously if you're running a tight fiscal policy, if you're trying to contain your expenditure and make sure you're balancing your budget or returning it to surplus then that gives the Reserve Bank the sort of flexibility they have.
HOST:
So you're claiming some credit for the rate cut?
BRADBURY:
Well, the Reserve Bank's independent and they take their decisions independently, but let's just understand this. It is important from a fiscal policy perspective that we are containing expenditure and that we are not allowing our expenses to exceed the revenue that's coming in.
HOST:
Your forecasts - you tell me if I've got my figures wrong - your forecasts for the previous financial year was a $20 billion deficit, it came in at something like a $40 billion deficit.
BRADBURY:
Well if you go back a couple of years that's where the forecast had it.
HOST:
That's not a couple of years, the forecast figure comes just before the financial year.
BRADBURY:
The forecast you're referring to was two years earlier, so if you go back and look at what we had forecast would be the deficit and what was delivered, then it was pretty close to the mark.
HOST:
I thought the forecast and the budget, the budget press release, the 2011, the budget lock up, forecast for the 11–12 budget, that was a $20 billion deficit wasn't it? That's not two years ago, that's 18 months ago.
BRADBURY:
Well if you have a look at what was forecast and what was delivered there was very little difference.
HOST:
There was a $20 billion difference.
BRADBURY:
No, not in terms of those figures.
HOST:
I just want to pin you down on this. You tell me if I have my memory wrong. When Wayne Swan gave a press conference, when was it, May 2011, the forecast deficit is roughly $20 billion and then the real deficit that came through just last week was it? With Wayne Swan and Penny Wong? It's around $44 billion. I mean, I think those figures are important because if you say you're running a tight fiscal ship those figures matter.
BRADBURY:
Well if you look at the most recent update to that figure and if you look at what was delivered in the Final Budget Outcome it was one of the closest results in terms of -
HOST:
I'm not interested in the most recent update. When you stand up and present a budget and say it's going to be $20 billion in deficit, if that deficit doubles, that's significant isn't it?
BRADBURY:
Raf, the proof will be in the pudding and there will be a Final Budget Outcome in relation to this year and there will either be a surplus or there will not be a surplus. We are determined to do everything possible to make sure that we do deliver that. But let's remember this, that we will be returning to surplus faster than any other comparable nation. We do this at a time when our economy is growing stronger than any other comparable nation. We do it at a time when we have a record pipeline of investment coming in and when it comes to debt and deficit, particularly in relation to net debt, we are peaking at about one-tenth of the levels at which most of our competitor economies are at. So the overall picture is one of an economy that is doing very well in very difficult global economic circumstances. Now, we will continue to work hard to manage the economy in the best interests of all Australians. Obviously, running a tight fiscal operation - and don't just listen to me, don't quibble with the figures and listen to what I have to say, Standard & Poors, the other two major ratings agencies, they have given us the gold-plated triple-A credit rating. Now that's something, amongst those three agencies, that was never achieved under the previous government. We've delivered that. These are independent judges of economic strength and they've all given us a big tick.
HOST:
David Bradbury is with us, he's the Assistant Treasurer in Julia Gillard's Government, it's coming up 18 minutes to six o'clock, you're listening to 774 ABC Melbourne, my name is Rafael Epstein. David Bradbury's it's always a big issue; I think Bank of Queensland, if I have that right, have passed on a substantial part of the rate cut. Do you think more of the rate cut will be passed on by the major four banks than last time?
BRADBURY:
Well look, I see no reason why the full extent of this rate cut shouldn't be passed on, and in fact if you go to the statement that was issued by the Governor of the Reserve Bank you see that in that statement that he refers specifically to the fact that Australian banks have had no difficulty in accessing funding. So we're not talking about the sort of circumstances that we've previously seen, where access to funding has been a constraint that the banks have relied upon in arguments as to why they couldn't pass on the rate cut. Obviously the cash rate is one component in their overall funding cost but against the back drop of a situation where our banks and their ratings are very strong, their capacity to access finance on global markets is relatively strong, we see no reason at all why they shouldn't be passing on the full amount and certainly that's the view that we take. I know that Joe Hockey and Andrew Robb have previously been prepared to give them the green light to jack up their rates or not pass on the full cut. We don't see that being an appropriate response, we think that they should be brought to account and they should do all that they can to pass on the full effect of this cut.
HOST:
David Bradbury is with us, 1300 222 774. I'd like to know if you welcome the cut or not. Also, if you believe both the government and the opposition when they say they can run the right sort of fiscal ship. Before I let you go David Bradbury, Alan Jones broadcasts, I would say, directly into your seat in Western Sydney. Do you think he deserves - I mean it's pretty hard to kick him out because he's part-owner of the station - do you think he deserves to lose his job over a series of offensive comments, or is it, he's apologized and it's part of free speech and the owners decide if he should stay.
BRADBURY:
I thought his comments were despicable and most decent–thinking Australians would share that. That's my experience of the feedback I've received from others. Obviously he has something of an ownership interest in the station and probably has more say over these matters than most people in relation to whether he stays or not. Ultimately that's a matter for the station.
I was disturbed by the comments he made in relation to the Prime Minister and her father, but when you look at what he actually said, the use of the expression 'we' constantly. We're taking about a Liberal Party function to Liberal Party people. Anyone that was under the false impression that somehow listening to Alan Jones you get an objective voice, surely that had to be dispelled. He is nothing more than a voice piece, or a spokesperson, for Liberal Party propaganda.
HOST:
But that's okay, they're a commercial radio station, they can do that if they want.
BRADBURY:
Well and he should acknowledge that. He should come out say it. Tony Abbot goes onto his program and it's free kick after free kick. There's no wonder he's committed to continuing to go on that program. Look, I think the other point to make is that if you look at the history of Alan Jones' involvement with the Liberal Party, it seems as though if you want to lead the Liberal Party you have to genuflect at the altar of Alan Jones and 2GB and that was one of the problems that Mr Turnbull faced, he wasn't prepared to do that.
HOST:
David, thanks for joining us.
BRADBURY:
Good to talk to you.