PAUL ALLEN:
Does this Budget draw a line under that poorly received Budget report four years ago? There’s no more of this debt and deficit disaster talk.
TREASURER:
Well, it draws a line on the measures that we’re unable to pass through the Senate and those measures are no longer included in this Budget, and what this shows is the Australian Government’s Budget is a credible document, it includes real measures. We’ve passed some $25 billion dollars of savings measures and budget improvement measures over the course of the last year, but we draw the line on the ones that remained outstanding and we have a projected surplus of $7.4 billion in 2021 and moving towards that balance over the next four years.
ALLEN:
If I can talk about the deficit reduction for the coming year – $29.4 billion – how confident are you in the growth forecast that underpinned that – particularly, the wages growth forecast?
TREASURER:
Our international forecast for a start – they’re actually more conservative than what the IMF has said. And our domestic growth forecast and the related forecast can simply be a consensus of market current levels. So we think they’re credible. They sit in, I think, a very reasonable range, consistent with what our forecasts are saying. And that’s also true when you go to our view on commodity prices which, you know, always has an impact on Australian Government Budgets. We’re forecasting the return down to US$55 F.O.B. and I think that demonstrates again, like we did last December when we retained our AAA credit rating, that not only will we maintain in our trajectory towards surplus but we had credible forecasts and the measures that made up our Budget also rely on it.
ALLEN:
There’s $75 billion in infrastructure funding over the next ten years but debt peaks at $75 billion on the 2018-19. So where’s that extra money coming from? Is it savings? Revenue? Or a combination?
TREASURER:
Well, as we look forward in the growth we’re seeing in our economy, we’re very encouraged by what’s happening in the trade sector, our service exports, our resource exports, but also our agricultural exports, we’re seeing an improvement in household consumption and we’re starting to see a turnaround in online business investments. So, all of these things support growth in the economy and wages and incomes but on top of that, we’re investing further to support that growth again. You’ve mentioned $75 billion in infrastructure investments over the next decade but the major projects, the Inland Rail project, the second major airport in the Sydney basin, and on top of that, major investments in our electricity generation, storage capacity, infrastructure like the Snowy 2.0 – which we are very committed to do – and so, an investment in infrastructure is an investment in growth. So together with our Enterprise Tax Plan I announced last year, which is about driving business investment, that’s now been supported even more by the public investment in these major economic infrastructure projects.
ALLEN:
Talking about revenue, particularly that levy on liabilities with big banks. What’s to stop them from just passing it on like they do with so many other things?
TREASURER:
Well, banks need to explain what they do to their customers and their customers can go elsewhere. Smaller banks, regional banks are unaffected by this change and the ACCC – our market and competition regulator – will be keeping a close eye on the banks to ensure they don’t misrepresent any changes in charging or fees or things like that in relation to this matter. If they want to put up their prices, that’s a matter for them, but this is not a tax on deposits. It’s not a tax on mortgages. This is a tax on liabilities which exclude those things and is on largely the liabilities that go to exchanges they have with banks elsewhere in the world.
ALLEN:
Have you done enough here to protect that AAA?
TREASURER:
That’ll be a matter for the ratings agencies. But on the issues they’ve raised, a balance in 2020-21, ensuring that the measures that are included in our Budget, are measures that we can reasonably expect to achieve support for in Parliament and a set of forecasts that sit, I think, in a conservative range – these are the things that ratings agencies have raised in the past. I think the Budget addresses all three of those things and to top it off, we continue to get very strong support in the debt markets for our sovereign debt and at the end of the day, they’re the people buying our debt and they’re buying it at a good price for Australia.
ALLEN:
This is the last one. You’ve got a one-seat majority in the Lower House and a difficult Senate, can you actually get these measures through?
TREASURER:
We believe so. I think they’re sensible measures. I think they’re progressive measures. They deal with the problems that we’re facing. They support confidence in the economy and I think they’ve been done with a very real appreciation of the economic means of the country and individual households.
ALLEN:
Thank you very much.