MARIUS BENSON:
Arthur Sinodinos good morning.
ARTHUR SINODINOS:
Marius good to be with you.
MARIUS BENSON:
The next significant moment for the Australia economy comes next month with the release of MYEFO, the Mid-Year Economic and Fiscal Outlook. Joe Hockey says that will be effectively a report card on Labor. The Coalition’s solution, the Coalition’s plan to shape the economy, will only come next May, with the budget, that’s 8 months after you were elected, what happened to the budget emergency you described from Opposition?
ARTHUR SINODINOS:
Well what we’re doing in terms of getting the Budget back is we’ve set up the Commission of Audit. That will report in two tranches, the end of January and then again at budget time and that will provide a rigorous external perspective on how to get government finances under control. The final decisions of course will rest with Government. In relation to tax, what we’ve been doing is dealing with the overhang of announced, but un-enacted measures, which give business and other stakeholders more certainty going forward about whether they have to comply with tax law or not. And on the way through we’ve had to balance preserving revenue with getting rid of measures, which were either not implementable, or involved unacceptably high compliance costs, or in the end were not good policies and you’ve got to be able to walk and chew gum in the budget game. You’ve got to be able to assert your priorities early on and that’s what the Treasurer’s done and go from there.
MARIUS BENSON:
But you can’t take that level of action if you’re facing an emergency. An emergency requires emergency action, what you’re talking about, establishing commissions of audit and doing housekeeping, may well be admirable, but it’s not a response to an emergency. Do you accept now that…
ARTHUR SINODINOS:
Marius, the thing we don’t want to do is come in and cut the place to ribbons, slow the economy down to crawl, because we are facing a situation where growth is below trend, unemployment had been edging up, so we have to balance what we do in getting the budget back into the black from a medium term perspective, where many of the challenges actually lie in the second half of the decade when we ramp up, for example spending on the National Disability Insurance Scheme by $7 or $8 or $9 billion, we have to balance that, with making sure in the mean time that we maintain a steadily growing economy, which actually preserves a good revenue base for the budget.
MARIUS BENSON:
Do you stand by the word ‘emergency’ in describing the situation?
ARTHUR SINODINOS:
Well I do, because my conviction in politics has always been that unless you take adequate early action to get the budget back in the black, you merely pile up problems and it’s much harder when the problem is much bigger to deal with it. The amount of money we need to fund the increase in the National Disability Insurance Scheme is equivalent to our debt interest payments today, so we need to get things under control and our population is ageing.
MARIUS BENSON:
The expectation is that there’ll be big spending cuts in the Budget, is that accurate? Will there be big spending cuts?
ARTHUR SINODINOS:
The spending cuttings will be appropriate to the state of the economy and for the need to create that medium term budget sustainability that we’re talking about. And what I mean by that is that by the end of the decade we’re going to have a budget that is in surplus and that is able to sustain increased defence spending, a capacity to bring back sensible measures like the private health insurance rebate, where possible, and also give us the capacity to be reducing debt and making Australia stronger as it faces a more volatile world.
MARIUS BENSON:
And to achieve those ends do you need big cuts elsewhere?
ARTHUR SINODINOS:
We need cuts across the board that reflect our policy priorities and by that I mean, our priorities are to put more focus on infrastructure spending, as opposed to recurrent spending. Our priorities are to do things that promote innovation and higher productivity and if we get higher productivity, the speed limits on growth go up, the economy can grow faster, budget revenue can grow faster and we can get back into surplus even more quickly.
MARIUS BENSON:
Among the changes you announced yesterday there are changes to superannuation. You’ve given tax breaks to people with super incomes over $100,000, you’ve taken away tax benefits provided by Labor to people below $37,000. Labor says when you ask which side are you on, you’ve set out quite clearly which side you’re on, you’re on the side of the better off at the expense of the less well off.
ARTHUR SINODINOS:
We’ve always been on the side of those people who are aspirational and in relation to the superannuation measure that you mentioned, it would not have just captured people whose earning from super in retirement were above $100,000, it would also capture people with much lower amounts, who for whatever reason in a particular year had their income from super bumped above $100,000. So when we asked for advice from the Australian Tax Office and from the Treasury about this measure, the advice we got from Treasury was that it is was very much that it was expensive to implement, it would have to cover a lot of funds, not just the accounts of those with the balances that you mentioned, some funds would have to increase their spending on IT and other things by at least $10 million, per fund this is, and a lot of pensioners would have been caught up in having to provide all sorts of details about their earnings from super. So the measure is not implementable in the form that Labor envisaged, they didn’t do their homework, because they just went for the money and in this business you can’t do that. You’ve got to be able to balance the capacity to raise the money that you’re talking about.
MARIUS BENSON:
Senator Sinodinos, thank you very much.
ARTHUR SINODINOS:
Thanks very much Marius.