NICK MCCALLUM:
… He is the Assistant Treasurer and ask him whether we have tough times ahead.
ARTHUR SINODINOS:
What we did today Nick was set out, if you like, the scale of the challenge or the problem that we’ve been left by Labor. But we are not saying to the Australian people: shock, horror, you have to wear this and you’re in this by yourselves. I mean we will look after the most vulnerable in our community. But going forward we need to be growing our economy so we can generate a stronger budget that way, while at the same time taking sensible measures to get wasteful, inefficient spending under control.
It’s not about breaching our election commitments. The major election commitment we made was getting the deficit and the debt under control. And today what we did was to show, based on the growth rates that Labour had in its spending, we’re spending and therefore the deficit and the debt we’re going to go if we didn’t make change. We’ve announced a number of savings initiatives in this Mid-Year Economic and Fiscal Outlook, we’ve had to announce some further measurers that were needed because Labor had ducked those difficult issues. But we’re here over the next few months to work with the Commission of Audit to come up with a plan to, in an equitable way, get the Budget under control.
NICK MCCALLUM:
Ok, so that plan no doubt will mean some pretty harsh spending cuts and some increase in taxes. So as I said, it’s a tough time ahead for the average Australian, isn’t it?
ARTHUR SINODINOS:
Look, when it comes to tax, we want to be cutting tax rather than increasing it. So for example we want to get the Carbon Tax out of the way, which will improve everybody’s living standard by cutting living costs. The Mining Tax, we want that to go. And by cutting Company Tax, we can actually generate more jobs. So as far as tax is concerned, our focus is on, through reduced spending, how we get to lower tax rather than higher tax…
NICK MCCALLUM:
But are you going to be able to do everything you need purely by cutting spending?
ARTHUR SINODINOS:
Well look, unless we have that discipline of looking at spending across the board, we won’t be able to find the efficiencies we need. So we do have to make sure all Ministers, particularly spending Ministers, are focused on the idea that there is no free lunch in this. That somehow by raising revenue they can get out of the important job of improving the efficiency and the effectiveness of how we spend your money.
NICK MCCALLUM:
So are you ruling out, now, tax increases?
ARTHUR SINODINOS:
We don’t want to see tax increases. Our [inaudible] and Labor can help us on this, by assisting the repeal of the Carbon Tax and the Mining Tax, is actually to lower tax. What Tony Abbott has said in the past is, we want lower tax based on lower spending.
NICK MCCALLUM:
OK, a bit of housekeeping here. There was a commitment that we would come back to a surplus by 16-17. Now that was abandoned today, wasn’t it?
ARTHUR SINODINOS:
Well look, we’ve said for some time, not just today, that the timing of the return to surplus was going to be dependent on what we find when we get here. And what we found here does make it harder in the very short run, if you like, to get back to a Budget surplus. We would have to cut too hard and too deep at a time where, Nick, the economy is actually running at below its trend. It’s in second gear, it’s around 2.5 per cent. Unemployment is edging up. We want to be able to support that growth in the short term while finding the savings measures that over the medium term give us the capacity to meet the spending pressures that Labor has left us.
NICK MCCALLUM:
Ok, when therefore is the new projected time for surplus?
ARTHUR SINODINOS:
Well look in the Budget in May we will layout the full plans plan in terms of the timetable over which we can return the surplus. Before the election Tony Abbott made it clear that we wanted to have at least a 1 per cent surplus of GDP by 2023-24. But look we need to have all the details of the budget measures before we can give the people all of the rest of that detail.
NICK MCCALLUM:
Ok Senator, before the last election Labor said, projected a deficit of 30 billion. Today it’s now 47 billion. So you’ve introduced a lot of spending measures as new governments do in your first 100 days, so surely we can’t blame all of this deficit on the Labor Party.
ARTHUR SINODINOS:
More than half the deterioration we’ve seen since the election in terms of the Budget for this year is because of new information about the deterioration in the state of the economy. We have introduced some new measures, some of which take effect this year, but as I’ve said before, all of our spending commitments are more than covered by our savings measures and you’ll see that in the Budget.
NICK MCCALLUM:
But, getting back to the original question, this blight, you can’t blame entirely on Labor can you? Because as a new Government you have made new spending commitments, which is…
ARTHUR SINODINOS:
We have made some, but as I say, before the election we had made a full savings plan that more than covered our particular commitments. What we’ve done here is to show that if we have spending continuing to grow at something like 3.5 per cent in real terms over the next few years, as it did over the last few years under Labor, that combined with where revenue is growing, means that you have these deficits out for as far as the eye can see and you end with 667 billion of debt in 2023/2024, which is what our kids are going to have to service rather than us.
NICK MCCALLUM:
Ok then, thank you very much Senator Arthur Sinodinos, the Assistant Treasurer.