SUBJECTS: Nation Building and Jobs Plan
JASON MORRISON:
Chris Bowen, good to speak to you today.
CHRIS BOWEN:
Thanks Jason.
MORRISON:
We didn't see this coming the other day but we knew you had something up your sleeve. I think that there has been, you would say a fair question, probably split of the population, most people will say, look thanks for the money but deep down maybe handouts aren't necessarily the answer for the country right now.
BOWEN:
We think these payments are very important, but the other point is that for every dollar we're spending on these bonuses, there is $2 in this package being invested in the future. This is a big package and we took the view that this is an opportunity to obviously stimulate the economy, but in doing that you can invest for the future. So that's why you've got, for example, the biggest rebuilding program of schools in Australian history in this package. A new library or school hall for every primary school in the country. If they don't want a new library or school hall, then they can talk to us about rebuilding classrooms, getting rid of demountables, rebuilding their school. A very significant program. Climate change, our insulation package, the advice to us is the equivalent of taking one million cars off the road. You've got to have think about that, one million cars off the road through this package.
MORRISON:
So that's of course if people pay for the rest of the insulation. You are giving them $500 or $1000.
BOWEN:
No, $1600.
MORRISON:
It's a fraction of the job.
BOWEN:
Well $1600, the advice to us is, will be in most cases, be a very substantial contribution to insulation.
MORRISON:
Maybe a fifth of the job?
BOWEN:
Insulating a house with yellow batts, or whatever the insulation is of your choice, it's a very substantial contribution. So the point is, yes the payments are an important part, we wanted to help people doing it tough and stimulate the economy and keep spending high, but it's also going to investing in the future. So you're creating jobs by the construction in schools, construction of roads. Now let's give another example we all know and we all hear the tragedies on level crossings, you hear them, you report they're terrible. About a hundred accidents a year on level crossings. Every time it happens people say, why doesn't government fix it, why don't we have more boom gates and lights, why do we still have these dangerous level crossings in the bush?
MORRISON:
So you're going to put them in. Good, but this is all patch up stuff. This country, you're a resident of Sydney, this wonderful city is sometimes a muddle of a place the transport infrastructure is not there, the people in the city are screaming out for someone to do something about it and to invest in the future. We're doing patch up work, we're fixing up schools we're giving things to schools that think they should have had in the first place. It doesn't feel like we're actually building the nation.
BOWEN:
I don't disagree with that, it is long overdue, but this is the stimulus package that we have now. We also have the infrastructure program. We took the view that there is a lot of good and valuable infrastructure projects which we should and will fund, but there's not many that are 100% ready to go. You can't come out and announce them today and then they're creating jobs tomorrow. They will still happen. We've got a very vigorous process to make sure we pick the right ones. We've got the Board of Infrastructure Australia with experts and people with experience on both sides of politics to independently assess all the projects and that process is going on and they will happen, but they're not going to create jobs today, tomorrow and next month. We think Federal Government should be involved in how people move around our big cities. We're one of the few nations in the world where the Federal government said we don't care how people move around big cities; we need to be involved and we will be.
MORRISON:
Well you've got to be, because the mob here doesn't seem to care too much about it. How long is this going to take to pay off? What's your forecast, you're speaking with the Assistant Treasurer here, for us to pay back the money that you're going to borrow here?
BOWEN:
There are a couple of points, we've said our forward projections have us in deficit over the forward projections and we have said that when the economic situation returns to normal, if you like, when growth returns to normal, then we will have a set of rules in place which will return us to surplus. That means, as you would understand when economic activity comes back, our tax revenues go back, more people are spending, more people are at work, our tax revenues come back. We'll back that, we'll use that to build the surplus and we will keep expenditure, our growth, at 2%.
MORRISON:
In a way you're lending us this money, because you're going to get it back.
BOWEN:
We are committed to a surplus over the cycle. But I would just make this point, at the end of this, under our projections we will have Federal government debt as proportion of GDP at about 5% of GDP. Now if you look around the world that's a very very small figure.
MORRISON:
How long are we going to take to pay this back before we're back to zero again. Surely Treasury has given you a projection?
BOWEN:
The projections go for four years, the forecasts go for four years and we're not going to make projections based on when this cycle turns around, because nobody knows, I don't know, you don't know.
MORRISON:
You'd have to have something there that you know, let's just start from today, let's start to say when is the plan, as of this moment, to pay this back?
BOWEN:
As soon as the economic circumstances allow it. I can't be more specific than that Jason. It would be irresponsible for us to be in a surplus.
MORRISON:
You have a home loan and you know your loan is over 25 years and you are going to pay your home off in 25, now you don't know what's going to happen between now and then, but you've got to plan to pay it in 25 years. We have a plan, surely we've got a plan?
BOWEN:
Yes and our plan is to bank the tax revenue increases and to keep government expenditure increases to 2%. That's our plan to get us back into surplus and just bear in mind that around the world, government's have massive debts. United States, almost every country in the world, massive debts - that are a big proportion of GDP. Ours, at 5%, will be amongst the lowest in the world, so it's prudent for the government to go into debt sometimes it's a responsible thing to do.
MORRISON:
I understand, providing there is some benefit for the country and we're not just lending people, giving them a cash advance, which is what this sort of feels like.
BOWEN:
We are giving people a stimulus now, we are giving people money now and we are stimulating and constructing and investing now and what we've said is when the economic situation returns, when it's prudent for us to go back into a surplus, that's exactly what we'll do.
MORRISON:
I still don't hear a number of years?
BOWEN:
No, because it depends on the cycle Jason.
MORRISON:
But you have a plan you'd say around the Cabinet table if it fixes up, we are going to have this back to normal in four years.
BOWEN:
We will have it back to normal when the world economic situation returns to normal.
MORRISON:
So it's how long is a piece of string?
BOWEN:
Well how long is the economic cycle?
MORRISON:
I don't know, but you've got Treasury on your side, I'm just the bloke on the air here.
BOWEN:
Well I'm the first to tell you, and Treasury will be the first to tell you, they don't know when this will end. Nobody knows when this world situation will end.
MORRISON:
Okay fair enough. I made a point a moment ago, I think a lot of people will agree with this, whilst immigration in this country has been grown off the back and the hard work of immigrants and the right sort of immigrants to this country, why are we proceeding with record immigration intake across these times?
BOWEN:
Governments do this year by year Jason. Around Budget time the Immigration Minister comes to the Cabinet and says this is how many people I think we should bring in over the next 12 months. The Cabinet considers it, weighs it up, argues about it and comes to a decision. That happens around Budget time in May, so you have a yearly program and certainly one of the key things that the Immigration Minister takes into account, and the Cabinet takes into account, is the economic situation. So you have that yearly program, there is all sorts of evidence about the effects of immigration on the economy. For example, there is lots of evidence that immigrants create jobs, its construction etc, but that all gets weighed up. If it's a good idea to reduce the immigration intake, that's something we do around Budget time.
MORRISON:
Has it been talked about?
BOWEN:
The Immigration Minister brings it forward around May, you can't fiddle with the yearly program once you embark on it and people are told they're coming etc, that's set for a year. But certainly as we approach May, it's something I know that will be exercising the Immigration Minister's mind and then will exercise the Cabinet's mind.
MORRISON:
With increasing unemployment, that's what Treasury is forecasting, it would be fair to say many of those coming to this country are going to be immediately unemployed?
BOWEN:
You've got various issues, various types of immigration, skilled migration and even though we are looking at unemployment increases, there are still issues about getting particular skills into the country, but then you've got the different types of immigration as well and they obviously will have more trouble getting a job – you're quite right.
MORRISON:
Which makes it sort of feel like your derelict in your duty - and I'm not meaning you - I mean the government, by encouraging people to come here in these times. We're on Australia's side and you are too.
BOWEN:
Well certainly it's in nobody's interest, if you are going to bring people here and they're going to be unemployed, you're not doing them any favours or you or the nation, that is certainly true. But as I say all these things get weighed up, we weigh up all the evidence about job creation from immigration, about what will happen to those people, about humanitarian obligations and concerns. We weigh all that up at the appropriate time.
MORRISON:
Thanks for coming on the program, nice to talk to you.