SUBJECTS: Newcastle, 2009 Budget, pensions, superannuation, credit cards, MP entitlements
JILL EMBERSON:
To welcome to our program this morning Chris Bowen who is the Assistant Treasurer and member for Prospect. Good morning Chris
CHRIS BOWEN:
Good morning Jill, good to be in Newcastle
EMBERSON:
Do you spend much time here?
BOWEN:
Well it is my second visit in about three weeks actually. I was up here with Jill Hall doing a pre-Budget lunch a couple weeks ago, and went out to talk to talk to the year 12 economic students at Belmont High I think it was, and we had a great day and back here with Sharon Grierson today.
So it is good to be here and my grandparents lived in Newcastle, my grandad was a fitter and turner on the railways and they lived out near Lampton. So there you go it's like coming home!
EMBERSON:
…as I have found everybody I reckon everybody certainly the New South Wales, or maybe Queensland and Victoria to has some historical roots.
BOWEN:
…has some connection with Newcastle that is right.
EMBERSON:
Yes, it is good to have you here. Is it true, as I understand it, the mission for all politicians at the moment, or government ministers, is to sell the budget. Now there is no doubt about it, this budget it was promised as a budget that was going to hurt, that wouldn't be popular, but it seems to me that it is a lot less popular that you guys thought it was going to be.
BOWEN:
Look at the end of the day people will make their own decisions, but we decided that we needed to do what was in the national interest and what was in the national interest at the moment is to keep putting more money in the economy now, and that's what the economy needs now, but also to make some pretty tough decisions about what is in the national interest going forward. To make sure that the budget is on an affordable and sustainable footing.
So things like increasing the pension age to 67 for example, we knew wouldn’t be popular. You don't do that for fun. But it is also very important in terms of dealing with the ageing population, dealing with the long-term challenges in the budget.
EMBERSON:
I get that, and I am not surprised by that, in fact as I look forward I think I will be working until I am 80, but I think that thing that was striking, and I do think the opposition has a point here, but just dropping it on the community out of nowhere, was felt a little bit mean, at a time that people are feeling it in the hip pocket on all sorts of fronts.
BOWEN:
Well what we have done is indicated the pathway that we are going to take to increase the retirement age, we're not doing it tomorrow we have indicated that we are going to start in 2017, so we're giving people as much notice as we think we can. That's a little way off. And we will do it gradually; we will increase it by six months over a period of time, over six years, until it gets up to 67.
So we are certainly doing it in a calm gradual, graduated, matter. Which we think is appropriate.
EMBERSON:
The other thing that of course is sort of the flipside of the pension age is the degree to which our superannuation funds are going to be able to complement or what’s there in available in a pension. Everybody has taken an absolute drubbing with their superannuation. One thing that concerns me about that is the panic, that there is nothing we can do about it but we are obliged to be in the superannuation system it is a regulated system and we ain't got any choice at all. And if you are at the top end of the retirement spectrum, that is a very bleak scenario.
BOWEN:
Yes look, we are in the middle of the worst downturn in 75 years and the stock markets have suffered around the world, and superannuation which invests in stock markets has suffered big time, there is no doubt about that. The thing we need to do for the vast majority of people is to take a long-term view. If you are in superannuation despite the downturn over the last 12 months or two years, if you look at a longer period of time you a much much better off being in superannuation than you are if you hadn’t been in superannuation.
EMBERSON:
It's not so good if you if you don't have a ‘long term’ any more
BOWEN:
Look if you are at that pointy end where you have just retired or are about to retire, of course then you have got a very, a different problem. But for the majority of people who are looking at the longer term and thinking ‘why am I in super’, but you don't feel that super is a bad thing because over the long run you are going to be much much better off.
EMBERSON:
There is downward pressure on everything, given the state of the economic crisis, however one thing is that I have seen in the papers today is one of the community and public sector union is looking towards a centralised wage push that would grant uniform terms and conditions to almost 200,000 federal public servants. Upward pressure on wages is inevitable, so that is going to impact government revenues?
BOWEN:
Look unions are entitled to make their case, that is their job not only are they entitled to make their case, they are obliged on the behalf of their members to make their case. We have called for everybody to be responsible in the current environment, unions and employers to do the right thing in terms of wage outcomes and we are getting good feedback on that. Of course the unions will make that case, and the government in terms of its own employees; we will strike a reasonable balance in terms of the impact on the budget looking after our employees.
EMBERSON:
But how do you deal with that as a government who has got limited access to revenue, and people who are feeling the pinch, you are going to have to do get the only sort of avenue that people have got, the community and workers have got, is wages.
BOWEN:
Well look there is always going to be the argy bargy around wage negotiations, that's always been the case and it always will be the case. And I think people understand that. But we have a responsibility in terms of the Budget to ensure a sustainable outcome and that's what we will be doing, the unions will no doubt make their case very strongly but we have asked them to have a mind to our responsibilities as well.
EMBERSON:
On 1233 ABC Newcastle with Jill Emberson, I’m joined by Chris Bowen the Assistant Treasurer and Member for Prospect, as part of the Federal government's programme of engaging the committee in the federal budget. A tough ask in this time when everybody is feeling the pinch, and a rosy glow that we will all living in over the last 10 to 12 years feeling very much like it has come to an end.
What's not so good news for politicians at the moment are the allowances that are getting; a lot of exposure around the place, but all sorts of things such as Frisbees, holiday’s etcetera, are being, not so much holidays, but trivial things being purchased by the government by members using this parliamentary allowance.
I see today that Bob Brown has called for a review of this process, it is pretty hard when we are scrimping and saving and being told that you know we can't get the pension until there 67, to here that there is a bit of elaborate spending going on by politicians.
BOWEN:
Sure, look, I think some of the commentary in Australia has been caught up with the story coming out of Great Britain, of pretty clear rorts, quite frankly, that have been going on over there, and they have a very very different system then we have here and we clearly have a lot more accountability for Australian politicians then the British MPs do.
And look it is fair to say I think across the board, Labor, Liberal, Independent Greens, all the people in Parliament are all there for the right reasons, and that is to serve the community. We have different ways of serving the community, we have a different idea about where we want Australia to go, but I can't think of anybody where I would say that that person is in it for the wrong reasons, which is to feather their own nest.
Now in terms of our allowances, yes, we get an electorate allowance, again in my experience, politicians spend it on their electorate. The electorate allowance hadn't increased since the year 2000, so I think politicians have played, have recognised, the expectations of the community.
We knocked back the pay rise last year, the Remuneration Tribunal said politicians should have a pay rise, we said no. For that reason, that we wanted to set that sort of example. So look I think Australian politicians are fairly accountable in terms of our expenses, for example of printing allowance, different MPs spend it on different things.
In my electorate I spend it on a newsletter which has a lot of community group information so I might get onto to Little Athletics and say you want to advertise your carnival, free advertising of course, in my newsletter. And community groups really appreciate that and in my experience politicians, of all flavours, do those sorts of things.
EMBERSON:
But what do you think of the idea of Bob Brown wanting to have like a standards commissioner, I think he called for, a standards commissioner to monitor the spending of that parliamentary allowance. It seems to me to be a good idea.
BOWEN:
Well look at the end of the day, that would be a matter for the Special Minister of State, not for me.
EMBERSON:
Do you think it you had a good idea?
BOWEN:
Well look, I would just make the point that politicians get an allowance for their electorate; they all spent it in different ways. Many of us spent it as we go around the community, we find community groups doing it tough, and you might say well here is a donation etcetera, and the different MPs will use it in different ways.
If it is not spent, then you pay tax on it. So the tax office gets it back off you anyway, in terms of the tax rate. So there is accountability there at the end of the day if there is a need for more accountability, then that is something the Special Minister of State would look at.
EMBERSON:
We did hear that example again last week of MPs being compensated for expenses whilst they were in Canberra for the sitting of Parliament. Those stories tend to sort of always come out its not pretty Chris Bowen.
BOWEN:
Yes, that will come up from time to time. In my case I have enough trouble paying off one mortgage, let alone take another one, so I don't have another mortgage in Canberra, but having said that, this is the difference between the British system and the Australian system.
In Britain, and we are seeing these problems arise, because MPs basically have to have two homes because in Britain that they are expected to be in London - in Australia we are expected to be in Canberra, it is part of our job about six months of the year, we are expected to be in Canberra. The other six months we are expected to be in our electorates so we have basically got to have two places to live; now in Britain they say any expenses on your second home we will pay, and you have seen those sorts of rorts.
In Australia, we don't have that system we just get a per night allowance. So we get paid a certain amount of money for every night that we are away from our homes. And then it is up to us how we spend that. Now some people say ‘well I going to be here for a long time, I will buy a house, and that contributes to that overnight payment - I will use to partially pay off the mortgage. Others of us say - and I share with another MP – ‘we will rent a flat, and we will use that money to pay the rent on the flat’.
At the end of the day the taxpayer is playing the same regardless of what the politician does with the money, and the Remuneration Tribunal that sets that rate has said well because politicians are spending a lot of time in Canberra, we will pay them less then we will pay them to say to go to Melbourne or Brisbane, because if you are going to Melbourne or Brisbane you are just there for one night and are going to pay an expensive hotel bill. But if you are going to Canberra you are there six months of the year, you are probably going to enter into a more permanent arrangement, you are going rent something permanently, or take out a mortgage, and so they appropriately say’ well you're allowance in Canberra is less because you will make a long term arrangements’.
EMBERSON:
So it is a complex system, but in your opinion something that is managed sufficiently?
BOWEN:
Yes I think frankly it is not popular to defend politicians and you might say I am a brave man for doing so, but I just want to make the point that across the board, I think MPs - it’s not a popular view - MPs of all parties work pretty hard and the salaries yes are comfortable, yes they are, but I don't see any evidence of excessive rorting or people misusing their allowances and those sorts of things.
EMBERSON:
We have got a couple of messages in from callers, here is one of our listeners. This goes back to the question of superannuation this is Jan in Swansea has asked what if you have not had the opportunity to accumulate superannuation. She is a single parent she works part-time, she is 50 years old, obviously she has not been able to work that much in order to accumulate superannuation - what does the government offer somebody like Jan who have done her share of work and raising her kids?
BOWEN:
Well this is always one of the balances that we have to reach, because superannuation is compulsory but then of course you get very low income workers who often part-time because they have to be, because of their other responsibilities. And you can't take that proportion of income out of their salary because they need it today. Frankly, that is why we have the aged pension, for those people who have not been able to secure the requisite amount of superannuation to live on, which is why we have the safety net, which is the aged pension. That is also why we took the decision to increase the aged pension in this Budget because those people are doing it tough.
EMBERSON:
Keeping that in mind we have also had a caller asking ‘why did married pensioners only get $5 per week increase and single pensioners get $30 per week, it’s quite a discrepancy.
BOWEN:
One of the problems that has arisen is that you find that find if you are a ‘single’ pensioner, your expenses aren’t that much less if you are a ‘couple’. Many single pensioners say ‘look, I realise that I have to get less than a couple pension but my council rates are the same, etc’. It’s not the case of half a married couple – ‘I have the heater on, so do they’.
We had a good look at that and decided to increase the rate of the single pension when compared to the couple pension. We’ve increased by a couple of percent to 66 per cent of the couple rate. So that meant that single pensioners got a bigger rise than couples, couples still got an increase, but we thought it was appropriate on balance that the single get a bigger increase.
EMBERSON:
Your in town today, it is unusual as a journalist and radio presenter, to have the offer of two politicians on consecutive days. Chris Bowen, why are you in town today?
BOWEN:
Because Sharon Grierson asked me to be here…
EMBERSON:
[laughs]
BOWEN:
…and Sharon is a very convincing lady…
EMBERSON:
Let’s be frank, you guys are what feels to me, in pre-election mode.
BOWEN:
No, no, look it’s true, we are out explaining the Budget, because it is an important Budget and it is important that the Australian people know where we are coming from. I did a breakfast this morning with 50 local business people, talking about the Budget, and the investment situation in Newcastle. And that’s important, important for me to be able to explain the Budget and also important for me to get the feedback from business: about where business is going; what there issues are; what assistance they need; what the challenges are, etc. So like the lunch I did with Jill Hall a couple of weeks ago, with business, it is important the Treasurer, the Finance Minister, the Assistant Treasurer – the economic Ministers in the Government – are engaging with business. When I leave you, Sharon has arranged for me to meet with the consumer credit advocates and some community groups about their issues. So I like getting out and about, it’s much better than being in the office in Sydney or Canberra; getting out talking to real people, it’s an important part of the job.
EMBERSON:
I’m glad you mentioned consumer credit, because the data is still coming out and telling us that we have addiction to credit cards and that the banks are having a real party over it, still.
BOWEN:
Yes it is a real issue in terms of people’s credit. Managing credit is really important. We are pretty proud of some of the reforms that we have in train, the National Consumer Credit Laws that will include a national responsible lending requirement on financial institutions, for the first time. There will actually be some responsibility on these institutions, for the first time, to ensure that you can afford the loan. It’s going to get you into trouble in the longer-term; we’ve all heard stories of the people who really already have enough credit as it is and getting letters in the mail offering an increase in your credit card limits and it is very attractive to people – a short-term fix…
EMBERSON:
I do look at the banks in this situation and banks as financial institutions do have a role to play there. Banks may force credit onto to people…
BOWEN:
We agree. They do have a role to play here and that’s why we have the national responsible lending requirements on financial institutions – they will need to justify that they have considered the circumstances of the individual and that loan is not over their head.
EMBERSON:
Yeah, but getting action of it…you might have all of the laws, but getting action.
BOWEN:
Sure, but the banks are not under any doubts as to the seriousness of the law.
EMBERSON:
Chris Bowen, a big job not only to sell this Budget but to get the nation through this really traumatic period.
BOWEN:
Absolutely, this is the biggest global financial crisis that we have had in 75 years, it’s easy to say but it’s hard to manage. Australia is well-placed; we will get through this, just about as well if not better than any other country. It will take of course some good economic management along the way.
EMBERSON:
Chris Bowen thanks very much for joining us this morning.
Chris Bowen is the Assistant Treasurer and the Member for Prospect.