SUBJECTS: Economic Security Package
PHILIP CLARK:
The Assistant Treasurer joins me on the line today, big day today. Mr Bowen good afternoon.
CHRIS BOWEN:
Good afternoon Philip.
CLARK:
Well money starts hitting bank accounts today I understand, and of course over the next week or so.
BOWEN:
Yes, that's right. It will be paid out pretty much as close as we can on people's normal payday. By Thursday this week it will be $4 billion paid out and $5 billion by Friday, and the rest of the money over the course of the next week, so by the 19th of December everybody who is due to receive their payment will have received it.
CLARK:
Just run through what people get.
BOWEN:
Well pensioners, and that includes aged pensioners and first-time disability support pensioners, receive their $1400 if they are single and $2100 if they are a couple. Families who receive the family tax benefit A receive $1,000 for each child, and that is a very high cut-off for the family tax benefit A, so most people will receive that. And of course carers receive their bonuses as well.
So they are the payments that going out over the next fortnight.
CLARK:
It's a lot of money in the economy at once and you and the government would like people to go out and spend it.
BOWEN:
Well we would like people to spend it responsibly, of course.
CLARK:
Not on drink and rock and roll?
BOWEN:
People will need to make their own decisions about what is in their own best interest. In some cases that will be spending on something that they have been saving for but haven't quite saved it, in other cases it will be paying down their credit card debt, which also increases liquidity in the economy at the same time. So people will need to make their own decisions - of course we are doing this to stimulate the economy and money needs to flow through, but people will make their own decisions about what is responsible for their own best interests.
CLARK:
Yes that's true. But you would prefer, all things being equal, people to go and consume, buy goods and services.
BOWEN:
Well certainly we are doing this to stimulate the economy and that means buying goods and services. But look, as I say, if people choose to use it to pay down their credit card debt – one of the troubles we have in Australia is that banks are having trouble raising money offshore to lend, so this package, as well as stimulate the economy, boosts confidence and boosts liquidity in the Australian economy. So it does achieve those aims.
CLARK:
What do you say to those who say 'well hang on Christmas of itself is an enormous fiscal stimulus anyway - because people tend to spend more at Christmas, and shops of course have a record sales and a lot of shops have most of their takings in the month December - that this is just a blip, and once all the excitement is over, and in mid January we will be back where we started'.
BOWEN:
Well look all the evidence is that people are obviously concerned. Confidence is low; it's low around the world. Every country in the world is facing their lowest confidence levels in decades, and that means people spend less, and that flows through to jobs, it flows through to investment. So we need to keep the economy bumping along.
The rest of the world is in recession Phil; let's not beat about the bush. The rest of the world is in recession and our job as the government is to keep our growth as high as we can and keep unemployment and low as we can.
That is why we got out early with this stimulus package. As you said in your introduction countries around the world are now embracing stimulus packages, we went out there and did one early in order to make sure that we don't blip into the negative territory if we can possibly avoid it.
So we need to keep responding flexibly to this crisis, and this stimulus package is a very important part of our response.
CLARK:
I said in that introduction that unfortunately the levers that work the economy are not like a Swiss clock, it is not fine machinery, because the truth is we are never quite sure what will happen. But this seems to be the sum of the best wisdom around the world doesn't it?
BOWEN:
Absolutely. You're dead right. Economic policymakers around the world grapple with the fact that the figures come in after the event.
CLARK:
That's right by the time you find out, the horse has bolted.
BOWEN:
We are better off than the United States, I must say. The United States last week announced that they have been in recession since December last year. So they took a little while to catch up with the reality. Our figures are more up to date than that, so we do have that advantage.
That is one of the challenges of economic management all governments face. That's why we have taken a decision, as I say, to get out early. To wait for the figures to show that the economy has slowed substantially, frankly, you have left it too late.
CLARK:
Andrew has a question on line 3, hello Andrew?
CALLER 1:
Hi.
CLARK:
You're on - the Assistant Treasurer Chris Bowen is on the other line…
CALLER 1:
I just wanted to ask, I got family tax benefit A, once I did my tax return this year, as a lump sum, would I still get the thousand dollars per child?
BOWEN:
Yes you do Andrew, but you don't get it this fortnight you get it when you claim it. So when you claim your family tax benefit refund - as he did last year - that's when you will get your payment.
CALLER 1:
So next financial year when I get my tax?
BOWEN:
That's right. The people who get it in their normal payments, get it this fortnight. I think it is 7% of people actually claim it as a lump sum - they don't miss out, but they will get it when they get the rest of their money.
CLARK:
Thanks Andrew. Goodbye.
Bernie, same question?
CALLER 2:
Yes, same question. Thanks very much
CLARK:
There is your answer, thanks for that Chris.
BOWEN:
Pleasure.
CLARK:
Okay, the question is of course if it doesn't work, what do you do next?
BOWEN:
We will continue to do what we have too, Phil. We will respond to the situation, the Prime Minister, the Treasurer, the Cabinet, will deal with it as it emerges and we will respond as we need to. The only thing certain about this crisis is its fluidity; it keeps changing around the world, and we will respond. We have shown that we are happy to get out in front of the game, and we will keep doing that.
CLARK:
In many ways Australia ought to be better placed than lots to withstand this, I mean the banks here are OK, no banks have gone bust. I know the stock market has lost 50%, so a lot of paper money has disappeared, and that of course means real money for those who took margin loans and so on. So there have been real losses in the economy, but the share market's is not everything.
BOWEN:
No, it is not. And you are right the fundamentals of the Australian economy are very sound. We will get through this as one of the few countries not to have a financial institution in major difficulty and that's because of a number of reasons. Our banks are well run and they are very well regulated, APRA has done a good job, and other countries around the world are taking note of how our institutions, most notably APRA, have handled this.
We are closely linked to the Chinese economy, which continues to grow strongly although their growth is coming down. It is continuing to grow strongly.
So we do have a lot going for us, and that one of the reasons we are very careful - while being upfront and honest with people, and saying look times are tough around the world, Australia is very well placed to get through this. We need to keep our confidence levels as high as we can so we don't become a self-fulfilling prophecy.
CLARK:
Richard hello?
CALLER 3:
G'day, how are you going?
CLARK:
Well thankyou.
CALLER 3:
I have just got a question, with the threshold, what is it based on, is based on last year's salary or this year's salary?
CLARK:
You mean for the family tax benefit A?
CALLER 3:
Yes, because I worked myself and last year I had a good year, and this year obviously hasn't been so good.
BOWEN:
Sure, it is a very high threshold - it varies depending on the number of children you have. Just to give you a couple of examples, and then I will give you a telephone number can ring for more information.
If you have one child aged under 17, and no other children the threshold there is effectively $100,000 a year. It goes up to if you have three children under 17, and some more children between 18 and 24 then it goes up to $160,000.
So they are quite high, but look there is a number to ring for family payments, which is 136 150. And they can run you through, in full detail, in relation to your own personal circumstances and of course you needed to be in receipt of family tax benefit A when the government announced this, which was the 14th of October.
CLARK:
Alright Richard.
CALLER 3:
Thank you.
CLARK:
Thank you mate, hello Gary?
CALLER 4:
Hello, how are you today?
CLARK:
Pretty good thanks.
CALLER 4:
That's good. I just wanted to ask the Assistant Treasurer - I actually lost my payments in a lump sum as the end of the financial year, but I lost my job two weeks ago and I wanted to see if I can actually ring up Centrelink and see if I can get it sooner?
BOWEN:
Look if you ring that number…
CLARK:
136 150.
BOWEN:
That's correct. They would be the best placed people to talk that through with you.
GARY:
Okay, thanks very much.
CLARK:
131 873 is the open line number if you would like to call.
Okay I said in the introduction for the sake of all of us, let's hope that we are at least halfway through this thing.
BOWEN:
Absolutely, look the world crisis has some way to run there is no doubt about that, and next year will be tougher than this year has been around the world, but we will continue to do what we need to.
CLARK:
Is that the advice you are getting? That certainly seems to be the advice coming out of Canberra, that we are yet to kind of see in unemployment levels at least, the effects of this?
BOWEN:
Well if you look at the OECD, their forecasts, they are saying 8 million jobs lost around the world that is a very substantial number. We are seeing big job losses in the United States over the last month. President-elect Obama responded to that in the last 24 hours, with a big stimulus package that he has flagged for when he takes office.
So there are signs that governments around the world are responding but, look this does still have some way to run.
CLARK:
Sure, alright Chris Bowen thanks for your time.
BOWEN:
My pleasure Phil.