SUBJECTS: Budget 2009, income tax cuts, Swine Flu, Defence White Paper, TV Logies
RICHARD GLOVER:
Geoffrey Cousins, business man and novelist, Cheryl Kernot from the Centre of Social Impact of the University of New South Wales, she is their director of teaching and learning, and Chris Bowen who is the Assistant Treasurer and Minister for Competition Policy and at this time of the year probably a very busy boy, so thank you very much for joining us.
Now a tough budget does appear to be ahead, the Treasurer Wayne Swan has refused to guarantee that tax cuts for people earning over $80,000 will go ahead as planned on July 1, and there has been talk of cutting back on what has been dubbed a middle class welfare benefits such as the baby bonus which are not subject to a means test. Should the better off bare the brunt of cuts in these tough times and has Australia allowed too many benefits to build up in areas not subject to mean test, Geoff Cussons?
GEOFFREY COUSINS:
Well look I don't think we want any middle class babies, Richard or rich babies either that wouldn't be good, only poor babies that's what we want. They might grow up and vote the wrong way if we had middle class or rich babies. We have got to be very very careful about this.
GLOVER:
But do middle class babies need a bonus?
COUSINS:
Look the reason for baby bonuses is to encourage people to have babies, I don't know of any other reason for it it's not a philosophical concept you're encouraging people to have babies. Therefore presumably you encourage everybody to have babies, and you have got to remember people who might be middle class today in these times might be very poor tomorrow. People who might be rich today might be very poor tomorrow and there has been some pretty spectacular examples of that happening just recently.
I don't think you want get too divisive in society and cut people out of benefits these people get them, these people don't get them and usually there is an enormous amount of cost to the administration in trying to separate one from the other. At a time when you're sending every man, woman and child in Australia 900 bucks in the mail. Why are you then running around trying to encourage people to spend and get out, why do you then run around and try and take things away from people?
GLOVER:
I suppose the argument is when Beaver, Brooke and all that lot came up with the idea of the welfare state. It was seen as a safety net for people who were in difficulty, some people argue that in modern Australia it's developed into a system where we take money in with one hand, through the tax system and then we often give it out to the very same people who we have just taken it off.
COUSINS:
Well I tell you, right at the minute would be the last time to tinker with it. The main job the Government has at the moment and the main job every Government in the world has is to restore confidence. Not to confuse people about whether a benefit they might have been getting is now gone. Whether you know the superannuation benefit they might have had won't be there. Don't do that, we are trying to get people confident, that's the whole main game.
GLOVER:
Chris Bowen are we in danger of confusing people and giving them less confidence at a difficult time, in trying to take things away from people who might be just a little bit better off?
BOWEN:
Well, I think we have made it quite clear that this budget will be necessarily tough. I think we have sent all those signals and for very good reason.
Now we do have a challenge here, what we need to do is keep, as Geoffrey rightly says, keep a stimulatory effect in the economy, we do want money flowing through to the economy, but at the same time we need to take the longer point of view as well the longer term point of view. We've seen expenditure increase very dramatically over the last ten years or so fuelled by the commodity boom the commodity boom is over, government revenue has fallen very very significantly and we need to make sure that our budget is structurally sound going forward.
So yes we want to spend money now to stimulate the economy now, but we also need to make sure that we have a path back to a balanced budget and to a surplus, now of course when you are doing that you are going to look at whether payments are sufficiently targeted. We will be announcing the budget in about a week's time, but of course when you are going through this process, you look at all options including targeting.
GLOVER:
It would be fair enough to say, obviously you're not going to reveal the budget tonight, but it would be fare enough to say there is a question mark about non means tested payments going to slightly somewhat better off Australians?
BOWEN:
Well we actually means tested the baby bonus in the last Budget that's already done and a lot of people on very high incomes say to me and other Ministers, well we didn't want the $5,000, you know we didn't need it we didn't want it, and so we got very little resistance frankly for that decision. Now of course there are people close to the cut off, but you have always got to draw the line somewhere. But the Prime Minister has said when times are tough you look across the board at who can make the best contribution.
We are not into targeting particular individuals or the old sort of divide, divide and conquer, sort of class welfare of course we are not, but you sensibly and rationally sit down and look at all your options and what can be most sensibly targeted.
GLOVER:
Do you accept that what is sometimes called middle class welfare, has grown too big in this country?
BOWEN:
Well it has certainly grown and as I say we, we means tested the baby bonus at the last budget. We thought that was the appropriate, sensible thing to do, and of course you need to continue to look at targeting and whether it is appropriate.
GLOVER:
What about the tax cuts which are promised for July 1? There seems to be a little bit of moving around by Wayne Swan, earlier today on when he was asked to promise that they would be delivered.
BOWEN:
Well he made the point I think that they are legislated, they are already in the law and some people have said...
KERNOT:
You can change the law can't you?
BOWEN:
Some people have said that we should have more tax cuts. Like Malcolm Turnbull has argued for more tax cuts and the point we made is that there were tax cuts in the last budget. That these ones are already legislated so therefore when looking at how you can further stimulate the economy it makes sense to look at other things, which is what we have done.
GLOVER:
Okay, but you are going to deliver those tax cuts?
BOWEN:
Well I think the Treasurer has made it clear that they are legislated. They are already the law and so they are the law and the budget will be announced on Tuesday night.
COUSINS:
But the law will be delivered you won't...
KERNOT:
L-A-W tax cuts, I remember that...
BOWEN:
You can repeal the law but you need to be, you need to have very good reason to do so and they were an election commitment and the Prime Minister has made it very clear that we, we are very reluctant to walk away from election commitments.
GLOVER:
Okay, Cheryl what do you think of all this tough budget talk?
KERNOT:
Well some of it is confusing as you say. I mean if the speculation about hobby farms for the wealthy is correct then why hit them with that, but still give them tax cuts. I find that very contradictory.
I have always thought that welfare policy and education policy and other policies are still about capacity to pay at one end and need at the other. I think some of the problems have arisen from where the cut off, the threshold has been set and sometimes, somewhere between sixty and a hundred twenty thousand.
There are always people who will feel that they unfairly missed out, but we shouldn't lose sight of the benefits we do enjoy in this country compared with some others in the rest of the world and I think if we have, if we earn and have the capacity to pay in order to help those who through not fault of their own don't, then we should continue to have our policies based on that fundamental principal.
GLOVER:
Okay, you believe that there has been too much growth in this so called middle class welfare?
KERNOT:
Yes I think there has, I thought it was right to means test the baby bonus. I agree there are lots of people who said we don't need it. I don't agree that you need a baby bonus to encourage people to have babies, I think it was a bonus rather primary course.
COUSINS:
Well don't have it at all. I'm not disagreeing with that, but don't have it at all. If it doesn't work, if it doesn't encourage people to have babies, and I would have serious doubts about whether it does. I would have thought the decision whether to have a child or not has probably got a lot more to do than whether you get a few hundred bucks from the Government, but if it doesn't work don't have it don't be divisive about it, of course you pay tax depending upon what you earn and I'm a great believer in people paying tax and not trying to be tricky and you get out of every single dollar they ought to pay and that sort of business, but I don't like all this other...
KERNOT:
But at the moment we don't need tax cuts for most well off do we?
COUSINS:
But you know this middle class...
KERNOT:
I'm talking about the most well off.
COUSINS:
Don't pay anything to the middle class, its sounds like England in the 18th century for goodness sake!
KERNOT:
Nobody is saying, nobody is saying don't pay...
COUSINS:
Well that was the question that was posed wasn't it?
GLOVER:
Class warfare you reckon, alright. 17 to 6 is the time Geoff Cousins, Cheryl Kernot and Chris Bowen are with us.
The fear of Swine flu seems to be moderating slightly, but not before a government publication advised people to start stock piling food and water of all things and a spate of media reporting that seem to headline every case of a sniffle world wide. Did the Government and media get the right balance between taking the threat seriously and descending into panic, and does the 24 hour news cycle add heat to these sort of crises in a way that is probably not that helpful? Cheryl Kernot.
KERNOT:
Well I think Nicola Roxon's done a very good job, I think that she has been measured, I think she has been calm and I think she has been really well informed and I think that she has communicated whenever she can, when she had something to add to the conversation. I do think though there, it was rather silly to rely on pilots to, oh these people were sick on my plane.
GLOVER:
They have got other things to do you reckon.
KERNOT:
They are not the best judge and they just want to get people to their destination has been my experience, but I think that now the infra red thermal image machines are in place. I think that is fabulous, I don't think it helps though when, I saw the Sydney Morning Herald headline – “Third Australian Has Swine Flu”. It doesn't even say in brackets, ‘oh in the UK by the way' and I don't know why we need to keep fuelling that part of the discussion it's not helpful and in the main you know I heard somebody confirm that there were twenty two cases in Australia which was inaccurate as well.
GLOVER:
Yes yeah.
KERNOT:
So I'd give full marks to Nicola. I don't think it has been helped by the Queensland officers, go and stockpile groceries and things but in the main, Australia is proceeding pretty sensibly.
GLOVER:
Chris Bowen how do you rate?
BOWEN:
Well certainly I would agree with Cheryl, that I think that Nicola Roxon has been outstanding in the middle of all this. She, as Cheryl said, has been measured and calm and has focused on giving information, which I think is what people expect from Ministers.
I have to say I think I need to defend the media a little in here, and I'm the first to say the media is often too sensationalist. I often have that view about issues, but on this one, faced with the situation that the World Health Organisation had declared this to be the second most serious level of pandemic. I mean what were the media...what alternative did they have?
GLOVER:
There seems to be a wide spread misunderstanding that the word pandemic, referred to the lethal potential of it rather than simply the global spread of it.
BOWEN:
I accept that but, this was very and continues to be a very serious issue and I think the community is rightly, is after a lot of information, and certainly families are looking for what are the symptoms what should I be doing etcetera and I think the media has paid a satisfactory role in that, and I think on this one I can't point to any particular of over dramatisation or...
GLOVER:
We now, I have to interrupt you. We now cross to Gosford to Harry who's got a sniffle. Geoff Cousins do you think the government and the media have handled it ok?
COUSINS:
Everybody warns about everything these days, don't they? I mean outside my house which I have had for over thirty years is now a sign saying beware of falling rocks. No rock has fallen there ever.
GLOVER:
It has been introduced has it?
COUSINS:
The sign has gone there you see because everyone says well we better warn because if we warn we are okay.
GLOVER:
And have they screwed on the sign well though, because it will be the sign that will fall off and hit you on the head.
COUSINS:
There is no question about that, no they haven't screwed it on it is just stuck, but look I don't think politicians are who we want to here from with due respect to my colleagues on the panel in these times.
We would like to hear from the health authorities, we would actually like to hear from someone who knows. Now we don't actually believe that you guys know anything about swine flu or indeed any other health issue. I don't think politicians should speak out, in my passing experience with politicians they have a great desire to speak about everything.
KERNOT:
You wanted to be one yourself didn't you?
COUSINS:
I never did at any time. I did not stand I have never been a member of a political party and I never bank rolled anyone. I have never been involved in party politics in my entire life.
KERNOT:
Issue politics?
COUSINS:
Issues are different.
GLOVER:
It is a good point about Nicola Roxon though, is it appropriate to ask about matters such as the stock pile and whether we have bought enough of it or whether it has gone off.
COUSINS:
If the Government has a stockpile of course yeah, but look leave it to the health authorities. You know you get politicians now who give their views on whether this art show is appropriate, whether this headmaster acted properly, for goodness sake.
KERNOT:
But the media asked it.
COUSINS:
We don't elect you folks actually give, and the answer should be it's really a matter for the health authorities, it's really a matter for the education department not the prime minister giving his personal view on every single thing or the Leader of the Opposition.
KERNOT:
Well I think that's true, but don't you think Nicola has a responsibility to show how the coordinated response of the nation is progressing?
COUSINS:
Her response would simply be a, want to direct you to the appropriate health authorities, in terms of the Governments stock pile I can tell you blah.
GLOVER:
It is 11 to 6 on the political forum. We will check Sydney's traffic again in a second.
With us is Chris Bowen the Assistant Treasurer, Cheryl Curnow from the university of New South Wales and businessman Geoff Cussons.
Now Kevin Rudd has been accused in the past with being too cosy with China, but not anymore. Now he has been accused of triggering a new arms race by releasing a new Defence blue print which refers to a threat from China and argue that Australia will no longer be able rely on the fading super power of America for its security, as Mr Rudd stumbled with his plans with a twenty year military build up, Cheryl Kernot?
KERNOT:
Well, I think you have to plan for the future, but Governments can always say we won't be around to have to worry about how this is implemented in twenty years time and although I have read a lot of people saying that it wasn't insinuating China; I think that the fact that it could be interpreted that it was.
GLOVER:
The Chinese certainly have, haven't they? Some expert says...
KERNOT:
...and apparently we sent somebody to brief them before hand, but look it is true that the US's future as a super power has a question mark, it is certainly true that China's future has a mega power is pretty certain.
How we respond strategically is an important question, but one tiny cynical bit of me that watches The Hollowmen, says was this kind of tag line - we will defend Australia, a kind of distraction for the issues raised around the Asylum people, and the breaching of our shores in that way as well.
GLOVER:
It was a coded response to that?
KERNOT:
I don't know, I think that it's a possibility, but I think we do have to acknowledge that things are going to change significantly in the next twenty years, and we do have to have a strategic response. Whether it's this kind of build up and whether this analysis is correct I don't think you will ever know twenty years out.
GLOVER:
Chris Bowen I suppose the problem is that if you build up and say your building up in this way you can create an arms race. Do you think there is a danger that will happen?
BOWEN:
I think in fairness, to say that Australia could spark an arms race by buying say twelve submarines, is a little to focussed on our impact on the world and certainly I think China and other nations have their plans and while they are interested in what we are doing, I don't think anybody could seriously suggest that Australia could spark an arms race.
GLOVER:
The head of one of China's main strategic think tanks, is saying just that on the front page of the Herald today.
BOWEN:
When you look at the White Paper, there are a couple of points that are important to me. Firstly, I think the white paper makes is clear that the main challenge for Australian Defence over the next thirty years is likely to be intra state and non national state movements, so not one nation declaring war on another, but having to get involved in insurgency.
GLOVER:
Like the Solomon's or something like that?
BOWEN:
In our region.
The other point to make is that China, which is a matter of some discussion has been talking about building their military for some time, of course they have, as they grow their economy and the Prime Minister talked about that last September and say this is happening and we will have a White Paper and we will say where we see Australia's defence going. So to say that Australia some how sparking an arms race, I just don't see it at all.
It's appropriate as Cheryl said - we are going from a uni polar to a multi polar world, not only China, Brazil, Russia, India - all developing into serious major world powers. Japan is having more emphasis on their military existence.
So there is a time of considerable uncertainty particular in the Asian region, and I think the White Paper strikes a pretty good balance.
GLOVER:
Geoff Cousins should we speak out loud about the threat we see from China and speak so frankly about how we are going to arm against it? Or should we be more circumspect?
COUSINS:
More circumspect I think might be wise. I think Chris makes the right point when he says we are hardly going to spark an arms race, but if that's true then what's the point of us suddenly up enormously if the impact of our arming ourselves is just about nil. I think, there is an old military adage that says you don't fight on two fronts at once.
This Government is battling to deal with all kinds of financial problems right now and they are not going to go away very quickly, and I think there are a lot of people who are beginning to think the Government has done quite well and I am one, to think that thus far, but there are a lot of us that are now beginning to get very worried about these billions and billions and billions of dollars that are flying everywhere on every issue. It doesn't matter what comes up.
GLOVER:
You haven't seen his budget.
COUSINS:
No I know but the reason, the reason...
GLOVER:
...Wayne and Chris' budget.
COUSINS:
The reason that people are talking about cuts to middle class welfare is because money is racing out the door at an extraordinary pace. Now that doesn't mean that I or the other people who are beginning to think this way thought it was wrong to try to stimulate the economy or anything like that. I'm not in the opposition, I think a lot of the things Turnbull said on that are quite silly, but you can't answer every problem that comes along by saying here's ten billion, here's forty billion.
GLOVER:
Are you worried particularly by the broad brand spending, because that's such a lot of money isn't it?
COUSINS:
I'm going to leave that aside, because I had obviously I'm on the Telstra board and I'm not going to touch it. That's an issue that should be dealt in another place not by me. I'm just saying there are a lot of these things and the response every time seems to be. The greatest project ever in the history of Australia, more money here, cheques in the mail. Now you can't do that on every single issue with credibility.
GLOVER:
Chris Bowen it's true that maybe one of Mr Turnbull's lines that got through to at least some people was when he says Whitlamesque spending from Labor?
BOWEN:
Well I mean spending was actually growing at Whitlam-ess levels under Prime Minister Howard, and we have actually made significant changes.
COUSINS:
Forget what happened...
BOWEN:
Well no, but if you are going to raise Whitlam, I'm entitled to raise Howard I think.
COUSINS:
...but you can't answer that question by saying..
BOWEN:
I'm moving on from there, but I think I'm entitled to make that point, but I don't think it's accurate to say we are throwing money at every single problem. There are a lot of important policy proposals going through to the Government which don't have big dollars attached to them.
Now in Defence you are talking about a period of thirty years and yes you look at the number and of course they are big. Any Defence spending over thirty years is going to look big. It is a substantial program in the White Paper, but I just don't think it is accurate to say that the Government's throwing money at everything, because we are simply not.
We are dealing with a range of very serious policy challenges some of which are expensive to fix, but certainly I can tell you within the Government there is not a disposition to throw money.
GLOVER:
Cheryl Kernot what do you think about this, do you think there is some criticism that stinging about the amount of money that is being spent? People who are worried as Mr Turnbull say of the debt for future generations.
KERNOT:
I have to admit I'm just starting to hear it, just starting to hear from people who say is this ‘are we ever going to run out of money' and I do think the one line he is saying which has some resonance.
It's not the Whitlamesque but how long will it take us to pay it back? How many generations? I think that has some resonance.
COUSINS:
And also I think there is not much thought, at least to us, that seems to be behind some of the things, not much detail comes with it. So there is a big announcement we are going to do this.
GLOVER:
Well what sort of things are you talking about?
COUSINS:
You don't get any modelling on how it was arrived at, what was behind it and in some cases, I think people are prepared to accept that well it needed to be done very quickly so lets no fiddle around, and governments are doing these things all around the world, but with some of these long range things.
It is fair for the opposition to say, give us the detail, where is the modelling, how did you arrive at this? And the Rudd response is I'm the Prime Minister your not.
BOWEN:
No, I don't think so, can I just deal with the issue about unsustainable debt and the debt levels of the nation? I mean if you look going forward you have got to look at us in comparison to nations that we normally compare ourselves with, the United Kingdom just brought down a budget with a budget deficit in the order of 10 per cent of GDP and the United States very similar. In Japan they are looking at public debt as a proportion of GDP 200 per cent.
These are much, much greater figures than the Australian Governments talking about by multiples of very big numbers. I mean we are talking about very sustainable debt to get us through greatest financial crisis.
KERNOT:
With a big lack of confidence Chris in the population to, a big lack of confidence in the population.
BOWEN:
Oh around the world absolutely, but what we are seeing? It would be imprudent not to go into debt at the moment because...
COUSINS:
I agree
BOWEN:
...if you didn't stimulate the economy you would find unemployment higher, company revenue's lower, government revenue a lot lower and a bigger deficit down the track. So you actually have to spend money
KERNOT:
No, we are not disagreeing with...
COUSINS:
I don't think I was debating that, but...
KERNOT:
It's a perception that has turned I think.
COUSINS:
I think you have got to be careful that you don't lose the confidence and the support of people. If you just keep doing this and you don't give enough information about it and I think that is what's beginning.
GLOVER:
We want to see a really tough budget Chris...
BOWEN:
We will do our best.
GLOVER:
Make it hurt.
Let me just ask you finally, Geoff Cousins, Cheryl Kernot and Chris Bowen with us. Last nights Logies chose the most popular TV shows on air at the moment, but what's the best Australian TV show ever? Cheryl Curnow.
KERNOT:
Well when I was a teenager Countdown and in recent year's Sea Change. I think Sea Change tapped, they tapped into values that I think I identified with.
GLOVER:
Countdown and Sea Change. You didn't identify with it but you identified with...
KERNOT:
I did.
GLOVER:
Looking at Diver Dan?
KERNOT:
No you, do not what? I must be one of the few people who didn't. I would rather have William McInnes.
GLOVER:
Chris Bowen?
BOWEN:
Look I have to confess I haven't seen underbelly two, but I thought that Underbelly one, was about the most compelling Australian television I have ever seen.
KERNOT:
That's depressing
BOWEN:
...and look I, my favourite TV shows, would say the Soprano's and the West Wing and I think Underbelly was up there with some of the best Television I have ever seen.
GLOVER:
Tough stuff with Chris Bowen, what about you Geoffrey?
COUSINS:
Games, the Games forget that wonderful satirical show from John Clarke and Brian Door.
GLOVER:
Which took you in to an organisation?
COUSINS:
I think it had everything television should have. It was entertaining and television has got to be entertaining at least in part. It was satirical so it made a lot of comment on the way things work and what have you.
GLOVER:
It is quite dissimilar to the organisations that you have worked in work like Optus and Telstra surely.
COUSINS:
Well I...
KERNOT:
Well I have to go to The Hollowmen.
GLOVER:
We are right out of time but thank you very much Geoff Cusson, Cheryl Curnow from the University of New South Wales and the Assistant Treasurer Chris Bowen.
Good luck for the budget thank you very much for coming in.