SUBJECTS: Liberal Party, Federal Budget, GST/Excise on fuel
CHRIS BOWEN:
Tonight the alternative government will be laying out their response to our Budget. As Peter Costello said in 2004 'a budget reply consists of going through the Budget and saying the things the opposition agrees with, the things it doesn't agree with, putting forward alternative tax proposals and putting forward when they will start, how they will be paid for, and what the opposition would do if they were bringing down a Budget.' Couldn't have put it better myself.
Tonight is a test, for Dr. Nelson. Tonight we will see whether the Liberal party will continue it's record of reckless spending in Government, or whether they will step up to the plate and deal with the problem of inflation in this country.
This Budget has reined in spending. We have reduced spending by one full percentage point of gross domestic product. We have spending increases one quarter of the average of the last four years. But the challenge for Dr. Nelson tonight, is to lay out whether he supports the restraint of the public spending to put downward pressure on interest rates and inflation or not.
We've outlined $7 billion worth of savings this year. It's up to the opposition to outline their savings tonight. Now the Liberal party and the National party have over the last few days, outlined their opposition to several of the sensible measures that we announced in the Budget.
This graph shows the difference in approach between the Government and the opposition. Now this has been based on comments made by front benchers from the opposition over the last few days. We've taken a conservative approach, for example, this graph does not include the Liberal party opposing the means-testing of important benefits like the Baby-Bonus and Family Tax Benefits B, because we remain hopeful that the Liberal party will see the light and support the means-testing of those benefits.
So we've taken the approach that where the Liberal party or the National party have indicated opposition, it is included in this graph. Its' been a difficult process because there are so many mixed-messages from the opposition about what they'll support and what they'll oppose, unable to reach a conclusion on many of the matters. But, if you look at this graph, you can see the Government providing savings, so far the opposition, in the fiscal year 08-09, not providing savings.
You can say over the course of the forward estimates the Government provided savings, and over the forward estimates the opposition deteriorating the fiscal bottom line. Now, we are not hopeful tonight because Brendan Nelson has indicated he does not believe inflation is a problem in this country.
He has indicated that inflation is a charade. So if you think inflation is a charade, you have to make a decision about whether you're going to deal with it or not. If you think the cost of living pressures on the Australian people are a charade you need to make a decision about whether you're going to deal with it or not.
Tonight, the leader of the opposition will outline their alternative plans, we hope. We want to hear from the opposition leader, what his plan to deal with inflation is. Because if they continue with their efforts of the last few days they will be fuelling inflation, they will be helping inflation. They will be fuelling inflation, not reining it in. We are circulating to you this graph and on the back of the graph, we are circulating to you the individual savings measures that the opposition has indicated that they will oppose or that they have concerns or problems with and the source of those claims. I'd be happy to take some questions.
JOURNALIST:
Baby bonus measures … Dr Nelson said this morning that he will allow passage of this measure in the appropriations bill.
BOWEN:
Well these are the mixed messages we're getting from the opposition, I mean what does the Liberal party stand for? Last week we had Dr. Nelson giving us the great revelation that every mother loves her baby, we've seen Mr. Turnbull say that the means-test should not be applied to the baby-bonus, now the signals this morning from Dr. Nelson are that they wont oppose the means-testing of the baby-bonus, so we don't know where they stand, we don't know what they stand for. We've taken a conservative approach, we're hopeful that they will see the light and will confirm tonight that they will agree with the means-testing of those benefits.
JOURNALIST:
He confirmed it this morning, do you welcome it?
BOWEN:
Of course, if that is confirmed we will welcome it. He also said he wouldn't block alco-pops and now they are, so we don't really know until we see the colour of their money, where they stand.
JOURNALIST:
Is what you're saying in this graph over four years there is roughly a $12 billion difference?
BOWEN:
There's roughly a $7 billion difference over the four years. $7 billion on the bottom line, when you take the combined impact, compare that to $6 billion from the ALP.
JOURNALIST:
Alco-pops, obviously young girls' drinks these are you worried about the politics of that if the opposition does decide to make it an issue and block it?
BOWEN:
Look, none of the saving measures that we took were easy, we thought long and hard about every single one of them. The ERC met long into the night, thinking about the implications for the Australian people of every measure that we took. But of course, alco-pops are a health problem in this country and we need to take measures and we recognise that there are people who will be disadvantaged by that, but at the end of the day, it's in the national interest to reduce binge-drinking and reduce consumption of this particular form of alcohol and that's why we've taken that measure. We accept, we recognise that some people are unhappy about that, but we hope that people will recognise that we've done this in the national interest.
JOURNALIST:
Minister, just on fuel prices there's been some suggestions the government should remove the double taxation inherent in them by removing the GST that's applied to the excise how do you respond?
BOWEN:
This is an issue that comes up often in the community, the interaction between the GST on petrol and the excise on petrol and you do get from the community the concern that this is some form of double taxation. It would be very expensive of course to remove that. It would be a considerable fiscal burden on the states, remembering that the states get the GST revenue however, given that it is a concern in the community and given that we have the full review of the taxation system underway, it is something that does need to be examined. It would be irresponsible to do it, in on of itself, it is a large amount of money involved but it is something that the review should look at and the government has asked the tax review to look at the interaction between the GST and fuel excise and see if there are any measures that can or should be taken.
JOURNALIST:
In past parliaments when Labor had the power to block budget measures it used that power, for instance, the PBS savings, the first time the Howard government tried it, that sort of thing. Won't you be open to compromise and into negotiating with the opposition on say the alcho-pops tax or other budget things?
BOWEN:
When we were in opposition we outlined our alternatives and that what Dr Nelson needs to do tonight. Now if Dr Nelson says that he is not supporting some of our cuts, either he has to propose his own cuts or he has to admit he's flying the white flag in the war on inflation.
Either you come up with your alternatives or you say, ‘inflation is a charade and we don't care about it and we're going to continue the fiscal profligacy that we had in government'.
JOURNALIST:
How much would removing the GST on the excise cost and how much would it save motorists?
BOWEN:
It would be a considerable cost to the States' revenue – it would be several hundred million dollars, that was the last estimate I saw, and that's why I say it would be irresponsible just in and of itself but when you're having a root and branch review of the tax system, this is the opportunity to look at these things. This interaction has been of concern in the community for some time, for many years, since the GST was introduced by the previous government.
So this is a very good opportunity to examine whether the system's operating fairly and whether there is some opportunity for some relief, through the tax system.
JOURNALIST:
But with the $21 billion surplus surely the government can afford several hundred million to take the burden off working families.
BOWEN:
But remember the GST revenue goes to the states so it would be the states that would bear that burden. So this review covers state taxes as well as federal taxes, and the GST.
Of course we've indicated that there'll be no increase in the GST and no broadening of the base of the GST; but it's perfectly appropriate and we have asked the review to look at the interaction of the GST with other taxes, especially the fuel excise.
JOURNALIST:
The Treasurer said yesterday that disability support was one area that he thought, hoped and I suppose regretted he couldn't have gone further on. Is there potential to increase and improve services and support for carers before the review is handed down, given they are so vulnerable? Is there scope to make announcements prior to the review handing down its finding?
BOWEN:
Well, I think what the Treasurer indicated yesterday was that as soon as the Government was in a position to do more then we will. This is a priority for us, we know how tough carers are doing that's why we instituted the bonus that we did in this budget. I think that what the Treasurer is saying is to regard that, if you like, as a down payment and we'll do more when we can.
I think everybody accepts inflation effects everybody and everybody is looking at the government to reign in spending to put downward pressure on inflation. I think the Australian people understand that the new government, which has been in office six months, would like to do more; and we will do more when we're in a position to do so.
Are there any other questions? Okay, thanks for your time.