SUBJECTS: Coalition costings, Budget surplus, Fringe Benefits Tax, Clive Palmer.
CHRIS BOWEN:
Well thank you for coming everybody. This morning we've seen an unprecedented statement by the Shadow Treasurer, which has since been confirmed by the Leader of the Opposition, that the Opposition will not respect the Pre-Election Fiscal Outlook (PEFO) as the basis for the costings and projections of its economic strategy. Clearly the Opposition is softening up the Australian people for not releasing their fully costed and funded policies, and softening up the Australian people for not telling the true story about the state of their budget plans.
This is a remarkable change of position from the Opposition. Just over two months ago, Mr Hockey said this: "We've always said that the only numbers we can actually rely on are the numbers released by the Secretary of the Department of Treasury and Finance ten days into the election campaign because they belong to the public servants rather than these numbers which belong to the Government".
That was Mr Hockey on the 15th of May this year. He's referring there to the Pre-Election Economic Outlook, which today in the papers he is trashing. This is a remarkable change of position.
The contrast is clear here. The Government will release an economic statement. The Government's fiscal strategy is a pathway to surplus over the economic cycle. The Government will offset new expenditure. Our economic statement will be clear, open, subject to debate and transparent. On the other hand, the Opposition keeps moving the goal posts on its costings and policies. A few months ago, it was going to be when the Treasury and Finance released their economic outlook. That, in itself was too late, now they're crab walking away even from that commitment.
The Coalition continues to trash the reputation of the Departments of Treasury and Finance in an extraordinary attack on Australia's public servants, and importantly the Coalition is today walking away from what is in fairness – to give credit where it's due – their own creation. The Charter of Budget Honesty was established by Peter Costello. Oppositions and governments have respected the Charter of Budget Honesty since then. Labor, Coalition have all respected the Charter of Budget Honesty. We've supported it, we've worked with it. This statement by the Opposition today means they are walking away from the Charter of Budget Honesty which was established by their own Peter Costello. I doubt this is going to do anything for Mr Costello's view of the economic credibility of Mr Abbott – he's already made clear that he thinks Mr Abbott does not understand economics.
Clearly the Opposition has a massive funding shortfall. They themselves have admitted that they have a $70 billon black hole, which is only getting bigger with their decisions to refuse to back the Government's change on Fringe Benefits Tax and they're signalling that they will change other tax measures in recent days, it gets bigger every day.
Today's statement from the Opposition cripples whatever economic credibility and fiscal credibility the Opposition had left. They are softening up for cuts to jobs and services which won't be fully costed by the appropriate people. Last election, we saw the Opposition use an accounting firm which was then fined for a breach of professional standards because of the sloppy work which went in to the Oppositions' costings. We are seeing yet again the same sloppy approach from the Opposition.
Yesterday, we saw Mr Robb compare Australia's position to Lehman Brothers and to belittle the importance of the AAA rating. He was soon slapped down by the Shadow Treasurer. But this underlines the fact that the Opposition just clearly isn't up to the job of managing the Australian economy.
They are clearly not up to the job of presenting credible fiscal alternatives, fully costed, fully-funded to ensure that the Budget remains on track to return to surplus. I am happy to take a few questions.
JOURNALIST:
Treasurer, do you accept that there is a problem with your own Budget? Here we are at the end of July and the Budget was released in May and the economists are already talking about substantial downgrades to economic growth coming into PEFO and you yourself are also looking to plug revenue holes.
BOWEN:
My position on this has been consistent since the day I became Treasurer. I've said publically, consistently, that there are impacts on the Budget, of things like rather dramatic reductions in our terms of trade, even since the Budget was released because that impacts on government revenues. Against that, the Australian dollar has been devaluing which has a countervailing affect. But I have been very clear that there are impacts on government revenues as a result of that. I've also been clear about the fact that we will stick to our budget strategy, we will offset new expenses and that we will issue an economic statement in an open, clear and transparent way.
Now by contrast, the Opposition won't do that. They will adopt a Campbell Newman style commission of cuts which will pave the way for serious cuts to jobs and services Queensland style but they won't be honest about with the Australian people. If they're going to propose cuts they should tell the Australian people now and get them fully costed through the appropriate ways. It is just not on, just not on - just let me finish this one point - just not on to hide your cuts in a commission of audit, Campbell Newman style, which will then be rolled out after the election and the Australian people will be misled about it in the lead up to the election.
JOURNALIST:
Do you accept that the forecasts in the Budget in May were wildly optimistic in terms of GDP and as a second, will you be back in surplus on time?
BOWEN:
I've said, as I say, that there are impacts on government revenue, they'll be outlined in the fiscal and economic statement that Minister Wong and I release. And yes, we are continuing with our strategy of returning the Budget to surplus over the economic cycle as I've previously said.
JOURNALIST:
You don't think you've inherited a lemon in the May Budget?
BOWEN:
No.
JOURNALIST:
Is the return to surplus commitment ,is that a rock solid commitment or is that just a target?
BOWEN:
Well that's our intention to return to surplus in 2016-17, that's our intention that what the economic statement will outline.
JOURNALIST:
So that's an intention rather than a commitment?
BOWEN:
Well you can quibble about words. What I'm saying, is that our approach is clear – that is what the economic statement will outline, an intention to return to budget surplus in 2016-17.
JOURNALIST:
Treasurer, is your government influencing Treasury to produce the figures you want to hear?
BOWEN:
No, and I completely reject that assertion. It is an insult not to me but to the Treasury and to the Department of Finance. And I am sick and tired of the Opposition trashing the reputation of Australia's public servants. Australia's public servants are independent and unimpeachable in this regard and if they prepare figures for the Pre-Election Fiscal Outlook those figures should be respected.
Now if the Opposition has a different set of figures they need to show exactly where they believe the Treasury and Department of Finance have got it wrong and they should stop impeaching the reputation of Australia's senior financial bureaucrats.
JOURNALIST:
Treasurer, do you concede the proposed changes to FBT legislation announced last week have damaged business?
BOWEN:
No, what I'd say is that clearly I accept that all industries, all businesses would like to have very concessional tax breaks – every industry in Australia would like that. I understand that some people will be disappointed that a very concessional tax break is being changed. All we have asked for is that there be some evidence provided of business use of a motor vehicle. Some evidence – three months' worth of log books which will then last over five years.
Does that, is that being universally welcomed by all in the sector? Of course not. It's never going to be. This is my point – difficult decisions need to be made, revenue decisions, saving decisions need to be made. But, they should be made up-front, open, transparent and subject to criticism like this one has been. They shouldn't be hidden away from the Australian people until after an election campaign. Couple more questions?
JOURNALIST:
Treasurer, on the FBT, were you at all surprised to discover that the share price of McMillan Shakespeare – the salary packaging company dropped by almost 50 per cent having been suspended for a week because of those FBT changes?
BOWEN:
Well I'm not going to comment on individual firms. What I will say is that given the nature of some of the public commentary, it is unsurprising that people have responded in some of the ways they have. But, I stand by the changes as being an important integrity measure, important to ensure the fairness of the tax system and important in terms of the Government's fiscal strategy of offsetting new expenditure.
JOURNALIST:
How significant to the Budget will the dividend be from the lower Aussie dollar?
BOWEN:
Well, we'll update those figures in the economic statement. I'm not going to provide a daily rolling commentary on the Australian dollar, what figure it is today compared to where it might be when we release the economic statement and what impact it will have on Government revenue – that will be outlined in the statement.
JOURNALIST:
But you raised that in your earlier response.
BOWEN:
I did in general terms, but I'm not providing a quantum today, I'm not releasing the economic statement today, that will be released by Minister Wong and I in due course. That's where those figures will be outlined.
JOURNALIST:
Can Treasury forecasts be trusted especially given that by the time the election comes around there will still be so many balls in the air when it comes to the immigration policy and how much money that will cost?
BOWEN:
Well the Treasury and the Department of Finance will in a very professional, methodical way will provide all their forecasts and projections and I don't accept that the Opposition is in any position to reject those. It has been the standard procedure for governments and oppositions to accept PEFO as the basis for costing and forward projections and this is an extraordinary step by the Opposition today. Okay, last question.
JOURNALIST:
What do you make of revelations that Clive Palmer appears to have been behind and bankrolled the organisation which he is so shocked has appointed him an advisor to the G20?
BOWEN:
Well pretty extraordinary turn of events. I've had a bit to do with the G20. I've been, as you know, to G20 Finance Ministers on the weekend, and I didn't run into Mr Palmer in Moscow. I'm not aware of any involvement he has with the G20 Finance Ministers or Leaders and I think he has got a bit of explaining to do. Thank you very much.