HOST:
We're pleased to have David Bradbury, the Assistant Federal Treasurer on the line right now. Good morning David.
BRADBURY:
Good morning Mark, good to be with you.
HOST:
David, as you can understand, there's a bit of ill-feeling here in the nation's capital this morning because the slasher's going through the public service here dramatically, reminiscent of when John Howard first came to power. We're talking about over three year estimates 12,000 public service jobs, of course not all of them in the capital. It's going to have a massive effect in Canberra. What have you got to say to the people of Canberra this morning?
BRADBURY:
Well the first point I'd make is I don't accept the comparison you're making with the Howard Government and I think it's important to put this in context. During the period '96 to '99, they cut 29,000 jobs. Now, in real terms, obviously the economy was much smaller back then than it is today. I think it's important to understand that sense of proportion and put it in that perspective. But can I say more broadly that we have been saying for some time now that this was going to be a tough Budget and there are many tough measures; in order to return the Budget to surplus we have had to take some difficult decisions, but I think when you have a look at the range of measures that have been put in place, there has been an attempt to make sure that the burden of wearing the effect of those cuts has been spread reasonably broadly. Now on the question of – I just caught the tail end of what you were saying at the introduction – whether or not the Coalition or the Government's being honest on this question, I would make this point: that even last night when Mr Hockey was asked to outline where it was within the Government Budget he would make alternative savings, he raised the spectre of another 20,000 job cuts. That's on top of the measures that are already contained in this Budget. So, I appreciate that many people will be looking at the Budget, wanting to digest its detail and understand how it impacts on them –
HOST:
What you're saying is if you look across at the other side, they might be a bit more savage?
BRADBURY:
Well, absolutely. Just to make that point, the only alternative saving measure that Joe Hockey could come up with on television was 20,000 job cuts to the public service.
HOST:
Wayne Swan stood before us a year ago with a $22 billion deficit. That's what he said would be the bottom line in the current financial year. In reality we are going to end up at $44 billion in the red. So he got it wrong to the tune of $44 billion. How can we possibly have faith in a wafer-thin $1.5 billion surplus when the Treasurer got it so wrong in the last 12 months?
BRADBURY:
Well, it's not a case of the Treasury getting it wrong. Obviously, when you hand down a Budget there is the period of time that occurs between handing down the Budget and what we call the final Budget outcome. Now there will be variations that will occur. The standout impact that we've been facing as a country over that period has been a massive write-down in our tax revenues and there are a whole series of reasons that are driving that, none of which relate to anything the Government has any control over. In large part it's as a result of the softening of the global economy and also things around the very slow recovery and capital gains taxes that are being paid and also the massive mining investment that we're seeing. Because it's at a very capital-intensive part of the process, many of those mining companies are not paying tax at this part of the cycle, they will pay tax later on down the track, whereas they're getting deductions for the capital investment that they're making. So, we've taken some massive write-downs in revenue, they are things that occur to Government, sometimes they occur in a positive way, sometimes they occur in a negative way. But what is the real question here? The question is we are handing down a Budget that will return us to surplus. We will be monitoring all of these matters throughout the course of the next year to try and ensure that we deliver the Budget outcome. There may well be a need for us to revise the way in which we deliver the Budget. That is a normal part of any process. We have a thing called the MYEFO which gives Governments that opportunity but we will deliver a surplus. We have committed to doing it and that's what the Treasurer handed down last night.
HOST:
David it's been suggested to me that a number of the Federal Departments here in Canberra have basically been given the go-ahead to operate at a deficit in terms of they've been told, look, this is what we want you to do but we want to cut you a bit of slack, if you don't come in at these figures it's alright, and if that's the case then these figures are all rubbery anyway.
BRADBURY:
Well I've got no knowledge of any directions of that sort and can I say that I think that people can't have it both ways here. They can't on the one hand say that we are very concerned about the depths of these cuts and then on the other hand say we don't think the Government's serious about delivering them. We have been imposing a fairly tight and disciplined fiscal policy for a number of years now. Obviously we had to make some investments to support jobs through the global financial crisis and that's one of the reasons why we've come through the crisis better than any other advanced economy in the world. And the IMF says that in the coming two years our growth prospects are better than any other comparable country. Now that's in part because we took the decisions to invest in keeping people in work and avoiding the costs of people being turfed out onto the unemployment queue.
Now, we're coming out the other end, growth is returning to trend. We've got low unemployment, contained inflation and a record pipeline of investment, now's the time for us to be making those corrections, bringing in Government spending, making sure that we give the confidence to the community and to the broader economy that this Government is going to run a tight and disciplined fiscal operation.
HOST:
David Bradbury is with us, the Assistant Federal Treasurer. A surplus at $1.5 billion – it's been pointed out to me that it would take us over 100 years if we delivered surpluses of that level to pay back what we borrowed during this term.
BRADBURY:
Look, I haven't done the mathematics, that may well be the case, but we are not operating on the basis that the best surplus we will ever achieve will be at $1.5 billion. Think about it this way: the Budget itself is a bit like your household Budget. Now we all have debt, separate to the budget we all manage on a year-to-year basis. If you've got a home, take your mortgage for example. You need to be not only balancing with the income coming in and the expenses that are going out, but also you've got to be paying off that debt. Part of the reason why we're returning the Budget to surplus in the first instance with a modest surplus of $1.5 billion but that is a surplus that will increase over the out years and by the end of the out years were up at around $7.5 billion. As you improve your capacity to pay down debt, then you will start to erode your debt base faster and faster. But let me make this point: our net debt in this country peaks at about 9.6 per cent – less than 10 per cent – and that is in this financial year. That peaks at one-tenth of the average of the peak of other advanced economies. So while we're looking at 10 per cent levels of debt, there are averages out there that are closer to 100 per cent of GDP. In the context of things, we recognise that this is a modest surplus. It is a surplus, it's the beginning of a process that gives us the capacity as we move out the back end of the GST to pay down that debt.
HOST:
David in closing, it got a little hairy there close to the end there when it comes to the Member for Dobell, Craig Thomson yesterday. Be honest with me, were there moments where you thought perhaps he could end up being suspended from Parliament for those 14 sitting days?
BRADBURY:
Well, no I didn't think that that would occur and I think that the Leader of the House made the point very clearly in Parliament that it would be an exceptionally dangerous precedent. It's okay for people to look in the context of minority government, but if you think that the Parliament, the House, has the ability to suspend a Member from the House by taking judgements that haven't yet been afforded all the due process that we have in a system with the separation of powers like ours, then imagine what you'd get if you had majority government? You could just punt out any opponent because you didn't like what they were up to.
HOST:
So why punt him from the Party then? If we're waiting for due process, why cut him from the Party?
BRADBURY:
There's two fundamentally different points here. His membership of the Labor Party is one thing, now that is something that is subject to the internal processes of the Labor Party, but when you're a Member of the Parliament, you're here because the people of your community elected you. Now, there is no provision within the constitution that allows other Members of Parliament to simply boot you out of Parliament.
HOST:
David, we'll have to leave it there but thanks for your time this morning, appreciate it.
BRADBURY:
Great to speak to you Mark.