HOST:
Joining us now from Parliament House is the Assistant Treasurer, David Bradbury, and his Opposition counterpart, Mathias Cormann.
Gentlemen, good morning to you.
MATHIAS CORMANN:
Good morning.
DAVID BRADBURY:
Good morning.
HOST:
David Bradbury, if we could start to you with the news this morning the government confirming it is delaying reaching its foreign aid target of 0.5 per cent of Gross National Income. We have foreign aid lobbyists, like Tim Costello, says this money does in fact save lives. Are you perfectly comfortable with this?
BRADBURY:
We very much support investing in foreign aid and that's one of the reasons why we're proud of the record that we've delivered in office. We have been increasing the foreign aid budget and we will continue to do that as part of this budget. And that's something we're very proud of. In fact, the aid levels will reach record levels of the likes that we've not seen for about 25 years in this country. And this all comes at a time when across the OECD countries have been pulling back on their contributions. So we're very proud of the contributions that we're making but of course when you face the sort of revenue write downs that we've experienced here in the lead up to the budget, then it's important that government has a look right across the budget itself and across all areas of spending to make sure that we're able to make the necessary adjustments that are needed in order to keep the budget strong and the economy strong moving forward.
HOST:
At the same time though, we had the UK Chancellor, George Osbourne, announcing this most recent UK Budget, British foreign aid spending will reach 0.7 per cent of Gross National Income. How does this continued delay make Australia stand on the international stage?
BRADBURY:
You could focus in on the delay or you can focus in on the fact that we will be increasing the aid budget by somewhere in the order of $500 million. Not insignificant. Significantly more than we ever saw under our opponents and it would be really interesting to see whether or not Mathias Cormann would be willing to confirm that an Abbott government, if they were to be elected, would retain that level of foreign aid. Because on the one hand we hear Julie Bishop out there every second day complaining about cuts to foreign aid, which is not true, meanwhile every other day Barnaby Joyce is out there spruiking the need to cut back on foreign aid. We have had a very generous and sensible program of contributions to foreign aid which will continue. We're proud of it. We think it's important that we make a contribution to global poverty. We've been doing that and we'll continue to do that in significant measure.
HOST:
Ok, Mathias Cormann, over to you. When would a Coalition government reach this 0.5 per cent target?
CORMANN:
Well, let me just make a point that this is yet another broken promise by the Labor Party. You might recall that the Labor Party described this particular commitment as an eyeball to eyeball commitment. And of course what we see here today is whether it's a promise that we will not have a carbon tax, whether it is a promise come hell or high water to have a budget surplus or whether indeed it is a promise to increase foreign aid to 0.5 per cent of Gross National Income. You can't trust the Labor Party. And let me just correct one of the false assertions that the Assistant Treasurer has again repeated here this morning. Revenue is not going down, revenue for this government will increase by about 3 times the rate of inflation this financial year. The government will have $25 billion more to spend this year than last year, which is an increase of about 7.6 per cent. The only reason the government is crying poor is because the Treasurer, incompetently and shamelessly, overestimated the revenue he expected to generate this year. He thought, he wanted people to believe that revenue would increase by about 12 per cent at a time when Treasury was forecasting slower economic growth and at a time when Treasury already last year was forecasting a fall in the terms of trade.
HOST:
I just want to get back to the question though, Mathias Cormann. Would a Coalition government, if one was elected in September, bank this delay in reaching the foreign aid target or would you, because you are as committed to Labor reaching that target, aim to reach that target earlier?
CORMANN:
Well, unlike the Labor Party, we go through proper and methodical process. We're not going to give a running commentary on a series of official and unofficial leaks that have characterised this pre-budget period. We will look at the budget in its totality and then of course make an informed judgement. The point here is we actually won't trust the budget paper that the Treasurer is going to put down tomorrow. We will wait for the Pre-Election Fiscal Outlook, which is released independently and objectively by the Secretaries of Treasury and Finance to find out what the true position of the budget is so that we can finalise judgements responsibly on this issue and on other issues across the budget.
HOST:
Ok, David Bradbury, we had the Treasurer Wayne Swan saying yesterday that it's going to be a pretty tough night for him tomorrow. Just how uncomfortable is it going to be for Labor, this budget?
BRADBURY:
It's going to be difficult because of the revenue write downs. We just heard from Mathias Cormann the sort of rubbish that you hear from the Opposition where they say "well, revenue is increasing, therefore there haven't been revenue write downs". When your economy is growing as strongly as ours is, independent forecasts, those of Treasury and the Department of Finance, they would suggest that you would bring in additional revenue. Now that hasn't come to pass for a whole range of reasons. I can go into them if you like, but the high Australian dollar is a very significant part of it. Those revenue write downs mean that the revenue that was expected to be coming in is not coming in in the same measure. Now that presents all sorts of challenges. But I'd make this point, for all of the claims from Mathias Cormann and others that there is a credibility problem when it comes to our budgeting, I make this point, don't listen to what politicians say, look at what the markets say, look at what the ratings agencies say. And every single one of those major ratings agencies have given us a big tick. We have the trifecta of Triple A ratings. Never achieved under Howard and Costello. Delivered under this government. So you can listen to the political carry on that you hear from Mathias and others, but look at what we have achieved, the record we have in office and yes it has been challenging getting back to surplus, we would have liked to have got their a whole lot faster, but in the context of the global environment and revenue write downs, we are managing an economy that is growing faster than any other advanced economy, we're doing that when we've created 960,000 jobs since we've been in office. Tony Abbott's out there saying he has an aspiration of creating a million jobs in five years in office. Well, we've done it. We've done it, we've delivered that, low and contained inflation, interest rates at record lows, and at the same time our net government debt is amongst the smallest of advanced economies in the world. We are a stand out economy and this budget will not only reflect that but it will reflect the important investments that we need to make to keep our economy stronger in the future, but to also deliver the fair society that Australians expect.
HOST:
Mathias Cormann, when you look at those naked figures, as David Bradbury was highlighting there, we've got 3 per cent growth, relatively low unemployment on an international level, benign inflation, a Triple A credit rating. It's a pretty good set of numbers there, isn't it?
CORMANN:
There was a lot of dishonest spin in the numbers that David Bradbury mentioned there. Let me just agree though, yes the current government inherited a very strong economy and a very strong budget position, with no government net debt, with a budget $20 billion in surplus, with about $70 billion in Commonwealth net assets, so they inherited a very strong budget position after the Howard-Costello government paid of $96 billion of Labor Hawke and Keating debt. So they did start in a much stronger position than everybody else. But let me just again correct some of the assertions made by David Bradbury. Wayne Swan and others are trying to hide behind the high Australian dollar to explain what they describe dishonestly as revenue write downs. Well, the Australian dollar is pretty well exactly where it was predicted it would be in last year's budget. So there is nothing new there. Commodity prices have fallen, exactly the way it was predicted in last year's budget. But of course the dishonesty was Wayne Swan wanted people to believe that revenue would grow by 12 per cent, which was never going to happen. It hadn't happen since 1986-87 when the economy grew much more strongly when the terms of trade increased by more than 8 per cent, when they were expected to fall over this last financial year. So, I mean cut a long story short, I mean, incidentally in May 2011 Wayne Swan promised that the budget was going to be all about jobs, jobs, jobs. Pretty well what he is saying now. Seems like Groundhog Day. He promised to create 500,000 jobs in the two years that followed. Well, he's about 50 per cent short of his target. He would have to create about 237,000 jobs in the remaining month and a half. And of course that's not going to happen.
HOST:
Mathias Cormann…
CORMANN:
The Labor Party promises a lot, they never deliver.
HOST:
Mathias Cormann. I want to just focus on one of the policies the Coalition has put out there, that is the generous parental leave scheme. Joe Hockey yesterday seemed to leave open the option of the Coalition amending that scheme before the election. Is it back on the drawing board?
CORMANN:
It is not back on the drawing board and I think that you are verballing Joe Hockey there.
HOST:
He was asked directly whether there would be changes and he wouldn't confirm nor deny.
CORMANN:
Well, what we've said is that we are fully committed to a fair dinkum paid parental leave scheme. I think the key features of that have been out there for the last three years now. It is an important economic reform. It's an important productivity measure. It is a measure which will help us grow our economy more strongly, which will be good for families and for business. But of course, what we have said, and what we've said for some time, is that we will finalise all of our costings and all of the funding context in the lead up to the next election, in good time before the next election, after we have seen the true state of the budget in the Pre-Election Fiscal Outlook.
BRADBURY:
Why do you need to wait for that Mathias? Why do you need to wait? On your Paid Parental Leave scheme…
HOST:
Mathias Cormann, I just want to pick up on that point. So by saying that, you're waiting on the numbers before the election, by extension this parental leave scheme and for that matter other policies, like direct action which has also been criticised by members within your own Coalition ranks, could be under review.
CORMANN:
Well, no, that's not what I'm saying. It really, I mean, if you, you …
HOST:
So you're committed to the parental paid leave scheme in its entirety as it stands now?
CORMANN:
Well, it goes to how you fund it. And all of the funding context. We're totally committed to the Paid Parental Leave scheme. But of course, if you look at what we said in the lead up to the last election, we were going to have a 1.5 per cent paid parental leave levy, a temporary levy, which was effectively offset by an across the board 1.5 per cent company tax cut. So the tax rate didn't change for anyone, for the larger companies, the tax rate at best, at worst, was going to remain the same. But of course, for most companies, the tax rate was going to come down. In the lead up this election, what we've said is that we're committed to a modest company tax cut and we will make final judgements in relation to the size of that company tax cut once we know what the true state of the budget is.
HOST:
Ok, David Bradbury.
BRADBURY:
But you could, Michael, you could release, Mathias, you could release today the costings of your policy. As you said, the policy has been set in stone for the last three years. Now there is no variable to come out in the budget, there is no variable to come out in PEFO that provides you any reason to wait. The reason you won't release the costings around your diabolical paid parental leave tax is that you don't have the money to fund it. Mr Abbott's out there saying it's fully funded, but the truth of the matter is a 1.5 per cent increase on business will not even fund the liability. It will be much more than that. Now even if it were only 1.5 per cent, as you people like to remind everyone, you put a great big new tax on business and that leads to pushing up the costing of living for every Australian. That is the reality of what people will face, and what we see today in the newspapers is that companies that have already been out there delivering their own generous parental leave scheme will now say "well, what's the point of us doing that". What we've got is a Liberal Opposition saying in government we want to nationalise parental leave schemes, we want to take it out of the hands of employers that are currently funding that within their own workplaces, because we want this big Rolls Royce scheme that will give $75,000 to someone that's on a very substantial income. It's just a joke. If you don't release it in the budget in reply, then you're not fair dinkum.
HOST:
Ok gentleman. Very quickly, Mathias Cormann. Your response and we'll have to wrap it up.
CORMANN:
Well, the Paid Parental Leave scheme is a very important economic reform. And just speaking up on the point that David Bradbury just made, well yes big businesses are able to fund them internally, but of course small businesses are not. And of course that puts them at a huge disadvantaged in terms of competing for staff. By us pursuing the reform that we've put forward, we will actually help small business compete on a more level playing field for the staffing resources that are out there.
HOST:
Mathias Cormann and David Bradbury, thank you both for your time this morning.