DALLEY:
The release of the five year Intergenerational Report by the Treasurer was meant to start a conversation about issues around Australia’s growth and wealth, particularly as the population ages and we live longer, but it was somewhat overwhelmed firstly by the Treasurer being in court fighting Fairfax Media on defamation, then by Tony Abbott managing to put off side his closest indigenous advisers by claiming that Aboriginal people who live in remote communities make a lifestyle choice doing that, that taxpayers can’t endlessly fund, and then Christopher Pyne’s actions on higher education changes in the past two days where he has brightly claimed today that he’s a fixer and he’s fixed it. Kelly O’Dwyer is the Parliamentary Secretary to the Treasurer and she joins me today from our Canberra studio. Kelly O’Dwyer thanks very much for being there.
O’DWYER:
Great pleasure Helen.
DALLEY:
Now you’ve got a smile on your face but it has been a day of backflips by Education Minister Pyne. For a government that promised no surprises, he said today there will be a surprise in the budget as to how he’s going to pay for the $150 million in continued research funding so how is the budget going to pay for that?
O’DWYER:
Well, the terrible truth here is that the Labor Party with the research funding, decided that they wouldn’t fund research beyond June 2015. This has not been noted, I think in a lot of the coverage here, but it was completely unfunded so there were no solutions by Labor. What the Minister came up with was an idea as to how it could be funded and he said it could be funded through the package to be delivered, that would de-regulate universities, increase action and increase competition and opportunity for people who want to get a higher education. He put that package to the Senate. He’s been negotiating that package with the crossbenchers, again, because the Labor Party refuse to negotiate on this Bill.
DALLEY:
Right, but yesterday he did threaten those jobs and then today he backed down from that. How is the budget going to pay for that $150 million to continue it?
O’DWYER:
Well, he’s acknowledged that more savings will have to be found in the budget in order to pay for those research positions. Now, this is the unfortunate truth of budgets, if you spend more in one area you have to find savings in another area. The Labor Party don’t seem to understand this, they seem to think there is some magic money tree, they seem to think that Government money is somehow completely detached from individual taxpayers whose money, whose hard earned money, is appropriated by the Government in order to fund the services that we expect and the services that are currently paid for out of the budget and out of appropriations. So, we’ve said we are not going to be irresponsible, we are not going to be reckless like the Labor Party, we are going to make sure that we have funded proposals that are brought forward, that’s what we’ve done here. We don’t want to jeopardise the university higher education reform. We know that university higher education reform is critical. Peter Beattie, someone who is not normally on the same page as Minister Christopher Pyne, even remarked today and in previous days that it would be dumb not to pass this package of reforms.
DALLEY:
Alright, fair point but would you agree it was a back-flip of pretty spectacular proportions. The Senate will now vote on fee deregulation or not, but the Government will put off debating the 20 per cent uni course funding cuts so you don’t get the cuts in spending that you wanted for the budget.
O’DWYER:
Well, look, the Labor Party of course, to the higher education sector, made cuts of more than six billion …
DALLEY:
Yes, no sorry Kelly, if you could please just stick to this issue that has happened today that is a back down from your side of politics. The Minister has put off the 20 per cent funding course cuts that the budget was going to get, was going to be able to save.
O’DWYER:
Well certainly that’s a fact and we are going to need to find further savings. It’s not helped by the fact that we don’t have political partners in the Labor Party that are also keen to make sure that we are not putting that funding burden onto future generations. You mentioned the Intergenerational Report before. The Intergenerational Report was the perfect example of just how reckless the Labor Party is with future generations—our children and our children’s children, who are going to be funding our lifestyles today and also their own services and their own infrastructure needs. This is not something that we can stand for, it is something that we have said that we would get under control. We are not going to accept that net debt should go to 122 per cent of GDP by 2054 which is what the Labor Party had us on track to do—which is only just below Greece really at 171 per cent. We’ve halved that, we’ve halved that with the legislated changes put in place. But you are right Helen, there is more work to do and we just hope that instead of political pygmies on the other side of the Chamber that we’ve actually got serious partners.
DALLEY:
Alright we are talking about the Intergenerational Report but in a sense the suggestion by the Treasurer that perhaps younger people could dip into their super savings for a house deposit or for re-training, took off as the most discussed issue. He put it because we are going to be living much longer. That was roundly criticised by former Treasurer Peter Costello, by Finance System Inquiry Head David Murray and others as a recipe for depleting retirement savings putting greater pressure down the track on pensions. Do you accept that?
O’DWYER:
I think that the key point in all of this Helen is that we actually need to have a discussion about superannuation and I think that every single one of those people you mentioned said that this is a conversation we need to have. It’s a conversation we need to have in light of the evidence that was brought forward by the Intergenerational Report. The Intergenerational Report was very clear. It said that currently, under our system right now, 70 per cent of people who are aged over 65 are on a pension or a part pension - that will only go down by about three percent to 67 per cent by 2054 despite the fact that we will have another 40 years of superannuation savings. We need to ask ourselves the question—is superannuation working to deliver the retirement incomes that will support people in their retirement? And it should be looked at from time to time and that’s what we are going to do.
DALLEY:
The one move that did win the Treasurer some brownie points was cracking down on foreign purchases of existing houses if the buyers are not resident in Australia and he’s forcing the sale, or FIRB is forcing the sale, now are all those foreign buyers – you’ve looked into this – are they trying to get around existing laws if they use local shelf companies or trust structures but they don’t actually live here?
O’DWYER:
Anybody who is trying to disguise that they are a non-resident foreign investor when purchasing existing homes is trying to flout our foreign investment framework, there’s no doubt about that. The rules are very clear.
DALLEY:
And do you have evidence that they are doing that in large numbers?
O’DWYER:
Well part of the problem with the review that was conducted last year by the House Standing Committee on Economics is that there is a paucity of data. One of the key recommendations made was that we need to have a national register so that we can have a discussion informed by fact rather than a discussion informed by anecdote. But what we do know is that there has been increased levels of foreign investment. They have in effect doubled in recent times and, during that time, we have not seen divestments ordered as we have seen in the past for people who have been flouting the laws. The Foreign Investment Review Board said at the time that was because everybody was being far more compliant. I think that defies credibility, the Treasurer thinks that defies credibility and the Government has acted.
DALLEY:
Alright, would you agree on another issue because the budget is less than eight weeks away, there have been many mixed messages from your Government, the Treasurer admitted biting off more than could be chewed in the last budget but he and the Prime Minister are also saying that the Government wants to stick to its spending cuts and to do budget repair, well, which is it, is the electorate getting mixed messages here?
O’DWYER:
Well we do need to commit to budget repair. That is the only sustainable solution for our budget and for the future prosperity of our nation. As I said before, there’s no money tree, it’s taxpayers, and 70 per cent of the revenue that is derived at the moment is derived from people who are paying income tax. Now, one sixth of those people paying income tax pay about two thirds of all of those taxes and if we’re talking about increasing their burden even further as Labor is suggesting that they do, we are talking about people who are only $4,000 a year off the average salary. Now this is not something that is sustainable and this is something that Labor needs to be honest about when they’re talking about increasing taxes.
DALLEY:
Would you describe the upcoming budget then, will it be tough on spending or a more softly, softly approach, in about ten words or less.
O’DWYER:
Well, we are going to stick to our plan to reduce spending; we are going to make sure that that is done in a fair and sustainable manner; we are going to make sure that we fund those things that need to be funded that people expect; and we are going to bring our budget back under control.
DALLEY:
Alright, Kelly O’Dwyer, appreciate your time, thanks for joining us.
O’DWYER:
Thanks Helen.