GILBERT:
This is AM Agenda. The Treasurer Joe Hockey will be introducing the five year Intergenerational Report a bit later. He will be releasing it at midday today publicly. A lock-up for the gallery journalist kicking off in a bit over an hour from now. The Treasurer this morning let the cameras in as he was accompanied by the Finance Minister and The Parliamentary Secretary to the Treasurer as well. Let’s have a look.
TREASURER:
The interesting thing is this will start the national conversation about our destiny and how every single Australian can influence our future. The wisdom of Australia’s future isn’t coming out of this building, it’s coming for the people of Australia, it’s coming from innovation and new medical research, new technology, greater workforce participation by women and older Australians. That’s going to help to drive the growth of our economy that will build prosperity and that’s very exciting. We are all going out to talk to the world and to talk to Australia about how we can engage in a conversation about our future.
GILBERT:
And from that office to this studio The Parliamentary Secretary to the Treasurer Kelly O’Dwyer, joins us as does Labor frontbencher Bernie Ripoll. Kelly the Treasurer said some of this information is going to knock Australians of their seats. What’s the information that is going to be so such a surprise do you think?
O’DWYER:
Well look firstly, let me say this is a very important document. It’s the start of a really critical conversation. The Intergenerational Report is a stocktake on where Australia is right now and where we’re heading, and there are a number of different paths that we can choose on that journey. The first path was the path that was set by Labor and that’s been modelled. Now, this is what’s going to knock people’s socks off. That is, if we had continued along the trajectory set by Labor, the net debt to GDP would have gone up to 122 percent by 2054. Now that is just below Greece and it is certainly ahead of Spain and a number of other European countries. If we continue on the path that we are currently on, the status quo that we have currently legislated, we would still see net debt to GDP at around 60 percent, which is again about equivalent to Spain. But if we commit to a reform path, we are actually not only going to be able to pay back that debt by about around 2030 or thereabouts, but we are going to be able to then start insuring that we can return payments to people through income tax cuts in the years beyond that, and that’s going to help grow our economy. Why is it important? Well it’s an important document because it sets this framework out. But it’s also important to understand that the assumptions in this document are really critical too. It assumes that we are going to continue along the path of uninterrupted economic growth so there is no margin for error here. There is no margin for error if there is a global downturn or a global shock. Now the Labor Party doesn’t seem to accept this…
GILBERT:
So it could be even worse than that? The projections that you are saying on net debt that we are going to be comparable to the countries of Europe that could be, that that scenario could be even worse?
O’DWYER:
It could be even worse and you only need to take a very small case study, a case study like Ireland for instance. Where you see that just before the Global Financial Crisis they had net debt to GDP of around about 11 per cent. We are around about just over 15 per cent right now. In six short years that shot up to 90 percent because they had a global downturn and their budget suffered. Now when your budget suffers your choices are reduced, and when your choices are reduced the people who actually get hurt are the most vulnerable people in our society.
GILBERT:
Let’s hear Bernie’s response to this because those warnings on the current trajectory are, well they are as Kelly says, there is a pretty potent point that the Governments got here.
RIPOLL:
Well Kieran let’s get some facts right. The Intergenerational Report is a complete work of fiction. It’s been disowned by Treasury. The Head of Treasury has said this is a work of the Treasurer. It has been disowned by the head of The Fiscal Group who also said this is a work of the Treasurer. And it contains in it budget measures which the Government have now dropped and dumped – significant ones including the GP Tax. So they can’t go out there with this work of fiction and say in 2055 this will be what it is. Now Kieran in the past the Intergenerational Report has been a bipartisan report that looked at some serious matters that Australia will have to deal with in the future. For example, the last one said that there will be twice as many 65 year olds as there are today, there will be four times as many 85 year olds as there are today, and while there’s about five people in the workforce for everyone aged over 65, we expect in 2050 there will only be two point seven. These are the serious matters that the Government should be dealing with and that’s what I talk about when I talk about the Intergenerational Report. I don’t talk about Labor or Liberal because I don’t want to politicise what is an important document for the country.
GILBERT:
When you say it’s a work of fiction, what specifically, given it’s only going to be released later today, and I’m not sure if you have had a chance to read it.
RIPOLL:
I haven’t.
GILBERT:
So how can you say it’s a work of fiction?
RIPOLL:
Well how can anyone say that it isn’t when they head of Treasury has disowned it? What it should be done, the Intergenerational Report should not be about bashing one Party or about making predictions to 2025.
O’DWYER:
It’s not about bashing anyone.
RIPOLL:
It should be done by the independent Parliamentary Budget Office and kept independent. Projecting out to 2055 is a long, long way away and that should be based around what Australia will look like and where we’re headed but as we already know…
GILBERT:
I’ll come back to you Bernie but I just want to get Kelly O’Dwyer’s response to this suggestion that this has not been undertaken like it was in the years of your former boss Peter Costello, who you worked for for many years.
O’DWYER:
Peter Costello who actually brought this into place in 2002, he released the very first Intergenerational Report because he understood it was important to have a long term vision for the country, and to understand the pressures that would be on the economy and on the Budget because it would impact the future choices of future generations.
GILBERT:
Was it done by Treasury?
O’DWYER:
It was done by Treasury, it was always the Treasurer’s report done by Treasury. This is exactly the same. It is the Treasurer’s Report done by Treasury. The modellings the same. The only people who have really mucked around with the Intergenerational Report was the previous Treasurer Wayne Swan who actually brought forward the report by two years and made it a very political document. Now this is the start of a conversation that we want to have and you’ve got to lay all the facts on the table. The Labor Party would like to ignore that. They would like to pretend you can ever increase debt and it will have no impact. That you can ever increase tax and it will have no impact. That’s just not true and Bernie is right to highlight that there are going to be…
GILBERT:
Some of the assumptions are though false in that they are based on policies that you’ve scrapped this week, for example the GP Co-payment.
O’DWYER:
One policy that has been scrapped this week was included in the trajectory of the current status-quo position. That’s around about just under a billion dollars. Obviously that is an important component. However, it is one seventh of less than one per cent of our budget so we just need to put that into a little bit of context. Now Bernie’s right when he says we have to look at the number of working age people for those people aged 65 and older. That’s actually something that we need to concentrate on in this country because the pressures on the budget for those working age people to fund aged care, welfare, the sort of services that we are going to require as our population ages is going to be very very significant. But the problem is Labor. Labor knocks it but they come up with no solutions.
GILBERT:
We know that that’s the point. The point Bernie Ripoll to you, again I say what’s different this time to what’s gone on previously with Peter Costello for example.
RIPOLL:
To be fair the Intergenerational Report should always be bipartisan it should be de-politicised and the fact that we have some very important issues…
GILBERT:
But you’re bagging it before it’s released, so how’s it being de-politicised?
O’DWYER:
You haven’t read it and you’re bagging it.
RIPOLL:
Well Kieran I’m advised, as you are, and as Kelly is. Kelly hasn’t read it either.
O’DWYER:
No I’ve read it.
RIPOLL:
You have read it?
O’DWYER:
I’ve read it.
RIPOLL:
Page to page, very good one advantage over me.
O’DWYER:
Page 53 I recommend.
RIPOLL:
Very good, well let’s look, I’m at a disadvantage here. But I’m advised and Kelly’s not arguing, in fact she has just confirmed what I’ve just said. I’m advised there are measures, budgetary saving measures contained in the Intergenerational Report which are no longer there, and I suspect there are many others as well. The fact is that this report has been disowned by Treasury. This is the first time that Treasury has made specific comments in Estimates about the veracity. We already know some numbers around migration figures have been manipulated, we already know that. We already know that there is a whole range of things that are contained in this report. Now if we want to talk about savings, if we want to talk about different budget measures that’s fine. But it’s a work of fiction in that it contains numbers that aren’t going to be there today before it’s even released.
GILBERT:
But do you accept the argument by Kelly and the Treasurer that this, if you pursue the status quo, we end up in the ballpark of Europe and Spain and countries like that?
RIPOLL:
But the status quo isn’t the status quo.
O’DWYER:
It’s what’s currently legislated, which assumes no shocks, which assumes there’s going to be no more spending.
RIPOLL:
The current status quo Kieran is just the view of the Treasurer, it’s not actually the status quo. And in fact the Liberal Government has been changing its mind on a range of things on a daily basis. Well we don’t know whether it’s going to be a GP Tax or not, today it’s gone but we already know that they want to bring it back. So it doesn’t stack up. If they want the Australian people to have a really good conversation around what we will look like in 2055, that’s a long way away, then we’ve got to look at some of the serious issues. Now if the Liberals’ view is just that people want to work until they are 70, well I’m not going to agree with that, and I know lots of Australians won’t agree with that either. If it’s about taxation and savings to the budget, well Labor put through legislation through multi-national profit shifting legislation in 2013, and tax avoidance legislation in 2013. But the Liberal Party voted against a billion dollars’ worth of tax measures on multinational companies. They took the money from pensioners and gave it back to the multinationals. That we shouldn’t have done, that the Liberal Party shouldn’t have done.
GILBERT:
Kelly, we’re almost out of time, just briefly finally to wrap up we are almost out of time.
O’DWYER:
Well look, I think this is the important beginning of an important national conversation and I think that rather than knock it straight away the Labor Party should engage, they should engage with this document, they should engage with the facts that are contained in the document. They should be part of the solutions that we are all going to need to come together to be part of, so that the next generation can inherit a better position that the position we are in today.
GILBERT:
Kelly O’Dwyer, Bernie Ripoll thanks, so much for that.