JOURNALIST:
Treasurer will your November Mid Year Review include a revised forecast for economic growth for the current fiscal year?
TREASURER:
When we bring down the Mid Year Review we look at all of our forecasts including economic forecasts and Budget forecasts. Now, I am not saying that it will change necessarily but every one of the parameters will be re-evaluated and we will restate our forecasts for the Mid Year.
JOURNALIST:
How committed is the Government to delivering tax cuts after yesterday?
TREASURER:
Well, we are very focused on balancing our Budget, paying for decent social security services, supporting our troops in the field, securing our country, and if we can do all of that, we would like to have the lowest tax base consistent with that. Now, we cut income tax on 1 July of this year because we believed that in this current financial year we could meet those just obligations and reduce tax. If we can do the same thing in future years, it would be our policy to do so. But it is conditional upon being able to balance our Budget, pay for decent social services, support our troops in the field and secure our country in a safety sense.
JOURNALIST:
So when could we expect another tax cut? Next year?
TREASURER:
Well, as I said, we have just cut taxes, we cut them on 1 July of this year. If, in the future, we were able to balance our Budget and pay for decent social security, support our troops, secure our country then we would always like to do it with the lowest tax base possible.
JOURNALIST:
There have been estimates in the press today of $10 a week. What do you think of that?
TREASURER:
Well, the press can estimate all they like but I am not looking at next year's Budget, I am looking at this year's Budget. And in this year's Budget we cut income tax. We cut it by $2 billion and people are now receiving those income tax cuts, they passed through the Senate and they were delivered on 1 July. What we might do in future Budgets, I will look at the time when future Budgets are brought down.
JOURNALIST:
Were you surprised how far out your estimates were?
TREASURER:
Well, the Final Budget Outcome was about 1 per cent of GDP, 1 per cent of GDP surplus. We were forecasting a little over half a per cent. So the variation is what, under half a per cent, that's not a great deal you know.
JOURNALIST:
What about on the surplus though?
TREASURER:
Well, on the surplus, on the surplus, the variation is about half a per cent of GDP, a surplus of $7.5 billion is 1 per cent of GDP. We were forecasting a little over half a per cent of GDP so the variation is about half a per cent of GDP. I have often said, I am not surprised by a variation of half a per cent of GDP, what I am surprised by is an accuracy that you can get it down to half a per cent of GDP. These are large sums but in proportion to the amount of Gross Domestic Product or in proportion to the Federal Budget, it is a pretty small proportion actually.
JOURNALIST:
Do you concede that there's a possibility that the previous $4 tax cut may have been absorbed now by bracket creep in light of one of the reasons revenue is up is increased income tax?
TREASURER:
Of course it hasn't been. This Government over the course of the Government has cut income taxes, taking into account all movements in prices, has cut them. Now, let me make this point again, on 1 July this year, for this financial year, we cut taxes by $2 billion, for this financial year. The Budget outcome which I announced yesterday was for the last financial year. That's the year that has passed. People ask me about future tax policy, that is for next financial year. We are talking about three different years here and you have to keep all of that in mind.
JOURNALIST:
Treasurer, would you be concerned that if you were to cut taxes even further that that may stimulate the economy to the point where the RBA would need to raise interest rates?
TREASURER:
Well look, when we take into account economic policy, it's a good point that you have made. It's not just a question of balancing your Budget and running a tax policy, you have also got to look at overall demand in the economy and you have to make sure that you are keeping an eye on other parts of the economy that can be affected by fiscal policy. And it's a good point that you make. I am not saying what I would do, I am just saying I keep in mind fiscal policy and the part that it plays in relation to aggregate demand.
JOURNALIST:
Treasurer a Geelong wool factory has shut down this morning citing an industrial dispute so about 100 people have lost their jobs, and the company is claiming that, sorry, rather the union is claiming that the Howard Government's lock out, laws on lock out, are to blame.
TREASURER:
Well, it looks to me like it is a long shot doesn't it? If the union calls an industrial dispute the Federal Government is responsible? I would have thought if the union calls an industrial dispute the union leaders can take responsibilities for their industrial disputes. Let me make this clear, industrial stoppages which damage companies also damage employees. That is the reality of the situation. You have got no employees without an employer and employees need employers and they need businesses to be profitable and if an industrial dispute affects the profitability of a business everybody is a loser. So, I think it's best if employers and employees can co-operatively work these things out, that is what our policy is designed to allow, and our policy is designed to get agreements between employers and employees. Thanks.