PAUL MURRAY:
He’s the Treasurer and we spoke to him earlier tonight.
TREASURER:
Thanks Paul great to be here.
MURRAY:
Now we’ll get into the numbers about debt and all of that in a second but I like the changes you’re making when it comes to university and university funding. We’ve shown on this program and you’ve been aware of it for a very long time that the university sector quite often likes to bitch and moan about its funding structure but the problem is there are lots and lots of courses that are filled with kids that aren’t smart enough to do them, instead the business model of the university says fill the room with whoever will turn up and then the Government will pay up front. We can’t afford that stuff anymore.
TREASURER:
Well that, and their funding was running ahead in growth of the costs that they were experiencing so they’ve been building up these reserves within the universities. We tried, as we did on many other savings measures, to get it through the Budget and then through the Parliament and the Labor party has always stood in the way of all that. But what we’ve said, well ok if we can’t go that way, we’ll go this way and we’ll freeze it which we can do under the legislation that the Labor party actually passed when they were in government and we supported them. So it doesn’t require legislation what we’re now doing with the freeze, some of the family tax benefit measures also don’t require that. I mean we did have a preference for actually having some reform in the higher education sector and getting longer term benefits from that but you know it was quite recalcitrant so we had to go this way.
MURRAY:
Well family tax benefit is something that I think all Treasurers will probably never say publicly but certainly when they must look at that numbers, I think as soon as we’re in deficits things like family tax benefit can supercharge deficits. What, if anything, can you do inside MYEFO to be able to as you say freeze a bit here, move a bit there, what can you do to make sure that some of the big things in the Budget that if left going would all just be running downhill as fast as they can?
TREASURER:
Well again in this update, what we’ve done is we’ve frozen some of those thresholds so they’re not indexing but one of the other things we’ve done is that when people have welfare debts the family tax benefit supplement, which is used as a balancing item at the end of the day, that can be used to ensure other welfare debts are paid. Another thing we’ve done is that if people have come as newly arrived migrants we’re extending the waiting periods. Australia’s a great immigration country and one of the reasons for that is because those who came here to make a contribution, not take one and so for those who have come to make that contribution and work and all the rest of it, well then this is a great country for you to come to and that’s why I think we’re as strong a nation as we are. But we will be extending the waiting periods for welfare for those who have come as new migrants including the family tax benefit.
MURRAY:
It would seem bizarre that that’s not the situation now anyway, this must always be the thing when you’re putting together the Federal Budget you know all the things that are hidden inside the cabinets, all the things that are hidden in the draws, the little systems and choices and changes generations of people have made. Do you find it bizarre that it took ‘til you know 2017 almost 2018 to work out maybe you can’t get welfare as soon as you turn up?
TREASURER:
Well in this case it was family tax benefit and there was some other changes around parental leave thresholds and things like this, I mean that’s why the budget process it’s just one of detail and you’ve just got to work through it over months and months and months, which is what myself and Mathias and the rest of the ERC team does. But I mean there was a waiting period for many other payments and there wasn’t on a few others, but what I’m really pleased to see in this update Paul is that we now have one of the lowest rates of welfare dependency for working age Australians in almost 25 years and that’s because we’ve been tightening up now, I mean Christian’s been doing that, I was doing it before him, Kevin Andrews before that. We’ve been tightening up the welfare system ever since we came to government and we’re now seeing the real dividends of that. I mean the reason these numbers are better today isn’t because there was some boon in iron ore prices or things like that, it’s because payments are actually going to be less and particularly in the welfare sector that 80 per cent, 70 or 80 per cent of the reason these budget numbers are better today is on the payment side, not on the revenue side.
MURRAY:
Now on the debt and deficit stuff, obviously the Budget still runs at a deficit, sadly we have to spend more money than the Government can get, but on the debt question there has been a slight change in the direction over the next couple of years but still that number in common use language is going to be too much for most people now that we’re sitting at what half a trillion dollars. How long before we go beneath that half a trillion dollar number?
TREASURER:
Well there are two numbers here and I want to be clear about this, there’s the net debt. Now you remember when the Howard government came in and they said there was $96 billion worth of debt? That was net debt and that’s the debt they paid off over that period of 11 years or so. Our net debt now will peak next year at just slightly over 19 per cent of the size of the economy, and then it falls and it falls over the next ten years to just around about 7.5, 7.7 per cent of the economy. So the net debt position will actually be falling. The only reason gross debt will be rising is because that is what is funding the roads, the hospital improvements, that is the capital works, bridges, airports, the defence recapitalisation the biggest one we’ve had since world war two and importantly in this budget update we’ve been able to bring forward that we are no longer borrowing any new money to pay for the everyday expenses. We’re not putting the grocery bill on the credit card anymore, that ends now, that’s the first time that’s happened in a decade since the GFC, that is a major turning point in how the nations finances have been managed and it’s happened under a coalition government.
MURRAY:
So that’s the good debt, bad debt conversation that you were trying to have at the start of the year…
TREASURER:
That’s right.
MURRAY:
And I think’s pretty effective. You borrow money to build stuff, you don’t borrow money to you know to pay off a bill.
TREASURER:
That’s exactly it and so that is what is happening now. And I hear the Labor party they were banging on today going but gross debt’s where that is, well are they not going to build the Western Sydney airport? Are they not going to do the inland rail? Are they not going to meet the target on defence spending to get that back up from the abhorrent levels and standard they left it in when they were in Government? Are they going to raid the Future Fund because our gross debt levels are based on the fact that it’s actually smarter finance to borrow at 2.5 per cent than take money out of the Future Fund which is earning at 7 per cent to pay for the unfunded superannuation liabilities? So these are just the smart choices I think we’re making to manage the finances. If the Labor party wants to reverse those smart choices, well look perhaps they would that’s why you wouldn’t let those Muppets run the finances.
MURRAY:
Speaking of Muppets, well pointed out to you on Facebook yesterday about two, count them two everyone, Greens senators who decided to play the smart aleck game around Christmas and removing Christmas and they did the sort of lefty non-denominational garbage. Of course they all say it’s a giant joke but I look forward to them doing this joke around important Islamic holidays Treasurer.
TREASURER:
Yeah, which they shouldn’t do either. Look what I genuinely took offense to is the word Christmas with a line through it, I mean literally striking out Christ in Christmas. Look they might think it’s funny but for millions of Australians Christmas is very important to them as a religious festival not just as a time to get together as family. And last time I looked in the Constitution it protected religious freedoms and last time I looked it actually referred to Australia’s Christian heritage in our Constitution. If the Greens want to go out there and take pot shots at Christians and Christian religion in this country well they should know that the Christians aren’t just going to stand there and cop it. I mean they should show the same respect to Christians that they should show to any other Australian at our religious festivals and our religious beliefs and to do so I think is a failing as a member of Parliament and they can’t just laugh it off, I mean what’s next do they want the Lord’s prayer taken out of Parliament? I mean does the Labor party want that, I don’t know. I mean know they tried to do it when they were last in Government, and if you allow these things to be said and not go unchallenged then guess what happens, they end up becoming the reality and I’m not going to let the Greens get rid of Christmas, basically. I’m told Richard Di Natale stands, in translation a colleague told me today, as Richard of Christmas, well he needs to get two of his senators in line now.
MURRAY:
Good man, Treasurer, thank you for everything on and off the air this year. All the best with the family, congrats on ten years in Parliament and we’ll see you next year.
TREASURER:
Thanks mate.