SPEERS:
With us now is the Parliamentary Secretary to the Treasurer, Steve Ciobo. Steve Ciobo thank you for your time. Can I start by asking you to confirm or deny something I've been told; there will be another cut to foreign aid in tomorrow's mid-year budget update?
CIOBO:
Nice try David, but I'm not confirming or denying anything at this stage. We will of course release MYEFO... the Treasurer will at the Press Club tomorrow. So everyone will be able to see the state of the books tomorrow and know what's going to be happening with respect to Government finances. But what's clear David is that we have an almost Herculean task ahead of us. We've got a Government that walked out at the September 7 election and left an absolute mountain of debt; left expenditure growing rapidly; and left a very serious problem that we as a new government are going to work damn hard to make sure we fix.
SPEERS:
Can you at least tell us will there be any further spending cut decisions into tomorrow's mid-year budget or will all the new spending cuts be in the Budget proper in May?
CIOBO:
David look I'm just not going to go into speculation about what is going to be announced tomorrow or not announced tomorrow. But what I can tell you though is that people will see tomorrow very clearly, Australians across the board, what is the current state of play and the challenges that this Government has inherited off the Labor Party. And off the back of that we're going to make good decisions in a calm and methodical way about what we want to be our legacy and about the way in which we can turn the ship around, so to speak, to make sure Australia's in a stronger position going forward.
SPEERS:
Alright let's get into some of that. You're there blaming Labor for what we're going to see on the bottom line tomorrow; the much bigger deficit. But let's have a look at some of the decisions this Government, the Abbott Government, have made that have made the bottom line worse; rightly or wrongly. Granting $8.8 billion to the Reserve Bank in one big hit; that is one decision that has added to the deficit hasn't it?
CIOBO:
I'm not going to pretend it hasn't. The reason we did it though is the important question, David. Because with each of these issues we've had to make decisions that we believe to be in Australia's national interest. Now I formerly was Deputy Chairman of the House of Representatives Economics Committee. We sat down every six months with the Reserve Bank Governor and looked at what was happening with monetary policy. Now I can tell you the Reserve Bank Governor made it crystal clear to us that the Bank saw that there was a special dividend that was demanded off them, against the Governors' advice, by the former Labor Treasurer Wayne Swan. And that's the reason why we've given this one off grant back to the Reserve Bank; because they say they need the Reserve Bank fund to be at 15 percent and Labor has whittled it away to basically nothing.
SPEERS:
Ok, and then you've got the decisions you took on taxes; not to go ahead with the changes to the Fringe Benefits Tax was one of them and the tax on superannuation earnings. That's $3.1 billion added to the deficit based on decisions of this Government as well.
CIOBO:
There again, David the reality is this: we have adopted a number of the saving announcements that were made by the Australian Labor Party. Because Labor clearly knew, they never said it, but they clearly knew that they had left the state of the books in a really bad way. So we've adopted a whole raft of Labor's saving initiatives and the extraordinary thing David in the current political climate, and this is what I think people need to be aware of, the extraordinary thing is that Labor is now opposing its own announced savings measures because they think there is a nickel and dime of political-one-up-man-ship, or a little glint of political opportunity that Labor want to take. This just underscores why we've got to be the adults in the room when it comes to restoring Australia's economic credibility.
SPEERS:
But you have to acknowledge there are some decisions here that as we're going through them, that are of this Government has added to the deficit. It's not all Labor's doing.
CIOBO:
But my concern David is that you're looking at something that's very minor compared to the much larger story. Let's not forget David that Labor originally said...
SPEERS:
Hang on, that $8.8 billion plus $3.1 billion is.... We're getting close to $12 billion...
CIOBO:
But what you rather as a Government that we didn't provide a big one off grant to the Reserve Bank? I mean the Governor made it clear...
SPEERS:
I'm not arguing whether that's the wrong or right thing, I'm just saying acknowledge that there are decisions you've taken that have had an impact on the deficit.
CIOBO:
David, I did that in my first breath. I said absolutely, guilty as charged, we gave the Reserve Bank nearly $9 billion in a grant. But as I said the key question is why we did it. And I can't stress this enough; we did it because the Reserve Bank Governor said ‘we need that capital’ because Labor kept drawing special dividends out and depleted the Reserve Bank, that’s why we did it.
SPEERS:
Can I ask you about the decision confirmed today to continue with $1 billion of infrastructure projects, road projects mostly, that were meant to be paid for by the mining tax. You’ve decided to go ahead with that spending, why?
CIOBO:
Well David, because we are fundamentally focused on making sure we are getting maximum bang for the buck when it comes to taxpayer funds. As far as the Coalition Government is concerned every dollar that taxpayers pay is a dollar that has to be highly regarded and looked after. Now if we can extract a more productive Australia through the wise investment of taxpayers’ money into infrastructure; something that’s going to boost productivity…
SPEERS:
If you don’t have the money to pay for it, you’re getting rid of the tax that was meant to pay for it, and you decided to not go ahead with other things it was meant to pay for like the School Kids Bonus, small business benefits, they’ve all gone. Why are you keeping this one?
CIOBO:
I’ll explain. I’m happy you asked that question and I’m very keen to explain. You get something like the School Kids Bonus right, now that’s a bad spend David. I’ll you the reason why that’s a bad spend and it was typical of Labor’s approach when they were in Government. It’s a bad spend because it is borrowed money, it is effectively intergenerational theft: that Labor is just dolling out cash with absolutely no linkage to it being spent on schools or on children. Then you get something like what we’re doing; which is focusing the spend on actual productive infrastructure. So I’m very happy for the Government to be judged on that contrast.
SPEERS:
So families wouldn’t have spent that money appropriately but the Government will. Is that what you’re saying?
CIOBO:
No. What I’m saying is that there is clear evidence from the $900 cash handouts that the former Labor Government rolled out there where we saw money getting shipped off to people overseas, we saw payments being made to dead people…
SPEERS:
I’m talking about the School Kids Bonus…
CIOBO:
David, it’s exactly the same thing. It’s cash that’s being borrowed that’s going straight into bank accounts. Now I’m not saying every person is going to misuse it; of course not David…
SPEERS:
How can you afford to spend this $1 billion in road projects without the mining tax? Isn’t that borrowed money as well?
CIOBO:
You know the mining tax was a classic example of Labor at their best. It raised compliance; it didn’t raise any revenue and it actually made the budget worse off…
SPEERS:
So why are you borrowing another $1 billion given the state of the budget for road projects?
CIOBO:
Because we’re not about to stop all spending David, that’s not about to happen. It’s not as if we’re suddenly going to stop all spending. What we’re going to do is make sure every dollar we invest is generating a return across the community. And the best way we can do that is by wise investment in productive infrastructure. And you know what David; you don’t have to take my word for it as a politician. The Reserve Bank Governor has said this is in the best interests; economists are saying this in the best interests of the country; and you’ve also got the Productivity Commission which has made it clear we need, as a nation, to boost productivity and we do that with effective infrastructure spending.
SPEERS:
Now about six weeks ago the Prime Minister said, and I quote: “we will get back to surplus at least as quickly as the former Government claimed that it would get back to surplus.” And the former Labor Government claimed that be in 2016/17. Does that still hold?
CIOBO:
Well I tell you what; what absolutely does not hold. There is absolutely no way, not a snowflakes chance in hell that Labor was ever going to get back into surplus in 2016/17…
SPEERS:
Maybe not, but I’m asking about the Prime Minister commitment that he would get the Budget back to surplus at least as quickly as the former Labor Government claimed it would which was 2016/17.
CIOBO:
Well we will see tomorrow the state of the books that has been left to us by the Australian Labor Party. We will make it very clear what we are dealing with and we will chart a pathway forward in no uncertain terms about what we’re going to do to restore Australia’s budget bottom line.
SPEERS:
And the promise made repeatedly by Tony Abbott prior to the election to deliver sustained surpluses of one percent of GDP within a decade. Does that promise still hold?
CIOBO:
Well that’s what we’re attempting to do David. We’re going to work towards implementing our policies that make sure we get Australia back on track. Now, as I said to you at the outset, the task that’s been left to us by Labor is almost herculean. Labor’s spending was growing rampantly; they were borrowing money left, right and centre; a lot of it as cash splashes and the reality is we have got a problem. And the problem is this: massive growth in expenditure under the Labor party which we’ve got to now try and control with a declining revenue base and a decision that governments have to make about how we get the balance right between making sure we can still spend on productive investments like infrastructure but also not have to cut too sharp or too hard and be mindful that we also get strong economic growth.
SPEERS:
Steve Ciobo, Parliamentary Secretary to the Treasurer, thanks so much. We’ll see you tomorrow down at the Press Club.