DOYLE:
Thanks Kim, Steve Ciobo, firstly the Opposition has accused the Government of making the deficit look as large as possible to then be able to come in and say well we're going to fix this situation up next year, is that true?
CIOBO:
Clearly it's not true, I mean what's happened is that the Treasurer outlined today the last Labor Budget and the first real one in terms of what has actually been Labor's legacy. Of course Labor has got to try and find some way to attack us, and we understand their role as an Opposition and they're going to attempt to try and muddy the waters. But the Australian people know fundamentally that what we are talking about today, what we outlined today, is the consequence of six years of Labor Party rule. Now Labor inherited a budget with no net debt, they're going to leave behind, if nothing changes, a debt of $667 billion. The forecasts are $123 billion of deficits over the forward estimates, so I say to Labor: I get they're trying to do what they can, but the Australian people understand that this isn't a 100 day consequence, this is a consequence of the last six years.
DOYLE:
But some of the decisions have been taken in the last 100 days though. For example the payment to the Reserve Bank, the extra money that will need to be found for the Gonski reforms, so you can't just say that it's all Labor's fault this situation.
CIOBO:
Well I mean the Gonski reforms you're talking about, the funding that we announced is entirely offset so that's the first point I'd make. But with respect to the Reserve Bank, I'm not going to sit here and say that we haven't had to have an impact. Of course we have in the first 100 days. Take for example, the Reserve Bank, because that's a great case in point. Labor was ripping special dividends out of the Reserve Bank, despite the Reserve Bank Governor saying he did not and could not afford to have those dividends taken from the Reserve Bank reserve funds. So absolutely, we are putting a grant of $8.8 billion into the Reserve Bank because the Reserve Bank has made it clear that they need that grant to make sure that the Bank has adequate capital in terms of its Reserve Bank Fund. So yes, we've made a contribution, but fundamentally if you have a look at $123 billion worth of deficits, projected peak debt at $667 billion; Australians get that hasn't happened in the last 100 days.
DOYLE:
On the Reserve Bank too, there has been argument though that payment was made to increase the deficit to make it look worse.
CIOBO:
Who's making that argument? The Labor party.
DOYLE:
And some economists.
CIOBO:
I mean the reality is the Reserve Bank reserve fund had money taken out of it, contrary to the, well not the instruction, but the wishes of the Reserve Bank Governor. So much so, that Reserve Bank reserve fund fell below the magic 15 per cent trigger and that's the reason why the Coalition is topping it up. You know, I think Labor likes to focus in on one little thing here or one little thing there but they ignore the bigger picture. The bigger picture here is that Australia has gone in six years from having no net debt to now having a situation where unless we make changes, Australia will have $667 billion worth of debt.
DOYLE:
What about the change though in the way that the unemployment rate is looked at the change in methodology there, that means that the unemployment rate is higher for those last two years of the cycle which then makes the bottom line look worse. Why did you change the methodology there?
CIOBO:
Well, I'll tell you the reason why: because Labor in terms of their projections was completely farcical. No I'm not trying to play the blame game here, I know that I talk about Labor, but that's because what we did today was take a stock, a picture effectively, of where we are: A stocktake effectively.
DOYLE:
You're saying there was something wrong with the old methodology.
CIOBO:
Absolutely, look at what Labor had, on Labor's old methodology they had the unemployment rate at six-and-a-quarter and then magically overnight, in the final two years of the forecasts it dropped from six-and-a-quarter down to five per cent. Now everyone knows that wasn't going to happen. I mean, that is the most optimistic sort of assumption that Labor used to excel at because that helped deliver them a surplus.
DOYLE:
But have you gone too far the other way now, have you been too conservative though, with these projections?
CIOBO:
Sure, and I've heard that claim made, and the reality is no we haven't and a key reason we can demonstrate that is because in MYEFO, we've provided confidence intervals so you can see what consensus view is, and on each of these key projections we've gone with the midpoint, the consensus view, in terms of what will happen in terms of GDP, in terms of unemployment. So what we've delivered is more transparency, more certainty, but most importantly what we've delivered is a more accurate snapshot of where we're likely to be.
DOYLE:
Well, let's talk about now the future from here, and the Government's commitment to return to sustainable surpluses within the next ten years. How are you going to do that? Are there going to be big cuts? Is this all part of softening the community up, preparing them, for these measures?
CIOBO:
Well look, we've been saying for some time that Labor's spending was unsustainable. I don't think any Australian would take the view that the Coalition wasn't upfront about the job that we've got to do. They, like us, no doubt are surprised at the actual size of the task. I mean Labor kept talking about delivering a budget surplus; originally it was in 2012-13. That was then pushed out to 2015-16. The reality is, as I said, part of delivering that surplus was this magic overnight transformation of unemployment getting down to five per cent.
DOYLE:
Let's talk about how you're going to achieve it.
CIOBO:
So what we're going to do is make sure we get spending under control, that we don't see the kind of profligacy that we saw under Labor and a good case in point with that Julie is, for example, what happened with the Schoolkids Bonus. Now we were upfront with the Australian People we said this: 'As a nation we can't afford the Schoolkids Bonus, it's borrowed money, and it's not effective spending'. So they're the kinds of decisions we're taking to make sure we improve Australia's economic outlook.
DOYLE:
Joe Hockey said today that all options are on the table. Should people be worried then that this is going to include things like education, health and defence? Things that previously the Government has said there wouldn't be big savings.
CIOBO:
Absolutely not. We are going to stick to our election promises, come hell or high water. From our perspective what we are making clear is that envelope of commitment in terms of the total pool of funding for things like health and education: that stands. What we are going to change though, is the way in which some of that money is spent. A case in point is the announcement…
DOYLE:
Does that mean there could be some cuts though to programs though, within those areas?
CIOBO:
The total envelope of funding will stand. Now there might be changes to the way in which funding is allocated, and indeed, we announced one today with, for example, finding $1.2 billion of additional funding for education funding for Queensland, Western Australia and the Northern Territory. This is another case in point where the farcical situation arose where Bill Shorten ripped $1.2 billion out of education and said 'well we're not giving that money to Queensland, Western Australia or the Northern Territory'. But, the reality is that money had to be found. You couldn't have a situation where Queensland, West Australian and Northern Territory students were getting $1.2 billion less funding.
DOYLE:
Well Steve Ciobo we're about to run out of time, so thank you very much for joining me.
CIOBO:
It's a pleasure, thanks.