TREASURER:
This afternoon the Prime Minister and I are meeting with senior Treasury officials ahead of meetings with State Treasurers tomorrow, State Health Ministers and of course my colleague Federal health Minister Nicola Roxon.
What we're going to talk about is Federal-State reform, a central part of the Rudd Government's reform agenda. We'll be talking about the reduction of elective surgery waiting lists and importantly we'll be talking about the reform of Specific Purpose Payments. These are the payments the Commonwealth makes to the States for service delivery. We want to ensure there's good value for money. We want to eliminate waste and duplication particularly when it comes to these specific purpose payments. Tomorrow we will be talking to Treasury officials and to the State Treasurers about these issues.
JOURNALIST:
Will the reforms to special payments mean more money or just more strings?
TREASURER:
Well certainly we're interested in reform across the board. We're interested in getting rid off waste and duplication and making sure that taxpayers get better value for money and making sure that service delivery happens on the ground without money being unnecessarily soaked up in administration. That's the objective but also we're interested in providing invective payments into the future because if we can get critical reform in Federal-State relations we can meet some of those big challenges that we've been talking about. The challenge of inflation that's been left to this government. The challenge of service delivery when it comes to health, when it comes to infrastructure, when it comes to education. These are all critical areas that go to the economic health of the country and we want to work with state officials and State Ministers in this critical area and we look forward to that.
JOURNALIST:
How many SPPs are there?
TREASURER:
There's something like 90 specific purpose payments made to the States and they account for something like 40 per cent of all Commonwealth payments to the States. We think that there is tremendous scope for reform, to eliminate waste and duplication in this critical area to make sure we get better service delivery on the ground. That's what we'll be talking to State Treasurers tomorrow and indeed that's what we'll be talking to State Health Ministers tomorrow as well.
JOURNALIST:
Have you got a specific target that you want to get those payments down to?
TREASURER:
We'll be talking about all of these matters tomorrow but I don't want to pre-empt the outcome of the meeting tomorrow
JOURNALIST:
What will be the formula for giving out special money? Reba Meagher for instance already says she wants $50m….
TREASURER:
Well these are matters that are being talked about and negotiated over as we speak. I don't intend to make any further comment. We'll be talking about the outcome tomorrow.
JOURNALIST:
Will you also be talking about the overall economic situation?
TREASURER:
Well certainly Australia has not been immune from the fallout of the US sub-prime mortgage crisis and of course the previous government has left as a parting gift an elevated level of inflation. I'll be talking to State Treasurers about the economic challenges ahead the need to meet that inflation challenge and the need to put in place a range of reforms, including Federal-State reform to make our economy more productive and to modernise our economy. So these will al be discussed tomorrow.
JOURNALIST:
That greater cost of money from the US sub-prime crisis…[inaudible]…flow through to Australia. How much of a concern is it for you? …[inaudible] Is that going to start impacting on infrastructure investment?
TREASURER:
I think it would be premature to make that judgement. I won't comment any further on that.
JOURNALIST:
Could you tell us more about your plan to let bank customers pressure the lenders….[inaudible]…
TREASURER:
Well we want to make sure the banking system works for Australian families not against them. And I said last week very clearly that some of the increases from some of the banks were excessive and I urged customers to vote with their feet. If there's an obstacle in the way when a customer wants to change their account we'll have a look at that. I've asked for a report from Treasury and I'll be off talking to the banks in the next few weeks about putting forward a range of reforms which make the market more competitive.
JOURNALIST:
So you're considering allowing them to swap their mortgages if they're not happy?
TREASURER:
Well I'm going to look at all the issues that have been raised by people with me. I will do it in a rational way. I will do it in a considered way and I'll do it by talking not only with the banks but I'll do it after receiving a full report from Treasury. That's what I've commissioned and that's what I'll act on.
JOURNALIST:
Do you honestly think that will have any impact?
TREASURER:
It's very important we have a very competitive market out there. Everybody knows we've been impacted upon by the US sub-prime mortgage crisis that has pushed up the cost of money. But as I said last week some of the increases we saw by the banks were not justified, in my view, they were excessive. I urge people to vote with their feet. If there are obstacles to people voting with their feet, switching their accounts we'll have a look at those. That's what we're going to do.
JOURNALIST:
What about people's whose properties have dropped in value? Are you going to do anything to help the?
TREASURER:
Well families out there are doing it tough. There have been 10 official interest rate rises in a row, six in the previous three years under the previous Liberal Government. That has put families under tremendous financial pressure. What the Rudd Government is going to do and has commenced work on from Day One is put in place a range of policies to put downward pressure on inflation and therefore put downward pressure on interest rates. Federal-State reforms which we're talking about today and tomorrow is part and parcel of the reform package that we must put in place to deal with the inflationary pressures that have building in the Australian economy over the past three years. It will take some time to deal with it but we've begin work immediately and that's what the Prime Minister and I are doing again today.
JOURNALIST:
So in terms of fiscal pressures how does that affect the timing of your budget? Now's the time when…
TREASURER:
Well it's very important that the Commonwealth play its part in cutting back unnecessary expenditure and we've indicated that in addition to the $10bn worth of savings that we would make, that we indicated during the election campaign, we will be seeking more and reform of Specific Purpose Payments is another way of ensuring that we get better value for money and that we make sure that every available dollar gets to critical service delivery.
JOURNALIST:
Is there one SPP you could nominate at the moment that you might give the chop tomorrow?
TREASURER:
I'm not going to pre-empt the outcomes from the meeting tomorrow. That's why we've got the State Health Ministers here. That's why we've got the State Treasurers here tot talk about these things in a co-operative way. You see what we're doing here today and tomorrow is something that hasn't occurred for a very long time in Australia- the Commonwealth and the States sitting down in a constructive way to meet further challenges. That's what Federal-State reform's about, we haven't had it for a very long time. We're serious about it so I don't intend to pre-empt the outcome of the meeting I intend to work with State Ministers, the Prime Minister will work with State Premiers to make sure we get constructive outcomes for the good of the nation, something that we haven't had for a long period of time.
JOURNALIST:
W
ith health in particular is health the biggest area?
TREASURER:
No all of them are on the table but health is urgent. The reduction of elective surgery waiting lists is critical and we wanted to have an impact on that as quickly as possible so that's first item on the agenda tomorrow. But the more general issue of specific purpose payments of value for money, eliminating waste and duplication, that'll be the subject of a more lengthy discussion tomorrow and further recommendations to COAG into the future.
JOURNALIST:
Well will the money be doled out on the basis of need or population?
TREASURER:
As I said I am not going to pre-empt the discussion at the meeting.
JOURNALIST:
Is there any threat to tax cuts given the job of trying to keep inflation down?
TREASURER:
What we've said is the tax cuts will be delivered because Australian families have worked hard and have earned those tax cuts. And those tax cuts give inceptive to people who've worked hard to make our economy strong and they help people with cost of living pressures out there. We're committed to the tax cuts because they've been earned by the workforce by the Australian people to assist them with the increases in the cost of living where people are doing it tough. So the tax we are absolutely committed to and we will deliver.
JOURNALIST:
….[inaudible]….
TREASURER:
The tax cuts are a very important part of lifting workforce participation and lifting workforce participation is a critical element of dealing with the inflationary challenge because inflation is fuelled by skill shortages. The tax cuts play a critical role in dampening that effect that's the other reason they've being supported as well.
JOURNALIST:
So are inflationary or deflationary?
TREASURER:
What I'm saying is the Commonwealth will play its part in cutting back on unnecessary expenditure. We will do that, as we've indicated, by reducing waste and duplication. We've already put through $10bn worth of savings and we are seeking further savings in addition to that.
JOURNALIST:
….[inaudible]….
TREASURER:
It's the net effect of the budget we take forward. We are committed to seeking further savings in the budget process but we're not taking those savings from the tax cuts which have been earned by the Australian people.
JOURNALIST:
…[inaudible]….inflationary or deflationary?
TREASURER:
It is the total budget and what we intend to do is to further cut spending. We are going to deliver the tax cuts but we will modernise and re-arrange spending and we've said further savings will be sought and delivered.
JOURNALIST:
On another subject altogether. Would you like to say anything to the kayakers who've crossed the Tasman?
TREASURER:
Well done! What an effort and I hope they enjoy that beer, and a steak.
JOURNALIST:
What's your message to families with interest rates continuing to rise?
TREASURER:
Well my message to families is very simple: you've worked hard, that's one of the reasons the Rudd Government is committed to delivering the tax cuts that you will receive later in the year and that we will do everything in our power to put downward pressure on inflation and to make sure that families get a fair go from the banking system, at the supermarket and when they buy their petrol. That's why we've acted straight away to put in place a Petrol Commissioner in the ACCC. That's why we're going to have the grocery inquiry. That's why we are seriously looking at these issues of competition in the banking market and we will do everything we possibly can within a competitive framework to make sure people get value for money.
JOURNALIST:
So would you consider regulating bank charges?
TREASURER:
No we're not considering regulating bank charges but we are concerned about ensuring the market is as competitive as it can possibly be.
JOURNALIST:
Voluntary Student Unionism…are you committed to its return?
TREASURER:
What we are committed to, and Kate Ellis, the Minister what she is doing is she is out there talking to the universities about what we can do to restore services on campuses.
JOURNALIST:
So is the major focus to restore services…or is…
TREASURER:
The major thrust is restoring services not restoring unionism.
Thanks.