GILBERT:
Treasurer Wayne Swan, thanks for your time this morning. The BCA's called for a three-year freeze in spending. Is that something that the Government would consider?
TREASURER:
We've called for a new era of fiscal discipline and we will apply that in the Budget process. We've already found $10 billion worth of savings through last year and we are looking for more as part of the Budget process. The era of reckless government spending is over. It's fuelling inflation and along with inattention to capacity constraints, it's putting that upward pressure on inflation that we've got to tackle.
GILBERT:
But a three-year freeze, is that something that is viable?
TREASURER:
Well Kieran, I won't be announcing our deliberations for the Budget on this program today. We're very serious about finding savings in the Budget. It's very important in dealing with this inflation legacy left to us by the Liberals but it's only part of the whole equation. We've also got to modernise spending. We've got to invest in skills. We've got to have political leadership when it comes to infrastructure. The good thing about this BCA report is that it correctly identifies the challenges before us and it correctly points the way to skills and to infrastructure as an important way of expanding the productive capacity of the economy and therefore, in the longer term, putting downward pressure on inflation.
GILBERT:
Are you going to talk to your state colleagues to try and get to rein in spending as well?
TREASURER:
We've already outlined an approach to federal/state relations – a new approach where we will cooperate with the states to make sure we get in place some political leadership when it comes to these key infrastructure questions. That was announced at COAG at the end of last year and further discussions are going on this year.
GILBERT:
So the states have got some room for improvement in terms of their own spending restraint?
TREASURER:
It's very important that we work with the states to make sure the outcome for the country across the board works in this environment. And infrastructure's a critical part of that and we've indicated our willingness to reform federal/state relations so we can really, for the first time in our history, have a coordinated approach, particularly to this critical question of infrastructure.
GILBERT:
The Business Council is happy to call for spending restraint but making no call for executives to take a bit of a pay cut. Is that a bit rich?
TREASURER:
We've made it very clear that we think everyone in the community must exercise restraint. That's why Kevin Rudd announced there would be restraint when it came to federal parliamentary salaries. Well, we think that should apply to everybody. We've got a situation where there's elevated inflationary environment, and according to the Reserve Bank it's going to be with us for some time. I think what that means is that everyone in the community – government, private sector – everybody out there needs to show some restraint as we go through this very difficult period. That's why we do need to attend to spending. We need to end the era of reckless spending and we need to make it much more productive.
GILBERT:
But when taxpayers see the top end of town making these calls for restraint and yet they're not willing to take a pay cut themselves, will they think that's a bit rich?
TREASURER:
Some may well think it's a bit rich. But we think it's very important that the Federal Government shows the way. That's what we've done. And we're calling on everyone in the community to show some restraint during this period where we have elevated inflation.
GILBERT:
Well, you've said that it's going to take more than one budget of tight spending to rein in the years of reckless spending, as you put it. How many budgets can we expect to have this sort of fiscal restraint?
TREASURER:
Well, this elevated inflation took some time to develop and it will take some time to tackle and it will take more than one budget. So it's very important that everybody puts their shoulder to the wheel, not just through this year but the year after and the year after that.
GILBERT:
A major review of government spending every five years is another proposal that the BCA's put forward. Is that something that is attractive to you?
TREASURER:
Well, it certainly is. It's something that we've already announced. We're indicating we're reviewing spending in the lead-up to the Budget.
GILBERT:
But every five years?
TREASURER:
But we've also indicated we will have a razor gang which will go on looking for the longer-term expenditure savings and greater efficiencies in terms of government spending.
GILBERT:
Mr Swan, thanks for your time.
TREASURER:
Good to be with you.