EASTLEY:
Treasurer Wayne Swan will hand down his first Federal Budget in which he wants to build a solid surplus to tackle inflation, take pressure of interest rates and eliminate what he calls reckless government spending. He’s also attacked his opposition counterpart, Malcolm Turnbull, who suggested yesterday that there wasn’t an economic need for the Government to make deep spending cuts.
TURNBULL:
There is a lot of grief coming in from overseas. We’re already seeing that in much higher interest rates over and above what the Reserve Bank has increased rates by. Does Wayne Swan really think that a prudent Treasurer should be imposing additional hardship on Australian families? What’s he … you know, does he really understand the pain that Australian families are suffering because of that?
EASTLEY:
The Shadow Treasurer, Malcolm Turnbull on Channel Ten’s Meet The Press program.
The Treasurer, Wayne Swan, says he wants to reduce government spending but he won’t quantify the amount, nor will he talk about the risks involved if he takes too much money out of the economy. Mr Swan is speaking here with Sabra Lane.
LANE:
Mr Swan, there’s no doubt you face a difficult Budget, but no federal government in history has inherited a better fiscal position than you, have they?
TREASURER:
What we have inherited is inflation at a 16-year high, a 16-year high in October, November and December last year and again in the March quarter. Now, that is something this country should be very concerned about. And it simply must be dealt with in this Budget, which is why we need to restrain spending, to eliminate reckless spending, and to build a solid surplus so we won’t have permanently high inflation and permanently high interest rates.
LANE:
You say there’s a case for cutting back on government spending. How much do you want to cut government spending by?
TREASURER:
Well, certainly government spending has been excessive in recent years. We’ve faced the highest government spending of any four-year period in the last decade and a half. So, we will restrain government spending to make room for our commitments to the Australian people, but most importantly, to put downward pressure on prices which are really hurting working families out there. Mr Turnbull doesn’t seem to understand the impact of inflation and rising prices on working families. And if he doesn’t understand that, it just proves he’s completely out of touch with what’s going on with average Australian families.
LANE:
Well Treasurer, can you put a dollar figure on how much you want to cut government spending by?
TREASURER:
That will be announced on Budget night, Sabra.
LANE:
How significant will it be?
TREASURER:
Well, we are going to wind back the excessive increase in government spending that’s occurred in recent years and we are going to put in place new spending priorities to ease the capacity constraints in the Australian economy that have been putting upward pressure on inflation and upward pressure on interest rates. We’ve had something like eight interest rate rises in the last three years – that’s put Australian families under tremendous financial pressure – and they have occurred because inflation has been elevated and growing. That’s why this [Budget] has, at its core, the task of fighting inflation – putting in place a strong surplus so we can impact on the inflation in the community which is pushing up interest rates.
LANE:
What are the risks though, Treasurer, if you take out too much money?
TREASURER:
Well, what we’ve got to do is get the balance right, and that’s why we need a strong surplus to pull back on public demand to ease those price pressures in the Australian economy, to provide the room to make the future investments to expand the productive capacity of the economy, and most importantly, a strong surplus to shield us against international uncertainty.
LANE:
But there is a risk though, Treasurer, that you could stall the economy.
TREASURER:
The most important thing that we need to do in this Budget is to fight inflation, because if we’re not successful in tackling inflation, that will produce permanently higher prices which will erode the living standards of working Australians, and permanently higher interest rates.
LANE:
…but Treasurer, there is the risk, isn’t there?...
TREASURER:
…and that will stall the Australian economy. If the legacy of the past government is high interest rates, that will stall the economy more than anything else could possibly impact.