CAVE:
The Federal Government has welcomed the Business Council's comments, saying they back up Labor's criticisms of the Howard Government's overspending. The Treasurer says the new Government is committed to cutting back spending and the full extent of the savings will be revealed when Labor's first Budget is released in May. Mr Swan spoke to Samantha Hawley in Canberra.
TREASURER:
The BCA's priorities are similar to ours: fiscal discipline, skills, infrastructure and workforce participation. But I think they are right to highlight fresh evidence of the Liberal Party's reckless spending and neglect of critical capacity constraints like skills shortages and infrastructure bottlenecks.
HAWLEY:
Will the Government, as business has demanded, put a three-year freeze on spending?
TREASURER:
Well, what we've indicated is we intend to cut back on spending. We've indicated that we'll have a surplus target of at least 1.5 per cent of GDP.
HAWLEY:
They don't want a cut back, they want a freeze.
TREASURER:
The outcome of our deliberations will be for all to see on Budget night.
HAWLEY:
Wouldn't getting rid of the promised $31 billion in tax cuts be a good first move in reducing spending?
TREASURER:
Well, what's important is the total spend of the Federal Government. The tax cuts are very important to enhance workforce participation, very important to encourage people to gain additional skills. They play an important role in tackling the skills shortages and labour shortages more generally, and they are an important part of the equation of easing the capacity constraints in the economy.
HAWLEY:
Kevin Rudd's made all MPs accept a wage freeze for the coming year and business says it won't be following suit on that one. Do you think it's a bit rich for it to then turn around and tell the Government that it should be freezing all spending for the next three years?
TREASURER:
Well, I think it's very important that everyone in the community demonstrates some restraint, given the very substantial inflation legacy that we've inherited. It must be dealt with. The Business Council has pointed to the problem. The Rudd Government is determined to deal with it. And we're determined to lead the way be exercising some restraint when it comes to our own salaries.