The full story...

2013 Budget Special: Swan defends deficit decision

Sabra Lane reported this story on Tuesday, May 14, 2013 08:16:00

SABRA LANE: In his speech to Parliament a short time ago, Wayne Swan said this budget was about choices.

The Government has outlined savings of $121 billion during the next 10 years to pay for the signature policies of DisabilityCare and the school improvement program based on the Gonski education changes.

But this time last year, the Treasurer was promising this would be the year the Budget would return to surplus - no ifs, no buts.

Now we know how much the budget is in the red - $18 billion this financial year, and it'll be another three years before it is back in the black.

I asked Mr Swan if he owes Australians an apology for not keeping his promise.

WAYNE SWAN: Well as I've said repeatedly, circumstances have changed dramatically. Would I prefer that hadn't happened? Absolutely.

But what we have to do as responsible decision-makers is to take those circumstances into account, because if we were going to make up for the revenue loss that we're experiencing not just this year but across future years, then we would have to cut to the bone and that would hit jobs and growth.

Now of course, that's the approach of the Liberals, and Mr Abbott and Mr Hockey, but we support jobs and growth first, and that's what we're doing in this Budget whilst at the same time making the smart investments for the future, particularly in education and DisabilityCare.

SABRA LANE: But you said, 'no ifs, no buts, come hell or high water', and the Prime Minister said 'failure wasn't an option'.

WAYNE SWAN: Well, what has happened is that there's been a fundamental change. A persistently high Australian dollar, a lower terms of trade have impacted dramatically on revenues, and I can't ignore that.

I've got to stand up and say what we need to do in the face of those changes. Now is that uncomfortable? Absolutely. But is it the right thing to do? Very much so.

SABRA LANE: You've talked about some of the tough choices that you've had to make in this budget - the Baby Bonus is gone, that will be very unpopular.

Why have you abolished it?

WAYNE SWAN: Well I think we need to make our family payments system more sustainable over time, and the Government has a very good record of supporting families, whether it's the Schoolkids Bonus or whether it's the additional support we've provided in the family payments system to teenagers.

All of those things are important, but it's got to be sustainable over time.

So we thought if we put part of that Baby Bonus payment into Family Tax Benefit Part A that would make it more sustainable over time.

SABRA LANE: Are you ready for a backlash?

WAYNE SWAN: Got to do what's right for the country. And what's right for the country is funding the essential reforms which will drive the education system in this country through the 21st century and make it one of the best in the world. The essential reforms that will deliver fairness to people in Australia with severe and permanent disability.

These are the right decisions for the long term of our country.

SABRA LANE: You've also said in your speech tonight that $24 billion will be spent on infrastructure in the years ahead, but really only $3 billion over the forward estimates. Is that not a little tricky?

WAYNE SWAN: No, not at all. These are long-term projects. Long-term projects have to be planned and implemented and built over a long period of time. What we're providing is the certainty over the years ahead, indicating what contribution we will make.

That's precisely the way in which you do long-term infrastructure - it takes a while to do.

SABRA LANE: You're also estimating that the unemployment rate will suddenly drop in 2016 and will stabilise, saving $2 billion in Newstart allowances.

How can you be so sure of those forecasts?

WAYNE SWAN: All of our forecasts are prepared by professional forecasters, the forecasters who worked for the previous government and worked for prominent members of the Opposition when they were in government.

SABRA LANE: And the forecasts up until now have been out every year. Why, suddenly, should we expect that that's going to change?

WAYNE SWAN: Well, you may think it's a little strange but economies change, and I made the point very strongly today that when there are changes in the global economy, responsible governments change as well.

And of course, the events which have caused the revenue write-down were unprecedented and not forecast-able. If they are in a one in 50 year event, then by definition, they can't be forecast.

SABRA LANE: Are 'Twiggy' Forest and Joe Hockey now proven to be right with your Mineral Resource Rent Tax that will only collect $200 million this financial year - that's a revision down of $3.6 billion this year, $3.2 billion for the next financial year. Is that not slightly embarrassing?

WAYNE SWAN: I'm not sure all of those figures are right, but the Mineral Resource Rent Tax will -

SABRA LANE: They've come from your papers.

WAYNE SWAN: The Mineral Resource Rent Tax will in net terms deliver revenue of $5 billion over the forward estimates, and that's a very substantial amount of money, and I don't know why anyone should think it isn't.

SABRA LANE: But it's still a lot lower than what you and Kevin Rudd initially announced. And, is it not wise now, given the Government has already spent a lot of those proceeds on things that are fixed?

WAYNE SWAN: Well I don't think we should turn our nose up at 5 billion dollars' worth of revenue, and I don't understand the logic with that at all. The fact is that commodity prices turned down dramatically in the first year of operation of the tax. That's had an impact on revenue. That's plain common sense, and I think people understand that.

But what we do see in the forward estimates is the revenue increases and that's a good thing and it's welcome money for the country and it goes towards making a significant contribution to the Australian budget.

And I don't see why anyone should turn their nose up at that.

SABRA LANE: I'm not - I'm simply pointing out that this government expected billions this year, and you're only going to get $200 million.

WAYNE SWAN: Well, of course, as I said to you before, conditions have changed.

But that's not an argument against a Mineral Resource Rent Tax where highly profitable miners pay some additional money to the people who own those resources 100 per cent.

SABRA LANE: The carbon price has also been revised down quite significantly. From 2015, you're now calculating - the Government's now calculating - that it will be $12.10. It was forecast to be $29. Again, isn't that embarrassing for you?

WAYNE SWAN: No, because carbon prices move around in a market. The whole point about a carbon price is that it's a market-based price, and it is the most efficient, least-cost way of reducing carbon pollution.

SABRA LANE: Only the companies now are paying $23 a tonne.

WAYNE SWAN: Well, there are particular circumstances in the European carbon market that have influenced the carbon price some years out, but at the moment, we are in the fixed price period.

I'm sure over time the European carbon market will adjust, and next time we're having this conversation in six months time, we might be having an entirely different one.

SABRA LANE: You recently wrote that Labor is not the flavour of the month and that in hindsight maybe you haven't pulled all the right reins at the right time.

Do you care to tell our listeners what, in hindsight, you might have done differently and better?

WAYNE SWAN: Well, I can only do the right thing by the country, but I was making the very obvious point that governments all, from time to time, lose a bit of paint when they're putting in place policies, and that's as true of this Government as it's been true of any government.

But I was also making the point that the most important thing to do is the right thing by the country.

That's what we're doing. Conditions have changed, we've responded. That's what people expect responsible decision makers to do - that's what we've done.

SABRA LANE: Four months now to polling day - can you turn it around?

WAYNE SWAN: I believe we can win the next election.

SABRA LANE: That's the Treasurer and the Deputy Prime Minister, Wayne Swan, speaking to me earlier.

From the Archives

27th February 2003


» More
Recent Programs
Follow us...
Follow us on Facebook
Follow us on Twitter
Other News Websites