Discussing the Manufactured 'Budget Crisis' on ABC NewsRadio

I spoke today with Marius Benson about Joe Hockey's one big manufacturing success - a manufactured budget crisis, created by doubling the deficit. Here's a transcript.




SUBJECT/S: Budget cuts; Means testing; Superannuation; Pensions

MARIUS BENSON, PRESENTER: Andrew Leigh, good morning.


BENSON: Can I start with some areas where there may be agreement with, between you and the Treasurer? That the broad points that he says we need to head back to surplus. To do that you need to cut government spending, it’s on track at 26 per cent, well above revenue coming in at 23 per cent and you should cap spending increases at 1.75 per cent, that increase above the inflation rate. I’m not sure how much of all of that you agree with. Andrew Leigh are you still with us there? We’re back live and I was just putting some points to you there that you might agree with in terms of the need to head back to surplus, broadly as one.

LEIGH: I can hear you now.

BENSON: Excellent. Did you hear the point I was putting to you which is the need to return to surplus is one that Joe Hockey was stressing?

LEIGH: Well it was certainly something that was in Labor’s last budget update in the Pre-election Economic and Fiscal Outlook. But what we’ve got now from Joe Hockey is really the Shadow Treasurer in drag, still trying to score political points by being unwilling to admit the impact of his own decisions on the budget bottom line. I mean, if you’re going to repeal the carbon price and the mining tax, that’s a huge hit to the budget. If you’re not going to go ahead with measures that Labor put in place to tax multinational firms fairly or to tax the superannuation of high income earners fairly, then again you blow holes in the budget. And if you relax Labor’s fiscal rule that was clearly put in place to contain spending growth, then again you manufacture a deficit. Joe Hockey has effectively doubled the deficit since coming to office by his own decisions. And he’s now playing political games and wanting the most vulnerable to bear the costs.

BENSON: Are you being fair to Joe Hockey there because you say that he is overlooking the corporate sector but there was actually an indication that the handouts welfare that is available now to the corporate sector may well be trimmed in the budget next month.

LEIGH: Well certainly that would be a different approach than we saw from Joe Hockey when Labor was in Government. You’ll remember then that he opposed almost every sensible savings measure that Labor put up, and eventually even blocked the company tax cut that we were proposing. And so you’ve got the Government playing political games which is terribly sad Marius because all of this should have been ruled out when Peter Costello brought in the Charter of Budget Honesty back in the 1990s. What Joe Hockey is doing is really the Charter of Budget Dishonesty. He is pretending that his first budget update is Labor’s last, that’s far from the truth and the difference between them is a massive doubling of the deficit. Joe Hockey, if he wants to find savings, ought to look to things like keeping the mining tax, which would add an extra $2 billion in 2016-17, he should look to things like dropping his unfair Parental Leave Scheme, giving $75,000 to the most affluent families to have a child.

BENSON: What about the point that he made that older Australians and now overwhelming relying to some extent on benefits. That only 14% of older Australians are not receiving any kind of federal government benefit, 86 per cent get a benefit, that’s just too wide. That doesn’t target need means testing; greater means testing would target need.

LEIGH: Marius, we certainly support means testing and it was a Labor Government that put an assets test on the pension in the 1980s to the cries of outrage from the conservatives at the time. But if you look at the overall public spending on pensions in Australia it’s 3.5 per cent of GDP, compared to 7.8 per cent across the typical developed country, so we spend less on pensions. And in fact if you’re looking for savings, then why not look for example to those with more than $2 million in their superannuation balances who are getting Government assistance via tax concessions that’s bigger than the full rate age pension. Joe Hockey scrapped a measure that Labor had in place to slightly raise the tax rate on that cohort – instead he seems to want to slug some of the most vulnerable Australians, people getting $20,000 a year or so.

BENSON: But in fact Joe Hockey did refer to superannuation in his speech last night saying, despite spending billions of dollars in taxation benefits for super, by 2050 the ratio of Australians receiving a full or part pension will still be around 4 out of 5. That those super tax breaks aren’t working. Would you support changing those superannuation tax concessions as they stand now?

LEIGH: I would, but it’s got to be done in a fair way and since coming to office, the Government has done it in a distinctly unfair way. They’ve refused as I said to go ahead with a modest Labor measure to slightly raise superannuation taxes at the top, but instead they’re raised superannuation taxes at the bottom. So you know, all of this has an equity implication and in Australia where inequality has grown markedly over the last generation, Joe Hockey thinks that those who have the least should bear the most when it comes to balancing the books. He wants to give parental leave to millionaires, at much higher rates than ordinary Australians, he wants to give a tax cut to mining billionaires, but at the same time he wants to take away things like the Low Income Superannuation Contribution and the School Kids Bonus: measures which are targeted at low and middle income Australian households and families.

BENSON: Andrew Leigh, thank you very much.

LEIGH: Thank you Marius.


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