666 ABC CANBERRA
WEDNESDAY, 13 MAY 2015
SUBJECT/S: Budget 2015
PHILIP CLARK: Joining us now at Parliament House, Andrew Leigh the Labor Member for Fraser and the Shadow Assistant Treasurer. Andrew, good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning, Philip.
CLARK: And Angus Taylor Member of the Parliamentary Standing Committee on Tax and Revenue and Liberal Member for Hume. Angus, good morning. And here in the studio with us is Susan Helyar from the ACT Council of Social Service, she is the director of ACTCOSS. Susan, good morning to you too.
HELYAR: Good morning.
CLARK: Angus to you first, the age of entitlement and taking the hard decisions and all of that was the language of last year. This year it's all about childcare, what happened?
FEDERAL MEMBER FOR HUME ANGUS TAYLOR: Well we've made a lot of the hard decisions and we've done a lot of hard work. What we've done, Phillip, over the last 12 months is we've contained the growth in spending that we inherited and that is the most important piece of work we've done over the last 12 months. We're now in a position where we can reinvest in childcare, in jobs, in small businesses – a completely unprecedented small business package – and that's because of the hard work we've been doing. Now you know, it hasn't all been easy and we haven't achieved everything we wanted to but we've gone a long way down the path of what we needed to what we needed to curb that absolutely profligate growth.
CLARK: So the debt and deficit emergency, the budget emergency, that's all over now is it?
TAYLOR: I always saw it as an emergency in spending growth being out of control, that was the problem that I, as someone with a background in economics, always saw. We've now curbed that, and now the job is to really stimulate the economy over the next little while. We are optimistic about the economy, we are optimistic about investment particularly coming from small business over the coming couple of years, and that's the real focus. As well as a focus on jobs and helping those who want to work more, particularly women who are working part-time with extraordinary support in this childcare package as well.
CLARK: Susan Helyar, is the budget fair? Last year there was a lot of talk about it not being fair, that the impacts fell on people who could least afford it: what about this one?
HELYAR: There are some fair measures in it, but we would continue with our previous analysis which is the savings are skewed to low-income households and the ongoing concessions and subsidies continue for higher income households. The other concern we have is that many of the very unfair and damaging impacts of last year's budget continue. We see that the savage cuts to social services, legal services and Aboriginal and Torres Strait Islanders Services are still in place. The childcare and early childhood learning measures expected to be funded out of cuts to family benefits. For example cutting $10 a week off a single income family to fund people on $170, 000 to get half their childcare fees subsidised. So there are still some concerns around its fairness.
CLARK: Andrew Leigh, are you pleased that the debt and deficit crisis is over?
LEIGH: I'm not sure in what world it would be over, Philip. If you look at the deficit for the coming year, it has doubled since the last budget. If you look at total spending, total spending is going to be higher under this Government as a share of national income than it was under the previous Government.
CLARK: I'm asking my question tongue in cheek. Back to you Angus, but Andrew continue your comment, essentially the Government is relying on rather optimistic growth forecasts aren't they?
LEIGH: What's striking about this budget is that it fails the Coalition's own test which they set themselves: that economic management was about debt and deficits. Debt and deficits are massively up under this Government. But it fails the more important test of investing in the future, building innovation, tackling inequality. We've still got those $100,000 degrees, the $80 billion cuts to schools and hospitals and the unfair cuts to families. On those two big things: the Coalition's test and Labor's test, the budget lets us down.
CLARK: The Australian's headline this morning; ‘this is a budget of lifters not leaners’ was the rhetoric from last year, but this is a budget about leaning towards an election, is that a fair characterisation?
TAYLOR: Let me be clear, what Andrew is saying is quite wrong. We are closing the deficit here, and we are closing it because we're containing the growth in spending that we inherited from Labor. They had growth in spending well above GDP and we're now containing that. Andrew says we're not dealing with an inequality problem he perceives, because he thinks Twiggy Forrest earns too much money or something. But Andrew has never explained what taxation policies Labor's going to put in place, presumably higher taxes, to address all of this. Look, this is a sensible budget focused on stimulating the economy and continuing the work of bringing the budget back into surplus. The key thing is we know, as I think Labor has never understood, that small business is the backbone of our economy. If we can get small business investing in creating jobs, we have very good reason to be optimistic about the growth of the economy. That is central to this budget and we want every small businessperson out there – and there are lots of them around Canberra – really going for it. That is what will stimulate the economy, not big government programs. That is what will ensure that we get back to surplus in a sensible timeframe.
HELYAR: The trouble with this strategy, Phil, is that the return to surplus is being done with one hand tied behind the back. It's all about spending and nothing about revenue. When you look at the papers – the Council of Social Service have done work on this with the Business Council of Australia and the ACTU – we know that the majority of the problem around the budget structural deficit is to do with a lack of revenue. This budget does nothing about that…
TAYLOR: [Interrupts] Philip can I just address that? Look if you continued with the growth in spending we saw under Labor, the only solution would be a massive increase in taxes. About three times the level of GST we've got today. The notion that you can solve Australia's budget problems through taxation is something that Labor and the Greens and others are pedalling. It is just plain wrong. The maths don't work, we have to be sensible here. We're not talking about massive tax cuts, there's a small amount of that but a significant tax cut here for small business and there's lots of stimulation. We are relying on increased growth in the economy and I think that's reasonable given the strength of the packages we've got here.
CLARK: But that's essentially what you've done, you really are just relying on this optimistic growth forecast to coast back. There haven't been any hard decisions as you promised in this budget, there haven't been any into the age of entitlement, all of this rhetoric has been ditched and now it's a pretty soft pre-election budget focusing on childcare and handouts to small business.
TAYLOR: Philip, that's just wrong. The growth in spending has been contained and we've done it in sensible ways which is why you're not hearing a whole lot of squealing about it, and rightly so. That's what we wanted to achieve so you look at the health area for instance, we are curbing the growth in our health spending under Labor. We had 8, 9, 10 per cent growth in health spending. We've managed to curb that in sensible ways and we're bringing stakeholders along with us as we do it. That's why people are seeing this as reasonable, you are getting a lot of support here from small business community, from those who use childcare, because this is a budget that will stimulate the economy.
CLARK: Andrew Leigh, I'll bring you in here, but in relation to the pension changes and the changes to welfare arrangements, a lot of that Labor would support wouldn't you?
LEIGH: We'll look closely at what they've done in the pensions package, Philip. We're pleased that they've brought back that instant asset write-off we had under Labor which was scrapped under the Government. But let's be clear on the spending issue and let's go directly to the budget paper numbers. Over the coming year, spending is going to be 26 per cent of GDP, it averaged around 25 per cent under Labor. So spending is up under this budget and the problem is that the Government is unable to tackle real issues like multinational profit shifting. Its multinational profit shifting package yields $30 million, 1/60th of what Labor's would yield. It doesn't tackle huge tax concessions to high end superannuants, it doesn't make tough decisions to invest in the future. The foreign aid spend is down, our research and development is down, those $100,000 university degrees will deter young kids from attending university which is fundamental for investing in the future. Childcare is great but you've got a childcare package that is being held to ransom against family tax benefit cuts. And you've got cuts to parental leave that will disadvantage single Mums.
CLARK: Susan, you were shaking your heard earlier when Angus Taylor was talking about spending being down, your point about that being?
HELYAR: I think I was concerned about the analysis that the only way to deal with the revenue problem is to triple the GST. There's substantial savings, a cost identified at $10 billion in savings and about $7 billion in investment that would be needed to actually put the community on the front foot and make sure that the most disadvantaged people in this community are not held to account for the small investments that are made in their lives that actually move things ahead and mean they can be part of the community, part of the economy and make the contribution that they want to make in the lives of their family and through work and other contributions. That's the concern that we have. There are also some really critical gaps in this budget around things like housing. Australia has an affordable housing crisis, housing is not mentioned anywhere in this budget and that's one of the things that's holding people back; they're spending all their money on housing and they've got nothing left for investing into their future.
TAYLOR: Phil, can I just go back to what Andrew said. Look, what Andrew said was just plain wrong. The budget numbers are here in front of me. We take spending down from 25.9 per cent of GDP to 25.3 across the forward estimates, that's what we do. Well the truth is that Labor left us with fast rising…
CLARK: Two to one here, Susan says spending is going up, Andrew says spending is going up.
TAYLOR: It is two to one so I should get double the time than the others. But the numbers are here in front of me. We are curbing the growth in spending and we are reducing spending as a per cent of GDP and we are doing it in sensible ways. Now Labor, of course, have not told us what they're going to do with spending. They keep telling us that all these spending measures that we've looked at, they're not interested in. Can I come back to Andrew's magic pudding on multinational taxes, this is just extraordinary. I know this area well, Labor's solution is not a solution.
CLARK: What's the Government's solution?
TAYLOR: Well the Government's solution is; the thing about multinationals is that if you do one little thing which is what they're proposing, they will walk straight around it. So we're taking a broad-based approach, we are much more conservative in our numbers than Labor. We intend to get significant amounts out of this but we haven't actually made wild forecasts about it. We're confident that we can actually make some big changes and as you know, we are putting a GST on multinationals.
LEIGH: Can I jump in on this?
CLARK: Just very quickly.
LEIGH: I'd be happy to have the following put to the ABC Fact Check, that spending under the Coalition, in their own budget papers and as a share of national income, is higher than spending as a share of national income under Labor.
CLARK: And spending growth, Andrew?
LEIGH: The rate at which you are accelerating might be decreasing, but spending as a share of the economy is bigger under you and deficits and debt are going up. This is from guys who were driving debt trucks around the country.
CLARK: Alright we'll have to leave it there. Andrew Leigh, Shadow Assistant Treasurer and Labor Member for Fraser, thank you for your time. Angus, thank you for your time, the Liberal Member for Hume and Member of the Parliamentary Standing Committee on Tax and Revenue. And Susan Helyar, ACT Council of Social Services Director, thank you for being in the ring there as we look at the wash up from the budget.
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