WEDNESDAY, 16 DECEMBER 2015
SUBJECT/S: Government fails on debt and deficit with MYEFO.
MARIUS BENSON: Andrew Leigh, the Treasurer was not claiming they were great figures he was dealing with yesterday but do you claim that Labor would be delivering better figures on debt and surplus?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Marius, you could hardly do worse than this. Debt and deficits were set as the main task of economic management by the Coalition from opposition. Most economists wouldn't say that was the hallmark of great economic management, but they did. On that mark they are failing spectacularly. This year's budget deficit has blown out by $33 billion. Total debt, when the Government came to office, was projected to peak at 13 per cent of national income and now it is projected to peak at nearly 19 per cent. So the debt and deficit blowout has been spectacular. I was struck by the fact that Joe Hockey kept on blaming Wayne Swan, and now Scott Morrison seems to be adopting a budget strategy of putting everything on to Joe Hockey. Australians just want a government that stops the blame game and starts acting to make sensible decisions in the long-term national interest.
BENSON: But when you say this Government made debt and deficit the hallmarks of good economic management, in fact Wayne Swan had the same economic mantra and failed to deliver the promised surplus.
LEIGH: Wayne Swan never said that debt and deficits were the signal tests. He talked about the importance of jobs, and let's face it: he saved hundreds of thousands of them during the Global Financial Crisis. Since this Government came to office we've got wages slowing and unemployment rising. We've got economic growth forecast to slow again, and we've got spending going up. All of the figures that were supposed to be going down under this Government are going up, and the ones that were set to be going up are going down.
BENSON: The bad figures you refer to there are only going up marginally, how worrying do you find the debt and deficit figures now?
LEIGH: It's the Government's lack of a long-term strategy and its willingness to consider cuts that even Tony Abbott wouldn't countenance that worry me, such as the cuts to bulk-billing, childcare and to radiation and oncology services, while at the same time not being willing to take on Labor's long-term plan to tackle multinational tax loopholes or our plans to look at high end superannuation and cigarette excise. All of those together, along with Labor's proposed scrapping of the Government's slush fund for polluters and the Baby Bonus, add around $70 billion to the budget bottom line over the course of the decade. That would make a significant contribution to fiscal repair. They'd also be better for growth, better for inequality and better for housing affordability than the cuts the Government has put on the table.
BENSON: But aren't you getting ahead of the game a bit there? Because you don't know what the Government is going to do with its tax review. It might well take issue with some of the tax breaks available for high income superannuation.
LEIGH: If you're serious about tax reform then you don't keep on kicking off tax reviews into an election year. You don't run through three Assistant Treasurers and two Treasurers in the space of two years, leaving a lack of continuity in economic policymaking. What you've seen from Labor is an unprecedented roll-out of carefully costed policies in the tax space. None of them have been straightforward; all of them have been attacked by certain groups in the community. But we've made the tough calls on tax reform. Surprisingly, we just haven't seen the Government be willing to do that. If you think that a higher GST is the answer then you'd have to wonder what that will do to the growth forecasts and the inequality figures.
BENSON: Just on the narrow issue of the budget surplus and deficit, is Labor promising a faster return to surplus, or is there now a bipartisan view that this is years away?
LEIGH: Well again, you couldn't do worse. The Government came to office with projections that we would be back in surplus in 2016-17 and now we've got deficits as far as the eye can see. So really, on this test of debt and deficits – which was set from opposition as being a critical test of economic management – the Government has absolutely failed on that. It's no wonder they had to do a deal with the Greens for unlimited debt, because where debt was forecast to peak at $219 billion, it is now forecast to peak at nearly $350 billion – around a 60 per cent blowout in peak debt for Australia. Again, not the number one test of economic management in my view, but certainly the view put by the Coalition from opposition was that the test of whether you could manage the economy was whether you could tackle debt and deficits. They've failed spectacularly.
BENSON: Andrew Leigh, thank you very much.
LEIGH: Thank you, Marius.
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