| |||||||||||||||||||||||||||
|
  Interview: Wayne Swan May 11, 2008  Watch our reportLaurie Oakes will be talking to Treasurer Wayne Swan about his first Federal budget which he'll be handing down this week. LO: Mr Swan, welcome to Sunday. WS: Good morning, Laurie. It's great to be here. LO: Natasha Stott Despoja says that on Mother's Day, the Government should give mothers a paid maternity leave scheme. Have you got any good news for mothers today? WS: Well, I've got some good news for my mother, for my mother-in-law and my wife and that is I've sent them some flowers this morning, so I hope they've arrived, but it's an important thing to talk about on Mother's Day. We have given a reference to the Productivity Commission to investigate paid maternity leave. They will report next year. We think the balance between work and family is critical. It's important to the economic health of the nation, as it is to the social health of families. So we're having a hard look at paid maternity leave and we will receive that report next year and give it due consideration. LO: OK. Well, there are a couple of well-placed Budget leaks in the papers this morning. We read, for example, that Tuesday night's Budget will provide $2.3 billion to counter climate change. How central is climate change to your budget? WS: Well, our whole budget is central to delivering our election commitments and nothing was more central to the election campaign than climate change. So this budget will deliver on all of those commitments in climate change that we gave during the last election campaign. Climate change is critical for the long-term economic health of the country and to make environmental sustainability work, we need to commence now. It's going to be a long process. LO: Well, the other leak is that you're going to whack up the tax on luxury cars from 25% to 33%. What's the rationale there? WS: Well Laurie, we've got a very big savings exercise to go through in this budget because, as you revealed earlier in the week, the previous government spent unsustainably; we've got to rein in that reckless spending to put downward pressure on inflation, and therefore, downward pressure on interest rates. This is one measure that will be announced on Budget night that's part of that saving exercise. We don't think it's unreasonable that people who've done well in recent years, particularly from Government decisions in terms of top-end tax cuts, just pay a little more for a luxury car. What we're dealing with here is perhaps about 10% of cars, most of them are imported, and, say, for an S-type Jaguar, it's about $2,600 additional. So, we think it's only tear that these people who can afford these cars make a small contribution to that savings effort. LO: Well all right, I want to come back to the soaking rich end of the Budget in a second, but I also understand that the centrepiece of the Budget will be the announcement of details of a comprehensive inquiry into the tax system as suggested by the 2020 Summit. Can you tell us about that? WS: Yes, most certainly Laurie. We think a modern economy needs a modern tax system. Particularly given our situation in the world, a modern tax system needs to be efficient, it needs to be internationally competitive. It certainly also needs to be fair and needs to ensure that everybody pays their fair share and it needs to be simpler. So we think now is the right time to comprehensively review our tax system. There hasn't been a complete review of our tax system in many years, and we will look at everything. We will look at personal taxation, we'll look at the transfer payment system, we'll look at how that affects individuals, how it affects families, how it affects retirees., we'll look at the company tax system, and we'll also look at all of the implications, say, of an emissions trading system for taxation as well, so it will be a comprehensive review of the tax system. LO: Who will do it? WS: It will be carried out by Dr Ken Henry, he will be assisted by Professor John Piggott from the University of New South Wales, Heather Ridout from the Australian Industry Group, Mr Greg Smith who has been a previous officer in the Tax Department and Mr Jeff Harmer from the Families Department. LO: Now, to get this straight, this is Federal and State and Local Government taxes, the whole lot? WS: Yes,family and Local Government - sorry, Federal, Local Government taxes and State Government taxes, a comprehensive review... LO: What about the GST? WS: ..of the relationship between all of those. But Laurie, when it comes to GST, we have ruled out any broadening of that base of the GST, or any increase in the GST rate. LO: What about tax - tax arrangements on super? WS: Yes, we've ruled out any change to tax-free super as well, but we do think there is a lot we can do to comprehensively look at all of the relationships between the various forms of taxation because the nature of a tax system affects economic prosperity in a country. I'd also like to make the point that our objective is to keep taxes as low as possible, but consistent with the delivery of quality public services. LO: How long will the review take? When do you expect a final report? WS: Well, the review will take probably through to the end of next year. It's a comprehensive review, but one we want to put in place and produce results as soon as we can. LO: So, does that mean you'll go to the 2010 election with proposals of a revamp of the tax system? WS: Well certainly, we will go to that election with a comprehensive set of proposals. I can't predict what the review might say. I mean, the review may say that in some aspects we are doing well, but it may also make substantial recommendations for change but we think it's important, and very timely, to look at the whole of the tax system, particularly given where we are in the world and particularly given international competitiveness reasons. LO: Well, we've seen the "soak the rich" hintings about the Budget, some people are sort of starring you as Robyn Hood although or maybe it's Kevin Rudd who's Robyn Hood and you're Little John. WS: Well, I wouldn't characterise it that way at all, we've got a very a substantial savings exercise to go through. It's very important that everyone in the community makes some sort of contribution to that savings exercise, but what we've said very clearly, is, our aim is to protect working families. Working families are doing it really tough. We've had something like eight interest rates rises in a row and we've got inflationary pressures in the economy. The central feature of this Government will be to deliver to working families, who are doing it tough, and also to make sure that when we make those savings, we make them in a way which doesn't unduly hurt those people who are in that situation. LO: But are you saying that working families, everybody will have to share the pain? WS: What I'm saying is we have been very determined to deliver our tax cuts to working families and it seems to us that when we're making our savings, some people who have done very well in recent years can afford to make a contribution to that savings effort so that's why we're taken the measure on the luxury sales tax. LO: Well, how serious are you about reducing middle-class - upper class welfare? I mean, how much means testing are we going to see? WS: Well, that will be revealed on Budget night. I can't speculate one way or the other.. LO: Well, you wouldn't be speculating, you know. WS: Well, of course, I do, but the most important thing about our savings package on Budget night, will be that it protects working families and what it will do is put in place the economic settings which can put downward pressure on inflation and therefore downward pressure on interest rates. LO: Well, we already know you're going to means test Family Tax Benefits Part B, you've said that and the baby bonus is pretty obvious, Kevin Rudd's virtually confirmed that. Will there be more? WS: Well, I'm not buying into measures for the night Laurie, we'll have to wait until Tuesday night. LO: Well, the Opposition has targeted you over this. I mean, are you worried that you could lose support by taking benefits away from people? WS: Well, I'm not worried about electoral support. What I'm worried about is the long-term national interest, the long-term economic interests of this country, getting the settings right. If we don't deal with tackling inflation, then we will have permanently higher inflation and permanently higher interest rates. What that does is erode the living standards of working families, we've got to get the balance right in this budget.. tackling inflation, protecting working families, and making the room for the investments of the future, particularly in education, particularly in health and particularly in infrastructure. LO: You've said you wouldn't characterise this as a Robin Hood budget, so what sort of headline would you be hoping for next Wednesday morning? WS: Well, I would be hoping for a headline that says "we will deliver a strong economy and we will deliver for working families". LO: So... I mean, I suppose what I really want to know is, are you going to have a huge deficit? Are you going to out Peter Costello in socking away massive deficit? WS: Well, the whole importance of the savings exercise and tackling inflation is to build a strong surplus, a strong surplus which can be a buffer against international uncertainty and a strong surplus which provides the capacity to invest in the future and a strong surplus which reduces public demand at this time so we can bring down inflation. LO: Everyone seems to think it will be at least $20 billion, probably more. Is that in the ballpark? WS: Well, I'm not buying into - into quantums on the program today, that will be revealed on the night, but it will be a responsible surplus which will deliver those objectives that I was talking about before. LO: And will you be tipping the surplus into the proposed new building Australia fund? WS: Well, we'll be using the surplus responsibly, Laurie, that's what we will be doing. We've already said that we will establish Infrastructure Australia and that we will have a Building Australia Fund and we will outline on how we propose to proceed from there on Budget night. LO: There's speculation over the weekend thought, that you won't put the whole surplus into that fund, you won't confirm that? WS: No, I won't confirm that and that doesn't mean a yea or nay Laurie. LO: Well, you're said the Budget will lift the threshold at which the Medicare levy kicks in for those who are not privately insured. Now, the health insurance industry, the Opposition, are adamant that that will make fewer people take up private health insurance. WS: Well, that situation has been very unfair. Up to 2 million Australians have been caught in a tax trap. When that was originally introduced, it was supposed to be a surcharge on high-in come earners and the previous government simply did not adjust those thresholds. All we have done is adjust those thresholds.. we think the decision that we have taken is fair. We are supporters of private health insurance and the private health insurance industry yesterday said that they didn't necessarily agree it would produce some of the dire circumstances that were predicted yesterday by others. LO: Well, the Australian Health Insurance Association said it will result in 400,000 people giving up private health insurance. WS: Well, I would have thought that the private health insurance industry would have had more faith in their product Laurie. LO: But, if that happens, that puts more pressure on public hospitals. There is a theory that we put to me yesterday that the Federal Government in fact will save money out of this by cost-shifting to the hospital system and because it'll have to pay out less in the private health insurance rebate. Is that true? Will you save money? WS: Laurie, you'll have to wait to see figures on Budget night, but I make this point: We have a very substantial package of measures to invest in public health in this budget. It is a very, very high priority for the Government... LO: But is this in fact a savings measure? WS: It's not directed as a savings measure at all. What it is directed at, is giving some justice to those people who've been flogged by a surcharge which can't be justified by the circumstances. LO: I mean, how concerned are you about unemployment rising, you've conceded now, I think, that unemployment is going to rise. How badly and how much contribution will the Budget make? WS: No, Laurie. What I've said is, that we have had 8 interest rate rises in a row and we've had an international economic slowdown. That will mean the Australian economy will slow and certainly that will have an impact on jobs, but our objective is to get the balance right in this Budget so we can have sustainable growth and sustainable job creation well into the future. You can't have that if you have permanently high inflation. LO: But the Opposition says that if you have a tough budget on top of that, you'll drive Australians out of jobs. WS: What we'll have Laurie is a responsible Budget which will put in place the settings to create jobs well into the future. You won't have that if you follow the advice of the Opposition and have no savings and no responsible economic policy. LO: Well, this Budget probably marks the real start to the Rudd Government. It's the end of all the symbolic announcements and suddenly you've got to make tough decisions... WS: Too right. LO: ..at will affect people directly. What do you think will be the result, is it politically smart or is it dangerous? WS: What we are going do is what is economically right for the country, not what's politically smart Laurie, what is economically right for the country, to tackle the inflation challenge, to deliver for working families and to put in place the investments for the future. LO: Are you nervous? WS: I'm really looking forward to it, Laurie, because this is the opportunity to make a very, very big difference. LO: Treasurer, we thank you. WS: Thank you. |
|
|||||||||||||||||||||||||
 |
