Transcript of interview with Paul Murray, 6PR
WED 09 MAY 2012
Subject(s): Budget 2012-13; Schoolkids Bonus; Henry Tax Review; WA infrastructure
HOST: Prime Minister Julia Gillard joins me now. Good morning Prime Minister.
PM: Good morning Paul.
HOST: Prime Minister, you’ve been selling the budget on the east coast for a few hours now, what’s been the reaction?
PM: I have been speaking to people about the budget and explaining that we’re bringing the budget to surplus this year, and why that’s the right thing for our economy. And that we’re spreading the benefits of the resources boom. So far I think people have just been pretty interested to try and get to grips with the details of it. It’s a lot of information that comes out in Budget Night so I’m not surprised that we’ll spend today and a number of days to come just taking people through the details.
HOST: Given that the deficit estimate in the last estimate was wrong by $22 billion, why should the public have any confidence that you’re predicting this year to squeak into surplus by – this next financial year – by just $1.5 billion?
PM: Paul if I could just give you one measure of how determined we are to achieve this budget surplus. In the financial year to come, 2012-12, where we’ve budgeted the surplus, since the last budget revenues have gone backwards by almost $10 billion. So in the face of that we could have said it’s all too hard, but what we’ve done instead is we’ve found savings so we still deliver a surplus, indeed we’ve found savings of $34 billion across the full budget and that builds on $100 billion of savings we’ve already delivered.
In the financial year we’re in now there were some special factors that made a big difference to the budget. It’s not every year that you need to cater for the aftermath of the most costly natural disasters in economic terms the nation’s ever seen, and of course we saw continued turbulence in the global economy as well.
HOST: That, those cuts, I must say, are one of the things in the budget that puzzles me a bit, because they are very big cuts. Almost unprecedented in recent times. It’s about the same amount of money that stimulus you put into the budget to get us over the GFC time. Don’t you run the risk when you pull that much out of the economy that you’re likely to limit or even stall growth?
PM: No you don’t, because if you go to the budget papers and you say well what is Treasury forecasting is going to happen in our economy, and these forecasts are broadly the same as what the Reserve Bank says and what the International Monetary Fund says, they tell us that our economy will be returning to trend growth – 3.25% growth – and that is with us implementing this strategy of having a budget surplus. And the budget surplus is important because it does give us a buffer for the future and it’s also important because it enables the Reserve Bank to have the room to move if it decides to reduce interest rates.
Now it does that independently of Government, but we all know when the Reserve Bank chooses to reduce interest rates it does make a big difference for families. So, you know, someone on a $300,000 mortgage is paying around $3000 less a year on that mortgage than when we came to government.
HOST: There are certainly lots of handouts and tax redistributions to the less well-off in this budget. When the Howard Government made a practice of handing out inducements to people like that it was on the proceeds of established big surpluses. You’re actually throwing the cash around when you haven’t even succeeded in bringing in a surplus yet. Is that responsible?
PM: Well we’ve taken a very responsible approach to supporting the needy, and low- and middle-income families even as we bring the budget to surplus. And Paul, I’m a Labor Prime Minister, I’m never going to utter a word of apology for putting the needs of low- and middle-income earners first, that’s what we do, we’re a Labor Party.
And so in doing that we’ve brought the budget to surplus, but we are going to deliver to people who have got kids in school and who are entitled to family payments, we’re going to deliver to them a Schoolkids Bonus to help with the costs of the school uniforms and the shoes and the excursions and the list goes on and on and on.
So people will see the first of those payments - $410 for a primary school student, $820 for a secondary school student – before 30 June this year. And then we have moved, Paul, into a different way of spreading the benefits of the resources boom, the benefits that come through the Minerals Resource Rent Tax.
We were hoping to be able to deliver some of that revenue to companies in the form of a company tax cut, because of the negativity in the Parliament House I’m sitting in we can’t get that through the Parliament, so what we’ll do is we will use that revenue to increase family payments and to give some support to the most needy in our community and I’ll keep working to deliver a company tax cut in a different way.
HOST: There’s no doubt a lot of people get quite a lot of money, a lot of less well-off people get quite a lot of money out of this budget without having to do anything extra to get it. Is that a Labor value?
PM: Well I think working with families who, you know, people work hard, they do the right thing, they, you know, go to their place of employment every day and knock themselves out to do their job as best as they can. They’re there taking the kids to school every morning trying to bring them up the best possible way they can. They’re under a lot of pressure in terms of costs. I think it’s the right thing to do to say to those families on low- and middle-incomes we’re going to give a helping hand too.
HOST: Yeah sure, but does it make our economy more productive by giving people money for doing nothing?
PM: Well when you look at the budget overall, we have been big investors in the drivers of productivity so this is not an either/or choice. We are big investors in skills and you see that in these budget papers. The new skills package I negotiated with all of the premiers and chief ministers, including Premier Barnett. We are huge investors in universities and growing university places. We’ve almost doubled the amount of funding in school education, we’re investing in early childhood education so kids come to school ready to learn and get the most out of primary school. So all of that is in the budget too as we help families.
HOST: Prime Minister, the Liberals have said that they will oppose the Schoolkids Bonus, Joe Hockey said that explicitly last night. Would you be happy for that to go through the House of Reps on the vote of Craig Thomson?
PM: Well I want to deliver this money to families and so I’m determined to get it through the Parliament and I just have to say, you know, I’m dismayed that the Opposition would be so negative as to stand in the way of giving families a bit of relief.
HOST: On the Schoolkids Bonus, why shouldn’t families claiming the tax deduction for their children’s education expenses be required to provide evidence that they’ve spent the money in that fashion? Don’t other taxpayers deserve to have that level of accountability?
PM: Well two things to that Paul, we are creating this Schoolkids Bonus to replace what has been the Education Tax Refund system, that’s been a system where you keep your receipts, you hold them all the way til tax time, you do your tax return and put your receipts in and then you get the money back. Running that system, what we’ve learned from running it is of the 1.3 million families eligible for the benefit, 1 million were either not getting it at all or not getting it in full, so it wasn’t working for people.
The Henry Tax Review actually recommended that we should move to an entitlement system rather than a receipts-based system and so, you know, an independent, Ken Henry, looking at this work said this isn’t the best system. So we’re moving to an entitlement system.
And then in terms of the amount, I mean, I’ve never met anybody who said to me, ‘here’s my young son or daughter, they go to primary school and guess what? Across the school year getting them to school I spend less than $410 doing it.’ No one has ever said that to me.
So people are meeting the cost of getting their kids to school and $410 for primary school students, $820 for secondary school students is going to be a help.
HOST: Why are most of these welfare payments pushed over into next year? Is it just the simple fact that it’s an election year?
PM: We’ve timed them to come out to support families and just the best way of moving to new systems. So we want to move from the Education Tax Refund system where people collect their receipts to this new Schoolkids Bonus so it makes sense to start that this financial year so we don’t have people on the old system if you like, trying to put their receipts in at tax time, so we’ve moved to that system.
Family payments – the new benefits of the boom package coming out of the Minerals Resource Rent Tax will start on the 1 July 2013, so these are benefits that have fitted into the budget and which are providing people with relief over time.
HOST: If we can just finish on that note, you say this budget is spreading the benefits of the mining boom, the Barnett Government is saying you didn’t spread very much of it into WA in terms of infrastructure spending. They say that you’re punishing WA for its own economic success.
PM: Well look that’s just a ridiculous claim. We are big investors in infrastructure in Western Australia, we’ve got a proud track record of investing there and I’m prepared to compare our track record investing in Western Australia against previous governments.
I mean things like the Gateway project for the airport being funded by us, things like the work with Northbridge in the city being funded by us, we’re also putting money into Oakajee and so the list goes on. So we are big investors in Western Australian infrastructure.
Now I know Premier Barnett likes to play the politics of it and he thinks, you know, it’s kind of smart to do the Canberra bad – Perth good. Well you know, so the world goes and Premier Barnett can play that politics, but I think he at least owes the people of Western Australia the facts about how much, as a Federal Government, we are investing in the infrastructure of Western Australia and proud and pleased to do so because it’s a growing state undergoing a huge resources boom and that means it’s hungry for infrastructure.
HOST: Appreciate your time this morning Prime Minister. Thanks a lot.
PM: Thanks very much Paul.