Doorstop - Sydney

19 Dec 2016


SUBJECT/S: MYEFO; Government risking AAA credit rating

CHRIS BOWEN, SHADOW TREASURER: Well thanks for coming ladies and gentlemen. I’m delighted to be joined by our Shadow Finance Minister, Dr Jim Chalmers. Well today, Australia’s poor excuse for a Treasurer is out of excuses. The Liberals and National promised Budget repair. All they’ve overseen is further budget damage. Now we know, most Australians understand, that parameters change, and budgets can change by international circumstances. But the fact of the matter is, there are no international circumstances that this Treasurer and Finance Minister can use as an excuse for their ongoing failure. We welcome the fact that the surplus will be projected to continue for 2021. However, it is a wafer thin surplus, subject to any changes in the Budget parameters that would be further announced. It is a wafer thin surplus which could be blown over by the slightest breeze. Now the fact of the matter is, there could have been a better way. The surplus for 2021 could be around $4 billion better, if the Government dropped their big business tax cuts and adopted Labor’s sensible plans for negative gearing and capital gains tax reforms. Something that this Prime Minister and Treasurer refuse to do because of their stubbornness and arrogance. So this update confirms the fact that since the Liberals and Nationals came to office, debt is around $100 billion higher, that’s around $4500 for every Australian. It confirms the fact that this Government has no plan, no proper plan, well thought out plan importantly which can pass the Parliament to see our Budget surplus protected.

Now we warned during the election campaign that the Government’s forecasts were overly optimistic. I did it at my debate at the National Press Club with the Treasurer. The Treasurer scoffed at that and said that that was just not right. And yet we see today $30 billion in write-downs of revenue over the forward estimates. So we were right to warn that the Government’s forecasts were too optimistic. And that is being shown in black and white by this budget update today. Now the fact of the matter is, that the budget, the mid-year economic forecast retains those measures which are zombie measures which won’t pass the Parliament.

Now the Government should accept the reality that their plans do not meet with the support of the Australian people or the Australian Parliament. And the Budget should be a more realistic document that reflects that fact. In other updates in today’s mid-year economic forecast we see the plebiscite being dropped, despite the Prime Minister saying just a few days that it was very much alive. We see confirmation that their attack on Medicare continues, with some changes being postponed but nevertheless maintained as Government policy. Now Malcolm Turnbull said he would learn the lesson on Medicare. He accepted that there had been mistakes made on Medicare, and yet that policy remains in the budget. And of course we see the Government scrap their so called asset recycling fund, which they had boasted about previously. Now the fact of the matter is the Government should have a better plan than this. All sides of Parliament agree with budget repair. But what we won’t do is sell out our values. We won’t sell out our values by supporting all of a sudden measures which were in the 2014 budget that cost Tony Abbott and Joe Hockey their jobs. The Australian people would look very dimly on that.

So we will continue to call it as we see it. To call out the optimistic forecasts when they are made by the Treasurer. And importantly to provide our own alternative plans. Our own alternatives which the Government can take up with our full bipartisan support at any time of their choosing. Which if they don’t we will take to the next election. Which will see improvements to the budget bottom line through things like reforms, sensible reforms to capital gains tax and negative gearing. And of course it’s time for the Government to drop their unfunded corporate tax cut. I’ll invite Dr Chalmers to add to those remarks, then we will take questions.

JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Thanks very much Chris. The Turnbull Government’s Triple-F performance on the budget is putting Australia’s AAA credit rating at risk. In this Budget update, we see bigger deficits, more debt, more excuses and a Government that is part of the problem and not part of the solution. It’s time for the Government to take responsibility for the fact that in their own update of their own Budget, accumulated deficits have blown out by more than $10 billion, net debt is $8.4 billion higher at the end of the forward estimates than it was in the last update. Net debt is $100 billion higher than what the Government inherited from Labor and gross debt breaks through $600 billion in the forward estimates of this Budget update.

Now it takes a special brand of incompetence to see revenue write downs and bigger deficits and more debt and think that the answer to that problem is to shovel another $50 billion in the direction of big business in this country. Scott Morrison had a choice today – he could cling to his big business tax cut, or he could cling to Australia’s AAA credit rating. And not for the first time, Scott Morrison made the wrong choice.

Now what we have here is an economy which is shrinking, deficits which are growing and full time jobs which are disappearing. So it’s no wonder that Scott Morrison risks being the first Treasurer in three decades to have the credit rating downgraded on his watch. If Australia loses its coveted AAA credit rating, that means higher borrowing costs for families and small business right around the country. Higher mortgage repayments would be a steep price for Australians to pay for this Treasurer and this Government’s incompetence. They promised that they would fix the budget and they promised jobs and growth but instead we’ve got bigger deficits, we’ve got a shrinking economy, and we’ve got those full time jobs disappearing. They have delivered precisely the opposite of what they promised they would deliver. And if the Government was proud of this situation that they've created, they wouldn't be dumping out all of this information six days before Christmas. Over to you.

JOURNALIST: Mr Bowen, do you think the Treasurer's assumptions for commodity prices are feasible?

BOWEN: We pointed out that the upsurge in commodity prices could very well be temporary and I welcome the fact the Treasurer agrees with that. We pointed out during the election campaign a number of our concerns, not only about commodity prices, but about wages forecasts and nominal growth forecasts and we retain those concerns and, in fact, I think they've been validated. But, it would be wrong to lock in these commodity price increases, because there are temporary factors at play and so I think that is the right assessment now. There are some other measures which we'll keep a watching brief on. Jim might say more about that - there's a considerable reduction in expenditure due to parameter variations. It's up to the Government to justify that and to explain that further. It's not explained in very much detail in the documents that have been released. Whether that is capable of withstanding close scrutiny, time will tell. But in terms of commodity prices, it's right and proper that those increases not be factored in.

JOURNALIST: Mr Bowen, the Federal Government says there are $13 billion of unlegislated savings still before the Parliament. Will you reconsider supporting any of them given what's at stake with the AAA credit rating?

BOWEN: The Treasurer was just boasting a few minutes ago that he'd passed two thirds of the Government's savings objective - and that's right. And the vast majority of that is with our support. Partly because some of them were our ideas, which they adopted. So we've shown that we can work with the Government in the Parliament to pass sensible savings measures. The Treasurer himself said two thirds had been passed. Yep. And that was with, by and large, our support. But what we won't do is sell out those Australians who voted for us and rely on us to protect them. We won't say that it's OK for unemployed people to wait an inordinate amount of time for basic support. We won't say it's OK that Australians should have the highest pension age in the world. We won't say it's OK, because it's not OK. And we stood against them in 2014, we stood against them in 2015, in 2016 and we'll stand against them in 2017. But what we will do is continue to do what we've done consistently and provide better alternatives, which the Government can take up, which will be better for the Budget.

JOURNALIST: So can I just confirm then that you're saying that you won't support any of those $13 billion savings?

BOWEN: Well we're not going to support measures that we've opposed consistently since 2014, no.

CHALMERS: Can I just add to that? No Opposition in recent memory has put more effort into proposing alternative savings when we oppose the savings the Government has put up. We took $130 billion worth of savings to a federal election, which is unheard of in this country, the effort that we put into proposing alternatives, when we won't cop smashing Medicare, or we won't cop smashing the most vulnerable people in this country to repair the Budget. We believe in Budget repair that's fair and we've pitched up those alternatives for that reason, because we do think there's a better way. As Chris said, both sides agree that we need to fix the mess that the Government has made of the Budget. We think there's a better way to do it. If the Government was serious about this, with the stroke of a pen, it could lock in Australia's AAA credit rating by not proceeding with that $50 billion ram raid on the Budget, which is the big business tax cut that the country can't afford. 

JOURNALIST: Did you risk though, Mr Bowen, undermining Australia's international reputation, by criticising the Government's efforts to balance the Budget?

BOWEN: Well I think the ratings agencies understand the Australian political system, which involves the Opposition to call it as we see it, to provide alternatives, to provide support where we can, which we've done. Two thirds of the Government's savings objectives have been met. The vast majority with our support. We've done that, whether it was Omnibus, whether it was tobacco, whether it was superannuation. In fact, we proposed $1.4 billion worth of further improvements, which the Government could have taken up and chose not to. So we've been more than constructive. We've provided our alternatives. Now, what we won't to is pretend that everything that the Government says is hunky dory, when they've got such an important track record. The ratings agencies will make their own judgements on the abilities of this Government to meet their commitments. And what they'll also look at is the ability and the willingness of the Labor Party to work across the aisle, which we've done on two thirds of the Government's savings agenda. But it would be better if the Government accepted the reality and had a better set of books, or a more accurate set of books by dropping these zombie measures, which have hung around since the disastrous Budget of 2014.

JOURNALIST: Would it be the fault of Parliament, including Labor, if the credit agencies scrapped Australia's AAA credit rating?

BOWEN: This Government has been in office now for more than three years and, for a Government which promised no excuses, they have just had pathetic excuse and alibi after another. It's almost as if the Treasurer wasn't sworn in. It's everybody elses fault. I just can't imagine Paul Keating or Peter Costello getting up and saying "it's all too hard, it somebody else's fault". That’s why this Treasurer is out of excuses. It's the Treasurer's role to work with the Parliament. It's very rare for Treasurers to have the numbers in the Senate, for example, for the Government to have the numbers in the Senate. But previous Treasurers have been able to get a fair bit of reform through, including Labor and Liberal Treasurers; Paul Keating, Wayne Swan have gotten reform through Senates without a majority in the Senate. They haven't stood there and wiped their hands and said "oh, this is all too hard" and just blamed consistently the other side of Parliament, especially when we've shown a willingness to work across the aisle and, importantly, have provided, as Jim said, our own alternatives - more than offsetting what we've opposed. We've provided our own alternatives, which would see the Budget build over time to structural balance and see those very important improvements to the Budget, which it so desperately needs.

Alright, thanks very much.

CHALMERS: Thank you.

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