E&OE TRANSCRIPT
RADIO INTERVIEW
ABC RN BREAKFAST
MONDAY, 12 DECEMBER 2016
SUBJECT/S: MYEFO and return to surplus; Government risking AAA credit rating; Labor’s fair Budget savings proposals; Government’s $50 billion big business tax cut; Badgerys Creek
HAMISH MACDONALD: Jim is the Shadow Finance Minister. I spoke to him a few minutes ago.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Good morning, Hamish.
MACDONALD: Mathias Cormann has said the Budget will be back in the black as soon as possible, but the Government appears not to be locking itself into an "artificial deadline", in his words. Does that sound to you like the Government is giving up on a Budget surplus by 20-21?
CHALMERS: They'd have no excuses whatsoever for not meeting that surplus target that they've set for themselves in their own Budget papers. We've got rising terms of trade; the prices we get for our commodities are actually going up, so there are no excuses there. They need to stop pointing the finger at others and take responsibility for the mess that they've made of the Budget. And they need to concede that the biggest threat to the surplus and the biggest threat to Australia's AAA credit rating is actually their $50 billion tax cut to big business, which the country can't afford.
MACDONALD: If the Budget returning to surplus is pushed beyond five to six years, in your view, is that placing the AAA credit rating at risk?
CHALMERS: Without question. Pushing the surplus date out would put the AAA credit rating at risk. We know that from the ratings agencies themselves, who have pointed to the prospect of slippage in that surplus as the key reason why they would downgrade Australia's AAA. The reason that matters to your listeners Hamish, is if Australia loses the AAA credit rating on the Government's watch, mortgage repayments will go up and confidence will be smashed in our economy. So this is a very serious mess that the Government has got Australia into. They've got in their own Budget papers the deficit for last year increase by eight times; the deficit for this year has tripled; and debt has blown out by more than $100 billion. So this is a mess of the Government's making. They need to take responsibility for it and they need to ditch that $50 billion tax cut, which is doing more than anything else to jeopardise that AAA credit rating.
MACDONALD: So how much responsibility do you, Labor, accept for this situation?
CHALMERS: Our job, Hamish, is to be a constructive Opposition. We have been doing that. We have participated with the Government in discussions around $6 billion worth of savings quite recently. We've put on the table a whole range of measures - both tax measures and spending cuts - to help the Government out of this mess that they've created in the Budget. We urge them to pick up some of our policies, for example on negative gearing. Even the NSW Liberal Government supports our policy on negative gearing. If it were serious, this Turnbull Government, about locking in the AAA credit rating, they'd ditch that $50 billion big business tax cut, they'd pick up some of our suggestions and lock that AAA in.
MACDONALD: You said you want to work constructively and I've asked you to identify how much responsibility is yours. You haven't answered that.
CHALMERS: We have a responsibility to the Australian people, Hamish, to agree where we can with the Government on Budget savings and disagree where we must when it comes to things like smashing Medicare or hollowing out the future –
MACDONALD: Sure. But you just said that the Government is responsible for this situation, but we all know that the Rudd and Gillard Governments never once delivered a Budget surplus. There is some responsibility there – a hefty proportion of it, is there not?
CHALMERS: Well nor has this Government delivered a surplus, Hamish. But on your main point –
MACDONALD: Sure, but I didn't ask you about them, I asked them about you.
CHALMERS: Sure, understood. On your main point: yes, there was a deterioration in the Budget during the Global Financial Crisis, which was the sharpest synchronised downturn in the global economy since the Great Depression and of course that had implications for the Budget. But throughout that period, around the world, experts, the OECD, the IMF and others applauded the way that Australia conducted its Budget policy. It is one of the key reasons why Australia out-performed the world during that period and we should be proud of it. This Government has no financial crisis to point to. The deterioration has come from their own decisions, even in the last couple of Budgets. Their policy decisions, taking away all of the variations in the economy, have deteriorated the Budget by $11 billion. So all we're saying, Hamish, is that the Government should take responsibility, stop pointing the finger at others and ditch that $50 billion tax cut, which is jeopardising the AAA rating.
MACDONALD: But Jim Chalmers, your party has spent so much of the last four years opposing many of this Government's Budget savings, which on the face of things, would put us in a better situation right now.
CHALMERS: We've come up with alternatives, Hamish, which would improve the Budget in a fair way; in a way that doesn't smash Medicare or hollow out the future. We've put on the table, even in the last election campaign, I think an unprecedented amount of savings – $130 billion on the table. So we have been a very constructive Opposition when it comes to improving the Budget. But we showed the Budget can be improved in a fair way and not the way that the Government goes about it.
MACDONALD: But they're in Government. They got elected. You're the ones opposing the policies that they're trying to pass in the Budget. Do you regret that, given as we now see the finances are in pretty dire straits?
CHALMERS: We've supported a number of the savings measures that the Government have put on the table. That doesn't get a lot of attention, but we have supported quite a few of them. The ones that we don't support are the ones where the Government has asked the most vulnerable people in our country to carry the can for Budget repair. We think there's a fairer way. We think that at a time when they are attacking the most vulnerable people, we shouldn't have a $50 billion tax cut. If they ditch that tax cut, they could lock in the AAA.
MACDONALD: Are you saying that Labor could get Australia back into surplus by 20-21?
CHALMERS: Of course we could, Hamish.
MACDONALD: By cutting what?
CHALMERS: The policy we took to the election had a surplus in the same year as the Government. But instead of going after Medicare and instead of attacking the most vulnerable, we had our sensible tax reform plans for things like negative gearing. We had savings on the expenditure side as well when it came to things like cracking down on the rorts in the vocational education sector. Right across the board we had shown the Australian people and the Government how to get to surplus in the same year without attacking the most vulnerable people, and that begins with not proceeding with a $50 billion gift to big multinational corporations.
MACDONALD: But the Government points out, what is ultimately a statement of fact, that we live in this incredibly competitive environment globally and we have to attract business to Australia. If you don't, business moves elsewhere. How would you get business to move to Australia, or stay in Australia, if you don't compete on corporate tax rates.
CHALMERS: Tax is just one of the factors in the decisions that businesses make. They make decisions –
MACDONALD: Well it's a pretty big one.
CHALMERS: They make decisions about the quality of our infrastructure; the quality of our human capital – our education system; the stability of our politics; the nature of our regulations; all kinds of things flow into that decision.
MACDONALD: So you think ultimately that a company will choose a higher tax environment just because there's good infrastructure, people and political certainty; whatever political stability actually means.
CHALMERS: I'm saying that tax is just one of the things that factor into their decisions. There are a whole range of other things as well and I think the Government's kidding itself if it thinks that if it takes a couple of points off Australia's corporate tax rate that there'll be some sort of flood of investment. It's a much broader set of considerations that come into play.
MACDONALD: The Prime Minister today is going to sign the final airport plan for Badgerys Creek. That should clear the way for Sydney's second airport to be operated by the mid-2020s, generating around 9000 jobs. Are you going to give the Government some credit for getting that project – difficult project – almost shovel ready?
CHALMERS: We've played a constructive role in the development of that project as well, Hamish, as you probably appreciate.
MACDONALD: I love it. I ask you a question about your responsibility, you point to them; I ask you to credit to them, you take it.
CHALMERS: The Western Sydney Airport has the capacity to be an economic game changer for that part of the country, but indeed for the whole country. It does have the capacity to create a lot of jobs, but it needs to be done the right way. It needs to be done in consultation with the local community. It needs to be done in the most environmentally-sensitive way possible and it needs to have the passenger rail network hooked up to it when it opens, and not sometime into the future. But yes, Badgerys Creek does have the capacity to change the game when it comes to the local and national economy. We support it on that basis, but we want it to be done the right way.
MACDONALD: Jim Chalmers there, the Shadow Finance Minister, speaking to me a few minutes ago.
ENDS
