E&OE TRANSCRIPT
DOORSTOP
ADELAIDE
MONDAY, 17 DECEMBER 2018

SUBJECTS: Mid-Year Economic Fiscal Outlook
 
BOWEN: Well thanks for coming everyone. Today in the mid-year economic update we see the continuation of five years of confusion and chaos in the Abbott/Turnbull/Morrison Government particularly when it comes to budget and economics. We saw a Treasurer who was unsure of what to say about whether the, what appear to be tax cuts, baked into the mid-year economic update means an early election. The Treasurer who was unaware that the section of his own update headed ‘decisions taken but not yet announced’ applied to decisions that he had actually already taken. A Finance Minister who was unable to confirm whether the Government was complying with its own Budget rules and was all at sea on answers about Budget rules. This is a Government which is riding on the back of a good international economy and has given up on the task of Budget repair themselves. What we see in this economic update today, the Government's own update, is that growth is down. Investment growth is down. Wages growth is down. Consumption growth is down. And the only thing that's up is terms of trade, what the world is prepared to pay us for our commodities, the one thing which this Government has absolutely no influence over is up. When it comes to wages growth and consumption, we're seeing the fruits of the Government's poor economic policy and the chaos and confusion at its heart. This is a Budget which is being delivered by a strong global economy, but we have a weak Government. Now the Government is patting themselves on the back for forecasting a surplus when in fact they've been failing to deliver surpluses now for almost six years.
 
Now, the Labor Party remains committed to good, solid, prudent budget repair, making difficult decisions to return the Budget to surplus. We're not relying on optimistic wages growth forecasts, or hoping that the global economy continues to grow in a synchronised fashion. But instead, Jim and I and the Labor Party will take to the election Budget plans based on good, prudent economic management. On ensuring that Australians actually can experience wages growth - not wages cuts for those Australians who happen to work on weekends. We're seeing a Government which is, as Jim will outline in more detail, riding the back of increased tax revenue. A Government which likes to lecture the rest of us about tax, but whose projected Budget forecast surplus is very much based on increased tax revenue, which is a result of international circumstances and companies having worked through losses from the global financial crisis.
 
What we're seeing is a Treasurer and a Finance Minister focused on the politics and not on the best interests of the Australian people, not on good budgeting, not on budgeting which is based on an appropriate forecast in terms of wages and the world economy, but is more based on hope and good luck. Well, we'll continue to prosecute the case for good, prudent budgeting based on difficult decisions, for ensuring that our Budget and tax system is based on fairness, is based on decisions to make our Budget stronger and which puts Australians at the heart of our consideration when it comes to housing affordability, wages growth and costs of living. That's what a Shorten Labor Government will deliver for Australia, whenever the next election is, whenever the Prime Minister chooses to call it, we will be ready, as we're showing in this national conference here in Adelaide over these three days, ready to govern, ready to deliver and ready to focus on the real needs of the Australian people. I will ask Jim to add to my remarks and then we will take questions.
 
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Thanks very much, Chris. Australians are paying the price for five years of division and dysfunction and cuts and chaos in the form of record debt, slowing growth and the triple whammy of weak wages, weak consumption and weak saving all at the same time. With billions of dollars in extra tax revenue rolling through the door, the Government has run out of excuses for doubling the debt they inherited in 2013. They've run out of excuses for doubling the 
debt since 2013 on their watch. 
 
If you look at the revenue figures in this midyear update, they are really the most important defining features of what has been released today. What they show is that the Government has revised up revenue, taxes essentially, by something like $14.2 billion over the forward estimates; $7.7 billion in this one year alone, and $40 billion in the last Budget. And what we need to understand is that this Government is collecting $108 billion more in taxes this year than they did in 2013. It has gone from $340 billion to $448 billion. 
 
They are entirely out of excuses for the fact that debt is at record highs in this country. If you look at the debt numbers in the mid-year update, they inherited $175 billion worth of net debt. In these figures released today, it's $352 billion - more than doubled - and gross debt is at $542 billion and is growing in their own numbers. 
 
This is a government which promised a surplus in its first year, and every year, and on their own numbers is on track to deliver six consecutive deficits. They said that they would pay down debt. Instead, they've doubled the debt. They said that they would bank upward revisions in revenue, and that promise has been thrown out the window as well. So the improvements in this mid-year update are more a function of good luck than good management. As Chris said, they are courtesy of a strong global economy, and nothing to do with the decisions taken by the Abbott or Turnbull or Morrison governments. 
 
Our colleague, Andy Leigh, the point that he will make later on today, is a big chunk of the revenue improvements are actually because of the laws that Labor put in place during the life of the last Government - that $500 million settlement, for example, with BHP - which is helping the budget bottom line, is a function of Labor laws, and he will have some other things to say about that later on today. 
 
The other point to make is this: the Budget would be in substantially better nick if it wasn't riddled with unsustainable and unaffordable tax loopholes; unsustainable and unaffordable tax loopholes which Labor, under Bill and Chris and my colleagues, have said that we will deal with in the interests of getting the Budget back into a sustainable position.
 
Labor's alternative to the cuts and chaos and division and dysfunction that we see in the Liberal Party is a stronger, more responsible Budget, where we make the tax system fairer, we pay down debt, and we make room for our priorities. Things like better schools and hospitals, more affordable housing, kindy for three and four-year-olds in this country. These are our priorities and we have taken the difficult decisions under Bill and Chris and others to make sure that we can pay for those priorities. 
 
There is a glaring omission in this mid-year update today - the Government is cutting funding for four-year-old preschool in this mid-year update. There is no provision made in this mid-year update for preschool for four-year-olds from 1 January 2020. There is a cut at the core of this MYEFO to preschool education. We've been saying for some time there should be subsidised kindy and preschool for three- and four-year-olds. We've been calling on the Government, at the very least, to extend the funding for four-year-olds. They have failed to do that and Amanda Rishworth will have more to say about that at some point today. 
 
So we will go to the election with a stronger, more responsible Budget position. We can do that because we are steady and stable and united. We're focused 100 per cent on middle Australia and on people who work and struggle, and we are ready to govern in their interests.
 
BOWEN: Thanks, guys. Phil?

JOURNALIST: That $9 billion they've got in the not yet taken decisions thing.

BOWEN: ‘The decisions taken, not yet announced’. The Treasurer didn't know.

JOURNALIST: That is a fair bit of moulah, and that is also yours going into the election to use as you wish. Would that make you rethink some of your own tax plans given the size of that was richest?

BOWEN: We're committed to all our policies Phil as announced and we'll take them to the election, every single one of them as announced. Now of course there is a lot of decisions taken but not announced in the mid-year economic update and you can all speculate as to what that might be. They appear to be revenue focused and as Jim said we hope and expect that at least one of them is four year old preschool, because there is no specific provision, we are falling behind globally so we have a commitment to do that and extend it to three year olds as well. This Government will, based on their own stated policy intent, let four year old preschool wither away on 1 January, 2020. Our commitment as we've said repeatedly is bigger Budget surpluses to provide a buffer for international circumstances but also to fund important initiatives in health and education, women's superannuation and other measures. That commitment remains and we're very comfortable with all of our policies, and we will be maintaining them and seeking a mandate for them and seeking to implement them in office.

JOURNALIST: $9 billion. What's your priority? Preschool, yes, but that is not $9 billion?

BOWEN: We've already announced our preschool policy. Fully costed, fully funded.

JOURNALIST: So what would you do with $9 billion? Return it to the bottom line or tax cuts or spend it?

BOWEN: With respect, the Government has got $9 billion worth of decisions in there, and you don't know what they are and we don’t know what they are. I don't think you can ask us to respond to policies they are not prepared to announce.

JOURNALIST: What should they do with it?

BOWEN: I don't think you can ask us to respond to policies they are not prepared to announce.

JOURNALIST: Would you bank it?

BOWEN: Our fiscal rules remain in terms of our own policies but we will have to see what they are. You are asking me to, if you like, oppose or support policies which they've not bothered to tell you or us about. We'll judge them on the merits.

CHALMERS: I wanted to add one more point, really, to Phil's question. The fact they've put that $9 billion in the "decisions taken, not announced" - that is a concession that they might not make it to the Budget. The fact that they have put aside so much money for an election campaign is an admission that they are so divided and so dysfunctional and so chaotic that they might not even make it to an April Budget. They've salted money away for an election campaign which may be forced upon them before the April Budget and that's because they are so hopelessly divided they can't guarantee that they can even limp on until April or May, and so they've put this money aside for an election campaign before then.
 
JOURNALIST: Do you question the accuracy of the Government's surplus forecast at all?
 
BOWEN: Look, we've consistently pointed out that they are banking on wages growth returning to strong levels when they have absolutely no policy to bring that about - absolutely none. In fact, their policy has been and it has been implemented to cut wages for the first time in 80 years in Australia. Obviously we don't pretend that forecasting world economy commodity prices is easy, it always has a degree of estimation about it, by definition, but I think where the Government is most exposed in terms of forecasts is the assumption that wages growth, I mean, they've already had to write it down in this Budget, in this update, that wages growth will return to strong levels, which underpins surpluses going forward.
 
JOURNALIST: So you would give the coalition Government nothing but given no matter how it comes the Budget will be in a better position than the one you handed over in 2010, won't it?

BOWEN: Well, again, the Liberal Party originally promised a return to surplus in the first year and every year following and now in the sixth year of the Abbott/Turnbull/Morrison Government they're forecasting a surplus, they've not delivered one, they are forecasting a surplus based on international circumstances, with a significant increase in tax revenue, a lot of which they've spent in their sort of rather desperate and chaotic attempt at political management. We will take to the election a stronger set of books based on the decisions that we have made.

JOURNALIST: Sure, but we could just make the contrast, in 2010 you were the Treasurer.

BOWEN: I don't think I was, Chris, with respect.

JOURNALIST: Sorry.

BOWEN: I think I'd remember.

JOURNALIST: Yeah, no, 2013, sorry. 2013 you were the Treasurer , so the last handover, my apologies, the forecasts were for deficits as far as the eye could see, that's what they were handed, and that is not what you would be getting, isn't that the case?

BOWEN: What we will deliver is stronger Budget figures based on the decisions we've made and we have had the courage to seek a mandate for. This is a Government that promised a surplus in the first year and is now forecasting a surplus in the sixth year and wants credit for it and pats itself on the back. They can pat themselves on the back, the Australian public will speak for themselves.

JOURNALIST: You keep talking about difficult decisions, does that include refusing to increase the rate of the sub-poverty Newstart allowance and other welfare benefits.

BOWEN: Our policy has been clear of our review of Newstart and that remains the policy that will be reflected in the resolution at the conference.

JOURNALIST: No increase for the unemployed?

BOWEN: I've answered your question. Thank you.

JOURNALIST: If there's $9 billion, though, could that go to Newstart?

BOWEN: Again, I don't know what policies the Government has committed to and the decisions they've taken and I would invite them to announce those decisions so we can respond.

JOURNALIST: The tax to GDP cap next year, they will be under the cap until 25/26, they are at 23.9%, do you think there's any further justification for tax cuts if they're not over the cap?

BOWEN: We are the party with tax cuts on the table, we are the party that has committed to tax cuts for those Australians - they have tax cuts in the never-never. We have tax cuts to be delivered over the forward estimates for every Australian who earns less than $125,000, that is a key difference. If they want to catch up with us that is a matter for them.

JOURNALIST: Any reaction to the resignation of Andrew Broad today?

BOWEN: I've seen the report. Obviously his resignation has a personal element for which I have absolutely no comment, that is entirely a matter for him. His resignation doesn't help the chaos and dysfunction at the heart of the Morrison Government. But the personal element I have no comment on.
Thanks, guys.
 
ENDS