SUBJECT/S: 2018 Budget


CHRIS UHLMANN, HOST: Chris Bowen, welcome.




UHLMANN: Debt reduction, tax relief, a return to surplus, what is not to like about this Budget?


BOWEN: What is not to like is $80 billion being given away to big business. What is not to like is Australians being told they have to work until they are 70 to get the aged pension. What is not to like is Australians on the pension or Newstart losing the energy supplement, up to $14 a fortnight. What is not to like is the fact that with the best global economic circumstances in a decade, all we get is a wafer-thin surplus in the first year and it doesn't build to 1 per cent of GDP until towards the end.


UHLMANN: Builds towards 0.8 by the end of the forward estimates. They are building towards 1 per cent.


BOWEN: Not strong enough Budget repair. We still have gross debt at more than half a trillion dollars every year for the next decade. We should be doing much better. I know where Peter Costello was coming from when he said the debt wouldn't be paid in his lifetime.


UHLMANN: Tax cuts, will you support them?


BOWEN: We’ll certainly support the first tranche, what applies on 1 July 2018. We are not at this point ready to sign on to the rest. 2022 and 2024, you have to vote for Malcolm Turnbull twice before you get the 2024 one.


UHLMANN: That is one way to guarantee, you could vote for them.


BOWEN: Do you know what the economy is going to be like in 2024, Chris?


UHLMANN: No, but as I say, if you want to guarantee it, the one way you could guarantee it is to vote for them.


BOWEN: I don’t know what the Budget is going to be like in 2024. You don't know what the Budget will be like in 2024. I think Australian people will look at it and say 2024, really? We are in 2018.


UHLMANN: You have had 10 year plans yourself?


BOWEN: We’ve had 10 year plans to fund the NDIS, to fund Gonski, do important things. We have never said to the Australian people what we’re going to do is give you a tax cut off into the never-never beyond the forward estimates.


UHLMANN: Can you do better than this in terms of tax cuts?


BOWEN: We will certainly have plenty more to say, not only on Thursday night, but going forward. We have done the hard yards. We have done the hard work. We will be able to be in a position to have a very good offering for the Australian people.


UHLMANN: Will it be phased in over time or something you will do in the first year of Government?


BOWEN: Chris, in fairness, tonight is the Government's night. They make their announcements tonight. You would be surprised if I made an announcement tonight.


UHLMANN: You have been critical, though, of their return to surplus. Will you do better on return to surplus?


BOWEN: Again, we will have more to say, but I do believe we need to have a robust return to surplus strategy. The Government appears to have given up.


UHLMANN: And you would do that in your first term of Government? Do better than the Government is doing now?


BOWEN: We will just say, Chris, about our Budgetary plans.


UHLMANN: Just going off some of the stuff you’ve said in the past, because obviously you’re going to raise a lot more money over the course of the next 10 years, but a lot comes at the end of the 10 year period or starts to builds over time.


BOWEN: Certainly we’ll be putting out four year figures and 10 year figures because the short-term is important, so is the long term about what the Budget will look like under us on all the best projections by obviously the expert forecasters. But what we will be doing is outlining in very great detail a return to Budget surplus strategy which we can be very proud of and which gets the country to safety. Half a per cent of GDP is like a cork bobbling around in the ocean, waiting for the international circumstances to change. It will be blown over in a light breeze.


UHLMANN: You are right, just a simple change in any of the economic circumstances could see that blown away. So are you saying that a future Labor Government will use that 1 per cent of GDP as its benchmark of where it will be surpluses?


BOWEN: We certainly need to do better than we are seeing from the Government and more importantly saying we need to do better, we have done the hard work as you have said to enable us to have a very robust return to Budget surplus plan which we will outline the details of.


UHLMANN: Now, Scott Morrison is talking about this 23.9 per cent of taxation. That is an arbitrary figure he certainly wants you to meet. But where do you think you will land on taxation? How much more than that will you take out of the equation?


BOWEN: What he is doing really is saying ‘I am going to leave it to future generations to repay the debt’. At 23.9 per cent he is saying ‘It is all too hard, I am going to leave it to the generations that come after us to get the debt down.’ Now, of course, Peter Costello had a debt to - sorry, tax to GDP at higher than his figure for five Budgets. I don't recall the Liberals saying it was an economic disaster and high tax was wrecking the country. Again, we have been very upfront with our plans. By the time of the next election we will be able to tally up all our plans, compare them to GDP, it will be very clear for all to see. We won't raise a dollar extra in tax that is necessary other than to fund important initiatives in health and education and return the Budget to balance.


UHLMANN: One of the things we have seen under both Governments is the size of Government continue to get bigger. So at some stage, don't you think that Governments are going to have to look at cutting the size of Government?


BOWEN: I think that people want to see their important essential services funded. They want to see aged care funded, they want to see health and education funded. They don't want to see more tax raised than is necessary, but they are prepared to make a contribution to ensure the services we all rely on as Australians or might rely on as the future as we get older or might rely on if we have a disabled member of our family, that they are properly funded going forward.


UHLMANN: What about some of the measures the Government put in to try and raise money, attacking the black economy? Are they good, well targeted measures?


BOWEN: On the face of them, they look like measures that we would support. We would, indeed, look at it positively and see if there is more that could be done.


UHLMANN: They are looking at making changes to superannuation to make sure that people under 25 don't pay an insurance that they don't need, to make sure that super that is lost can be easily found. Again, all things you would be supporting?


BOWEN: We understand what the Government is trying to do and look positively, consult with the sector, but look constructively at that.


UHLMANN: When you look at the overall shape of this Budget this evening, you’ve talked about some of the negatives in it, the Government obviously has had a big revenue boost, but getting about $35 billion extra, spending about $15 billion of that on tax reform, what is wrong essentially with going about doing your business that way?


BOWEN: Well, the Government has wrecked their own fiscal rules. They said all tax revenue would go to the Budget bottom line. Not what I said, not you said, what Scott Morrison said not that long ago. Of course he is not doing that. Now he has this 23.9 per cent rule. It wasn't that long ago he had 1 per cent of GDP surplus rule. The rules are changing around. Of course, Governments prioritise. Of course you make decisions based on what revenue is coming in, but you have to be consistent in your approach. Certainly the approach we are taking is layout the policies well in advance of the election and let the Australian people judge them.


UHLMANN: You are laying out your plan over a four year budget cycle? Because you rightly criticised the seven year plan the Government has, but you’ve talked about 10 years in the past and in the end we get to a point where no-one can possibly forecast where we are going to be in ten years’ time.


BOWEN: I think you have to do both, Chris.


UHLMANN: I accept you have to plan that, but in terms of where you will land your budget, you are going to make your plans over four years?


BOWEN: Both. We will outline our plans over four years, because you are right, that is the key Budget parameter. We will also outline them over 10 because while it is difficult to predict what something will cost in 10 years time, of course that is the case, it is also important. Governments have been criticised in the past for making decisions which might have a small impact now, but grow over time. We have to be prepared to think about the future. I mean, I want to be making - thinking about what sort of Australia do you want in 10 years time. I don't want to make a decision now which might be sustainable now, but which costs the Budget unsustainably in 10 years time. You’ve got to think those things through.


UHLMANN: Finally on that, can you give us the essence of what you believe, because you will have to do it probably, a Budget’s about? What is it you are trying to do with a Federal Budget?


BOWEN: A Budget is about growing the economy and ensuring that growth is fairly shared and ensuring that our finances are on the even footing going forward. They are the three things that a Treasurer has got to do. You have got to ensure the economic growth, you have got to ensure fairness and people having a stake in that growth and you’ve got to ensure our books are in good order.


UHLMANN: Chris Bowen, thank you.


BOWEN: Great pleasure Chris.