Subjects: Federal Budget 2002.
E&OE...........
WILLACY:
Mr Howard you said before the election it wasn';t your policy to run a budget deficit. What has happened since then?
PRIME MINISTER:
Well we were given predictions not by our own making, but they were assessments prepared by the two departments of Treasury and Finance and both of them predicted that this year';s budget would end with a slight surplus. They are now as a result of slightly weaker revenues, as much as anything else, ending with possibly a very small deficit. And of course you have had the additional commitment against that slightly weaker revenue. You have had the additional defence. We were quite open about it.
WILLACY:
You did tell voters though that if elected Labor would drive the budget into deficit.
PRIME MINISTER:
Well of course. And you know how much of their debt we have repaid in six years - $61 billion. I mean we';re talking here about inheriting a Labor deficit of $10.5 billion. What we did when we were elected was to change the law to require the Government of the day, once an election had been called, to allow the head of the Treasury and the Secretary of the Department of Finance to issue a statement about the books. And that statement issued by them at the beginning of the election campaign predicted, the two departmental heads predicted that there would be a surplus, a cash surplus, a very small one this financial year. What they are now telling us is there is going to be a very small deficit. But importantly they are predicting that we are going back into surplus next year and that the surpluses will rise. What really matters is that the public debt of this country is about the lowest in the developed world. It is 4.5% of our Gross Domestic Product. The average in the industrialised world is about 35 or 40%. In Japan it is 130%. In the United States I think it is about 45%. So I mean if the Labor Party wants to engage us in a debate about fiscal rectitude and budget deficits, make my day.
WILLACY:
Well we want to look at the surplus next year. The budget is in the red now to the tune of about $1.2 billion. Now that is at the very least $1.7 billion short of your forecast. How credible is your prediction…
PRIME MINISTER:
When you are dealing with a gigantic budget, you have to see that in perspective. But look Mark nobody can dispute the fact that when we came to Government there was about $96 billion of Federal Government debt. And over the last six years, despite the best efforts of the Labor Party to stop us doing it, we have repaid $61 billion of that. And that is one of the reasons why interest rates are at a 30 year low. It is one of the reasons why. And I repeat, if the Labor Party wants to have a debate about budget deficits, if they want the focus to be on their deficit surplus performance and ours, I would be delighted to engage them.
WILLACY:
Well there was a lot of spending last year before the budget. An economist said you were a bit like drunken sailors.
PRIME MINISTER:
I keep hearing this from the Labor Party. Well keep going.
WILLACY:
Well obviously there was a lot of spending like freezing the petrol excise. Now that would have helped your budget bottom line in this budget. Why won';t you reconsider reintroducing that indexation?
PRIME MINISTER:
What, do you want us to put up tax? The Labor Party wants us to put up taxation does it? I mean the Labor Party all through the first part of last year, every day they were… they introduced special Bills into the Parliament to reduce petrol excise. They complained every day about that. We take some action in response to community concern. We cut the level of petrol excise and we removed the automatic tax increase on petrol. That';s what I did last year. They now want us to put it back. Well I hope Mr Crean has the courage to introduce a Private Members Bill in favour of increasing petrol excise because that in effect is what he is arguing.
WILLACY:
I don';t think Mr Crean was arguing that.
PRIME MINISTER:
Mr Crean was in fact arguing. He was arguing last year that we should cut the tax take on petrol. We cut the tax take on petrol and I want to tell the Australian public we have no intention of reintroducing petrol excise and I would like to know whether Mr Crean is prepared to certify that it is not the Labor Party';s policy either. He also talks about the other ridiculous spending that we embraced last year. Road funding. Is that ridiculous?
WILLACY:
Can we move on…
PRIME MINISTER:
No no. You did ask me about last year';s spending. You had road funding, you had petrol excise and you had defence. I don';t regard any of those things as having been ridiculous. They were all important to the national interest and they also helped put a floor under economic activity at a time when economic activity around the world was sagging and could have had a deleterious effect on the Australian economy.
WILLACY:
If we look at the specific measures in this budget like increasing the cost of prescriptions for pensioners, healthcare card holders by about a dollar a script, Labor and the Democrats argue that that measure is forcing the most vulnerable in our society to pay for things like border security and the campaign against terror.
PRIME MINISTER:
Well I';d expect them to say that. I mean they have to say something in response to the budget. We didn';t like having to introduce this but the cost of the pharmaceutical benefits scheme is growing far too rapidly and unless we begin now, and the Intergenerational Report indicates that this problem is going to get worse as the years go by, unless we start now to bring the cost of that scheme under greater control then we';re simply not going to be able to afford it in the years ahead.
WILLACY:
But in last year';s Budget [inaudible] allowed an extra 200,000 people well off for the pension [inaudible]. Now after the election you';re clawing the system back.
PRIME MINISTER:
No we';re not clawing the system back.
WILLACY:
Well you';re making prescriptions more expensive.
PRIME MINISTER:
Well we are making them a little more expensive as a device, as a way of putting some kind of control on the growth in the cost of the scheme. Now I';d rather not have to do it and if the cost of the scheme were not growing almost exponentially then we wouldn';t have to do it. But you can';t have everything. You can';t complain that the surplus should be even greater and there should never have been a small temporary deficit but then object to every measure that the Government takes to control our expenditures but at the same time of course go around saying you';re not in favour of any tax increase. I mean in the end if you are responsible you have to take some decisions and we do have a safety net arrangement so that people who need a large number of prescriptions once they';ve gone beyond a certain number they don';t have to pay any more. And unless we do something about the cost of this scheme as the years go by it will break down under its own weight and then people will then be really exposed particularly the poor and the vulnerable.
WILLACY:
Well if we look at another one of the more controversial aspects of the Budget, that';s tightening the eligibility for the disability pension, do you think too many people are rorting the disability pension?
PRIME MINISTER:
Well to quote what somebody said a couple of years ago – solutions must be found of the growth in disability support pension to ensure people with disabilities have the fullest opportunity available to reach their potential. Those were the words of the Labor Party';s social security spokesman in a submission to the welfare review, and it was a recommendation of the McClure welfare review that we look at this 30 hour measurement. Now we think what we are proposing when combined with the additional money we';re putting into the disability services programs with the states and the additional 73,000 places at a cost of $258 million that we are creating at a Commonwealth level we believe that what we will be able to build is a system that provides greater incentives for people to get back into the workforce or to work longer while at the same time supporting critical areas of need. This is another area where everybody in their calmer, less rhetorical, less political moments, will acknowledge does have to be addressed. I mean we could put it off, we could do nothing about it and we could pretend that if you just sit there some how or other miraculously these things will cure themselves. But for a society that is meant to be getting a little healthier and to have the means at its disposal to live more healthy lives the disability support pension has been growing at a surprisingly high rate and we do believe that these modest additional measures will curtail that and provide a greater incentive for people to re-engage with the workforce.
WILLACY:
Prime Minister thanks for joining us.
PRIME MINISTER:
You';re always welcome.
[ends]