DAVID SPEERS:
Prime Minister, thanks for talking us today. Now, there has been a lot of contrast between this year’s Budget and last year’s Budget. I am wondering how you would contrast the two?
PRIME MINISTER:
Last year’s Budget was right for last year. This year’s Budget is right for this year. This year’s Budget builds on last year’s Budget and it builds for next year’s Budget. The characteristic is that all Coalition Budgets are tax cutting Budgets. Last year’s Budget scrapped the carbon tax and the mining tax. This year’s Budget is a really good Budget for small business because we are cutting tax for small business. We are giving small business the incentive to go out there and invest and employ.
DAVID SPEERS:
What about your commitment though to reducing the size of government. There is a figure in these Budget papers, it is called the Government Sector Call on Resources. It is a pretty good measure of how big Government is. It’s bigger this coming financial year than any time since Paul Keating’s ‘banana republic’ comments in ‘86.
PRIME MINISTER:
David, the important thing is to get the deficit down and every year that is exactly what we do. We inherited $48 billion of deficit in Labor’s last Budget and every year the deficit comes down by about a half a per cent of GDP.
DAVID SPEERS:
But the size of government has grown and continues to grow next year.
PRIME MINISTER:
I know you are looking for things to criticise in this Budget and there is a sense in which that is your job but the important thing is we are getting taxes down and we are getting the deficit down because we are encouraging people to have a go.
DAVID SPEERS:
Are you getting spending down enough though? It is still a problem, isn’t it?
PRIME MINISTER:
Well, over time of course we want to shrink the size of government because lower taxes, smaller government, greater freedom is in the DNA of the Liberal and National Parties but we have to deal with the situation that we inherited. Under the former government we saw spending blow out and out and out. We saw government grow and grow and grow. What we have done is got a responsible path back to surplus.
DAVID SPEERS:
You are spending a bit more than $10 billion on the families package and the small business package. I want to ask you about the small business package, it seems to be particularly targeted at tradies. We had Howard’s battlers are there going to be Abbott’s tradies?
PRIME MINISTER:
Tony’s tradies?
DAVID SPEERS:
Tony’s tradies.
PRIME MINISTER:
Well, I certainly have an enormous amount of respect for the people who are out there having a go. They are the backbone of any society. They are certainly the backbone of any strong economy. So, I want to encourage them to have a go. I think it’s in our DNA, David, to want to have a go. We all love giving people a fair go. It is only because most of us have a go that all of us can get the fair go that every Australian deserves.
DAVID SPEERS:
And why only two years for this instant asset write-off? Is there a risk this could just be a sugar hit? Why not make it permanent?
PRIME MINISTER:
Well, let’s wait and see. We think that the small businesses of Australia want to go out there and invest. We think there is a lot of latent energy in the small businesses of Australia and this is designed to unlock that.
DAVID SPEERS:
So, it might go on for longer?
PRIME MINISTER:
Let’s not speculate, let’s look at what we have done. What we have done is brought this in. It is operational as of last night and I hope there will be lots of small business people thinking now, “what have I always wanted to buy?” Is it a new ute, is it a new bit of equipment, a new fridge or freezer for my shop or restaurant? Well you can go out, buy it now and write it off straight away against your tax.
DAVID SPEERS:
The Intergenerational Report not long ago highlighted health as the big spending growth area over the coming decade. It is going to hit more than 7 per cent of GDP by the middle of the century. You have dumped the GP co-payment, what are you going to do to reign in health spending?
PRIME MINISTER:
Well, as you know, David, in last year’s Budget, consistent with the commitment that we made before the election, we didn’t go on with Julia Gillard and Kevin Rudd’s cash splash. Still, hospital funding does go up. It goes up nine per cent, nine per cent and thereafter six per cent. Schools funding goes up eight per cent, eight per cent and thereafter six per cent.
DAVID SPEERS:
I just want to ask you about that though. You told the premiers that you would have another look at the health and education funding issue in the meeting that you are having in July. So, is that still an open door? What is the go there?
PRIME MINISTER:
What I said, David, was that I was more than happy to look at ways of driving our dollars further because everyone says, the premiers all say, that it is possible to be efficient but they want better health outcomes to drive the efficiencies and I am very happy to work with them on that.
DAVID SPEERS:
Back on health spending, no GP co-payments. So, what are you going to do beyond the cut to the states to reign in Commonwealth health spending?
PRIME MINISTER:
Well, we do have a review under way which Sussan Ley is very well leading. We are looking at all of the Medicare item numbers to see how they can be better and more efficiently deployed because no less than the Government, the doctors of Australia want to ensure that the system is as efficient and as effective as possible.
DAVID SPEERS:
What about on the PBS? Last year’s Budget had a $1.3 billion increase in the co-payment for medicines. What has happened to that?
PRIME MINISTER:
Well, we want a strong and sustainable Pharmaceutical Benefit Scheme. As you know, David, we are talking to the Pharmacy Guild of Australia about the next Pharmacy Agreement. I am confident that we can come up with a Pharmacy Agreement which is fair to pharmacists, fair to taxpayers and in the end has better primary health care outcomes because the pharmacists of Australia are a great resource and I want to see them better utilised in our health system.
DAVID SPEERS:
Will medicine go up or down?
PRIME MINISTER:
Well, what we would like to see is an opportunity for the public to continue to have access to the best possible drugs at the best possible price.
DAVID SPEERS:
I want to ask you about the taxation side of the Budget, you ruled out changes to superannuation taxes, negative gearing, GST but you are happy, it seems, to see bracket creep push us into higher tax brackets between now and the end of the Forward Estimates?
PRIME MINISTER:
David, what I think we have demonstrated in this Budget and in last year’s Budget is that we are serious about cutting taxes. We are very serious about cutting taxes; we cut the carbon tax, the mining tax – they are gone thanks to last year’s Budget. Last night, a very substantial tax boost for small business. This is a Government which always wants to bring taxes down and I think you can be confident that every Coalition Budget will involve some tax cuts.
DAVID SPEERS:
The Budget Papers tell the story, tax as a proportion of GDP is going up and up and up over the Forward Estimates.
PRIME MINISTER:
And in every Budget we will find a way to cut taxes. The carbon tax and the mining tax went last time, small business taxes down and the…
DAVID SPEERS:
[Inaudible]
PRIME MINISTER:
I accept that this is an issue but what we have demonstrated, David, is that we are serious about cutting taxes. We are also serious about expenditure restraint. Under the former government expenditure was growing by 3.6 per cent real every year – under us, 1.5 per cent real. It is only a government that is serious about spending restraint that can credibly deliver tax cuts.
DAVID SPEERS:
Finally, will there be a third Budget before you go to an election?
PRIME MINISTER:
We were elected to govern for three years. We were elected to implement our commitments over three years and that is certainly my plan. It is the Government’s plan.
DAVID SPEERS:
Prime Minister, Tony Abbott, thank you.
PRIME MINISTER:
Thanks David.
[ends]