Subjects: Budget surplus; Government spending; economic forecast.
E&OE……………………………………………………………………………………
GAGAN:
Prime Minister thanks for your time.
PRIME MINISTER:
Good morning.
GAGAN:
You said you’re committed to maintaining a Budget surplus yet there are increasing calls for new spending particularly in regional areas, you can’t have it both ways, can you?
PRIME MINISTER:
Yes you can. It’s a question of degree. We have every intention of maintaining a Budget surplus, it’s ridiculous to suggest you can’t have any Government spending in necessary areas. We’re going to commit more resources to defence because our Budget surplus is likely to be greater this year than we’d forecast. At Budget time we’re able to put some additional money into road funding. It’s all a question of having a balance but I just ask people to look at the record. We got the Budget back into surplus a year earlier than we originally thought would be the case. We’ve repaid about $A50 billion of the national debt we inherited from the former Labor Government. And we’ve also been able to maintain our social security safety net. So, I can make it very plain that this Government has no intention of going back into deficit, none whatsoever, but we can remain in surplus and also have the capacity to do a number of things where government spending is needed. It’s all a question of having a sensible balance.
GAGAN:
Well as you mentioned you’ve already spent more than $1 billion on roads and this morning there are reports of an extra $500 million to be spent on defence, is that correct and do you plan . . .
PRIME MINISTER:
Well I’m not going, I’m not going to talk about what will be in the Defence White Paper. I’ve made it very clear for a year or eighteen months now that this country does need to spend more money on defence. But can I just ask you to keep it in proportion. We’re going to remain healthily in surplus because we believe in continued debt retirement. And Australia at the present time has one of the lowest national debt to GDP ratios of any OECD country. And our government sector according to a bar chart I saw in the latest issue of the Economist, our government sector has a share of GDP is much lower than the European average, lower than Japan and indeed according to that chart larger only to that of the United States. Now we have a very healthy balance and governments have social as well as economic responsibilities and the responsibility I see for myself is to keep those two things into, in balance.
GAGAN:
Well Mr Howard how concerned are you with economic forecasts? There are more recent economic indicators like building activity, consumer sentiment and capital expenditure pointing to the fact that there is a slow-down in the economy.
PRIME MINISTER:
Well our own internal forecasts which we’ve made public indicate that there’ll be somewhat of a slowing, but not one that would cause us any concern. We’ve had thirteen successive quarters of growth above 4%, that’s the best economic performance in this country for 40 years. Now we’ve factored in some coming off of that performance but not a great deal and our current forecast and both the Treasury and the Reserve Bank are to that effect and their track record over the last few years has been very good.
GAGAN:
Well George W Bush’s running mate over the weekend, Dick Cheney, he’s said that the US is on the front edge of a recession and he’s pushing for tax cuts, could we see that repeated here?
PRIME MINISTER:
Well Australia is on no end of a recession, neither a front end or any other end. There’s no suggestion that we’re going to have any kind of recession in this country. The fact that you may have a slightly moderate rate of, slightly more moderate rate of economic growth than previously doesn’t mean of course you start using ‘r’ words, that’s foolish. We gave a big tax cut on the 1st of July this year, a $12 billion personal tax cut, the biggest in our history. We also gave big cuts in capital gains tax and the company tax rate is coming down to a very competitive 30 cents in the dollar. So if you ask me about tax cuts, my response is to say, look at what we have given in the last year.
GAGAN:
How concerned are you perhaps that Asia is facing a tougher time ahead particularly with oil prices? And that’s likely obviously to affect our trade?
PRIME MINISTER:
Well we’re naturally always interested in what happens in our region. I should point out of course that one of the reasons why Australia came through the Asian economic downturn better than just about everybody predicted was that we had a very flexible competitive economy including a very flexible exchange rate. So whilst I remain very concerned and interested in what is happening in our region . . .
GAGAN:
Prime Minister I am sorry I have to interrupt you, we’ve run out of time. Thank you very much for your time.
[ends]