The Oakes Interview: Wayne Swan

Nine political editor Laurie Oakes presents his weekly political interview on TODAY on Sunday every Sunday from 7am -10am on the Nine Network.

LAURIE OAKES "TODAY on SUNDAY" interview with WAYNE SWAN, FEDERAL TREASURER

LAURIE OAKES: Mr. Swan welcome to the programme.

WAYNE SWAN: Good morning Laurie, good to be with you.

LAURIE OAKES: Now, it's Mothers Day, so let me ask you this off the top. In Tuesday's horror budget, will there be anything nice for mums?

LAURIE OAKES: Well, first of all Laurie, could I send my love to my wife Kim and my mother-in-law Shirley over in Yass this morning. And secondly, the government will commit to a system of paid parental leave in the Budget, we think it is very, very important social economic reform, it goes to the core of work and family life in this country and the fact that we must value the relationship between a mum and a newborn child. So we think a system of paid parental leave is very important; the scheme must be introduced in a measureed and responsible way, particularly taking into account the global recession, so the scheme won't begin until January 2011.

LAURIE OAKES: So that's not part of your stimulus package then if it is a year or more off?

WAYNE SWAN: No this is a very significant reform in its own right. The early years of a child's life is so important to that child's prospects in later life. The quality of family life is impacted upon by the quality of work life. We've got to get that balance between the work and family right and paid parental leave is an essential reform. We're only one of two countries in the western world that doesn't have paid parental leave.

LAURIE OAKES: How much will they be paid?

WAYNE SWAN: Well, they'll be paid the Federal minimum wage and it will go for 18 weeks.

LAURIE OAKES: That's about 544 dollars a week?

WAYNE SWAN: That's right, now, of course, it must go to those that need it most. This will be of particular benefit to low and middle income families, to low and middle income mums who've been left out in the cold for so long, so those, where the primary carer's income is over $150,000 won't be eligible. Now, the other thing I must say, is that this will be funded by government, not funded by business. We are very mindful that this significant reform must be progressed in a measureed and responsible way and might I say, as someone who's been very concerned with the whole early years agenda for all of my political life, nothing could be more important to a prosperous economy but also a healthy society, than a measure like this.

LAURIE OAKES: Well, let's stick with the Mothers Day theme briefly. Some newspapers are reporting that your budget will snub Australia's 350,000 single parents, that while other pensioners get a rise, they're going to miss out. Is that right?

WAYNE SWAN: Well, I can't go into what will be in the budget on Tuesday night...

LAURIE OAKES: But you've said there will be a pension increase, so surely you can tell us which pension?

WAYNE SWAN: Well, certainly we've said there will be a pension increase for the base rate of pension for aged pensioners. We've certainly said that. I can't go into the rest of the arrangements until we get to Tuesday night. But I make a couple of points about that story today. It neglects to say that single parents do receive very substantial family benefits and let's say you were comparing a single aged pensioner to say a single mum with a couple of children, the benefits are roughly twice that for the single mum than they are for the single pensioner and I'd also the point that there has been very substantial assistance to single parents from this government in the last budget, and also, by way of our various stimulus packages at the end of last year and this year and most particularly the back to school bonus.

LAURIE OAKES: We're talking of a 30 dollar increase for single aged pensioners, are they going to get the full amount they've been expecting?

WAYNE SWAN: Look, I can't go into the detail today, what I can say is that there will be a fair go for pensioners on budget night and that we will put in place a system which is sustainable for the long-term.

LAURIE OAKES: Well alright, given that the bottom's dropped out of government revenue, I think to the tune of 200 billion dollars because of the world economic crisis, I mean, how can the government afford, in that climate, to introduce paid parental leave and a pension rise?

WAYNE SWAN: Well, it is true Laurie we do face a very complex situation. Government revenue is down by over $200 billion, over the forward estimates - this is unprecedented in terms of the revenue write-down in our history and is brought about by a global recession, that is unprecedented in 70-odd years. But what we have to do in this budget is, first of all stimulate the economy to support jobs now, and also make room in the budget for these vital long-term reforms, not just pensions but also those critical nation building investments we need for the future.

LAURIE OAKES: Why do you... How...

WAYNE SWAN: Whilst putting in place, long-term saving, to make the budget sustainable for the long-term, that's very important and that's why there will be, in this budget, tough decisions. Tough decisions which will be unpopular, but absolutely essential to return the budget to surplus over time.

LAURIE OAKES: Well, the Opposition's made it clear they will try to block some of the budget nasties in the Senate and they've obviously targeted so far what you're going to do with private health insurance.

WAYNE SWAN: Well, the Opposition can't pretend that it's for a pension increase and then turn around and block savings that are going to fund that pension increase.

LAURIE OAKES: What if they do block measures that you intend to fund the pension rises, does that mean the pensioners will miss out or you borrow more and increase the deficit?

WAYNE SWAN: Well, I think the weight is really going to be on the Opposition in terms of their Budget Reply...

LAURIE OAKES: Will the pension rise be pinned to these other measures?

WAYNE SWAN: Well the savings that we are putting in place, to fund the pension increase, are absolutely essential to keep our budget sustainable in the long-term. You see, Laurie, taking a decision on pensions is a long-term decision. It has long-term financial implications. The ageing of our population is a very serious issue for this country. The opposition when in government had an intergenerational report. The basic facts are these: there is something like five workers for every person over 65 today. In 2047 it will be two-and-a-half. Therefore, if we are going to put in place decent arrangements for pensioners, as we should, because it's a core Australian value, we have to find savings elsewhere in the budget to fund that and make it sustainable over time.

LAURIE OAKES: but can you reallly....

WAYNE SWAN: And, if they don't support the savings that do that, their con job on deficit and death will be exposed for all Australians to see.

LAURIE OAKES: But, can you really expect an Opposition to vote in the Senate for things they don't believe in. For example, I mean the Labor Party voted against budget tax cuts, so you can't squeal now, surely?

WAYNE SWAN: We are in unprecedented times Laurie. This global recession poses challenges for this country that we've not seen in 70 odd years, and what it really demands from this Opposition is a lot more maturity, some thoughtfulness and some moderation in their response, because we do face a very substantial national economic challenge and they ought to stop playing politics; stop pretending there wouldn't be deficit and debt if they were in government; stop pretending that there hasn't been a 200 billion dollar write-down and come to the table and accept the fact that we've got to deal with the legacy left to us by the previous government. They entered into unsustainable arrangements, in some areas, in terms of spending. There was raining gold bars; they couldn't find time for a pension increase for the base rate of pension; they couldn't find the room in the budget to do the basic investing, well, the luxury of that position has run out for them and they're going to have to front up to some of the tough choices just like this government is going to do.

LAURIE OAKES: Well, it might have been raining gold bars then, but you've been spraying out gold bars all over the electorate as part of your stimulus plan....

WAYNE SWAN: No, we haven't been doing that at all. What we've been doing

LAURIE OAKES: The 900 dollar cheques going out ....?

WAYNE SWAN: Not at all. The responsible course of action, when you have the biggest contraction in global demand, in six months since the Great Recession, the responsible course is to stimulate the economy now, that's what we've been doing to support demand; to suppport jobs and then what you have to do is to make room - make room for the vital investments we need for the future and put in place a savings plan for the future because as the economy grows, as growth returns globally, we put in place those savings to bring the budget back to surplus. That's what we're doing.

LAURIE OAKES: Do you think people are not worried about the deficit you are running up and the debt, I mean, a 60 billion dollar deficit...- 300 ...

WAYNE SWAN: Laurie the deficit that has been run up is principally caused by the revenue write-downs of 200 billion dollars, not caused by the stimulus spending. But what we have to do in the short term is to stimulation the economy; to support employment and what we have to do in the long-term, is to find the essential savings to put the budget on a sustainable course for the future.

LAURIE OAKES: A lot of the budget leak so far have emphasised the nasties that will hit the rich, cutting back various bits of middle-class welfare, but will it just be the well-off who'll be hurt by this budget or will ordinary families be hurt?

WAYNE SWAN: Oh Laurie, I think everybody in these unprecedented circumstances with these unprecedented revenue write-downs and all of the challenges we face is going to have to do their bit. I think everybody will have to do their bit. But, of course, some people do have the capacity to do more than others and I think that will be the case as well.

LAURIE OAKES: Now, you've admitted you're going to be breaking promises and one of the big leaks - obviously an authorised leak, was that you're going to break your promise on private health insurance rebates, that there will be a cut back. Now, you must expect a big electoral backlash on that one?

WAYNE SWAN: Well, I'm not guided by what will occur out there, in opinion polls or the electorate, what the government has absolutely seized on is doing the right thing by the economy and by the national interest in the long-term. And it's just the case that in some areas of government expenditure they are not sustainable for the long-term. For the reasons that I outlined before, in terms of the ageing of our population. So it is the case that many people on low and middle incomes have in effect been subsidising high degrees of subsidy for high income earners on private health insurance and that's just not sustainable into the future.

LAURIE OAKES: Do you think that all benefits really should be means tested and is that where the Rudd government is headed?

WAYNE SWAN: Oh Laurie, I think we indicated in last year's budget that it was appropriate to means test, some family payments and we did. What we want to do, across all areas of government spending, is to put them on a sustainable footing for the long-term, because what's equally important to us, along with stimulating the economy now, to protect the jobs of Australians and support Australian businesses, is putting the budget back on a sustainable path into the future and that is equally important in this budget as is the stimulus now to support employment, because supporting employment at the moment is absolutely critical. If you did what the opposition was saying at the moment, that they wouldn't have a deficit or they wouldn't be borrowing, what they would have to do in these circumstances is dramatically cut government services or dramatically increase taxation which would deepen the downturn. What we are doing is supporting employment and supporting businesses in the short term and putting in place responsible investment for the future with a strong medium-term savings policy to bring the budget back to surplus.

LAURIE OAKES: Now, Paul Keating used to come up with a catchphrase for every budget, I mean, this is the budget that brings home the bacon. Give me a Keating type-line to describe this budget?

WAYNE SWAN: Well, I'm not Paul Keating and I don't deliver Paul Keating-type lines, but what this budget is about making sure that we do everything in our power to support jobs and Australian businesses in the face of a global recession and make sure that we put this country on the right course for the long-term.

LAURIE OAKES: You say you're not Paul Keating, I guess that is right, but it seems this budget is going to go ahead with the legislative tax cuts, even though most economists agree that's silly, but you're going to claw back money from most people in other ways...

WAYNE SWAN: I don't know - I don't think so....

LAURIE OAKES: Aren't you running scared of the ghost of Paul Keating...

WAYNE SWAN: Not at all.

LAURIE OAKES: with the "l a w law" problem

WAYNE SWAN: Not at all, you'll have to wait until you see the budget Tuesday night but I want to make this point. I have been a very strong advocate of tax reform over a long period because tax reform which delivers particularly to working families who work hard and gives them the incentive to work a few extra hours has always been important to me, which is why in the last budget we put in tax reforms that delivered particularly to low and middle income families the tax changes that are in the system we'll further build on those incentives. The mix in the system between the tax system and the transfer payment system and the incentives that it delivers to people who work hard and when they do a few extra hours can get cash in their hand, that matters to me.

LAURIE OAKES: One final question: 25 billion on infrastructure spending in this budget, why couldn't you have bought some of those projects forward instead of using the cash splash?

WAYNE SWAN: I don't know where that figure came from but I think one thing needs to be clearly understood, our nation building and jobs plan is supporting demand right now. Over two-thirds of that is being invested through this year and next year in schools, energy efficiency, social housing and, of course, many of the bigger economic projects just take longer to plan. But we are absolutely mindful of putting those arrangements in place for the long-term as well.

LAURIE OAKES: Mr Swan, we thank you.

WAYNE SWAN: Thank you.