JON FAINE: Wayne Swan as you've heard on AM this morning warning that this year's budget will be one of his toughest yet. He says Government receipts have fallen and the pressure on Government expenditure programs is intense. Joining me is Bill Shorten, who is the Minister for Financial Services in the Gillard Government.
Mr Shorten, good morning to you.
BILL SHORTEN: Good morning Jon.
JON FAINE: You're going to disappoint many of your constituents, many of the people who you were elected to help if you've got to slash Government programs in this year's budget, aren't you?
BILL SHORTEN: No the Treasurer will make, I understand, the point in his speech today that returning to surplus is actually Australia's best defence - Australia's best defence in times of global economic uncertainty. A surplus will ensure that the Reserve Bank has a flexibility to alter interest rates or to make interest rates cuts if global conditions worsen again. It's also when you talk about the constituents for me in the western suburbs of Melbourne, it will ensure that the Government has the capacity to deliver the vital Labor reforms which strengthen the community and ensure the economy delivers for working people.
JON FAINE: But the Reserve Bank figures released yesterday show that households are feeling more than a little bit of pain. Where less - we have less disposable income and in fact mortgage stress, paying for fuel, paying for petrol, all of these things are making people feel less well off than they have for maybe six or seven years.
BILL SHORTEN: Yes that's true. In terms of what the RBA estimates are saying, but...
JON FAINE: They blame the Government for that and now you're going to impose further pain in this budget.
BILL SHORTEN: I don't agree that they blame the Government, but what is the case is that we do have to have budget savings with balance budget discipline with fairness for families and those that most need help. I mean by keeping the economy strong and keeping Australians in jobs, that helps the people in my electorate. Having a job is still the best way forward to make sure you can make a living in society and make ends meet.
JON FAINE: But no one thanks the Government for the fact that they've still got a job.
BILL SHORTEN: No one, and I accept that if people also don't remember that we've introduced the paid parental scheme. We've made the biggest boost to the pension in our nation's history. I know that we started the education tax refund. We've increased the childcare rebate and we've introduced - we've cut personal income taxes and we've got a plan to triple the tax-free threshold from six to eighteen thousand dollars.
And you know I am proud today that someone with a three-hundred-thousand dollar mortgage is paying three thousand dollars less a year than they were when the Liberals left. I mean I think there is a challenge. The Government's got to perhaps not move off each thing we do onto the next new thing and keep talking about what we actually have done and those points are what we've done.
There's no doubt that the prices of many assets haven't recovered since the GFC. But I do believe - and I also believe that Australians, when they see the news on the television and listen to the radio that they know that things are tough in Europe. So people are taking an opportunity of the solid income growth in recent years to save a bit more of their extra income and pay off debt.
JON FAINE: Alright now meanwhile the Opposition are making hay. I had an interview with Barnaby Joyce the other day where amongst other things, he actually said that the Government was irresponsible in the amount of money that it spends; and predicted and just this is a little bit of a fairly feisty exchange I might say Mr Shorten with Barnaby Joyce the other day, he predicted that the Government will not be able to pay its debts.
BARNABY JOYCE: [Even to try and borrow a little less than what we're borrowing at the moment and stop fooling people that you know well let's all talk about net debt. But we've got to actually know - we can't actually tell you day to day what it is. But gross debt, if we don't actually increase our limit and we're only about fifteen bill. away from that limit and we borrowed two billion dollars last week. So what does that leave you, so about seven weeks, seven and a half weeks to go.
If we don't increase that limit what's going to happen to the cheques for the ABC? They might bounce.
JON FAINE: And he went on to expand on that Mr Shorten. Is the Government borrowing more than it can afford to repay? Is it going to go broke? Are cheques going to bounce?
BILL SHORTEN: No, listen. Barnaby Joyce - I don't know if it's an excitement after their Queensland result that's made him inclined to think he can say anything and not be challenged; or it's because he's hunting for a seat in the lower house. But the reality, the reality is that our net debt - that is the real figure we have to pay the net debt - is going to peak at eight-point-nine per cent of our GDP in 2011/12. That is less than one tenth, one tenth of the average net debt position of the major average advanced economies, expected in 2016.
I mean when I say net debt, let me use this analogy. This is the amount of money you owe and GDP being the economy of Australia - of your household income. So what householder in Australia would like just to have eight-point-nine per cent of their total yearly income in debt?
Most Australians would rush out and borrow more. I mean the major average economies - advanced economies - by 2016 will be at ninety-two-point-nine per cent.
JON FAINE: Yeah, that's why they're all in so much trouble. But his point is, forget international comparisons, just look at us in isolation.The Government is borrowing in order to stay afloat and he says that's unsustainable.
BILL SHORTEN: No, the issue would be if we didn't have the cash flow, if the total economy was less than what we're borrowing that would be an issue It is not the case that governments should never borrow money. That is just economically absurd. The cheques are still going. I don't know - this guy wants to knock off the leader of the National Party and be potentially the Deputy Prime Minister of Australia.
He can be quite charming to talk to, but I have to say when it comes to this stuff that we're about to be bankrupt, it's just wrong and it's irresponsible. And if you want to know why Australians are feeling a bit down, sometimes it's the negative political debate. Well, I'm a minister in the Government. I'm proud of that and I'm telling you and everyone who's listening that what he said to you on Tuesday was wrong.
You called him on it. I mean we've got a triple A credit rating. What he's basically saying is all the economists in the world are wrong. What he's saying is the people who rate Australia's credit are wrong. What he's saying is that he's got a different view of economics and that he's right and everyone else is wrong. That isn't the case.
JON FAINE: Okay, one other thing .You're having a brawl with the ACTU. They're meeting in Melbourne today to decide whether or not they will persist with a national wage claim. You're telling them to hold off because they're getting super increases. Well, most workers would rather one in the hand than one in the bush. They'd rather have a pay rise…
BILL SHORTEN: Yeah.
JON FAINE: ...than an increase in their super and yet you're trying to tell us that it's better the other way round. Why?
BILL SHORTEN: But Jon that isn't what I'm saying and that isn't actually what the unions are saying. The unions are going to make a submission to the national wage case this year. We have a deregulated bargaining system with the emphasis on the enterprise. There's about one-point-four million people who are on the minimum wage. There's a national wage case to be heard. The unions this year will make a submission to that. There's no increase in superannuation this year.
Next year, in 2013, what I am saying is that superannuation has to be viewed as part of the total remuneration increase. If your superannuation goes up by a quarter of a per cent that is a rise in your total remuneration.
JON FAINE: Yeah but if you're a twenty-five year old carpenter or something then a super increase isn't nearly as good as an increase in your pay?
BILL SHORTEN: Yeah, well you're not going to get it for a lot longer that's true, but that's why we tax the modest portion of that superannuation. Let me put it in really plain English. If you are getting a forty dollar a week pay rise, the superannuation increase next year will be one dollar of it. You still get thirty-nine dollars per week. The good thing about that, the good thing about that one...
JON FAINE: Yeah but if I've got increased costs of petrol and increased costs of housing.
BILL SHORTEN: It's one dollar and I tell you what when you're fifty-five and sixty-five and you're looking to retire, then you're going to say well thank goodness thirty years' ago superannuation was lifted from nine to nine and a quarter. This is a three per cent increase over seven years. It is not a tax on business. It's a deferred wage rise and it's a very modest proportion.
But Jon I don't want Australians, as some are facing now retiring on the prospect of a piece of toast and can of baked beans to get by on.
JON FAINE: Well it's an interesting juggle. We'll see where the ACTU go to in their campaign and where the Government goes in its response. Thank you for your time this morning.
BILL SHORTEN: Cheers.
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