This is an unedited transcript of what Tony Abbott said to Sabra Lane this morning. It is strong evidence that he is an economic oaf and cannot now, on his present policies, win a fair election. If the ABC resents me putting it up, I will take it down.
SABRA LANE: Good morning Mr Abbott. Welcome back to AM.
TONY ABBOTT: Nice to be with you Sabra.
SABRA LANE: You’ve said that Australia is in a budget emergency. How is it an emergency?
TONY ABBOTT: Well, plainly this is a government which was promising us to get back to surplus this year. No surplus this year, no surplus next year, no surplus the year after and as the Prime Minister and the Treasurer told us again and again, the best thing you can do to take the pressure off families is to get the budget back to surplus.
SABRA LANE: But unemployment is low, we have low interest rates, low inflation, debt to GDP, the ratio is low compared with other comparable nations. How is that an emergency?
TONY ABBOTT: Well, I said it was a budget emergency. I didn’t say it was an economic emergency. Australia’s economy has some fundamental strengths thanks to the reforms of both the Hawke/Keating governments and then the Howard/Costello governments, but the budget is in crisis because this is a government which is just addicted to constantly spending.
SABRA LANE: If it is an emergency, a budget emergency, why are you pressing ahead then with delivering tax cuts?
TONY ABBOTT: Well, unlike this Government, we are showing clearly how we can fund the tax cuts that we want to keep and that means that under us the tax cuts and the benefit increases will no longer be compensation because we’re abolishing the carbon tax, they’ll be fully funded by sensible savings in government expenditure.
SABRA LANE: And you’ve said that prices will fall. Can you guarantee that?
TONY ABBOTT: Go back to the time of the introduction of the GST. The GST also involved the abolition of the wholesale sales tax. Now a lot of prices did come down at that time because the ACCC (Australian Competition and Consumer Commission) was very vigilant in policing the removal of the wholesale sales tax, which in many cases was considerably greater than the GST.
So we will have the ACCC policing the removal of the carbon tax and look, the Government tells us that the carbon tax has added 10 per cent to the price of power. It tells us it has added 9 per cent to the price of gas. If the ACCC is out there policing these things, presumably that means a commensurate reduction in the price when the carbon tax goes.
SABRA L ANE: So they’ll fall by 10 and 9 per cent?
TONY ABBOTT: Well, as I said I’m not, I don’t know what else might be happening in these markets at the time the carbon tax goes.
SABRA LANE: But you can’t guarantee it?
TONY ABBOTT: Prices will go down, power prices and gas prices will go down when the carbon tax is removed.
SABRA LANE: You’ve announced a Commission of Audit to review the size and scope of government. Who will you get to head it?
TONY ABBOTT: We will announce that at the right time but it is 15 years or so since the last Commission of Audit. In fact, it was something that the Howard government did very early on in its term. This is something that does need to be done every couple of decades because it’s important to be sure that government is doing only those things that people can’t do for themselves.
SABRA LANE: Will you get someone like Peter Costello or will you get an independent economist to head it up?
TONY ABBOTT: The important thing Sabra is to ensure that the audit that we do, that the review of the size, scope and efficiency of government that we do is credible and respected so you can be absolutely confident that the last thing that we would want to do is damage our credibility as an incoming government should we win the election by appointing someone who doesn’t have wide public respect.
SABRA LANE: To achieve the budget bottom line in the black, you are going to have to make further huge cuts, painful cuts that you’ve not yet announced.
TONY ABBOTT: We will be very upfront with people in good time before the election but one of the points that I made last night Sabra is that while much that the Government has done by way of cutting in this budget is objectionable. We can’t guarantee to oppose anything, can’t guarantee to rescind anything and indeed may well have to implement these things as short term emergency measures to get the budget back under control.
SABRA LANE: There is no clear difference though to the budget bottom line in what you’ve proposed last night. You’re cutting 12,000 public servants, delaying the boost in superannuation contributions to pay for other things. The measures that you announced last night will not measurably change the budget bottom line.
TONY ABBOTT: Well, Sabra, I don’t accept that. Certainly we are funding our measures and we announced how we were going to do it last night. We also indicated that we were prepared to accept all of Labor’s cuts but we certainly weren’t going ahead necessarily with all of Labor’s spending.
So given that what we’ve done is fully funded, given that we’re prepared to accept at least short term emergency measures all of Labor’s cuts but not go ahead with all of their spending, I think the budget is in much better shape under us than under this current government.
SABRA LANE: So short term, define short term. How long will these measures need to be in place?
TONY ABBOTT: Well, we will be responsible and I think that’s what the public expect. I think the public understand that this has been a poor government, a terrible government in many ways. Even this government’s strongest supporters would accept that it’s been a bitter, bitter disappointment so I think the public understand that there is going to be a fair bit of putting the house back in order.
SABRA LANE: With an $18 billion deficit predicted for the next financial year, Treasury is forecasting a growth at around seven, 2.75 per cent. The Reserve Bank is around 2.5 per cent, both down on what we’re expecting this year. How low would you be prepared to see growth go to see a reduction in the deficit even further beyond that figure?
TONY ABBOTT: Well, normally economic growth is good for the budget and I want to get economic growth up and the great thing about cutting the carbon tax, cutting the mining tax, getting rid of unnecessary regulation, moving the workplace relations pendulum back to the sensible centre is that we should get productivity up, competitiveness up and ultimately economic growth up.
SABRA LANE: What trade off are you prepared though to make between making big spending cuts which could trigger a recession and growth?
TONY ABBOTT: Well, if the private sector starts spending, that’s going to be good for the economy and as confidence comes back I think the private sector will start spending. One of the reasons why the private sector is not spending at the moment and the household savings rate is sky high is because people don’t trust the Government.
So I think there will be a very strong confidence boost if there is a change.
SABRA LANE: Is there ever an acceptable level of net debt?
TONY ABBOTT: Ah, I’m not against debt. For instance I’m very strong on infrastructure spending and I made a series of very important infrastructure commitments last night but if you’re going to borrow, let it be borrowing for something that lasts. You can’t just borrow to blow it and that’s the problem. This Government is…
SABRA LANE: But what is an acceptable level?
TONY ABBOTT: This Government is borrowing for a current spending. It’s not borrowing for capital spending, and that’s the big difference. If we’re borrowing, let it be borrowing to build something that is really going to help our country like WestConnex, like the East-West Link, like getting the Pacific Highway duplicated. This is the sort of thing that we understand.
SABRA LANE: You’ve put reform of tax and Commonwealth/State relations firmly on the agenda. You’ve announced white papers on both. If the tax review recommends broadening the base of the GST and lifting the rate as many economists say is now essential, is it possible that you will take those proposals to the following election?
TONY ABBOTT: Well, that’s a hypothetical question that you’re asking me. Sabra, we have no plans to change the GST. We don’t intend to change the GST. Anyone who wanted to change the GST and that wouldn’t be us, would have to get the agreement of every single state and territory because it is a state and territory tax and anything that we might do arising from our white paper, we would seek a mandate for – not at this election but at the election after. We won’t do anything without seeking a mandate.
SABRA LANE: Mr Abbott, thanks for your time this morning.
TONY ABBOTT: Thanks so much Sabra.