FRAN KELLY: And as Michelle and I have been discussing over the last week or so, a shiny, new Senate sits next week with the Rudd Government needing the Greens, the Family First Senator Steve Fielding and the South Australian Independent Nick Xenophon, to get through any legislation that is opposed by the Coalition. And at this stage, that looks like it might be a fair slab of the Government's agenda.
Lindsay Tanner is the Finance Minister. His job is to find savings, so I imagine he's very attuned to these threats to the Government's bottom line. Many of the key players are reserving their decision on things like the luxury car tax and a new tax on condensate, which is the light crude oil produced from natural gas. So how badly will this affect the Government's program or more precisely, its Budget?
Lindsay Tanner, good morning.
LINDSAY TANNER: Good morning, Fran.
FRAN KELLY: How ugly is this Senate going to be for your legislation program, do you think?
LINDSAY TANNER: Well ultimately, this all depends on the Liberal Party. Everybody's hoping that in the next couple of weeks, the Reserve Bank will reduce interest rates. There's been a lot of commentary in the media and amongst financial institutions about this, and one of the key things that they look at of course, is the position of the Budget, the extent to which the Budget is putting downward pressure on inflation. And any erosion of that by the Liberal Party through the Senate, will ultimately be at their peril.
FRAN KELLY: Yes, but the Opposition has a right to look at your legislation and oppose it if it wants. It's very opposed for instance, to the tax on alcopops, which is - would net the Government $3 billion, over $3 billion for the - for general revenue. The Opposition says this is a tax grab wrapped up as a social measure. It certainly is a handy tax haul to the bank, isn't it?
LINDSAY TANNER: I find Brendan Nelson's position very hard to understand on this, Fran. He seems to be saying that one of the reasons the change in the tax regime should be opposed is that people will switch to using illicit drugs. So the implication of this is that if we actually want to get people off harder drugs, let's make alcohol cheaper. Let's make binge drinking more attractive. I think that is a very, very peculiar position. And we don't know what the Liberal Party's position on these issues is from one day to the next.
There are no broken promises by the Government h... involved here. There are no big issues of principle for the Liberal Party. They're just acting as vandals seeking to get some kind of relevance. They should pass the Budget intact. They should ensure that the Government has got the ability to put downward pressure on interest rates, and to help the Reserve Bank do its job.
FRAN KELLY: I think there's every sign that the Coalition isn't going to pass the alcopops tax, so you will be negotiating with the minor players. The Government would have more credibility on this issue if that money being raised by this alcopops tax was going straight back into health programs. That's where it should go, isn't it?
LINDSAY TANNER: Look Fran, we're putting very substantial sums into health programs, both specifically with respect to binge drinking but also more generally. There are very...
FRAN KELLY: [Interrupts] Out of this money, out - particularly out of this g... this money raised?
LINDSAY TANNER: Look, all money is as the term goes, fungible. So one dollar is the same another dollar. It's impor...
FRAN KELLY: Well except, what I'm asking for is, on top of existing health budgets?
LINDSAY TANNER: We've already put an additional $600 million on to... into elective surgery, on top of the commitments that were made prior to the election. And we are in negotiations with the states for the new round of health funding that is due to commence in the middle of next year. And inevitably, those negotiations will lead to funding to some degree.
So if you look across the totality of health funding under this Government, you'll see that the amount of increase that is going to occur will be well beyond the annual amount that would be delivered by this change in the tax regime.
FRAN KELLY: I think some of the independents and minor parties are talking about trying earmark some of this money specially for health programs that might look at, you know, youth addiction problems.
But you're also facing a battle over the change to the Medicare surcharge threshold, which is rising to $100,000 for singles and $150,000 for couples and families. What about Nick Xenophon's idea to index that surcharge, maybe split the difference, make it $75,000 for singles so we don't overload our public hospital beds?
LINDSAY TANNER: Fran, we have simply put back the effective application of that surcharge, which is a tax on middle and higher income earners, to where it was when the Howard Government introduced it. It applied to about eight per cent of people when it was introduced over 10 years ago, and progressively it has got more and more people within its net.
What we've done by shifting the levels back to areas that could genuinely be described as higher income earners, that has meant that it will go back to covering only about eight per cent of people. Where it's currently at is that somebody earning $50,000 is deemed to be a high income earner and hit with this tax slug. Brendan Nelson and the Liberal Party want to perpetuate a tax slug on middle income earners. We don't agree with them.
FRAN KELLY: Lindsay Tanner, it looks like the Government has got a long three years ahead of it, negotiating with the independents and the minor parties. What are you doing? Are you already talking to the Greens, the Steve Fielding, Nick Xenophon, about their votes? Because you're going to need to do some negotiating, aren't you?
LINDSAY TANNER: Ultimately Fran, this is all up to the Liberal Party. The only circumstances in which the minor parties become relevant for votes in the Senate is when the Liberal Party votes against the Government. They're the ones that really matter. They're the ones that should be looking at what they are doing, particularly on Budget measures. We'll obviously pursue our agenda as vigorously as we can, and seek to persuade everybody in the Senate that they should support the initiatives that we're putting forward.
But the people who really matter are the Liberal Party. They're the alternative government. They're the ones who have responsibility for the outcomes. Minor parties can do what they like, safe in the knowledge that they will never have responsibility for governing the country. The Liberal Party is the ones that the focus should be on.
FRAN KELLY: Well, they said the same thing to you when you were in opposition. Just a quick couple of questions on some spending measures. The Sydney Morning Herald today says the Government is considering reversing the total ban on compulsory student unionism. Are you considering reintroducing some kind of compulsory services fee for some student services at universities?
LINDSAY TANNER: From what I've heard of this article, it sounds a bit contradictory. The...
FRAN KELLY: Well, are you?
LINDSAY TANNER: ... the impl... we're considering options about how to tackle the problem that has emerged on university campuses as a result of the changes introduced by the Howard Government. But this arti... suggests that we are both going to do something that is compulsory, but also an opt-out clause. Now it can't be both, so I'm not quite sure the logic of the position that's been put, Fran, but yes, we are...
FRAN KELLY: Are you looking at some kind of compulsory fee, perhaps for - to cover sports services or other student services?
LINDSAY TANNER: We've indicated we are not proposing to do something that is compulsory, but we are looking at ways to ensure we can revive services on campuses, non-academic services that in many parts of Australia have been seriously eroded by the changes the Howard Government has made. I can't comment any further on it, because obviously we haven't concluded those consultations and investigation of what the options are.
FRAN KELLY: Okay, and just another spending measure. A parliamentary hearing yesterday heard from some of the small compliance agencies like the Ombudsman's office, the Auditor-General, and they're saying that the added extra efficiency drive of two per cent that you imposed, the Auditor-General says it'll have to cut back on five audits a year because of this cut. This is self-defeating efficiency, isn't it?
LINDSAY TANNER: Look, no it's not, Fran. And if you look across the total picture, what you'll see is that there has been a very substantial increase in both government spending and in particular, the number of public servants over the past five or six years.
All we've sought to do is rein in that total growth, and in fact, our Budget shows that there will be a slight decrease in the total head count, the total number of public servants working for the Federal Government over the next 12 months or the 12 months that have just started. We need to keep in mind though, that the total will still be very substantially higher than it was five or six years ago. We believe that there has been considerable fat built up into the system generally as a result of...
FRAN KELLY: In the Auditor-General's office?
LINDSAY TANNER: Look, I can't comment specifically on the Auditor-General's office, but we are increasing the Auditor-General's budget for specific audits in the Defence area. So although there will be some changes as a result of the efficiency dividend, there will also be increases in other area. We don't believe that the overall effort on the part of the Auditor-General in examining the finances of the Commonwealth will be in any way significantly harmed.
FRAN KELLY: Okay, Lindsay Tanner, thank you very much for joining us.
LINDSAY TANNER: Thank you very much, Fran.
FRAN KELLY: Lindsay Tanner is the federal Finance Minister.
- ENDS -
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