FRAN KELLY: And the Federal Government has described the economic situation as an unfolding emergency; an extraordinary measure for extraordinary times; and is no doubt desperately hoping this $42 billion stimulus package will keep the economy running well enough to avoid a serious downturn - otherwise known as a recession. One of the architects of the package is the Federal Finance Minister Lindsay Tanner. Lindsay Tanner, welcome back to Breakfast.
LINDSAY TANNER: Good morning Fran.
FRAN KELLY: How will you know whether this package has worked?
LINDSAY TANNER: Inevitably it'll take some time, and there'll be lots of argument about it Fran. We're already seeing debate about the impact of the package that went out in December; and that'll probably continue for a while. So we'll be daily assessing the state of the economy and the circumstances that we face of course, as we have been, and, as things unfold, if we need to do more, we're prepared to do more. But this is really unchartered territory internationally. The unfolding economic crisis in the United States and Europe and parts of Asia of course, has profound negative impacts on Australia. We're just pushing back as hard as we can, seeking to keep jobs and growth as strong as possible. But we have to keep assessing where things are heading.
FRAN KELLY: Is keeping growth in the positive, is that the measure? Because some suggest keeping growth above zero would constitute success. Would you agree with that, and can it be done?
LINDSAY TANNER: Oh, I believe it can be done, and if any nation in the world is in a position to be able to stay in positive growth it's Australia. We start with a very robust set of ingredients here with sound financial institutions, companies in good shape generally, government budgets in good shape; so with the room to move, the room to accept the deficit and to be able to finance that deficit - so we do start with a very good set of ingredients to fight back on this. The projections that were announced yesterday of course indicate that we are going to go pretty close to zero in terms of growth levels - down to as low as three quarters of a percent - so, clearly we are anticipating it's going to be a fairly close run thing. These things of course will unfold and we'll assess them in due course. But we are committed to doing everything we can to sustain jobs, to keep growth going, and to ensure that we minimise the impact of these international forces.
FRAN KELLY: A lot of people have already pointed out it feels like we're in recession already even if we're not, and those who feel that most presumably are those on the unemployment queues. And if we look at the; there's winners and losers of this package; one of the losers are the unemployed. There's nothing here for them.
LINDSAY TANNER: Oh no, that's not correct Fran, in fact there is a substantial extension to the training cost payment that is available for people who are unemployed; a very substantial extension that's broadly comparable with the one-off payments that many others will be getting. The idea is to make it easier for people to upgrade their skills. It can be expensive to undertake retraining of course. The existing payment that is available is a relatively modest one. We are substantially extending that, so, to ensure that we give people the greatest opportunity and those who want to get back to work, those who want to improve their chances, the greatest opportunity to do that.
FRAN KELLY: It strikes me there's one group that's pretty unlucky and that's the group that's just come out of their education - the university graduates, come out, tipped out onto these long dole queues; they're not going to want to go and retrain straight away. There is nothing for them is there in this?
LINDSAY TANNER: Look Fran, I can't cite you statistics but I suggest that at this stage there aren't huge numbers of university graduates on the dole queue.
FRAN KELLY: I think there might be. I think...
LINDSAY TANNER: The - well we're, time will, time will tell of course, but the key thing is that unavoidably this package is based on contemporary and recent past data, so you can't actually make predictions about somebody as to where they might be in three months or six months...
FRAN KELLY: Sure.
LINDSAY TANNER: ...time. But the data always shows that people who graduate from university have much better prospects in the employment market, no matter what the economic circumstances, than for example somebody who left school at the age of 16.
FRAN KELLY: Let's go to your promises. What's the timeline on these construction promises? Would you expect to see new buildings in schools being constructed within months - by 1 July start it for instance?
LINDSAY TANNER: We certainly expect to see some of that work commence within months. Clearly you don't put up these kind of buildings overnight, but, we are very keen to get this moving; and Kevin Rudd's made it absolutely plain that we will stomp all over any bureaucratic impediments; that we will make sure - both in our dealings with the states and in our management processes internally - that this is moved as quickly as possible. If you look at the numbers in the budget you will see that a significant amount is budgeted for in this financial year, but the bulk of the money of course flows in the next financial year. So I would expect that there would be work started, in initial stages, before the middle of this year in some places. But the real oomph will come during the latter part of this year and into next year.
FRAN KELLY: And Minister, with such haste and such urgency, which is obviously called for, what quality control will the Federal Government have?
LINDSAY TANNER: Well, clearly we've opted to go for things where there are established mechanisms. So we have established decision making processes with the states with respect to school funding. We've got established accountability arrangements there, for example. So, in that case, you've already got a structure in place that's pretty well managed and ensures that everybody knows who's responsible for what and how the money is being spent. Similarly with the payments, one of the reasons why we've adopted the structure we have - payment through the Tax Office, payment through Centrelink, and existing reference points; so existing eligibility reference points - is that that minimises the risk of things going wrong; of people getting payments who shouldn't. There's always risks involved in implementing things this big and this complex, but I believe that it will be managed well, and that the money will get to where it is intended to go.
FRAN KELLY: And in terms of the cheques going directly to people; apart from the family payments one, the for the middle to low income earners; is that based on last year's tax return?
LINDSAY TANNER: Yes.
FRAN KELLY: Okay.
LINDSAY TANNER: That's correct.
FRAN KELLY: Now, the Prime Minister has called for this package to be passed by the parliament by the end of the week. The Opposition wants more delay to allow scrutiny; so do the Greens - we'll speak to Bob Brown in a moment. Why the rush? Why not let parliament at least take another week?
LINDSAY TANNER: Basically the quicker we get money moving the more impact we have on pushing back against these powerful international forces that are really pressing down on Australia's economy; the more we sustain jobs; the more we put upward pressure on growth. And, we have some significant constraints in processing. So, although nobody really notices unless something goes terribly wrong; it's not an easy thing for Centrelink to get payments out; it's not an easy thing for the Tax Office to get payments out. All of these things require a lot of work and very complex computer arrangements; and therefore any delay just adds to that challenge. So we're conscious of getting things moving. And we're also conscious of the fact that, your earlier question really pointed to, which is that when you're devoting the bulk of the package to building things; these things don't start instantly. So the longer we delay, then the longer the major impact starts to flow into the economy.
FRAN KELLY: Alright. Lindsay Tanner thanks very much for joining us.
LINDSAY TANNER: Thank you very much.
FRAN KELLY: Federal Finance Minister Lindsay Tanner.
-ends-
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