MEET THE PRESS PRESENTER PAUL BONGIORNO: Good morning and welcome to Meet The Press. The nation is still reeling from the Victorian bushfire catastrophe which saw our political leaders as one in their response. Not so harmonious - the brawl over the $42 billion economic stimulus package. South Australian independent Nick Xenophon became the deal breaker and maker, sending the Government into shock over his initial rejection of the package, stubbornly not for turning the Opposition.
OPPOSITION LEADER MALCOLM TURNBULL (Thursday): We for our part will not give it any support it at all. We are opposed to this.
PRIME MINISTER KEVIN RUDD (Thursday): What the Opposition has done by this act of economic sabotage in the Senate is to threaten the jobs, the livelihoods and the businesses of nearly 100,000 Australians. Finance Minister Lindsay Tanner is a guest. And later - when arson becomes mass murder. We speak with a leading criminologist. But first - what's making news in the nation's papers this Sunday, February 15. The 'Sunday Herald Sun' reports "Heartbroken survivors of the Marysville inferno made their tragic homecoming yesterday." The bushfires refugees wept as police bused them into the locked-down wasteland where only 12 houses remain standing. It's feared as many as 100 people may have been killed in the town. And the Sunday 'Age' reports "A huge fire class action against the State Government and a private electricity company is being launched. The 'Sunday Telegraph' has "Turnbull protects a vulnerable Bishop. Opposition Leader Malcolm Turnbull has been forced to defend his Shadow Treasurer Julie Bishop from internal party critics who say she should go. And according to the 'Sunday Mail' an early election is on the cards both federally and in Queensland. The 'Sun-Herald' reports "Global crisis threatens maternity leave plan." There are fears the $500 million paid maternity scheme may now be excluded from this year's federal budget. Good morning Lindsay Tanner and welcome back to Meet The Press.
FINANCE MINISTER LINDSAY TANNER: Morning Paul.
PAUL BONGIORNO: We now have the $42 billion stimulus package. What will be the benchmarks for its success?
LINDSAY TANNER: We have projections in the economic and fiscal statement that was released at the same time that indicate where we expect the Australian economy to go in the next few years. They're not great numbers but are an awful lot better than the numbers you're seeing start to emerge in other countries around the world. They do keep growth just in the positive. So that clearly will be the measure of how things unfold, but of course this is not the only thing that's involved here. What's happening overseas is unprecedented. We are getting enormous downward, enormous negative pressures put on the Australian economy. So we have to fight our way back, that's what we're doing.
PAUL BONGIORNO: So if more than 300,000 jobs are lost in the next two years, will this package have failed?
LINDSAY TANNER: I think it's simplistic to just pick one particular number and also one particular point in time, because we don't know how long the global recession is going to last for, how intense it is going to be, so we have to look at a total picture, as things unfold, in six months, 12 months, 18 months time, so you can't set one particular snapshot at a point in time and say that will tell you success or failure. I think we will know how long it's gone and what the impact has been to some degree within 12 months or so. But because there are so many things in an economy at any time, it's always difficult to tell. There will be arguments on all sides inevitably.
PAUL BONGIORNO: There were plenty of arguments over the first stimulus package, the $10.4 billion. The Opposition is adamant that there's no evidence it's worked.
LINDSAY TANNER: That's completely wrong. Most of the major players in this, market economists, the retailers association, indicate it has worked. We've seen retail sales go up by 3.5% as at a time they've literally plummeted in other major economies. The key thing here is not measuring that against what may have occurred a year or two years ago, but to actually contemplate what would have happened had there been no stimulus package. There is no doubt that without that money flowing into the pockets of ordinary Australians and much of it been spent, we would have had a very grim December and January, like you're seeing in countries like the United States and Britain and Japan and elsewhere.
PAUL BONGIORNO: Malcolm Turnbull and the Opposition have washed their hands of the debt generated by the stimulus package. Here is how he put it.
MALCOLM TURNBULL (Thursday): Every cent in this package will have to be repaid. It's not the distribution of a surplus, it's all debt. It's borrowed from the future.
PAUL BONGIORNO: Well, it is borrowed from the future, we know it took ten years to pay the $96 billion of debt left after the Keating government - how many years will it take to pay this debt?
LINDSAY TANNER: The Liberal Party is seeing new records in hysterical exaggeration here. The debt level involved here is the same as applied under Howard in 2002 - literally half way through his term, the level of government debt was the same as a proportion of the total economy as it would be as a result of the loss of revenue are experiencing and our stimulus package. And for the previous 20 years before that time, from the early 1980s to the early part of this century, the debt level was higher, for 17 of those 20 years. The world didn't come to an end. We still have a level that will be around 5% of the total economy. That's like a person on $100,000 a year borrowing $5,000 - sustainable. That compares with the rest of the developed world which averages 45%, which is rising rapidly. So this is entirely sustainable, we can handle it and it's necessary to defend and support jobs and economic activity.
PAUL BONGIORNO: For argument's sake, let's say it is, but the Treasurer and the Prime Minister saying if they need to do more they will. It seems the Government is prepared to go deeper into debt.
LINDSAY TANNER: Paul, we've set no specific boundary on this because of the extraordinary circumstances that we're in, we've set forward a programme that we believe will do the job, but if you look at what's going on overseas, it is genuinely concerning and I think this is a thing the Opposition have to give serious thought to, instead of playing politics and block measures crucial in a period of literal economic crisis, they should look at what's happening overseas. Industrial production in Japan has plummeted. That connects to Australia's exports to Japan very directly. England looks like it will have a recession losing 4-6% of economic output - that is extraordinary. The United States is in an extraordinary mess as well, so we have to fight back and defend Australian jobs and businesses. The debt levels we have are very low in this country, they will stay very low.
PAUL BONGIORNO: Can you rule out now raising taxes to pay this debt?
LINDSAY TANNER: We have a three-pronged plan to deal with the commitment to get the budget back to surplus. The first is that tax revenues will rise again automatically as growth returns, without having to change tax rates they will rise again automatically. Second, we are going to restrict new spending or increases in spending to 2% of the increase for all new spending. We will put a 2% cap on it, until we get the budget back to surplus, and thirdly any new spending proposals, once growth has resumed, will have to be offset by savings or by other kinds of offsets in the overall budget. So we have a path back to surplus, it doesn't involve increasing taxes, it involves discipline, it involves keeping the budget in good shape as we did last year, with very strong savings.
PAUL BONGIORNO: Time for a break. When we return with the panel, rebuilding shattered lives, but at what cost? And in a week of moving speeches in Parliament none was more powerful than Russell Broadbent's, the Liberal member whose electorate of Macmillian was gutted by the fire storm.
MP RUSSELL BROADBENT (Tuesday): In times such as these of unprecedented trauma, when faced with an inescapable disaster, from a near indestructible force, all we can rely on is each other. Sadly, as the Prime Minister has described today, there are so many that cannot even do that.
(APPLAUSE)
PAUL BONGIORNO: You're on Meet the Press with Finance Minister Lindsay Tanner and welcome to our panel - Jennifer Hewett from the 'Australian' and Glenn Milne from the 'Sunday Telegraph'. The depths of despair and human desolation caused by the bushfires were powerful motivators for our political leaders to write a debt for the recovery.
KEVIN RUDD (Tuesday): Given the magnitude of this tragedy, we have deliberately made a decision to place no cap on the Commonwealth's contribution to the recovery and reconstruction effort.
MALCOLM TURNBULL (Monday): The three words that should define our national response to this tragedy must be "whatever it takes" - whatever it takes.
JENNIFER HEWETT, THE ‘AUSTRALIAN’: Minister, have you got any idea yet what it will take?
LINDSAY TANNER: We haven't got specifics yet Jennifer, because clearly the absolute magnitude of the whole event is unfolding and the amount of rebuilding that will be required, the amount of money that will be needed, can't be precisely estimated yet, it will obviously be pretty substantial, but it's both the State and Federal governments involved in this, and we have made it clear what that whatever is required will be done, that's all you can do in this extraordinary situation. A lot of stuff has to be done, rebuilding homes, businesses, community infrastructure, roads, those kind of things, a lot of work to be done.
JENNIFER HEWETT: There's been a lot of community compassion and people wanting to help in whatever way they can. What else do you think people can do?
LINDSAY TANNER: Well, one thing that's important is the initial focus will be on physical rebuilding, that's unavoidable, but there's also an emotional rebuilding that in many respect will be much harder, and that's where I think the communities throughout Victoria, and Australia can play a big role. There's all kinds of community assets that bind a community together that governments can't necessarily replace or build, that other communities can help with. For example, a church will not only lose its building but also all of the things inside the building that make it a church. A local cricket club will lose its ground, but probably its gear as well, Kinders, they don't just lose their building, they won't have toys, books. And I would like to see other community groups, organisations around the State, around the country, as the months unfold and all these things start to be put back together, partnering with those organisations, with those communities, to help contribute those things. Because if you're in a local cricket club, as I've been, and you're trying to put some gear together to get back into a competition after this kind of tragedy, it will mean a lot more if that gear came from your mates down the road than from a cheque from the government. Now that's not to let us off the hook. We've indicated we will do whatever is required, but there is such a huge outpouring of community sentiment here that I think that is the kind of area that will make a big difference to the emotional recovery as well, the community is butt putting themselves back together.
GLENN MILNE, THE ‘SUNDAY TELEGRAPH’: Well, Mr Tanner, we have heard a lot about emotions, and it's been a horrific week, but we're hearing the first news this morning of class actions. If there is a class action against Commonwealth, will you defend it?
LINDSAY TANNER: We can't make judgments about those things until we see if and when such an action is made and what is alleged by it. It would clearly be irresponsible to take any position about a potential legal action without knowing what it consisted of. We've all seen over recent years that these kind of things have grown a bit in intensity and breadth, so we would need to see what's involved. Clearly, I suspect, if there were any actions against any governments, it is more likely to be the Victorian Government, because they have the primary responsibilities involved here, but if anything does eventuate, we will obviously do the responsible thing and work through it.
GLENN MILNE: Clearly there is more money in the pipeline as a result of the bushfires, but let's just go back to the fiscal stimulus package for a moment. ABM Ambro says this package has a low productivity effect and more bonuses than Wall Street. They're right, aren't they?
LINDSAY TANNER: No, I don't agree with that. Almost three quarters of the package relates to building things, to putting insulation in people's homes, which reduces electricity costs, to building new schools, a lot of schools around the country desperately need those new facilities, to improving defence housing, to increasing our road spending, so there will be lots of community and productive infrastructure left as a legacy of this package, but the reason there has to be some spending on immediate payments is that is what circulates quickly, that is what gets things moving quickly, so we have to get the mix right. There's no perfect structure here, but I think you will find that other credible commentators, including the International Monetary Fund, have broadly indicated that what we're doing is the right way forward. So we think we're doing the right thing here.
GLENN MILNE: You mentioned schools, but ABM Ambro says where is the machinery and the plant and factories that will remain after this spend?
LINDSAY TANNER: Well, we do have to look at the dealing with the issue of electricity consumption, both with respect to climate change, but also with respect to resource use generally, so the suggestion somehow this doesn't leave a longer term productive impact I think is completely false. That is a really significant benefit for our economy into the longer term, and schools and the quality of schooling, which relates to the physical infrastructure, whether or not you have a decent library, a good gym or multipurpose room, that is all critical in primary schooling. All the evidence shows that what happens in the early years of schooling has a critical role in determining people's capabilities and their capacity to contribute to the economy in later life. If they think that's not contributing to longer term productivity, that's fine, that's their view, they are wrong.
JENNIFER HEWETT: Minister, you've said that there's no need for tax increases. Doesn't that stretch credulity a bit, given how much money the government is going to spend, has spent already, and is likely to have to spend over the next year or so?
LINDSAY TANNER: Our overall budget position is in good shape and there's no reason to assume that tax increases will be required in the medium term as a result of the circumstances the country is in now. Tax revenues have plummeted without there being any changes to tax rates. What that means of course is that when growth returns as normal, they will increase very significantly without any changes to tax rates. So that hole that's been opened up in our revenue will gradually of its own accord close, because of growth returning. Now, it won't necessarily close overnight and won't close completely in the next year or two, but it will return to normal.
JENNIFER HEWETT: But there is a big hole of course produced by extra government spending. In that context, can the Government still afford to keep its commitment to things like paid maternity leave in this budget?
LINDSAY TANNER: You're right about the additional Government spending, but that is why we've been absolutely clear in keeping our initiatives as temporary, so we're not creating long-term spending burdens that keep recurring every year. That is why this package that we put forward is about temporary spending over a couple of years. The paid maternity leave issue is the subject of a Productivity Commission report. We are expecting the final report on that to be brought down very shortly. That along with a range of issues - our commitment to increase the living standards of the pensioners of Australia, other important issues that are on the table - they will be in the mix for the budget. But we won't pre-empt that report, we have to see where that leads us. Because there's a lot of issues within the paid maternity leave question that have to be dealt with as well. It's not a simple matter by any means.
PAUL BONGIORNO: Just briefly, Mr Tanner, before with go, there's speculation in the papers today that the Government is giving itself the option of going early. It must be tempting to go to an election before things get really bad?
LINDSAY TANNER: Paul, that's certainly the last thing on my mind, and I'm sure the last thing on the Government's mind. People in these circumstances expect us to govern, deal with the crises we've been presented with. We are literally one year and three months into our term. The last thing I want to talk about is elections. An election, I don't think, would create jobs or help us tackle the huge problems we have arising from the international recession. We are committed to doing what is needed to govern Australia, to protect jobs and ensure growth continues. That's the issue.
PAUL BONGIORNO: Thank you very much for being with us.
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