HOWARD SATTLER: Well, double dose of bad news today if A, you're one of the people who was looking to enter the housing market under the First Home Buyers [sic]Scheme later this year after 30 June, or you're a person in a job which is looking a bit shaky at the moment. The first bit of news is that the First Home Owners Grant won't be extended past its deadline of 30 June; the second is that the Federal Treasurer's reported admitting there are no guarantees unemployment won't rise above 10 per cent - one in ten - and also refused to rule out raising taxes. Well, the Acting Treasurer, I don't know where the treasurer's gone now, might have left town [laughs], Lindsay Tanner joins us on the line. Hello, Lindsay.
LINDSAY TANNER: G'day, Howard, how are you?
HOWARD SATTLER: Where's Wayne?
LINDSAY TANNER: He's heading off to a G20 finance ministers meeting so it's a pretty valid reason for him being overseas. The international nature of this crisis makes it very important that people like him and Kevin Rudd are interacting with key players in other major nations pretty regularly.
HOWARD SATTLER: Okay, he has left town, but legitimately.
LINDSAY TANNER: Yes, [laughs] that's right.
HOWARD SATTLER: All right, let's start with unemployment for a start. Do you agree with his summation that unemployment could get above 10 per cent?
LINDSAY TANNER: Look, I think it's important to get the emphasis right here, Howard, I still think that's very unlikely. But we can't guarantee it won't because the nature of this global recession that's really just got worse and worse over the past six months is such that it's impossible to be absolutely certain that really extreme things like that won't occur. We're seeing dramatic things occur in other nations that Australia's connected with through trade that you just would have thought would be impossible, the incredible drops in...
HOWARD SATTLER: Give us an example.
LINDSAY TANNER: Oh, well, you're seeing for example industrial production in Japan in the last quarter of last year dropped, by something like 35 or 40 per cent. You're seeing budget deficits in the United States and Great Britain of about 12 per cent of the total economy, 12 per cent of GDP and incredible drops in housing prices, the overall economy going backwards at a great rate of knots. You know, our economy went backwards by half a per cent in the last quarter of last year. In many other countries it was double, treble that amount; so all of that has an impact on Australia.
HOWARD SATTLER: So are you getting reports every day from people within - where do you get your reports from?
LINDSAY TANNER: Oh, mostly Treasury but also in my department, there's a small unit that deals with these things. And of course there's a regular flow of information from other countries, but the International Monetary Fund, the OECD, the world club of developed countries, all have big departments doing analysis and providing information.
HOWARD SATTLER: What you're saying is it hasn't bottomed out yet?
LINDSAY TANNER: Look, it certainly couldn't be called that way. The problem with these things of course is you don't know where the bottom is until you're well beyond it, because there is a history in these situations of false dawns; where you think that an economic downturn has bottomed, and you get a little bit of a kick-up and then it appears to be a bit of a false dawn so...
HOWARD SATTLER: But with all the money that governments are injecting into the economies right around world, ours included, you'd think that there'd be some positive reaction.
LINDSAY TANNER: Well, it's difficult for me to comment on the impact in other countries, because obviously I don't know enough - and I can certainly give you the full bells and whistles about my beliefs about how its impacting here - but I think the problem really is in some countries like the United States is that they were so overextended, they had such huge over-borrowing, and people just partying so hard, that the unwinding that's occurring and the re-balancing that's occurring is so extreme that although their big injections of money are probably having an effect, it's up against a real tidal wave of negative economic forces.
HOWARD SATTLER: All right, we may think that you've got a bottomless pit on our behalf, the Government, but you haven't, we know that at the end of the day.
LINDSAY TANNER: I am very conscious of that, Howard, that's some... that's a point very well made.
HOWARD SATTLER: So does that mean, is that a reason why the First Home Buyers Grant won't be extended past 30 June?
LINDSAY TANNER: Oh, look, I - you need to be careful not to assume anything here because we are just very conscious of not speculating about the budget - not saying this is going to happen or that might happen or this is going to happen.
HOWARD SATTLER: Well, I thought that Prime Minister actually confirmed it.
LINDSAY TANNER: Well, he - I haven't seen his comments but it's just something that's scheduled to end on 30 June, it was always going to be a temporary increase - remember there's a permanent First Home Owners Grant there of $7000, but this was always going to be a temporary increase. There's been some debate about whether it should be extended or not, that's fair enough, but we're just not going to speculate on that. But the position is, as things stand at the present, that it will conclude. The same thing applies to a range of issues, but we've always made a claim we don't rule things in our out, because we're instructed such extraordinary circumstances. But your point about there not being a bottomless pit is absolutely spot on.
HOWARD SATTLER: But the - what would it do to the construction industry if you don't extend it? I mean, 4200 first home buyers have entered the market in this state since October; it's been a huge boost.
LINDSAY TANNER: Look, Howard, I think it - there are limits to the number of first home buyers obviously and there are limits to the extent of the impact of these things and the fact that there is still an incentive in the system, albeit a smaller incentive, shouldn't be overlooked either. So these are all things that obviously are under consideration that we have to take into account. But this is a very difficult budget to frame because, although we have to stimulate the economy in the short-term, we've got to get money moving, we've got to get spending moving to sustain jobs, we've also got to chart a medium-term path back into surplus. So in effect, there's two almost different things having to occur at the same time which is very tricky.
HOWARD SATTLER: You're going to have to look at raising taxes down the track too.
LINDSAY TANNER: We've again, been careful just not to rule things in, rule them out. Obviously...
HOWARD SATTLER: I love that terminology.
LINDSAY TANNER: Well, it's...
HOWARD SATTLER: I don't really, because it's such a trite one, it's so often [indistinct]...
LINDSAY TANNER: I can understand the frustration that people must feel hearing those words.
HOWARD SATTLER: Well, they want to know where we're going here.
LINDSAY TANNER: Well, that will all be revealed on budget night and that's, you knew, that's just the way things are...
HOWARD SATTLER: That's apart from what you leak beforehand, right?
LINDSAY TANNER: [Laughs]
HOWARD SATTLER: You know - we know you do.
LINDSAY TANNER: You're in a very cynical mood this evening, Howard.
HOWARD SATTLER: No. Now, what about private health insurance, the rebate there, is that in the crosshairs, too?
LINDSAY TANNER: Look, it's one of the many issues that we're, you know, obviously considering - all these things. Everything conceivable setting, we're not ruling, again, things in or things out. I can't comment on the speculation that has been around there about all these things, but we have got a really challenging task on our hands here. And I am sure you understand the importance of this that we've had a big hit to our national income and although in the short-term, in order to avoid that flowing through to really big increases in unemployment and business losses, we've got to push back with spending, in the medium term, we have to trim our sales in terms of our budget settings to accommodate that, so that we don't end up with deficits forever and that we've got a path back into surplus. Now that means tough decisions, it means all kinds of challenging choices and we are working our way through all this.
HOWARD SATTLER: All right, what about those queues of people up at Ballajura last night, were you up there, by the way?
LINDSAY TANNER: No, I wasn't I am afraid.
HOWARD SATTLER: Well, there were queues of people lined up speaking to ministers hoping to extract things from them, they got - were they wasting their time?
LINDSAY TANNER: Oh, no. In fact, I've been to many of - almost all of these events and they are good value. There was one for example, in the seat of Canning last year and the very first one was in Perth in the seat of Canning, and you meet a wide range of people and they get a chance, even if it's only for 10 or 15 minutes to put individual circumstances, points of view, and often there are follow up things, so you know, quite often what will happen is...
HOWARD SATTLER: And things do happen as a result of those meetings?
LINDSAY TANNER: Oh, yeah, look, and - not always because sometimes just somebody expressing a view, somebody saying, look, I think you should do this or I should do that. Sometimes it's specific individual circumstances, you can help them. I had a sports club, a footy club in Queensland, for example, that had a previous administration had messed up their GST and they had no hope of paying, you know, I think they owed a certain amount of money and they had no hope of ever paying it back, and they were looking for a waiver for that. We worked through that and in result we got the result they were after, according to the rules. So, issues do get dealt with and I think people appreciate just being able to eyeball ministers.
HOWARD SATTLER: Yes, they do. Thanks for joining us.
LINDSAY TANNER: Thank you very much, Howard.
HOWARD SATTLER: This is radio, but there - I know what he looks like. Okay, 92211882, what did you think of that?
- ENDS -
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