GLEN BARTHOLOMEW: Well amid feverish speculation over the next two and half weeks, the Rudd Government will put the finishing touches to its second budget. And, as the economic news just gets worse, the options for the government get tougher. This morning we're hearing that the government may have to break its self-imposed limit of $200 billion to fight off the effects of that now inevitable recession. The Finance Minister is Lindsay Tanner. He's a key figure in the budget formulation of course, and he's speaking here to ABC NewsRadio Steve Chase.
REPORTER: First and foremost Mr Tanner, suggestions this morning that the government's considering breaking its self-imposed borrowing limit. Is that in your contemplation at this stage?
LINDSAY TANNER: The budget will show that the deficits projected over the next couple of years will be significantly larger than was anticipated in February, because the global economic downturn has got more severe. But, I'll leave it up till budget time for the detail of that to be made public. That will clearly increase the extent to which we have to borrow. But, it's inappropriate to speculate on just how that will impact on our overall borrowing requirement.
REPORTER: So, will we know before budget night just exactly how much the government intends to borrow over the next few years?
LINDSAY TANNER: All of these things will be outlined in the budget. The impact of the global recession on our revenues has been getting worse over the past few months. The deficits that were projected in February of course were pretty substantial. We're now anticipating that these will be significantly larger over the next couple of years. But these calculations are not finalised until fairly close to the budget so they can be made as accurate as possible.
REPORTER: Now one can understand a Treasurer playing his cards close to his chest, but, analysts are warning this morning that you may have to raise taxes in the short-term to bring the deficits under control. Is that one of your options?
LINDSAY TANNER: We're not ruling anything in or out in the approach to this budget. We are in completely unprecedented circumstances, particularly in the situation dealing with the extraordinary global slowdown. Some of the drops in economic activity and increases in budget deficits and unemployment you are seeing in major countries like the United States, Britain, various European countries, Japan, are pretty much unprecedented; and they're imposing a huge downward pressure on the Australian economy. We've learned over the past 12 months or so that in extraordinary circumstances sometimes you have to do extraordinary things. So, we're being very careful not to speculate or rule out or rule in or guarantee things, because we have to do what's required, everything that's necessary to sustain jobs and economic growth in Australia in very very challenging circumstances.
REPORTER: And do you think that the Australian public are going to give the Rudd Government the benefit of the doubt if in fact they do have to take the harsh measures like raising taxes or the like?
LINDSAY TANNER: I believe that Australians will judge the government by its actions and by our efforts to deal with the global recession. People understand that we're dealing with an extraordinary situation; one that we didn't cause. But they'll judge us by how we respond; they'll judge us by our decisions; and by whether we sustain employment and economic growth in the short-term, to the best extent we can, and whether we have a clear strategy to return the budget to surplus and to ensure that growth resumes as quickly as possible. The Liberal Party are running around hysterically ranting about debt and deficit, when in fact their approach, the position they have made public, is very very similar to the government's. They accept that the government has to borrow to cover the huge hole in revenue that the global recession is causing. And they accept that there needs to be on top of that a stimulus. Their proposals are smaller than the government's, but the vast bulk of the borrowing that is being required as a result of this global recession, is borrowing that would occur were Mr Turnbull in charge. So his hysterical ranting literally has no foundation in substance.
REPORTER: The Prime Minister yesterday was casting doubt on whether or not the First Homeowners Scheme would be extended in the budget. News Limited papers this morning are telling us very definitely that it will be extended. What is the position?
LINDSAY TANNER: I'm not going to speculate on what the outcome might be on this issue, but that's one of a number of issues that we have to give consideration to in the circumstances that we're in. The First Homeowners Grant of course is an ongoing program, and we chose to increase it for a specified period of time in order to stimulate the housing sector, to stimulate real estate activity. That's proved to be very successful. It's due to end on 30 June, and therefore the level of the grant to return to its normal level. That's the position that prevails as things stand at the moment. I can't speculate on whether or not we may choose to modify that. That'll be something that people will have to wait until the budget to see.
REPORTER: But could you say that the lobbying by the housing industry has made inroads into the government's thinking?
LINDSAY TANNER: There are important issues in play here, and it's one of the questions that we have to consider - is to exactly how to exit from what is inevitably a temporary measure. We're not going to have a First Homeowners Grant at the level that it's been, forever, because it was put in place to deal with a specific set of economic circumstances. But the question of exactly how and when that exit occurs is something that we will be addressing. The position that prevails at the moment, and one that people should regard as the government's position, is of course that the extended grant finishes on 30 June.
REPORTER: Lindsay Tanner, thanks for joining us this morning.
LINDSAY TANNER: Thank you very much Steve.
GLEN BARTHOLOMEW: The Finance Minister, Lindsay Tanner, being careful with his words, with Steve Chase.
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