STEVE PRICE: Speaking of federal politics, the Federal Finance Minister Lindsay Tanner has agreed to join us this morning to talk about the state of the economy. Lindsay, I'm sitting at Harvey Norman Domain Belrose in the middle of the store that I suspect has consumed a lot of your stimulus package.
LINDSAY TANNER: And you're watching people buying TVs and computers as we speak, Steve.
STEVE PRICE: Yes. They've got the Kevin Rudd chequebook out, and they're out there signing up as we talk. What sort of - that result that we had yesterday, 0.6 increase in GDP, just put that into a context if you can for me on what growth is like in places like the US, the UK and Japan.
LINDSAY TANNER: Well over the year we've seen growth in, or negative growth in countries like those you've named in the vicinity of four and even five per cent, so you've seen huge drops in activity. And of course that means big increases in unemployment, lots of businesses going broke, and budget deficits going through the roof. So Australia's result, in normal times you'd say that level of growth is pretty modest. Australia's result is tremendous, compared with what's happened around the world.
STEVE PRICE: And have those similar economies doled out money like you have to prop their economies up, because your critics are saying, well, it's only because we're giving people money that we're in this position.
LINDSAY TANNER: They have up to a point, Steve. But every country has done some things a bit differently, and I think the main thing that's been different about Australia's approach has been that we got the money moving quickly. There's money moving in other countries, for example you have cash for clunkers schemes in places like Germany and the US where people get a fairly hefty subsidy for trading in their old gas guzzler for a new, much more environmentally-efficient car. But the key thing I think here has been that we've got the money moving quickly, both the cash payments, but also things like the maintenance in schools and that kind of stuff. And it's clearly showing up in these growth figures. The Treasury says that if we hadn't have had the stimulus, instead of going forward by 0.6 of a per cent in the last quarter, we would have gone backwards by 0.3. That means thousands of jobs and businesses go down.
STEVE PRICE: Does that give you some room for optimism on the job front?
LINDSAY TANNER: Look, cautiously, yes. But I think the best phrase I can use to sum up what yesterday means is, so far so good. But there's a way to go yet. We've got a projection in this year's budget for unemployment to hit eight and a half per cent next year, in the middle of next year. Now that's a pretty serious figure, of course. Now there's a lot of commentators suggesting that it won't go anywhere near that. It's too early in our assessment to be definitive about that. But we revise those projections in the normal course of events later this year, and I'd certainly be hopeful that those revisions will project lower unemployment that was otherwise expected. But a lot can still go wrong, Steve, in the international economy.
STEVE PRICE: Opposition says it's time to pull back on the stimulus. What's your reaction to that?
LINDSAY TANNER: Look, I think that's misguided. They opposed it from the start. So it's hardly surprising that after it's been successful, they're now saying well, it was not necessary. I think that's a ridiculous position. The facts I've just cited I think bear that out, Steve, that had it not been for the stimulus, we would have gone backwards in the last three quarters. As it turned out, we've only had one quarter where growth has gone backwards. The last two quarters we've had growth in the positive. It's clear that without the stimulus, things would have been very, very difficult for a lot of families, a lot of jobs lost, a lot of businesses going broke. And we're not over. You know, the - we're not declaring victory by any means. There's still some tough times to get through, and we need that stimulus money flowing. And it's also structured in a way that it gradually scales down anyway, so the First Home Owners Grant boost scales out at the end of this year. You'll get the incentives for businesses to invest. They drop off in the not-too-distant future, and of course the spending on construction and on infrastructure, that gradually scales down over the next year or so.
STEVE PRICE: So what's still to come? I mean, the pensioners will get an increase in a couple of weeks time, the long-promised and long-awaited and overdue increase. What else is to come?
LINDSAY TANNER: Well that pension increase is permanent. It's not part of the stimulus package. The stimulus package, of course, is temporary, and that's the key thing. It's spread over a couple of years, because we've got a couple of years of rough going. But it is temporary. And the pension increase of $35 a week for singles is of course permanent. That's locked in. It will have a helpful effect on the economy, though that's absolutely correct. The stuff that's still rolling out, of course, is the insulation of homes, the building of buildings in primary schools, the building of new science and technology centres and language centres in secondary schools. There's a variety of transport kind of projects like the rail and road projects that are underway. There's still more money to flow for those. And of course there are the really big things that have, that in some cases take several years to get moving. So - but they're necessary anyway. They're important for our economies future anyway.
STEVE PRICE: Just on the schools spending. There's a story this morning in The Australian suggesting that one school in Queensland only has one student, one child going there, he is getting $250,000 for a new hall. I mean that's ridiculous.
LINDSAY TANNER: Well Steve, I have learnt over the past few months to treat some of these stories with a grain of salt, because invariably you tend to find out that there are other bits of the picture that haven't been presented that do modify the conclusions. So until I can scrutinise all the facts, I'm - you know, I haven't even had a chance…
STEVE PRICE: [Interrupts] But we shouldn't be spending a quarter of a million dollars on a school hall for students - school with one student, should we?
LINDSAY TANNER: Well, frankly I find it strange that there is a school in existence that's got one student.
STEVE PRICE: Oh no, we had an example here in New South Wales where there's a school with three students, and two of them are going somewhere else next year. So it's not uncommon in rural Australia to have that happen from time to time.
LINDSAY TANNER: Well, the…
STEVE PRICE: [Interrupts] But the bottom line is, we shouldn't spend a quarter of a million dollars on a school with one student, should we?
LINDSAY TANNER: Well, until I know the facts, Steve, I'm going to withhold judgement on this. I haven't seen the article to be honest, much less know the…
STEVE PRICE: Okay.
LINDSAY TANNER: …the detail of what's gone on.
STEVE PRICE: Well, the other part of this, I mean there is a problem with that school rebuilding program, where you've now had to shift money from building school science labs and take it across to the primary school rebuild fund, which is basically any school with a certain number of students got money to rebuild a part of their school. Was that a mistake?
LINDSAY TANNER: Oh no, I don't think it was. And the key thing here is that the money is still being spent on keeping people working, people building things, and you're going to have important education infrastructure at the end of it. The Auditor-General is scrutinising the primary schools construction program and I'm not exactly sure when he'll present a report, but no doubt everybody will look at all that with great interest once that reports come out, and there are various processes of Parliament that these things will get probed. But the key thing is that whether it's in primary schools or secondary schools, it's keeping people in jobs, it's keeping businesses afloat, and you've got important education infrastructure as a legacy for the future.
STEVE PRICE: Look, I know this is not your portfolio, but I mean, the education revolution was supposed to include money being spent on science labs and language centres. That money's now been withdrawn and put into the primary school pot of money where the scheme is, if you have a certain number of students, you can get up to $250,000 to rebuild, whether you need it or not. That money's gone to the richest schools in the country. I mean, the school my children go to got a quarter of a million dollars, King's Schools in Sydney, Cranbrook, all of these schools up and down the eastern suburbs, they got the money, and yet a story today says ten of the most disadvantaged schools in New South Wales - and it names the towns they're in - will now not get their science and language labs because the money's gone.
LINDSAY TANNER: Well, Steve, again without seeing the report it's difficult for me to comment on that specific one. But my understanding is that we will hit the target of 500 schools in that secondary area that we set for ourselves anyway, and so in effect we've been able to do better than we anticipated there, and that's enabled us to transfer some of that funding. But ultimately, what we're dealing with here, of course, is investing in education infrastructure, whether it's in secondary schools, primary schools…
STEVE PRICE: [Interrupts] Yeah, but ultimately we're dealing…
LINDSAY TANNER: …it is all important.
STEVE PRICE: …we're dealing in spending the taxpayers' money. Shouldn't we be spending it properly?
LINDSAY TANNER: Oh look, that's going to be a matter of debate, and the example you used of some of the wealthier schools, governments are on a hiding to nothing on this issue, Steve, that if it's not for every school, then immediately we're going to get attacked for all kinds of things; the politics of envy and all this other stuff. So it doesn't matter which way you jump on this question about providing assistance to schools. And of course there are, within the government sector, there are some schools that are very disadvantaged, have poor facilities; there are others, because they are in higher income areas, that do pretty well and have got strong fundraising capacity.
STEVE PRICE: Yeah, okay.
LINDSAY TANNER: So even within the government sector, you've got the same issue.
STEVE PRICE: To be fair to you I should raise that with Julia Gillard. When she gets back, I will. Just finally, should the private lives of politicians be open to public scrutiny? Should a politician who's having an affair with someone who's not his wife, is that news?
LINDSAY TANNER: Well, I'm hardly an objective commentator on this, Steve, because I'm a politician and I have a private life [laughs]. But look, I think it's a reality. I just think however intrusive it can be and however difficult it can be from time to time, it's just part of the landscape in public life, whether we like it or not. It applies to a variety of other people. You know, you're in the same position. You know, you've a public figure, you're well-known, and if something funny happens in your private life, I'm sure that some of your competitors would be only too happy to tell the rest of the world about is [laughs]. So…
STEVE PRICE: It's happened, don't worry.
LINDSAY TANNER: [Laughs] It's just - it just goes with the territory, I think. And you know, there are occasions when it goes over the line, in my view, but I'm just phlegmatic about it; I just accept that that's a reality we have to live with, whether we like it or not.
STEVE PRICE: Good to catch up, thanks a lot.
LINDSAY TANNER: Good to speak to you. Thank you.
STEVE PRICE: Lindsay Tanner there, the Finance Minister.
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