JON FAINE: Well, the question being asked this morning is how much stimulus is too much stimulus? And how do you stop the Australian economy now from going into overdrive, the Reserve Bank yesterday warning that there is no recession, the stimulus package is creating growth, and the next rise in - the next change in interest rates may well be upwards. Lindsay Tanner is the Acting Treasurer, as Wayne Swan heads off to the G20 finance meeting in London, the Government keen to get the message out that they're handling the economy and that Labor governments can indeed do so, just like the conservatives could. Lindsay Tanner, good morning.
LINDSAY TANNER: Good morning, Jon.
JON FAINE: How much stimulus is too much?
LINDSAY TANNER: Well, certainly the stimulus that we've got in the pipeline is appropriate and we're not going to back away from that. I think the best summary I can make of the current situation, Jon, is so far, so good. But Treasury estimates that the growth figure we got yesterday, without the stimulus initiatives, would have been minus 0.3, so we would have been going backwards but for the stimulus. As it turns out, the stimulus measures have meant that we are marginally in the positive, modest growth, so it's way too early to be turning the taps off.
JON FAINE: The warnings that you were given are bearing fruit; which is, you can throw money around, but some of it will be wasted.
LINDSAY TANNER: Jon, you might recall that there were controversies about some of the [mobile phone breaks up] to individuals ending up with people who were overseas or dead people. We did acknowledge at the time that because speed was of the essence, there were always going to be some anomalies, some problems on the fringes. But the crucial thing was sustaining hundreds of thousands of jobs and keeping thousands of businesses open. When you have to act really quickly and get money moving, inevitably you're going to hit some of those difficulties.
JON FAINE: Did you overshoot?
LINDSAY TANNER: No, I don't think so. People will debate these things for years, of course, and it's always difficult to assess because there are so many different things going on in the economy, both here and globally. And of course you've got potential threats in the world economy we can't overlook; people query how robust the Chinese recovery is, for example. We just won't know for some time. But we believe that it's way too early to be claiming victory and to be withdrawing stimulus measures. We think that so far, the strategy we've adopted is working, but it's still needed to be followed through on.
JON FAINE: There's a double standard surely though, Lindsay Tanner, between portfolios and between different projects. In some areas you are prepared to overlook waste and inefficiency because it's part of stimulus; in other portfolios you're determined to stamp out overspending and waste because it's good for the economy and good for the Australian - not just revenue, but also discipline in spending. It's inconsistent and it affects your credibility, when you tell, for instance, defence to pull their head in, but you're throwing money around in education.
LINDSAY TANNER: Look, I don't agree with that, Jon, because we were literally in an emergency situation, and I don't accept the premise. But when you're in a situation where you've just got to get money moving quickly and it's one-off measures, that's very different from year in, year out spending where we're always looking to improve the efficiency of that spending. So, you're going to have difficulties doing these kinds of things that don't arise when it's part of your normal day-to-day activities of government that simply continue indefinitely. I believe we've minimised those. I believe that we will end up looking back with a significant legacy for our nation's infrastructure as a result of this period, but we shouldn't lose sight of the fact that what this was all about is keeping the economy protected and jobs protected in an unprecedented international economic crisis.
JON FAINE: More than $100 million in stimulus cheques have either been returned or not cashed, 119,130 of them. There's $100 million that you thought was going into the economy that isn't going into the economy. If that money had gone into the economy, the pressure on interest rates would be even greater.
LINDSAY TANNER: Oh look, Jon, that's a - in the context of the total Australian economy, that's a very small amount of money. Our economy now is somewhere around $1.2 trillion dollars a year. So, although that's a big amount of money in isolation, as part of total economic activity, that's a pretty tiny amount and…
JON FAINE: [Interrupts] But still a significant amount. What do you do with $100 million more than you thought you had to spend. What - do you redirect it? Do you save it? What do you do?
LINDSAY TANNER: Oh look, you don't redirect that money. But of course, amounts of money that are budgeted for every year end up not necessarily, I mean, bang on the amount that was initially projected, you get unders and overs essentially. What happens every year, no matter who's in government, is that there are some areas where less is spent than was budgeted; there are other areas where more is spent. It's the total on the tape(*) that really matters, and of course, as you pointed out, the efficiency of spending and making sure that it's applied as it's supposed to be applied. But the end result of that $100 million, if that's the figure that is involved there of course, is that that simply returns to the budget.
JON FAINE: So you agree with Joe Hockey that it should be used to pay off debt?
LINDSAY TANNER: Oh look, that's a facile way of describing it, Jon, because you've - that is one of hundreds and hundreds of different initiatives, programs, activities of government that are occurring on a daily basis, and the amounts of money that are involved are very substantial, in some cases much larger than that amount, and every year there are variations. Every year, whether it's a Liberal government or a Labor government, there are variations in spending, there are modifications made because circumstances change. So the end result is, yes, I don't anticipate that we would be then saying, oh [mobile phone breaks up] that's $100 million we can now go and spend on something else. But those variations occur across government; there are ups and downs.
JON FAINE: Well, some of the downs, The Australian newspaper continues every day to tell another story about another school. Today, it's a school with one child in outback Queensland that gets a quarter of a million dollars for a resource centre, in other words a library, for one kid, on top of $400,000 that they had a share in before and they're just continuing to highlight some of the waste which you say you're against, but is a feature of your so-called stimulus package.
LINDSAY TANNER: Well Jon, every time one of these stories has emerged, it's turned out that there are a few bits of the puzzle that haven't been put forward. So, for example, we had the Opposition raising a school on French Island claiming that it was going to get a quarter of a million dollars, when, in fact, the amount that was spent on this school, for memory, was only about $50,000 or $60,000, and what the Opposition were doing was actually inserting the amount that technically they could have been eligible for but hadn't actually sought, and, indeed, hadn't been paid. So I'd withhold judgement on any particular case until I'd got advice from the relevant state or territory government, the people who are actually directly involved with the school, because often there's some highly coloured stories being put out there that don't quite add up when you actually look at the detail.
JON FAINE: So are you calling for advice on this one too?
LINDSAY TANNER: Oh look, obviously, it's not my portfolio, so I don't directly deal with the states on these things. But that's certainly what the Deputy Prime Minister has been doing in each of these cases, and you will have heard in question time in some instances, she's actually given responses, saying, well this picture isn't quite correct because certain things have been left out or overlooked.
JON FAINE: Speaking of the Deputy Prime Minister, while she's in India, are the wheels falling off your industrial relations strategy that she's in charge of? The AIRC - the Industrial Relations Commission - saying that the awards revamp will mean that some workers will potentially be worse off, and the Financial Review says some employers will be too.
LINDSAY TANNER: Well, obviously, the Financial Review's position is not necessarily going to be the Government's position, Jon, and they tend to reflect a view that is broadly in line with what the employers would think and it's…
JON FAINE: No, it's what the AIRC says that matters, Lindsay Tanner…
LINDSAY TANNER: Well sorry…
JON FAINE: …and you know that.
LINDSAY TANNER: …you were quoting two sources and I was responding to the second. The AIRC, I haven't seen their comments, but, of course, that's ultimately going to be a question of how they proceed in putting together what is a very, very complex process. And we should…
JON FAINE: Why is it complex? You - part of the promise was to simplify.
LINDSAY TANNER: Well, the process of getting there is complex, because you've got a whole variety of - several thousand different awards around the country, covering all kinds of different activities, and in many cases, there are different arrangements and awards. The aim of getting a simplified award in all the major areas, I think's really important for the economy, really important for business, particularly businesses that span more than one state, of which there are an ever mounting number. So the process that's occurring here is extremely important. It's always going to be difficult, because you've got all kinds of obscure awards. I used to be a union secretary and deal with some of these awards, Jon. We had awards that covered 25 people. You know, it's ridiculous to have this degree of complexity across the whole workforce. So it's a difficult process. There's proposed to be a very lengthy phase-in time to allow for any adjustments. I haven't seen the AIRC comments, so I'm not quite sure exactly what they're referring to. But I think you shouldn't underestimate both the importance of this task and the difficulty.
JON FAINE: And just finally, is the New South Wales Labor Party starting to hurt federal Labor's prospects at the next election in 2010?
LINDSAY TANNER: Look, I don't believe so, Jon, and all governments go through bad patches. They've been in power for a long time. It's just the nature of politics that once you've been there for a long time, you will have these periods where things don't go all that well and where your polling numbers drop. But in spite of all of the kind of disc… debate and colour and movement, I suppose…
JON FAINE: Scandal is the word I think you're looking for, Lindsay Tanner.
LINDSAY TANNER: …surrou… [laughs] surrounding…
JON FAINE: Can you say scandal?
LINDSAY TANNER: No. Look, I'll allow you to use that, but colour and movement will do me. The - in spite of all that, the polling numbers show that they're still sitting in a position that would enable them to win an election. So I wouldn't write off the New South Wales Government just yet. I think there's been areas where performance has improved in recent times. Often, it takes a while for people to catch up with the reality. So yeah, they're a government that's been - having some difficult times recently. I don't think anybody doubts that. But never write off the expected in politics. Nobody expected Labor to lose the Western Australian election, for example. Nobody thought that Colin Barnett would bob up after having retired, and…
JON FAINE: So you shouldn't assume that Labor can survive in New South Wales, no matter what the numbers are saying.
LINDSAY TANNER: Oh, absolutely. I don't assume any government survives, Jon. I don't assume we'll win the next election with or without problems in New South Wales either. I'm just making the point that I don't believe it's of detriment to Labor federally. I think most people these days do distinguish between the levels of government and I think that by the time we get to our election, the focus will very - be very firmly on whether we're any good, whether we've done the right thing, whether we're committed to solving Australia's problems, and I think state government matters, whether they are in New South Wales or anywhere else, will very much fade into the background.
JON FAINE: Time will tell. Thank you for your time this morning.
LINDSAY TANNER: Thanks very much.
JON FAINE: Lindsay Tanner, Minister for Finance, but Acting Treasurer in the absence overseas of Wayne Swan, who's off to London to attend the G20.
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