ROSS GREENWOOD: Now I did say that we would speak with Lindsay Tanner, the Finance Minister, and he joins us now on Money News. G'day there Lindsay.
LINDSAY TANNER: Good evening Ross.
ROSS GREENWOOD: Now look, can I just say there's a whole bunch of things around the place and I know you had opinions about a few of them. I want to start with the obvious one that's sitting out there at the moment, and that is you're in the budget process right now and it's fair to say each of the departments is coming to you and the Treasurer, and you're really trying to balance the budget, work out where it sits. How is that process proceeding, because there would be enormous pressures on you at the moment in terms of everybody wanting to spend more and a lot of people not wanting to cut so much. But, of course, your job is to make certain that they're doing both of those things.
LINDSAY TANNER: It is pretty tough Ross, but I think it's always been like that. And it's tough this year, because we've had the stuffing knocked out of our revenues by the global financial crisis, that's driven the budget into fairly substantial deficit and that, of course, means borrowing and debt. And we're really committed to getting the budget back into surplus and so, particularly in an election year, it's tricky to really put the screws on, but we have to do it and make sure that we get back to surplus as quick as we can.
ROSS GREENWOOD: Yeah, because I was going to say that is the difficulty isn't it, and you're sitting in the Finance Minister's seat. You and I have spoken about this before. The difficulty certainly going to back into those budgets that were done by the previous Labor Government, the Keating Government, after the '87 share market crash, and then, if you like, the refloating of the economy through the economic stimulus. Of course, the budgets were not cut. Now you're in the same predicament but, of course, you've got an election coming and quite clearly you've got a political process that says that you need to keep the stimulus going. You, as the Finance Minister, have to really try and rein it in. Which comes first, the economic commonsense, or the political will?
LINDSAY TANNER: Well look ultimately, I think the proper management of the economy always has to take priority. But we can't be naive about these things, political pressures do play a part and it's a democracy so we shouldn't complain about it. It will always be a bit up to individual opinion, of course, Ross, that what you see as a tight budget might be very different from what I see as a tight budget. But we'll just get on with the business and I have every expectation we'll produce a strong budget that will set us back on the path towards surplus. And frankly, I think the days when the big spending behaviour of politicians used to win votes, I think those days are over. I think people are a little bit awake to that and they realise that it's not such a great thing.
ROSS GREENWOOD: And the other thing also, what about the suggestion from Macquarie Research saying that the budget could be back in surplus by 2011, 2012 on the back of corporate tax receipts. Is that something that you would even sort of countenance at this stage?
LINDSAY TANNER: Look, I'd just urge people to take a cold shower when they're reading those kind of reports. I'm not in a position to give you a direct response that says yes, that will happen, or not it won't, because obviously we get updated budget figures probably, you know, over the next month or two that will ultimately be published in the budget. But I'd have to say I'd regard that outlook as extremely unlikely. The global economy is still very fragile. We've had the Chinese Premier just speculating on the risks of a double-dip recession only a few days ago. We've still got growth running below par in Australia and although unemployment has been kept pretty low, people's hours of work have shrunk a bit, so although I think the outlook's obviously a lot more positive than many people were anticipating a year, 18 months ago, the notion that suddenly we're going to flick back into all systems go and, you know, the budget's going to roar back into surplus miraculously overnight, I think just don't really pass muster from where I sit.
ROSS GREENWOOD: Of course, the Chinese Premier Wen Jiabao did make those comments about the world potentially falling into a double-dip recession. On the other side, they came almost a day after Timothy Geithner, the US Treasury Secretary said that he believes that, in fact, the US will come out of the downturn faster than most other developed economies and stronger. Those two commentaries appear to be at odds with each other. Where does Australia and the Government currently sit on this?
LINDSAY TANNER: Look, I'm not sure that I'm expert enough to really comment on that Ross, but the US typically tends to be very resilient and it tends to recover quickly from economic shocks. So I suspect that the Treasury Secretary may well be right there and it's difficult to really, from the vantage point in Australia, to know enough to have a strong view on it. But the American economy is something that, even when it takes a bit hit, it tends to recover relatively quickly whereas, of course, there is a range of other issues in Europe, including lower population growth, for example, that will tend to make it harder for Europe to recover. And they've got some entrenched problems in countries like Spain and other parts of Europe that will take some time to get over, particularly the collapse of construction booms and, in some cases, enormous budget deficits in the UK, for example.
ROSS GREENWOOD: Can I take you to another subject, of course, this is the former Prime Minister, your former Prime Minister, of course, Paul Keating. He, of course, was the architect - if you like, the grandfather now of Australia's compulsory superannuation scheme. He continuously says that the superannuation contribution should be raised from nine per cent to 12 per cent, on the way potentially to even 15 per cent. The Government seems reluctant to do that, despite even surveys that say that the public - more than 60 per cent of the public would be willing to see their superannuation rise to 12 per cent. Why is this government so unwilling to, if you like, continue to take up the cudgel that Paul Keating created for it in the first place?
LINDSAY TANNER: Look, I'm always very cautious about that survey material Ross, and I haven't seen the particular ones you refer to. But people tend to get asked questions without being given the flip-side of the choice to consider at the same time. So, for example, if you ask people a question would you support a three per cent increase in the compulsory super fee, understanding that that three per cent is going to effectively come off your wages, and that if it goes into superannuation, it means that you miss out on what otherwise would have been a three per cent increase in your wages, then I think you might get a different response. People do these surveys without actually explaining to people where the money's coming from and, in effect, ultimately it's only us, it's all Australians contributing, and so it's not money falling out of the sky and the fact that your employer is forced to put in an extra three per cent in your super means that money that otherwise could have gone into your wages, is going into your super basically.
ROSS GREENWOOD: But let's say, for example, - and there you see the ACT, you're pushing for large - low wage earners to be given a catch-up pay rise of around three per cent. Wages have grown about three per cent this year. The inflation rate's gone up by around three per cent. If that wage rise, instead of going into a person's pay, were frozen and went into their super fund, I think most people, as the accumulation phase of superannuation was coming, would have said; well, fair enough, I can understand that that money is actually there for my future. Is that not something that philosophically this government believes in?
LINDSAY TANNER: Oh look, look, there is some merit in those kind of arguments, you know, in a theoretical sense Ross. But the inflation rate's actually dropped to a little over two per cent and wages growth has been at a very low level for some time, of course, inevitably, influenced by the impact of the global financial crisis. There's going to be, particularly at enterprise bargaining levels, I think some potential for that kind of thing to be pursued into the future. And we don't necessarily believe that the case has been made for an across the board increase beyond the nine per cent. We've got some major inquiries reporting to us, the Cooper inquiry and, of course, the Henry Review on issues that really do touch on these things. So there's a bit of a debate in front of us, but I just think it's important to emphasise that the issue's not as simple as some people portray. Ultimately, yes, you'll get people answering surveys saying, you know, would you like - how much would you like to live on in retirement. Unless you ask them how much are you prepared to set aside now, you'll get inflated answers to how much do you want in retirement. And so, yet surveys [indistinct] really tell you meaningless outcomes I think.
ROSS GREENWOOD: Just a question; Henry and Coopers reports, when do you believe that they'll get - they'll fall due?
LINDSAY TANNER: Oh look, obviously I can't answer that question. [Laughs]
ROSS GREENWOOD: Well you must have some idea as to when they're going to come? Can I make a - would it be reasonable to suggest that the Henry Report could come and be coinciding with the budget, that would be early May?
LINDSAY TANNER: Well look, I'm not in a position to answer other than that the Treasurer's obviously indicated that it's going to be sooner rather than later.
ROSS GREENWOOD: Well if it dropped with the budget, then obviously there would be a lot of stuff to digest at the same time?
LINDSAY TANNER: Oh, well, that's theoretically possible but, you know, it could be any time when - so I can't speculate.
ROSS GREENWOOD: And what about the Cooper report on superannuation?
LINDSAY TANNER: Oh look, just genuinely, I don't know Ross. I'm just not in a position to give you - it's not part of my responsibility.
ROSS GREENWOOD: No...
LINDSAY TANNER: I've got some idea of what's going on, but haven't discussed...
ROSS GREENWOOD: No, that's fine.
LINDSAY TANNER: ...that with the relevant minister.
ROSS GREENWOOD: Finally, I want to talk to you about - and this is about what you plan to do to cut red tape for business. Now the Productivity Commission says that, you know, the types of inefficiencies that are in the system could effectively cost the country four per cent of economic output each year, you know, $40 billion. The truth is that every government since Adam was a boy has said it will cut red tape. Is this simply mouthing words, or is there genuine hard things that you can do to try and recoup some of that $40 billion.
LINDSAY TANNER: Oh no, we're getting some serious runs on the board Ross, but it's hard going. We're working with the states to get uniform national regulation in a whole range of areas, so we don't have these ridiculous situations where something's legal in one state and not in the other and where if you're a Victorian plumber you have to get a New South Wales licence if you want to practice your trade on the other side of the border. Now that's a process that's taking several years. We're well into it. The states have frankly been very constructive and that will make a big difference to a lot of businesses. We're also doing some work on some specific things in our Commonwealth area and we've just announced the strengthening of the regulatory impact state process that applies at the national level. John Howard introduced it and we supported it. The system's been in place for three or four years and we've undertaken a bit of re-examination, consulted with the Business Council and made a number of modifications just to make it work better. So it's always an uphill battle, let's not mince words about it. Governments tend to exist to regulate and the pressure's from the general public to regulate are always very strong, so pushing back against that to get better business outcomes is always difficult. But I'd argue we are getting some runs on the board. There's a lot of medium-term stuff happening that will deliver benefits over the next few years and we will be judged by all those outcomes.
ROSS GREENWOOD: Look, we appreciate your time always on Money News Lindsay Tanner and, as I say, it's one of those times we know is busy for you and we do appreciate you talking to us.
LINDSAY TANNER: Happy to be with you again Ross.
ROSS GREENWOOD: Many thanks Lindsay.
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