Transcripts → 2015


Joint Press Conference - Show us the Money: Labor's $52 Billion Black Hole

Senator the Hon Mathias Cormann
Minister for Finance

The Hon Josh Frydenberg
Assistant Treasurer


Date: Thursday, 14 May 2015


MATHIAS CORMANN: This week we delivered our next instalment in our plan for a stronger economy, for more jobs and to get the Budget back to surplus. Tonight, Mr Shorten and Labor have the opportunity to present their alternative plan. It is in our national interest for Labor to support our measures which strengthen growth, jobs and opportunity. Returning the Budget back to surplus on a credible path is an important part of our plan to strengthen Australia. Tonight, Mr Shorten has to demonstrate that he has what it takes to make the necessary decisions in our national interest.

Firstly, he needs to show that he is prepared to deal with the legacy left behind by the previous Government in which he was a senior member. Tonight, specifically, he will have to show us the money. He will have to explain how he is going to pay for his new spending and how he is going to pay for not proceeding with the many savings which he continues to oppose. Because right now, Labor has a $52 billion Budget black hole.

What we are releasing today is an update on the fiscal impact of Labor’s decisions to block savings, Labor’s decision to block savings and revenues measures that they themselves initiated and Labor’s calls on the Government to restore spending in areas where we have been able to implement savings. So what the detailed information that you will have in front of you shows is that Labor right now is blocking $17 billion in savings and revenue measures which were put forward by the Government. These are updated numbers. $6.5 billion in savings and revenue measures that Labor themselves initiated in their last Budget in 2013. These have also been updated for the effect over the 15-16 forward estimates. And how they are going to pay for the restoration of more than $31 billion in spending from savings the Government has already banked. This includes $18 billion in foreign aid spending that Labor says we must restore. If Bill Shorten doesn’t like our savings, he will have to show us his savings. As you can see in this graph, right now, while Labor has come up with a series of proposals to increase taxes, including taxes on people across Australia saving for their retirement, he has actually identified so far zero dollars in spending reductions. There are zero dollars in spending reduction proposals from Labor on the table right now. And that at a time when Labor has a $52 billion Budget black hole. Bill Shorten has to explain whether his plan is to just increase taxes by $52 billion to make up the shortfall, whether he wants to add $52 billion to the deficit over the forward estimates or what he wants to do. If he wants to achieve that consolidation, if he wants to achieve that saving by spending reductions and he doesn’t like our spending reductions, he has to show us the money. He has to show us where those savings are going to be coming from. Mr Shorten in recent weeks and months and in fact since our election to Government has been all politics and no substance. Tonight, Mr Shorten has the opportunity to show that he is a leader and that he has what it takes to make the necessary decisions in our national interest, that he has what it takes to make the necessary decisions to strengthen our economy, to create more jobs and to get our Budget back to a more sustainable foundation for the future. Over to you Josh.

JOSH FRYDENBERG: Thanks very much Mathias. Well tonight Bill Shorten has to come clean. If he has any credibility, he needs to accept responsibility for the debt and deficit disaster that he and the Labor Party created. Yesterday, on Neil Mitchell's radio show in Melbourne, he was asked 13 times to accept responsibility for the fiscal mess he created - each time he denied the opportunity to do so. We know that Labor's only solution is to increase taxes, and he came out, Bill Shorten, against our Budget before it was even delivered. As Mathias said, the Leader of the Opposition is all politics and no substance. So tonight he simply has to answer just one question: how will he and the Labor Party fix the mess that they created?


JOURNALIST: Senator Cormann, you’re talking about the numbers and that is understandable. There were 50 or 60 people yesterday in the Senate courtyard, different people, Indigenous groups, ACOSS, talking about the unfairness of last Budget confirmed in this Budget. Now there are key measures now, there are big debates on: the parental leave, the Family Tax Benefit. How do you explain to Australians who can’t afford things that you’re more concerned about this money than you are about their lives?

MATHIAS CORMANN: We have put forward a responsible, long term plan to strengthen our economy, to ensure that we can create more jobs and to get the Budget back to surplus on a reasonable and credible trajectory. The measures that we have taken in this Budget are responsible, they are measured and they are fair. We have put forward our plan. Now people will discuss and argue and make judgment about our plan but our plan is on the table. What we are saying to Bill Shorten is, if you don’t like our plan, if you don’t agree with any of the elements in our plan, show us how you would do it differently. Because particularly given that Bill Shorten is starting $52 billion behind. It is important for our economic fortunes as a nation to get the Budget back to surplus as soon as possible. We have laid out our plan on how we propose to do it. Tonight Bill Shorten has to explain how he would do it if he doesn’t agree with our approach.

JOURNALIST: Senator, if tax increases are so bad, are you tempted to lead by example and immediately abolish the deficit tax you increased last year and the re-indexation of the fuel excise? Why is that allowable and Labor is not allowed to increase taxes?

MATHIAS CORMANN: We are not saying that they are not allowed to increase taxes at all. What we are saying to them is tell us what you’re planning to do? What we are saying is that we have put our plan on the table, revenue measures and savings measures. Over the period since our election, most of the Budget repair effort has been on the spending side of the Budget. We have worked to control spending growth and our plan is working. What I am showing to you here is that so far, all of the effort, all of Labor’s effort is on the revenue side. Labor is trying to be a bit smart by presenting the figures on a 10 year basis, trying to make them look larger than what they really are. We taken Labor’s word for their costings, we have taken them on trust which some people would say is perhaps not a sensible thing to do, but we have used their numbers, put them over the forward estimates period instead of over the 10 year period. So you can see that the additional spending commitments and the cost of the decisions that they have taken so far is about $55.8 billion. The only offset against that are revenue measures of $3.8 billion. There is not a single spending reduction proposal that has come forward from Bill Shorten since his election as leader of the Opposition.

JOURNALIST: Minister, looking at your numbers, how can you claim to have spending under control when the spending is going to be 25.9 per cent of GDP. Only seven times in Australia’s history since 1971 has it been higher than that.

MATHIAS CORMANN: We inherited a spending growth trajectory that was taking us to spending at 26.5 per cent as a share of GDP by 23-24. We inherited a spending growth trajectory at 3.6 per cent on average per year above inflation and we reduced that down to 1 per cent in our first Budget and to 1.5 per cent in our second Budget. We are still controlling spending growth compared to what the trajectory was under Labor. Importantly, Federal Government spending as a share of the economy is reducing over the forward estimates down to 25.3 per cent. There is more work to be done. We are committed to doing that work, but at least we’re heading in the right direction. At least we are making progress. At least we’re making an effort on the spending side. Bill Shorten is making absolutely no effort on the spending side. He is making a little effort on the revenue side, but look at the gap. Look at Labor’s Budget black hole.

JOURNALIST: Minister, just to be clear on childcare and other measures in the Budget and last year’s policies. How are you planning to present them? Will the childcare package be standalone legislation or are you planning on putting things like PPL changes and the Family Tax Benefits into the one legislation?

MATHIAS CORMANN: We’ve been very clear. We want to make an additional significant investment in facilitating better access to simpler, more affordable, more flexible childcare for Australian families. That is because we want to help families with getting into work, staying in work, being in work. This is our jobs for families package. What we have also said is the only way we can make that additional investment, the only way we can make the additional spend is if we can pass savings to pay for it through the parliament.

JOURNALIST: Will those savings be in the one Bill?

MATHIAS CORMANN: The logistics in the parliament will work their way through over the next few weeks and months. Let me just say, we will not proceed with the spending unless we get the savings. The process through the parliament will ensure that there is no additional spending unless there are the additional savings to pay for it.

JOURNALIST: Minister, has the Government now banned the term double-dipping from its vocabulary and was it a mistake for Minister’s to use that term?

MATHIAS CORMANN: The measure in the Budget in relation to parental leave pay is based on a very simple proposition. Most women across Australia have access to one scheme, which is funded by the taxpayer. Some women have access to two schemes and what we’re saying is it’s great if you can get access to a more generous scheme through your private or public sector employer, but if you have access to a more generous paid parental leave arrangement, then we don’t think it’s fair to all of the women across Australia who have only got access to one scheme, for the taxpayer to be required to pay for access to a second scheme. That is a very simple proposition and from our point of view it is a fairness measure in the system.

JOURNALIST: Is that double-dipping?

MATHIAS CORMANN: We actually went to the last election, as part of our paid parental leave policy, as part of the costing for our paid parental leave policy, the term double-dipping was there then in the lead up to the last election. I’m a bit interested that everybody is focused on it because at the time when we explained very clearly our costings in the lead up to the last election we said then that we would pursue a measure like this in order to help repair the Budget.

JOURNALIST: Senator do you think you need a better approach to the Senate this time around?

MATHIAS CORMANN: The question today is for Bill Shorten and the Labor party. Are Bill Shorten and the Labor party going to stand up for the national interest or are they going to continue to play politics. Does Bill Shorten have the strength to convince Labor to do what is right or is he just going to roll over and let…interrupted

JOURNALIST: But with respect you’ve already said that. I’m asking a different question. I’m asking if you need a different approach to the Senate? Still a valid question today, you’ve made that point.

MATHIAS CORMANN: The country needs a different approach. The country needs a different approach from Labor. This is not a question for the crossbench today. Tonight we’re hearing from the person who presents himself as the alternative Prime Minister. Tonight Bill Shorten has to explain, given that he was part of the government that left behind a pretty challenging legacy. What is his proposal to help deal with it? The best thing that Bill Shorten and Labor could do is to support our plan to strengthen growth, to create more jobs and to repair the Budget. And of course if Labor did that we wouldn’t be having a conversation about the crossbench.

JOSH FRYDENBERG: Let's just remember here that Bill Shorten, when in Government, went out and sent a newsletter to his constituents that they had delivered a surplus. Now this was something that he did, this was something that the Treasurer and now the Shadow Treasurer, Chris Bowen, did as well.

MATHIAS CORMANN: One more question.

JOSH FRYDENBERG: Labor has no fiscal record to stand on. And tonight they have to explain how they're going to fix their own mess.

JOURNALIST: Can you let us know whether your partner received two paid parental leave schemes, are they double-dippers?

MATHIAS CORMANN: My wife you mean? The mother of my little two year old girl complied with all of the systems that are in place.

JOURNALIST: So did she get two schemes?

MATHIAS CORMANN: I’ve got to check with my wife.

JOURNALIST: Can I ask you an important matter on bio-security Minister. Should Johnny Depp’s dogs be terminated?

MATHIAS CORMANN: I think we might leave it there.