Senator the Hon Mathias Cormann
Minister for Finance
TREASURER: Can I start by thanking everyone for joining us here in Perth today and while I'm very pleased to be here with my good friend and colleague Mathias Cormann. As a Sydneysider, I can't help but send my condolences and my respects to all of those who are commemorating the first anniversary of the Lindt siege back in my home town of Sydney. Thoughts and prayers are with everyone engaged with that today.
But here we are in Perth today and we’re awaiting another precious event here in Perth - that is the arrival of Mathias’ and Hayley's next child. That's why we are in Perth today. I'm very pleased to be here with them and have the opportunity to present MYEFO here in Perth. I want to thank those who have made the journey to be here with us here in Perth and for those who will be joining us later by questions by teleconference, I will come to those arrangement when we get to questions.
As the recent national accounts data demonstrated our transition from the investment boom in the mining sector to a more diversified, innovative and people-driven economy is under way. The transition is creating a new and emerging momentum in our economy. Our economy is heading in the right direction, with growing confidence, strong jobs growth and improving business conditions. Australians know this. They are already out there working, saving and investing to make this transition happen - and make it successful.
As a national government, it is our job to provide economic leadership through this transition. To nurture and protect this emerging momentum in our economy and to back Australians as they continue to back themselves through this transition. We achieve this by placing jobs and growth at the centre of our policy agenda. A budget is a means to an end, it is not an end in itself. It is there to support the Government's core objective, that is jobs and growth. In turn, this enables us as we focus on jobs and growth to address the many other challenges that we have as a Government, whether it is the many social issues we have to address through our programs and various activities as well as the national security challenges, but jobs and growth is what enables us to address all of these issues.
Strengthening our nation's finances is a core component of our national plan for jobs and growth. As we go into this summer season and Christmas season, many Australians will jump in the car and they'll head off to their favourite holiday destination. They know where they're going and they know how to get there. There are no short-cuts, there may be some delays on the way with road works or things like this and plenty of people in the back seat - which often happens when I'm driving the family away - saying "are we there yet? Are we there yet?". That's natural. Our path back to budget balance is very similar to that. We need to take a very safe and careful route and one that does not put at risk the very important objectives we have on growth and on jobs.
Our plan on returning the Budget to balance is straightforward. Responsibly restraining expenditure while supporting economic growth to lift revenues. The release of today's MYEFO, the Mid Year Economic and Fiscal Outlook demonstrates that the Turnbull Government is holding to this plan and we are making progress. Despite revenue write-downs of almost $34 billion caused by falling commodity prices, declining terms of trade, weaker global growth and the adoption of more realistic domestic growth outlook, we continue patiently and responsibly on the path to budget balance. I want to stress those words: patiently and responsibly. The underlying deficit is projected to contract from 2.3 per cent to 0.7 per cent of GDP over the Budget and the forward estimates as updated in MYEFO. Government payments as a share of GDP has been brought back to 25.9 per cent as a result of the process we have been engaged with over the last three months and it will fall to 25.3 per cent at the end of the forward estimates period. While real growth in payments have been reduced from 2 per cent at the final Budget outcome for last year at the time of the Budget to 1.8 per cent per annum over the forward estimates, so a decline in the real growth and expenditure.
All policy decisions taken since the Budget, including the cost of Senate negotiations, have been more than offset by the savings measures contained in MYEFO, adding almost $400 million to the Budget bottom line. These results better the average of market expectations that have been reported over the last few days and are the results of the Government focusing on what it can control rather than on the things that it can't. Critically, we have adopted a measured approach that avoids extreme responses that would place a handbrake on household consumption and business investment growth and unnecessarily threaten the fresh new momentum emerging in our transitioning economy.
Alternative responses have consequences. Net exports and household consumption is currently more than offsetting the expected falls in business investment following the mining boom. It is important that this continues to drive expansion in the non-mining sectors of our economy to drive future growth and jobs. Underpinning the fiscal outlook is an Australian economy that continues to demonstrate resilience in the face of strong global head winds. Australia's real GDP growth in MYEFO is forecast to strengthen from 2.5 per cent this year to 2.75 per cent next year with 3 per cent projected growth thereafter. The inclusion of this more realistic outlook on domestic growth should be seen for what it is; that is a statement of confidence in our economy. More importantly, it presents an even more positive story on jobs with an upward revision to the employment outlook and a reduction in the forecast unemployment rate on forecast since the Budget. Recent jobs data indicates that even these forecasts may be too conservative when it comes to jobs. There are 340,000 more Australians in jobs than a year ago, reflecting the transition in the economy to growth in more job-intensive sectors. This is very welcome. The Government and the Australian people know the challenges we face. That is why we are continuing to roll out our national plan for jobs and growth that is backing Australians by opening up trade, boosting innovation, building new infrastructure, modernising the way we deliver products and services at State and Federal levels and working to deliver a more growth-friendly tax system and, of course, strengthening the Budget.
With interest rates at historic lows, a lower exchange rate assisting our export and import-competing industries and capital utilisation on the increase and unemployment falling, the conditions are now right for business to invest and this transition is under way to continue. I will ask Mathias to make some comments, and then we’ll go to questions.
MINISTER CORMANN: Thank you Treasurer. Welcome to the great State of Western Australia and thank you very much for agreeing to release our half yearly budget update here from Perth. Thank you also to our friends in the media for accommodating those arrangements. What our half yearly budget update shows is that we are able to maintain an improving budget trajectory over the forward estimates period by controlling expenditure. Despite the additional global economic head winds, despite further revenue write-downs, the deficit is still expected to decrease over the forward estimates. Government expenditure is now $13.3 billion lower than anticipated at budget time. In fact, spending in three out of the four years over the current forward estimates is lower than was anticipated at Budget time and only slightly higher than anticipated next financial year. As the Treasurer mentioned, spending as a share of GDP is forecast to decline from 25.9 per cent this year to 25.3 per cent over the forward estimates, which is the same as at Budget, despite the need for additional spending decisions in the intervening period. That is because we have stuck to our fiscal discipline. All decisions to increase spending since the Budget, including those made in the context of Senate negotiations, have been more than fully offset by spending reductions in other areas. Policy decisions overall have improved the Budget bottom line by just under $400 million over the forward estimates. Since the Budget, some of the major decisions to increase spending have included an additional $1.1 billion investment in the Roads to Recovery program, which was done to facilitate the successful passage of the fuel excise indexation measure through the Senate. About $900 million has been allocated to fund the increase in our humanitarian program to resettle about 12,000 additional Syrian refugees in Australia and to provide support to about 240,000 displaced people in the conflict zone. There is $621 million in additional expenditure on PBS items, new drugs listed on the PBS principally for cancer treatment. There is a whole range of other measures and all of them, together, have been more than fully offset by savings in other areas. To offset any additional spending, we have been able to achieve savings principally by improving consistency, integrity and efficiency across Commonwealth Government payment arrangements. For example, we have been able to achieve - and you will see that in the document - nearly $2 billion in savings from two enhanced welfare payment integrity measures, using better income data matching to ensure welfare payments are made within the rules. To put that saving into context, we are expecting to spend more than $660 billion worth on Social Security and welfare payments. So that is about a 0.3 per cent efficiency, which will help us achieve that saving. There are various other savings which are listed in the document. Importantly, the spending reductions that we have been able to achieve are sensible, they are measured, they are focused on improving consistency, integrity and efficiency across Commonwealth Government payments, and help us to ensure we continue to head in the right direction as we focus on stronger growth, more jobs and to get the budget back into balance as soon as possible.
TREASURER: Thank you Mathias. What we will do now is take some questions here from those who have travelled and are here from WA. Then I will go to a session where we will take some calls over the teleconference and then we will come back for some final questions from the group here. So, questions?
QUESTION: Treasurer, two: is the promise made by Tony Abbott of a return to 1 per cent budget surplus of GDP dead? And, if the economy is gaining momentum as you have just mentioned, why have you been forced to slice your forecast GDP, household consumption, dwelling investment, non-mining investment and terms of trade?
TREASURER: These are a realistic set of forecasts and there’s new projections also for the economy as you would be aware, particularly over the out years. The story about our economy is that it's growing. It is growing very strongly, particularly compared to other advanced economies around the world. Our Budget position is also stronger than other advanced economies around the world. But you have to be honest about the outlook of the economy, you have to be realistic about it, because that's what Australians are doing. Australians know the challenges that they face in our economy. They know the changes they are having to make to adjust to this transition from the mining investment boom to a more diversified economy. They are going through that process and the Government has the same view as them. We look honestly and soberly and realistically at the outlook and it is a positive one going forward.
The largest impacts on the revenue estimates that are in these documents, actually come from those revisions of projections and forecasts. Now, it may well be that things may improve more than what we have said in this document. That would have the obvious positive impact, but what we have in this document, I think, is a very realistic and honest outlook. It’s one that says, we know where the destination is and we know how we're going to get there and we will arrive there when expenditure is less than revenue.
MINISTER CORMANN: Incidentally, just on that point, this is actually not a new development. Previous budgets and budget updates have clearly spelt out the fact we are facing additional global economic head winds. We are facing additional challenges given what's been happening to our terms of trade. Everybody knows that the price for iron ore is much lower now than what it was when we came into Government. I think you'll find the question that you asked today actually does not relate to a new development in our half-yearly budget update today. That is something that we have previously quite readily acknowledged that it would take us longer to reach that aspiration than what we had previously expected.
TREASURER: If you go to page 18 of the document, I’ll read it to you. "The budget repair strategy is designed to deliver budget surpluses building to at least 1 per cent of GDP as soon as possible, consistent with the medium-term fiscal strategy". That gives you the answer.
QUESTION: Treasurer, the deficits in the [inaudible] are far worse. So you are not putting off difficult decisions into the future?
TREASURER: This MYEFO - and this isn't a budget, this is an update on the Budget - contains savings and other measures that more than account for the spending decisions that have been taken since the last Budget. We will go to a Budget next year and we will look further to what needs to be achieved to keep the tension in the cord when it comes to controlling expenditure. Already, as a Government over the last two years, almost $90 billion worth of savings and other measures have been able to be passed through the Parliament as we have gone about the job of budget repair. This is an unending task and we will continue along that task. What we are seeing as a country is a reduction of expenditure as a percentage GDP from 25.9 per cent down to 25.3 per cent. We have seen a slowing in the growth rate, the real growth rate of expenditure, in this MYEFO compared to where we were just several months ago. I think that demonstrates the resolve of the Government to make the decisions that are necessary but to keep these decisions in balance. We are seeing an emerging momentum coming out of our economy, and you need to keep in balance the objective of growth and jobs and make sure that that is what's driving your decisions. We will continue to work with the Parliament as we have. We still have measures before the Parliament that we would like to see passed which will contribute to the budget task that we have. We see the projection going forward is expenditure as a percentage of GDP falling.
QUESTION: Is there a plan B if the Senate doesn't cooperate with the savings measures you have already counted here, or if the iron ore price continues to fall? Currently it is below the price that's predicated upon in this document. Senator Cormann, the narrative of jobs and growth does not ring true in WA at the moment. So how bad is it going to get in WA?
MINISTER CORMANN: Firstly in relation to your question about the Senate, our Budget - and now updated in this budget update - is our plan. That's the plan we are putting forward, openly and transparently forward for all to see and for all to assess and scrutinise. The Budget is our plan. Of course we have been, as the Treasurer has been saying, been making significant progress in getting our Budget through the Senate. Nearly 90 per cent of all our budget measures to repair the Budget have passed. Yes, sometimes we have got to accept some changes, sometimes we have got to accept lower savings, sometimes we have to accept the savings take effect a bit later than we would like, but we are continuing to work our way through this. We are putting the plan on the table for all to see and we will continue to work with the Senate to give effect to it.
Now of course we are facing some particular challenges in Western Australia right now. The price for iron ore, the price we are able to achieve in global markets for iron ore, went from a high of $180 a tonne to about, you know, $38, $39 a tonne at the moment. When iron ore is about 20 per cent of our national export income, of course you'd expect that to flow through. But the good news is, the good news is that the economy, including here in Western Australia, is actually transitioning quite well from significant resource investment-driven growth to broader drivers of economic activity. We are very confident that, over time, that will show significant progress here in WA.
TREASURER: The destination we are heading towards is a more diversified economy where the impact of things like the iron ore price in the future will not have the result that it has in these figures in the future, because we'll have a more diversified economy. Here in Western Australia, that transition couldn't be more important of the diversifying of the economy. That's why our primary focus is on policies that promote growth and jobs. Whether it is in the tax system, or whether it is in the infrastructure rollout, or whether it is the innovation statement, or whether it's in the trade sector, where we have had the most ambitious trade agenda of any government in recent memory and the runs on the board to back that up. The task is to keep that transition occurring. Australians are making that transition and this plan backs Australians.
MINISTER CORMANN: The trade agenda is particularly important for Western Australia.
QUESTION: The price of US$39 a tonne in this document, is that realistic?
TREASURER: It is based on the four-week average which is the methodology used by Treasury. There are some particular factors impacting on the iron ore price out of China at the moment. There are seasonal issues, there are weather issues, there are some financing issues that go to how credit is being made available at the back end of the year. There are some rather specific figures. This is an update, this is where it was struck at the time of finalising this document. There will be a Budget next year. I remember at the last Budget the Treasurer was criticised for having an overly pessimistic view of the iron ore price and today others will make commentaries whether it is too optimistic. It has a 3 in front of it and I think that's important. Obviously, if things change in the future, then future updates and future budgets will reflect that. The key here is we've got to keep this transitioning occurring in our economy and that is particularly important here in Western Australia.
QUESTION: Treasurer, the falling iron ore price will have an even bigger impact here in Western Australia and on the WA Government's finances, as well as the GST issue, of course. Will you agree to the Barnett Government's request for another special funding injection for this year to offset that?
TREASURER: I will let the Finance Minister respond to that, but I have been on the record now for some time, both in this job and previous jobs expressing some pretty strong sympathy for the way that the current formula has played out. Particularly in terms of Western Australia. I don't think there's ever been any intention on those who designed that system for it to produce the sort of egregious outcomes that it has. Previously the Government had made some changes and some other arrangements, I think to reflect that. Obviously, the Government will continue to consider those sort of things going forward. I've got to say the State Treasurer here Mike Nahan has been a great colleague in working on the issue of growth and jobs. He was recently in Sydney for the State Treasurers' meeting. He gets it, that the way we go forward is to grow the economy. We have to have policies that grow the economy.
MINISTER CORMANN: In answer to your question, earlier this year we made a decision as a government effectively to stop the drop in GST payments to Western Australia. That is why, for the 15-16 financial year, we made an additional allocation from the Federal Government of $500 million towards various infrastructure projects here in Western Australia. We said then we would re-assess the situation once the Commonwealth Grants Commission has made the determination for the next financial year. That is for the 16-17 financial year, as to what other arrangements might need to be put in place to ensure that there isn't a further drop, effectively, in the share of the GST for Western Australia. The broader point I would make, though – sadly for the wrong reasons – but one of the consequences of the significant fall in the price for iron ore means that, over time, the WA share of the GST will quite naturally start to increase again. That is because there will be less revenue comparatively from iron ore-related royalty payments. Over time, if the current trend continues, obviously you would expect that in the ordinary course of events, that WA's share of the GST will start increasing again.
TREASURER: I will take one more here, then we are going to go to the phone calls.
QUESTION: Treasurer, can you explain what the health workforce programs are that will be cut to save over half a billion dollars?
TREASURER: I’ll let the Finance Minister answer that.
MINISTER CORMANN: There is a range of workforce-related programs across Government in relation to health and the aged care sector in particular. What we found is that there is a level of duplication inefficiency and our focus has been on removing duplication wherever we can, on making sure that all government spending, in particular and including this area, is as efficient and effective and as well targeted as possible and the details are, of course, all there in the measure description.
TREASURER: Let’s go to the first phone call question. Who have we got?
MODERATOR: First questions from the Phillip Coorey from The Australian Financial Review.
PHILLIP COOREY: G’day, fellas, how are you?
TREASURER: G’day Phil.
PHIL COOREY: Scott, Mathias, page 32 of the document, and I have got two questions, where we’re talking about the total impact of policy decisions, $3.7 billion, then it says the net budgeting impact is $1.8 and in that total you have got in italics $4 billion contribution from the China Free Trade Agreement. Can you explain what that $4 billion is and how that's arrived at? And just secondly, one of the savings, the aged care provider funding, can you tell us what that means exactly to people seeking aged care, what they will no longer be entitled to?
TREASURER: I will let the Finance Minister deal with the second question. On the first question he might want to add to that as well. There was a provision made in the Budget for the revenue impact of the China Free Trade Agreement and that has been taken into account in these documents but that 4115 also includes the net contribution of the outcome of the policy saves and revenue measures - predominantly saves - which has been added to the bottom line. So, there is a netting-off in that, Phil, of the provision made for the impact of the China Free Trade Agreement which has an impact, obviously, a projected impact on excises and various other things that come through the system. That has been netted off by the provision that was made for in the Budget. That's why we talk about there being a $33.8 billion impact of the parameter estimates on the Budget bottom line and particularly on revenues and the issue of the China Free Trade Agreement is netted-out when we get to those figures and Mathias will add to that.
MINISTER CORMANN: In relation to the China-Australia Free Trade Agreement, it is exactly as the Treasurer has indicated. We previously made a provision which was reflected in the Budget bottom line by way of estimate variation in what is called the heads of revenue. The $4.1 billion figure relates to the expectation of lower revenue from tariffs. Of course, that is going to be a benefit that will be reciprocated to Australian businesses exporting to China. We have, as part of the Free Trade Agreement, reduced various tariffs for businesses exporting from China to Australia which is of benefit to Australian consumers, it is of benefit generally to the Australian economy but consistent with the charter of budget honesty. Second round affects in terms of economic growth are of course not factored into costings. In the circumstances, this is not crystallised as a policy decision and we made a judgment that in the circumstances this is the appropriate treatment for this sort of measure. When it comes to the aged care provider funding, expenditure in this area, in this particular area, is actually expected to increase by about a billion dollars as a result of essentially the application of a technical formula, methodology, through the aged care funding instrument which goes to assessing complexity of various health needs of residents in aged care homes. What we are doing here is to manage that exposure by making some adjustments to the way the formula works, given that expenditure is running about a billion dollars overall above expectations. So, we are seeking to manage that by achieving an efficiency of about $472 million there.
TREASURER: The expenditure measures – the savings measures that are in this document focus very much on improving the integrity of systems, efficiency of systems, better targeting, better constraining the growth in expenditures and that – there are some 180 plus measures in this document. I think that indicates that the level of detail that we have been through over the last three months to ensure that we are able to cover off the additional commitments which the Finance Minister went through, but to do that, there have been some headline items there which obviously people have focused on, but there is a large number also of very detailed work which is being done to ensure we are in the position we are in.
Next question on the phone?
MODERATOR: Our next question comes from David Crowe from News. David, please go ahead.
DAVID CROWE: G’day Treasurer and Finance Minister. A big picture question, in the press release, it talks about adding $400 million to the bottom line over four years. That's the net saving. At a time when the Commonwealth spends about $400 billion a year, is it really not possible to find any other ways to scale back in the Federal Government?
TREASURER: David, this is a budget update, it is not a Budget. The Budget will be the next time when we work through these measures again. The other thing – I should stress that means that net figure, David, is after you've netted out some $10.2 billion – $10.6 in saves and some $10.2 billion dollars in spends that have also had to be addressed. So, what we have done is identified actually over $10.5 billion worth of savings in this process which is obviously a much bigger figure than the $400 million net contribution to the bottom line. This is an exhaustive process. Over 180 individual measures were necessary to identify that. We also have some $13 billion in measures that still sit before the Parliament which we remain absolutely committed to. Yes, we've been successful in legislating almost 90 per cent of the more than $100 billion worth of saving and other measures that have been improving the Budget position over the last few years. So, there is already significant issues there, around Family Tax Benefit payments which are before the Senate and many other important measures and we intend to pursue those along with the additional ones we have identified in today's document.
MINISTER CORMANN: And may I say that this is entirely consistent with the fiscal strategy that we have laid out in the Budget and indeed in this Budget update. That is, wherever there is an identified need to increase expenditure in one area or to make policy decisions with a negative impact on the budget bottom line, that these sorts of decisions have to be fully offset by decisions that reduce spending in other areas or that improve the budget bottom line, so that the effect broadly of policy decisions is budget neutral. Of course, we have done better than that. What I also would just remind you of again, is that expenditure in this budget update is actually $13.3 billion lower than had been anticipated at Budget time. So, if you look at the trend and where we are heading, we are clearly heading in the right direction.
TREASURER: Two per cent real growth down to 1.8 per cent real growth is not easily attained and it has been attained through the process we have been engaged in. Next phone question.
MODERATOR: Our next question comes from Mark Kenny from The Sydney Morning Herald.
MARK KENNY: Good afternoon gentlemen. I wonder if you could explain the decision, there is $650 million saving there in the Medicare benefit schedule changes to diagnostic, imaging and pathology services. What sort of impact is that expected to have on people, obviously, it is having a pretty significant impact on savings. Can you just explain what's behind that policy?
MINISTER CORMANN: It is not expected to have an impact on people. What we are seeking to do here, in the main, is make the benefit arrangements consistent with those that apply in the context of benefits for GP services, so there is what is described as a bulk billing incentive payment in relation to GP services that is limited to concession card holders, children under 16 years of age and so on. In relation to the bulk billing incentive payment, for diagnostic imaging services, we are essentially making it entirely consistent with that. We thought that that was an anomaly here. In relation to pathology services, we are removing the bulk billing incentive payment because there is a very strong competitive sector here, there is about 89-90 per cent bulk billing takes place as we speak in relation to services provided through the pathology service providers. So, there is essentially not the additional benefit provided by continuing that arrangement in place. That is essentially the main driver.
TREASURER: We are applying the same targeting that applies to doctors and bulk billing of doctors to this area. The previous government allowed this programme to get out of control and to go beyond what we would consider was its original design. When you are dealing with the Budget, you need to make sure not just that your revenue is fit for purpose but your expenditure is fit for purpose. There are clear purposes around bulk billing incentives. When they are out of alignment with the way the rest of the system works, that's how you bring your budget back to balance. Back to the room, one or two more, then we'll have to call it quits.
QUESTION: Going back to WA, the specific measure that Mike Nahan has put to yourself and to the Prime Minister is to take less royalties from the north-west shelf in exchange for a bigger slice of the GST. I get the fact you have talked about sympathies, I have listened to Mr Cormann talk about the fact that eventually we will get more GST, I'm just not getting the vibe that you will actually commit to any specific measure for this financial year?
TREASURER: Our record, as the Finance Minister outlined in terms of the decisions we took and the support we provided previously, we have met with Mike Nahan about that. I met with him again about it just last week. So, we are still taking that under consideration. There are also issues to work through as to how that would potentially impact on other states and territories and their situation and one of the things I think we were able to do last time was to be able to provide a recognition to WA of the situation without penalising other states and territories at the same time. There are a lot of moving parts on this. We will continue to assess those various moving parts.
MINISTER CORMANN: That is of course why earlier this year we did make the decision as a Commonwealth to provide that $500 million in additional funding for WA outside of the GST shared pool. What we have indicated at the time - which is a bit inconsistent with the way you framed your question - what we indicated at the time was that we would revisit that decision and have another look as to what might be required when we know what the Commonwealth Grants Commission determines the sharing arrangements to be for 2016-17. In the meantime, of course, the Treasurer and I and indeed the Prime Minister, we are all having regular conversations with the Premier, with Mike Nahan the Treasurer here in Western Australia, on how we can work together to make sure that the arrangements are as fair and equitable as possible. The national government does have to consider these things in a national context.
QUESTION: When do you expect a decision to be able to be made?
TREASURER: We will make announcements about any decisions on that when we have gone through the process.
QUESTION: What sort of proportion of the new measures you announced today will you need to get through the Senate?
TREASURER: There are a variety which are administrative and executive matters and also legislation. They'll be presented as we go back into Parliament next year and so you'll see that very plainly at that time. I would simply say to the Parliament that we do have, and remain having in front of us a significant budget challenge. There is no question about that but the way we go about it I think is continuing to make this very workman-like progress on this, year by year. I'm pleased that this year's Budget position as forecast will be better than last year Budget position and it will be better the year after that. That shows, to use the analogy I used before, we are making progress towards our destination, we are not there yet, but we are not going to take detours, we are not going to take short-cuts. We are not going to put the safety of the passengers at risk. Those passengers are growth and jobs of Australians. That's why we will remain very focused on this workman-like approach to delivering on this task. I think that's what Australians expect of the Government. They don't think there is any magic solution to this. They don't think there is any one save or one tax that will solve this problem because their situations are just as complex and they don't see and easy answers or simple answers to the things they face. So, I think, with the Australian people, we are very much on the same page. I don't think they would like to see more extreme positions adopted in how we deal with this issue. I think they would very much appreciate the very patient approach we are taking to this because that is what, at the end of the day, is going to preserve jobs and increase growth.
QUESTION: Treasurer do you think we are on the same page as the ratings agency [inaudible]
TREASURER: I think it is for them to make their own judgments but, I think, what you see in this document is the Government continuing to keep to its plan. That is to control expenditure and put in place policies that lift revenue. That shows that we are making progress on all the key indicators. Net debt peaking is projected to fall as percentage of GDP. Expenditure as a percentage of GDP is projected to fall over the Budget and the forward estimates. I think in this document and this process the Finance Minister and I, and I thank the other members of the ERC for this process and my colleagues as we work through Cabinet. We have remained committed to the task and I think that is one of the key things that is often looked at by the agencies. What is the forward plan? What is the destination, what's the path forward? As a Government, I think we are showing very clear economic leadership on these issues. The plan is set out, we have shown the flexibility in the past already and even more recently with the passage of measures just before the Parliament in the final sitting weeks of this year, to be able to work with the Parliament to get matters through, to be able to keep committed to the goal. So, as we leave you and I wish all of those who may be looking on, particularly families out there going on their holiday road trip, that they have a very happy and safe journey and once again we pass on our sincere condolences to all those back in Sydney today who are remembering a very, very tragic day.
Thank you very much for your time.