KIERAN GILBERT: With me now, Liberal frontbencher Senator Simon Birmingham and Labor MP Andrew Leigh. Andrew Leigh, thanks for your time. I’ll start with you if I can. On the budget, Joe Hockey is saying that, well, the Disability Insurance Scheme, if the Government is going to pursue a Medicare-style levy it’s only going to fund a fraction of the overall cost. You’re going to have to find a lot more than just a levy, aren’t you?
KIERAN GILBERT: A lot of economists believe that a levy is the right way forward. The Productivity Commission’s recommended it, Saul Eslake from the Bank of America Merrill Lynch also believes that, if you’ve got an insurance policy, you need a premium. Do you see the merits in that case and, I suppose, why did the Treasurer ever rule it out in the first place?
ANDREW LEIGH: Well, I think, Kieran, in an ideal world, consolidated revenue is where you draw on for all of your schemes but as we’ve seen this substantial hit to revenues – revenues down from 24 per cent of GDP [gross domestic product] in the mid-2000s down to now 22 per cent of GDP. That’s a substantial reduction. I mean, you’ll hear from people on the other side of politics that the dollar amount of revenue coming into the Commonwealth has gone up but the fact is it hasn’t kept pace with the demand for things like the pension, things like health expenditure and of course a growing population so that’s why we’re in the position we’re in now.
KIERAN GILBERT: Senator Birmingham, Every Australian Counts… that campaign on a disability insurance scheme believes that a levy is the way forward. What do you make of this debate?
SIMON BIRMINGHAM: Well, Kieran, we want to see the NDIS [National Disability Insurance Scheme] implemented and we’re very concerned about the fact, though, that this Government has now taken it to a stage of… having ruled out a levy, is now considering a levy, and this is, of course, sadly politicising something that should have been done in a far more sensible way. We have, for a long period of time, called for a Joint Parliamentary Committee that could work in a bipartisan way to get the NDIS implemented and to deal through these issues. Instead, now, at the eleventh hour, as the Government is creating its own budget crisis and it’s a crisis of its own creation because the truth is, though Andrew wants to talk about revenues from a decade ago… the truth is this Government will still have more money this year than they had last year, they’ll still in fact have around $25 billion or so more in revenue this year than they had last year, so revenue is significantly up over the year. It’s the Government’s spending that is the problem and it’s a tragedy the NDIS has been caught in the middle of this vortex.
KIERAN GILBERT: That’s the point that was made repeatedly by Joe Hockey this morning and yesterday and Senator Birmingham just now on this revenue increase of 7.6 per cent year on year, so you’re saying that spending has outstripped that. Is it time that politicians, policymakers, rethink the way they do budgets?
ANDREW LEIGH: But, Kieran, the point I was making was that demands of our society are outstripping that. The Health expenditure has gone up…
KIERAN GILBERT: Do expectations have to change?
ANDREW LEIGH: Well, I think we have to make responsible savings measures. Ever since the global financial crisis, every new spending measure Labor has made has been offset by an appropriate savings measure but it’s just not helpful to talk about the dollar amount of revenue. What you need to focus on is revenue as a share of GDP because that brings into mind the increase in the demand for Health expenditure, the increase in the overall population and so, taken as a share of GDP, our tax revenue is well down on what it was in that boom period of the Howard years.
KIERAN GILBERT: Senator Birmingham, that specific point there… if you can respond to that specific point about the revenue as a share of GDP as opposed to simply the dollar amount which has been referred to the last day or so.
SIMON BIRMINGHAM: Well, Kieran, what is a good thing is that the Australian economy has kept growing and that’s why we should be in a surplus position and when the economy grows, if it grows at a particular rate ahead of the rate that taxation grows, then the revenue as a share of GDP will shrink. That is actually a good thing if that happens and governments should be able to manage in those circumstances. Revenues are still growing – that is an absolute fact. What is a complete bunkum utter untruth is when Andrew says that the Government has banked savings to offset new spending initiatives. That’s just not true. The Government has claimed to have revenue from its mining tax, made all these spending decisions based on it and not had the revenue there. The same thing is unfolding with the carbon tax. We see in other areas, where the Government’s shuffled around the timing of when it’s going to get its revenue from spectrum sale, so this Governments has played a lot of games on the revenue side, has made a lot of assumptions on the revenue side and those assumptions have simply been wrong. Their problem is they’ve made all the spending decisions based on wrong assumptions of their own making.
ANDREW LEIGH: … the Coalition also need to recognise that the current fiscal condition is very challenging for them. For example, they need to recognise that they’re going to fund a paid parental leave scheme with a levy on company tax… that the huge reduction in company tax revenues is going to have an impact on that budget costing.
KIERAN GILBERT: Let’s get to Senator Birmingham on that point, that reality that we saw yesterday. It is going to affect the Coalition if in government and on that specific policy.
SIMON BIRMINGHAM: Kieran, we don’t pretend that it’s going to be easy to get this budget back into shape, especially not after the type of spending decisions the Government’s taken. We know it will be hard. That’s why we’re being upfront about having to make some difficult decisions. We know that it’s not popular to say we’ll axe the Schoolkids Bonus. Those people who are getting that money in the bank don’t like the fact that we’re going to cut that but we recognise these types of savings decisions must be made and we will make those difficult decisions, just as we outlined in our costings at the last election, we’ll outline them again in our costings at the next election. Most importantly, we will get the size of the bureaucracy under control as well. We’ve seen phenomenal growth in the bureaucracy. I know it’s Andrew’s own electorate there, much of it, but we’ve seen huge growth in the size of our Health bureaucracy, our Education bureaucracy… despite the fact they don’t run any hospitals or schools. These are areas where government has to keep a really tight rein on spending.
KIERAN GILBERT: Senator Birmingham, Andrew Leigh, thank you for your time. We’re out of time.
ANDREW LEIGH: Thanks, Kieran. Thanks, Simon.
SIMON BIRMINGHAM: Thank you very much. Cheers.