TOM CONNELL: Well, we still don’t know when the election is going to be held. It appears as though August 31 is off the table but we do know it’s close and in times past that usually meant a sweetener or two for voters. This time around, though, they’ll be asked to take on for the country. The Expenditure Review Committee is meeting today. Also later on today Cabinet will be meeting. Their task will be to find $20 billion in savings, possibly cuts to programs or increases in tax, to help pay for a reported $20 billion write-down in revenue since the May Budget and that’s before you factor in the ‘PNG [Papua New Guinea] solution’. We haven’t found out how much that’s going to cost. We do know, though, that will also have to be factored in when the Government gives its economic update later on this week.
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TOM CONNELL: … I’m joined by our political panel. Today we have Graham Perrett, Labor backbencher, in Brisbane and also shadow parliamentary secretary Simon Birmingham. He’s in Melbourne. Gents, thank you both for joining me today.
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TOM CONNELL: Simon Birmingham, I’d like to go to you. The Coalition’s saying now, because of these same write-downs, the $20 billion in write-downs, that they don’t want to go through the costing process that was suggested. Instead, they’re going to go with an independent process. Now, the last time that happened, there was an $11 billion hole. The accountants responsible were fined because of issues with the way they actually handled that. Hasn’t the Coalition learnt their lesson?
SIMON BIRMINGHAM: Well, Tom, it’s just a case of another day, another grand adjustment to Labor’s costings and Labor’s budgets and, in this case, once again plunging the country further into the red. Now, we’ve seen this countless times and, to be honest, how could anybody believe anything, it seems, that comes out of the Labor Government’s mouths when it comes to what will be in their budget and what the final costings will be? Budget after budget has delivered a whopping great deficit far grander, far bigger, than they predicted originally. Every budget update, it seems, ends up writing down budget revenue, writing up spending, ending up in a situation where the deficit is once again going to be bigger. It’s little wonder the country is headed towards…
TOM CONNELL: But this part has just been a… this just has been revenue write-down, so, I mean, you can’t blame the Government for just simply a revenue write-down, can you? I know it’s reported so far we’ll wait and see what the figure is but that can happen to any government, can’t it?
SIMON BIRMINGHAM: Well, we’ll just see what happens here in terms of what stacks up on the government spending side of the ledger, as well. Let’s understand government spending under Labor is significantly larger, significantly larger, than it was when they came to office. We’re talking tens and tens and tens of billions of dollars extra being spent every single year under this Government than they were when they came to office, so spending is the real problem here. Their spending increase is what’s been driving the budget deficits. Kevin Rudd’s propensity to dive into spending saw him deliver the largest deficit in Australia’s history. Now, this is a real problem for the country and is a real challenge as to how we get it back on track and my real fear is that, though Labor will talk about savings in this latest economic statement, what we too often see is when those savings are released they’re actually tax hikes. That’s what happened with the carbon tax just last week. We ended up seeing a new $1.8 billion tax hit in relation to fringe benefits tax. That’s not a saving. That’s a tax hike.
TOM CONNELL: I will touch on that in a minute, Simon Birmingham. Just returning to the question, are you comfortable going to your voters and saying ‘we’re going to get our costings done independently again’ after a pretty embarrassing error last time, at the 2010 election?
SIMON BIRMINGHAM: Firstly, I completely reject the notion that there was an error and completely reject what ended up being Labor’s claims in that regard. Let’s understand we went with a detailed package outlining exactly where we would find significant budget savings. We’ll do that again. We’ll do it by taking hard decisions. We know they’re difficult but it’s about eliminating the waste, focusing government back on what is most important and getting our fiscal management on track. It’s the higher taxes…
TOM CONNELL: But were those… sorry, but were those two accountants not fined for breaching professional standards?
SIMON BIRMINGHAM: Tom, they’re private business matters relating to the accounting firm. They’ve certainly got nothing to do with the work undertaken in relation to the Coalition’s costings at the last election. The real concern here is we have a Government whose spending is out of control; the debts and deficits are out of control. Their answer is to have higher taxes. Those higher taxes of course cripple economic growth and economic confidence and then you have a vicious circle in place when you have, of course, those higher taxes, when it cripples confidence, spending drops off in the economy and then you get a hit to revenue and the Government somehow thinks they can manage to fix the budget problem by raising taxes yet again. Well, that just won’t work because that will cripple confidence even further and hurt revenue even further and so the vicious cycle continues. Somehow you’ve got to break that and the only way to break it will be to change the government and get to a government that knows that higher taxes and higher red tape just are not the answer.
TOM CONNELL: Graham Perrett, when it comes to the fringe benefits tax that Simon Birmingham touched on there, he’s certainly right in one aspect that Kevin Rudd and Labor didn’t consult with the car industry on this. This was supposed to be Kevin Rudd more friendly to business. He’s failed at the first hurdle, hasn’t he?
GRAHAM PERRETT: Well, look, the reality is a good government would do as much consultation as possible if there were a normal set of circumstances but, you know, when it comes to coming up with the solution to a big hit to the budget and that’s what the asylum seekers… you know, that’s the reality of a cost that wasn’t factored in, so we have to make…
TOM CONNELL: But this was to pay for the carbon tax shift to the ETS [emissions trading scheme or floating carbon tax], wasn’t it?
GRAHAM PERRETT: Sorry, sorry, the carbon tax, but they’re… the carbon tax…
SIMON BIRMINGHAM: Graham can’t remember Labor’s many new taxes.
GRAHAM PERRETT: Making the carbon tax an emissions trading scheme was something that we hopefully would have got up in December 2009…
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TOM CONNELL: Simon Birmingham, just quickly, this fringe benefits tax change… Joe Hockey spoke about the end of the age of entitlement. This change says that people just need to prove they are using the car for some sort of business purpose and, in terms of red tape, it’s asking for three months’ worth of records over a five-year period. It doesn’t sound onerous, however badly the change has been managed, it doesn’t sound like an onerous requirement.
SIMON BIRMINGHAM: Tom, this is not about a Government entitlement, this is about a Government-levied tax and, in the end, how that tax is administered and this change that the Government is putting in place will increase red tape. By whatever amount you want to say, it increases red tape and that’s a fact. It also increases, on the Government’s estimates, Government tax revenue by $1.8 billion. Now, what type of madness is it to be living in a country where, on the one hand, the Government’s talking about handing hundreds of millions of dollars over, extra, in taxpayers’ subsidies to prop up an industry but, on the other hand, they’re giving $1.8 billion in extra tax hit to that very industry? I mean, clearly, it just doesn’t make sense and it shows very clearly that this Government has no consistency of strategy, no consistency in terms of its economic plans for the country and it’s little wonder that all sectors of the economy are feeling the pain of such illogical decisions.
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GRAHAM PERRETT: This diplomatic masterstroke of Kevin Rudd’s, in terms of working with our neighbours working with Indonesia and working in terms of stopping Iranians getting off the planes in Jakarta, working with Papua New Guinea in terms of giving the only outcome that people who undertake dangerous maritime vessels is they’ll end up in Papua New Guinea, they’ll be processed in Papua New Guinea, they’ll be resettled in Papua New Guinea… these two together, working with our neighbours, means that we should be able to stop the boats. That’s the reality of our policy but it will take time as the desperate people smugglers promise anything, do anything, to get people on boats to take the money off them, so it will take a while to play out. I’m very optimistic that things will turn around pretty quickly, that it will…
TOM CONNELL: Before the election?
GRAHAM PERRETT: Well, I would hope so. Obviously, we don’t know when the election would be. I’m not sure if the… whether it’s going to be October, November or, you know, the end of August. We’ll find that out in the next little while.
TOM CONNELL: Yeah, I guess that could be part of the key. Simon Birmingham, Graham Perrett spoke there about working with neighbours. We know Tony Abbott and Julie Bishop have been saying they’ll be able to get closer ties with Indonesia and also Papua New Guinea but we’ve had two rebukes from the Papua New Guinean Prime Minister towards the Coalition in terms of their language. They’ve also said Indonesia that they wouldn’t be too happy with turning around boats when safe to do so. It looks as though the Coalition is going to be starting a bit behind the eight-ball when it comes to these key relationships.
SIMON BIRMINGHAM: Tom, I’m still grappling with the idea that this is somehow a diplomatic masterstroke from Kevin Rudd that we just heard from Graham. In the end, Kevin Rudd is trying to desperately pick up the pieces of policy failings entirely of his own making. Now, the Coalition knows we can work with Indonesia, because we did it before in government, to turn boats around and to work cooperatively, quietly, out of the limelight, to make sure that the Indonesian authorities are cooperating with Australian authorities as much as possible and we’re confident that, in government, we’ll be able to achieve that again as we did before. We know we’ll be able to work with Papua New Guinea to run detention facilities on Manus Island. Why? Because we were the ones who opened them. We were the ones that opened Manus Island detention centre.
TOM CONNELL: You don’t think that relationship is a little bit strained after those comments from Peter O’Neill about Tony Abbott and Julie Bishop? There appeared to have been a fair level of offence on behalf of PNG.
SIMON BIRMINGHAM: Look, I think everybody has to play their own domestic politics, essentially, and I’m sure that’s happening in PNG as we speak. Ultimately, Papua New Guinea will work closely with whoever the Australian government of the day is. They’ve made that very clear that it’s about two friends, as nations, working cooperatively together. They did it before under the Coalition when we established Manus Island. Then, of course, Mr Rudd came along and closed down Manus Island. Now he’s having to spend unknown billions of dollars to re-establish something that was working effectively six years ago, before Mr Rudd came along, so let’s be under no illusion here the Coalition will and can work with its international partners. We’ve done it before, we’ll do it again. The benefit they’ll have from us is they’ll always know where we stand and they’ll always know that we can deliver. Nobody has any idea where Mr Rudd stands because he’s constantly changing his mind.
TOM CONNELL: Simon Birmingham, I just want to finish quickly…
GRAHAM PERRETT: Tom…
TOM CONNELL: Oh, go, Graham, sorry…
GRAHAM PERRETT: I was just going to say… look, rarely in the history of Australian politics has an opposition been able to have… pick fights with the Indonesian Government and the Papua New Guinea Government from opposition. They’ve inflamed the Indonesian Government with their… incensed the Indonesian Government with their statements about tow-backs… there’s been a flat rejection of that. The PNG Prime Minister is also…
SIMON BIRMINGHAM: Graham, yours is the Government that cut off their food supply. That inflamed tensions, mate.
GRAHAM PERRETT: … up in arms about… I mean, all Tony Abbott has to do is go to New Zealand and head-butt John Key to get the trifecta of upsetting all of our neighbours. I mean, it’s unbelievable that someone could say that.
SIMON BIRMINGHAM: Graham, your Government and your party cut off Indonesia’s food supply. That had a far greater impact than anything that’s been said or done in the last week or two.
TOM CONNELL: Gentlemen, I’m going to have to wade in there. We are all out of time… vigorous discussion as always. Thank you both for joining us on Sky News…
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