Doorstop Interview

CEDA 'State of the Nation' Conference, Canberra

15 June 2009

SUBJECTS: Address to CEDA 'State of the Nation' Conference; Interest Rates; Henry Review; Economic Stimulus

TREASURER:

It's good to be down here at CEDA this morning talking about our number one priority, and our number one priority is to support jobs. What we know is the stimulus is supporting jobs, keeping people in employment – 210,000 breadwinners in employment as a result of our stimulus – people who would be otherwise without a breadwinner. And what we do know is this is good for the economy overall: higher incomes, higher taxation, and less money spent on unemployment benefits.

And of course, I'll also be talking this morning about the need for the community to pull together. I think we can really see as we've been through this difficult period over the last six months or so what Australians can do when we all work together – the Government and the community working together in the middle of a global recession. Which is why it has been so disappointing to see this decision from the Commonwealth Bank to raise interest rates. I don't believe that decision is justified, and I believe that if any other bank were to take a similar decision, there would be understandable community outrage at that decision.

JOURNALIST:

Mr Treasurer, the BCA is this morning calling for an increase to the GST and a halving of company tax. What would your response to that be?

TREASURER:

Well, we have the Henry review in place, but part of the remit of the Henry review is that we're not considering any increase in the GST at all.

JOURNALIST:

Why wouldn't it work? Why isn't it a good idea?

TREASURER:

Well, because the Government is having a comprehensive tax review, but we're not going to contemplate a higher GST. What we do want to do is to look at the tax system in total, and we will do that through the Henry review. But we ruled out from day one any increase in the GST. It has a savage impact on people on modest incomes, and that's why we've ruled it out.

JOURNALIST:

In your speech this morning you'll be talking about the beneficial effects of the stimulus packages going through well into the next decade. Aren't these effects merely illusory? Aren't they just hypothetical? I mean, if this would have happened, maybe something else would have happened?

TREASURER:

I think we've seen from the recent national accounts what a very dramatic impact economic stimulus does have on the economy. We are the only advanced major economy in the world that is growing. Economic stimulus is absolutely vital to supporting employment in our community, and I think the results are there for all to see. Because what you do have with higher unemployment is a dramatic impact in the longer term. It erodes tax revenue. It results in higher expenditure on unemployment benefits. But it leaves a social and human cost as well.

JOURNALIST:

Treasurer, on another matter I guess, but you must be devastated that your thunder has been stolen by the leaking of this speech?

TREASURER:

No, I'm not devastated at all. Thank you.