TONY BURKE MP SHADOW MINISTER FOR FINANCE MANAGER OF OPPOSITION BUSINESS MEMBER FOR WATSON

E&OE TRANSCRIPT TELEVISION INTERVIEW SKY AUSTRALIAN AGENDA SUNDAY, 13 APRIL 2014 SUBJECT/S: Pensions, GST, the Budget and the Speaker. PETER VAN ONSELEN: Welcome back, youre watching Australian Agenda and we are joined now by the Manager for Opposition Business, also the Shadow inance spokesperson !ony Burke" !hanks for your company" TONY BURKE, SHADOW MINISTER FOR FINANCE: #ood morning" VAN ONSELEN: $ wanted to start by asking you about something that just a short time ago %oe &ockey had to say on another network" &es ob'iously doing an inter'iew in the countdown to the May budget" And this is a (uote, it might be slightly paraphrased but it is) *!here is a serious (uestion+ , this is what %oe &ockey said , *!here is a serious (uestion as to whether our current welfare system, which was designed in the -.th century, is sustainable in the -/st century"+ $t sounds like in the May budget we can e0pect some significant changes to the welfare system" BURKE: Brace yourself for the broken promises, thats e0actly what %oe &ockey has flagged today" !ony Abbott for some years made point after point o'er an inter'iew that %ulia #illard ga'e the day before the -./. election" Well, the day before the -./1 election, !ony Abbott made a number of promises) 2o cuts to health, no cuts to education, no changes to pensions, no cuts to the AB3 and SBS" !hat *no changes to pension4 promise is about to be broken and that was made clear today by %oe &ockey"

VAN ONSELEN: What if these changes that look like theyre going to be in the May budget are in the out5years, and theyre only are to be put in effect post the ne0t election, which means that in a sense the ne0t election becomes their attempt to achie'e a mandate, and then thered be no broken promise this term" BURKE: Well the promise was no changes" ull stop, no (ualifications , no changes to pensions" $f we go through the budget, and in the budget there are no announced changes to pensions then that promise may not ha'e been broken" But thats not the way %oe &ockey is talking today" VAN ONSELEN: Well it sounds like theyre going to do more than that, but it may well be in the out years" A lot of speculation has been that they will frame it so that anything they look to push through this budget is post the ne0t election by way of these sorts of announcements" !hats not unreasonable, is it6 BURKE: $ think thats a nuance that !ony Abbott did not flag at all before the election and $ think that if you start getting into changes of that nature, and the best hes got is to say *oh look its not until you actually retire, which is some time off therefor its not a broken promise+, $ think hell be judged 'ery harshly for that" VAN ONSELEN: What about back to the actual issue though6 7o you agree with %oe &ockey about the issue that was a system designed in the -.th century which is not financially sustainable in the -/st century6 A lot of people think so" BURKE: !he principle with the age pension , and its for them to come up with a proposal, its not for us to second guess and then comment and pro'ide an alternati'e before they'e e'en deli'ered their first budget , but the principle that we took when we shifted the age pension from 89 to 8: out to about -.-9 or thereabouts is the process where that gradually took place" ;'en then you ha'e to be aware of the fact that its one thing for those of us who wear ties and collars to work who dont ha'e physical labour as the main part of our work, to say *oh look people are li'ing longer, therefore later retirements a gi'en"+ or a whole lot of people in jobs that in'ol'e physical labour, a shift in the retirement age can be a 'ery big deal and simply (uoting statistics about how long people are li'ing doesnt actually get you there for the impact that this has on real peoples li'es" And when youre talking about the pension as well, youre talking about those retirees who will ha'e less , ha'e smaller superannuation sa'ings, and therefore are the people more likely to be in physical labour jobs" PAUL KELLY: 7oes <abor accept the warning gi'en by !reasury Secretary Martin =arkinson that we face a decade of deficits and therefore there must be a new round of restraint on the spending side6 7oes <abor accept that general proposition6 BURKE: Well the proposition that !reasury Secretary now works from is the figures contained in M>; O" 2ot the figures contained in that mid5year economic forecast that was brought out at the end of last year radically changed a whole series of budget presumptions" 2ow (uite properly the !reasury Secretary works from that, but %oe &ockey when he changed those budget presumptions, in one sweep of decisions, more than doubled the deficit 5 added ?8@ billion to the deficit, blew the figures out so that he could then be in a situation to say *the problem is much, much worse+ 5 ha'ing cooked the books to do so 5 *now $ll go about fi0ing it"+

VAN ONSELEN: 7ont both sides do that , KELLY: $ appreciate that argument, $ appreciate that argument, but the argument from the !reasury Secretary relates to the structural problems of the budget, which go to spending commitments o'er the course of a decade, of the terms of trade, producti'ity, and economic growth" So do you accept the argument put there in structural terms that we do ha'e a medium5 to longer5term budgetary problem which needs to be addressed6 BURKE: $ dont accept, =aul, that you can separate the point $ just made from the specific factors you just referred to" And $ will refer to two of them" When you said spending growth, now one of the things %oe &ockey did in that mid5year document which is the only one hell keep (uoting, was he remo'ed the two per cent spending cap" A spending cap thats since -..A <abor had been following and following strictly" &e took that out, and presumed it was no longer there" And when you do that and you just remo'e that discipline on the budget and remo'e your fiscal rules, then you do end up with a situation where spending keeps going up and up" KELLY: So essentially youre saying that you dont agree with this analysis being put forward by the !reasury and the #o'ernment6 >ou dont actually agree with the dimensions of the fiscal problem that they talk about6 BURKE: !he fiscal problem begins with abandoning a fiscal rule that <abor followed, which was the two per cent cap" $f you keep the two per cent cap in, then you dont ha'e the problem that is being discussed openly and reflected in figures that ha'e been released by the !reasurer" !he second issue though, when you went through the different principles that the Secretary to !reasury had elaborated on, the second one was when you hit economic growth" 2ow the other thing that was done at the end of last year by the !reasurer when he released that document was to change how unemployment figures are dealt with in the budget" So there has always been the case that for years three and four of the forward estimates you would presume that unemployment returned to its trend figure of fi'e per cent" What the !reasurer did was say *no no no, were going to presume that if its currently abo'e trend, it stays there"+ 2ow that hits your re'enue figures, that also hits your e0penditure figures, because if you'e got people out of the workforce on different forms of benefits and falling lower on a whole series of things" !hat hits your economic growth" VAN ONSELEN: But do you acknowledge that both sides ha'e done their own 'ersion of this to suit the times that they were in6 %oe &ockey may well doing that now, but in a similar way the <abor party did the same thing with the numbers in the lead up to the last election to try and project a surplus, because that was a constant re(uirement of the political narrati'e6 7o you accept that6

BURKE: $ think the weakness, the weakness though of that argument comes when you take in =eter 3ostellos 3harter of Budget &onesty because you'e got a whole lot of budget figures, yes prepared by our own cabinet when we were there" >ou'e got budget figures prepared by the new cabinet that %oe &ockeys wanting to rely on, but you ha'e the pre5 election fiscal outlook, the one prepared by public ser'ants themsel'es without the o'ersight or editing of any politicians" When $'e said that %oe &ockey doubled the deficit, more than doubled the deficit, its not compared with documents that we'e released, its documents

prepared independently under the 3harter of Budget &onesty and against the =; O figures, the independent figures, its against those that %oe &ockey has changed the presumptions that they used, more than doubled the deficit, added ?8@ billion to it" VAN ONSLEN: But you must be worried non5the5less that hell win the political battle on this one, rhetorically, because the #o'ernment after a period of strong deficits, will presumably present us with a budget that shows a pathway back to surplus e'en if its not immediately apparent and there chances of wining the public relations war on this one is higher than on your side $ would ha'e thought" BURKE: Well thats normally the argument gi'en that the #o'ernment megaphone is louder than the Opposition megaphone" $m not going to dispute the reality of them ha'ing a higher 'olume control than what we ha'e" $ts also the case its for us to argue and e0plain e0actly what %oe &ockeys done so he doest get away with it, just as with the welfare reference to e0plain e0actly, and remind people e0actly what !ony Abbott said the day before the election and how all of that is coming up for broken promises in the ne0t few weeks" KELLY: But were in a situation where real spending has been growing faster than real #7=, which seems by definition to suggest spending for a number of years has been too high" 7o you reject that6 BURKE: !he, two issues) One, when you'e had an international downturn you'e had some impacts on re'enue where if you, some impacts on re'enue happened with the international downturn, which no matter whos in go'ernment those things justB KELLY: >es but $m talking about spending" $m talking about spending" ;ssentially the analysis is, the analysis is, that spending has been e0cessi'e for (uite a considerable period of time" What $m asking is whether you reject that or not6 BURKE: $ think so long as you keep within the two per cent discipline that we had form -..A on, that we kept within 5 VAN ONSLEN: >ou didnt always keep within it, $ mean it was always there" you kept within it going into the budget but when we saw the actuals coming out the other side, (uite often it was blown" BURKE: rom -..A on the two per cent figures were kept to" =rior to that when you had the stimulus spending its true they werent kept to and there was a good reason they werent kept to then and a good employment outcome that Australian enjoyed that was not enjoyed by other countries" !he other thing with respect to all of these figures is that they belie the fact that Australia has a triple5A credit rating from all three major credit rating agencies" 2ow if you are heading down a pathway where youre ha'ing these sorts of alarmist re'enue 'ersus e0penditure problems you would not get the triple5A credit rating that Australia enjoys and only achie'ed under <abor" KELLY: Whats response to the 'iew of another !reasury Secretary Cen &enry, former !reasury Secretary who says that the big spending commitments in the <abor last budget couldnt be financed by the current ta0 system6 &e was (uite blunt about that he said *we cant finance these schemes+"

BURKE: !he situation that you need to ha'e is the discipline we showed to continue into the following years" 7o $ ha'e e'idence that we were able to make the tough spending decisions to make sure we stayed within our means6 >es" $n that e0act same period that $ referred to, ?/1. billion in sa'ings, in that e0act same period" So tough decisions ha'e to be made at different points, we made them" Where the #o'ernment is now heading, where the new #o'ernment is now heading is to make decisions in the new budget, which go completely against specific commitments that were made by the =rime Minister before people 'oted" VAN ONSLEN: 3an $ ask you about the #S!" Why does <abor ha'e a fundamental unwillingness to e'en debate the issue of adjusting the #S!6 $m not necessarily meaning ultimately support where that debate might end up, but e'en debate it6 BURKE: Well, we do debate it" Were opposed to it going up" We'e been opposed to changes to it, we'e made commitments prior to elections that we wouldt change it and $'e got to say when $ went through the list of things, $ actually left one out in that (uote from !ony Abbott and it was *2o changes to the #S!+" 7ay before the election you make that sort of commitment, particularly after three years campainging entirely on the need for a change of #o'ernment based on your 'iew of what the then =rime Minister said the day before the pre'ious election, you cant just throw commitment like that away" KELLY: Are there any limits to the increase in the personal income ta0 burden that <abors prepared to see as a result of refusing to modify the #S!6 BURKE: On issues of specific budget measures were not going to get out in front of the budget being deli'ered" Dight now the #o'ernment is strategically leaking a whole series of intended breaches of election promises and we intent to hold them to account on that" But while inance might be in my title, theres a word before it, which is EShadow and $m not going to come and ad'ance and pro'ide a <abor playbook of e'ery <abor reaction to e'ery possible policy" KELLY: $ understand that completely" But $ guess the issue is does <abor accept that if you dont touch the #S! what this means is that more and more of the ta0 burden comes on the personal income ta0 side" $ mean that ob'iously just by definition" 7o you accept that proposition and do you accept there may be political risks in that6 BURKE: $t depends on a whole series of other decisions =aul" #S! re'enue as you know finds its way through to the states so a strict match between #S! re'enue decisions you make there and other forms of ta0ation wont always directly line up in its outcomes" Secondly, you'e got the issue on whether or not you return to the le'el of fiscal discipline of that two per cent figure that <abor kept that %oe &ockey abandoned at the end of last year because theres a direct connection ob'iously between re'enue re(uired and how disciplined youre willing to be on your e0penditure decisions" VAN ONSLEN: Alright !ony Burke we are out of time, but $ cant let you go without a (uestion $ guess about Bronwyn Bishop" Before =arliament rose you had that motion, the ne0t time you see her will be for the budget" $s <abor going to continue to make that same point about Bronwyn Bishop if she doesnt change your 'iew of the way she functions6 BURKE: !he gateway for an Opposition to make sure that the people who 'oted for us are represented and are heard in =arliament is that you ha'e an opportunity to ha'e your say

and that you ha'e a fair umpire and the umpire or the ref should ne'er be in'ol'ed in sledging" VAN ONSLEN: So is that a yes6 >ou will continue to run a hard line on her position if you belie'e thats what shes doing6 BURKE: $ actually dont belie'e our lines been particularly hard" $ think our line has been an e0pectation that has been followed by almost e'ery speaker in the history of the =arliament" VAN ONSNEL: Alright !ony Burke Manager of Opposition Business and Shadow inance Spokesperson thanks 'ery much for your company" BURKE: See you again"

ENDS