Interview with Peter Switzer, Sky News Business
Subjects: Budget, small business
Peter Switzer: So if the current Government was a small business trying to flog its latest product called the Budget, they would go out of business. So what can the small business Minister Bruce Billson add to the marketing pitch, because we know the other two guys do need a little bit of help at this stage. Bruce thanks for joining us.
Minister Billson: Good to be with you Peter and your viewers.
Peter Switzer: Okay now you heard my comment and you heard what I said then. I’m looking for the silver lining in the black cloud but it’s been a pretty tough budget reaction hasn’t it?
Minister Billson: Yeah it has, an obviously there have been some adjustments that are in the budget to try and repair the situation the Commonwealth finds itself in of rocketing debt and deficits. But beneath the story of budget repair is a real pivot to focus on the productivity, the growth opportunities, the need to shift consumption expenditure into investment for the future and a need to take a longer term perspective so we can create the conditions to grow the economy at the rate that will give us the incomes and employment growth that we are looking for. So that’s the broader story but so much of the short term reaction has been, in some cases, quite shrill.
A suggestion that pensions will be cut is just nonsense but that’s some of the story that is taking hold and I’m not surprised that it’s had an impact on consumer confidence, just when we were shaping the budget to make some modest but well targeted adjustments now that delivered big dividends down the track. So that we didn’t impact on those green shoots that we see in the economy and that you touched on in your introduction.
Peter Switzer: So let’s say later on we will talk about the good stuff in the budget, I’m sure you’ve got a long list you want to share with me Bruce. I would have thought there were two negatives in the budget for small business and I’m sure you will correct me if you think I’m wrong.
One is the consumer confidence effects that we have seen and your constituency in retail would probably be worried about that and there could be a knock on effect to businesses that supply the retail sector. Also – the increase in fuel prices which would hit some small business people as well.
How would you respond if people said ‘Bruce why have you done this?’
Minister Billson: A couple of things I would point to Peter. First of all you would have heard some economists ask why didn’t we go harder and shorter in the near term? The reason for that is we were very conscience that consumer confidence is a brittle and fragile beast that we didn’t want to spook. We wanted to make some modest and targeted adjustments now and structural changes that dealt with that debt and deficit trajectory into the future. That’s why we are still strongly advocating for the abolition of the Carbon Tax. The average household will be $550 better off – that’s spending money available to consumers.
In the area of the fuel excise – let’s be realistic. It’s one cent a litre, to put a $50 billion injection into infrastructure. A lot of businesses say to me Bruce why doesn’t Government’s take a longer term view? Why don’t they build our productive capacity? Why don’t they make those big investments in infrastructure that sets our economy up for the future and helps us move commuters quicker? Those important arteries of enterprise need a financial injection, we need to be able to fund them and that’s what the excise is about.
The other thing too Peter is that we need to get the carbon tax abolished as it’s a sleeping giant. It is due to go up again from 1 July and then extend to on-road heavy freight transport. This is another reason why we need to implement all of the budget to get the budget settings right, build the infrastructure for the future, lift our productivity capacity, build the economy and the jobs and take some of these needless costs and impediments out of the economy.
Peter Switzer: I tell you what Bruce, its very inspiring stuff. We should have given you a Guernsey on budget night.
Minister Billson: Well I’m happy to be on Peter Switzer’s show, the audience might be slightly different, but I feel strongly about this Peter because we are on a debt and deficit trajectory that is going to be left for our kids. At a time when there is fewer people in the workforce, for those that have retired, at a time when we have got challenges about the competitiveness and productivity in our economy, when we’ve got an ageing population – we need to be spectacular in the years ahead. Our kids need us today to invest in that productive capacity and not load them up with the debt and deficit lead in the saddle bag. We are borrowing $1 billion a month now just to pay the interest on our debt.
Now your viewers would know if they were putting their overdraft servicing cost payments on their Visa card there is only so long that you can do that. That’s why we have taken that longer term perspective with modest adjustments now that pay big dividends in terms of the sustainability of our budget in the future, setting up our economy for jobs and economic growth that we really need to turbo charge.
Peter Switzer: Alright Bruce, are you a betting man? Can you tell us what the odds are that you will get rid of the carbon tax?
Minister Billson: Look I can’t see an argument to keep it and even the menagerie of minor party players that are a little hard to pick on their form in the Senate, surely they have got to see it. No one is out there saying give us more cost pressures in our household budgets, make it more expensive to do business in our country, reduce the amount of disposable expenditure for households. No one is saying that and if anybody is concerned about cost of living pressures, whether it is the Opposition or the minor parties, or our competitiveness to win opportunities for work and economic growth – this carbon tax is a dog. It’s a reverse tariff that impedes our capacity to win work internationally; it’s a burden on households, its putting up costs of doing business and is serving no good purpose in environmental terms. What’s the argument for keeping it? There is none. So I’m sure the Senate will come to its right senses and support the implementation of that commitment.
Peter Switzer: Bruce you’ve been in politics for a long time and you know that great businesses operate off being the embodiment of trust and that’s exactly what Steve Jobs said about Apple. Now clearly, has politics got to a stage where you can only get voted is by gilding the lily, not completely telling the truth? Because if you tell the truth like John Houston did back in fight back days – you don’t get elected. Are we in that terrible situation that all politicians have to gild the lily to be given the guernsey?
Minister Billson: Look I hope not. They say we get the politics we deserve and what the budget was about was responding to a call for a longer term perspective, some plain straight speaking for really looking to the future and being prepared to confront the challenges we face. It was about taking responsibility for problems, even if we haven’t created them. We were clear with the electorate – we wanted to axe the carbon tax, stop the boats, build the infrastructure of the future and fix this diabolical budget that’s just out of control. Costs have taken off like a jetfighter not on a smooth trajectory like a jumbo.
We’ve got a reduction in the overall rate of tax by $5.7 billion in this budget. Yes there has been some recalibration to make sure we are all making a contribution. Expenditure on schools, health and hospitals is still being guaranteed in the out years, which is our commitment.
There’s been some criticism that beyond the out years is beyond where a budget needs to be accounted for. Labor wanted it to take off like a jetfighter but had no way of paying for it.
We’ve been careful, frank and true to our commitments and now we need to make sure that other people understand this isn’t about a hunt for tomorrow’s headline, it’s about the hard work for our future, and growing the economy for a strong and safe nation that offers opportunities and the support for those that need it.
That’s what this is about and I’m hopeful we will get the support of the Government, but it’s fair to say Peter in terms of popularity and support, we haven’t peaked early have we? There’s a bit of work to be done there.
Peter Switzer: No you certainly have not. Well the point is this, 106,000 jobs created since January that’s a great start. My first guest Charles Tarbey from Century 21, said the property market went off the boil probably a couple of months before the budget and a lot of consumers got spooked, because we were talking about tough budgets.
How do you change the mentality now of consumers? You’ve made a nice start on this program talking about the positives, but is that going to be enough? How are you going to get consumers to believe that the real impact of this budget is not going to be as tough as their thinking right now?
Minister Billson: Well we’ve got to keep arguing the case Peter and that’s why you’ve got the senior minister’s out there explaining what’s in the Budget, not what some people are trying to characterise it as for their own self-serving political objective. But what’s actually in the budget and what’s actually in the budget is something that we can be strong and confident about because it lays a solid and predictable foundation for what we are trying to achieve and how we plan to get there. That Economic Action Plan gives confidence to households and businesses that there are not shocks around the corner that we are in control of our own destiny and prepared to make difficult decisions now. For people thinking about buying a house or building a house we are giving then certainty, predictability about the environment within which they operate.
We are doing a lot to take costs out of the economy where they are serving no good purpose, the red tape reduction agenda, the investment in infrastructure that will have thousands of jobs during the construction phase to deal with what’s coming as a fall in mining construction activity. We want civil construction activity to help grow that area of the economy, that’s direct jobs, that’s confidence and the domino effect is there.
We just want to get on with it and we feel when we are able to get on with it, and when Labor gets out of the road of this plan, the benefits will speak for themselves. They will build the confidence of a confident government with a predictable economic plan, delivering benefits for all Australians and security for those that are depending on Government support to maintain the quality of life they are looking for.
Peter Switzer: Well Bruce apart from the big picture benefits of the Budget which a lot of people aren’t seeing at this point in time, because they are worried about their own personal hip pocket situation. What are the things in the Budget that you think will really help small business? Apart from the important things like the infrastructure spends. What other things should business be saying to themselves – you little beauty Bruce?
Minister Billson: Well let’s not discount the infrastructure spend, because for a lot of smaller businesses those big projects represent opportunities for them to work as well. But also we’ve seen some of the bigger construction companies where they are not sure about where those bigger projects are coming from, moving into areas of construction that are traditionally more for smaller and medium sized businesses.
The confidence to see the housing and construction trajectory, we are seeing some early signs there Peter, but we really want to get that going as well. The company tax cut – that’s an incentive to invest and grow to see some reward for their work. The carbon tax abolition is going to deliver benefits to households to boost consumer confidence, spending capability and to reduce costs.
There are some important measures in there. We have funded the ACCC properly, but part of that funding is to make sure unfair contract terms mean that smaller businesses aren’t pushed around and driven to the brink by big business just throwing around their contractual muscle.
There are areas of change around the Small Business and Family Enterprise Ombudsman, getting government procurement right, reshaping programs through the Entrepreneurs Infrastructure Program to make that more tailored for small and medium enterprises. The export effort through the Export Market Development Program has been reshaped to better support small business.
Changes have been made across the board including EFICs work in providing trade, finance and insurance because there is no single ‘you beauty’ that you are looking for, but a range of measures that together come to make this a better place to start and grow a business with a supportive government policy setting. Let’s call it an entrepreneurial ecosystem that values that risk taking, values that enterprise and that’s what the Budget story is about for smaller businesses.
Peter Switzer: It seems to me on the supply side, the Budget is no real problem for small business. The great question mark is can you make the Australian people understand that there is no easy way of selling tough medicine and this is what it is, but the medicine doesn’t taste as bad as some people are suggesting. That should be challenged over the next few months otherwise the benefits of this recovery that is happening cold go off the boil?
Minister Billson: That is the risk but I think it’s important to get the message across and that is part of my job. This isn’t ultra tough medicine – these are multivitamins to improve the wellness and to tackle the risks that we need to address that are emerging down the track. We need to make sure that harsh medicine isn’t necessary. These are important recalibrations and yes we are looking for a contribution from everybody but if we can’t get control of the debt trajectory, it will take control of us. If we can’t get deficits under control we’ll have people wondering about the security of the income support, the welfare safety net because they’ll know that they won’t be able to fund it into the future. We’ve got five people in the workforce today for every one retiree. Mid-century, there will be only three people in the workforce for every retiree.
We need to be smarter, more productive, more competitive, able to create the wealth that’s needed and we shouldn’t make bad decisions today that impede our future prospects. We need to invest today so that we can reap the benefits down the track and build that strong economy, the jobs and the living standards that everyone is looking for.
Peter Switzer: Good luck with it. Thanks for joining us on the program.
Minister Billson: Thanks Peter, thanks for your interest.