Budget – Interview with Laurie Oakes, Channel Nine

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Budget – Interview with Laurie Oakes, Channel Nine





Interview with Laurie Oakes

Channel Nine

Tuesday, 14 May 2002
9.00 pm



Mr Costello, welcome to the programme.


Thanks Laurie.


A $1.2 billion deficit this financial year, are you embarrassed?


No, this is a year which I always said would be a difficult year – global downturn,

war in Afghanistan, events of September the 11th.. That meant that

there were additional security spending in a weaker economy. If you are ever

going to run a stimulation in your fiscal policy, you would do it when there

was a global down-turn, and if you put on top of that war commitments as well,

that would be the outcome.


But you said in the election campaign that our commitment to Afghanistan was,

and the border protection measures, were fully funded?


As at that time they were. We came back into the Parliament after the election

and we had further appropriations. We did that earlier this year. I think from

memory, it was about three or four hundred million earlier this year in relation

to commitments in Afghanistan. So we put all of that on the table, we came into

the Parliament, we sought additional funding.


Now I know politicians hate having their own words quoted back at them but

you said in the election campaign on October the 17th, we are going,

we are giving a guarantee that we will keep the Budget in surplus, yes we are.

Egg on your face?


No, Laurie. During a period of increased commitments, as we said, as the war

developed in Afghanistan, I think it was the right thing to do. Certainly wasn’t

going to be in a situation where we would cut money from our troops while they

were in the field, or from our sailors, or from our air men. But we have been

very open about that appropriation. The good news is we kept the Australian

economy going through a global downturn and even with a small deficit we would

have the strongest fiscal position of any advanced economy in the world, stronger

than America, Britain, any of the Europeans, Japan, and we probably would, alone,

be in surplus in the budget year. I do not think there would be another advanced

economy in the world that would be in that position.


If I had to pick one word for this Budget I think I would pick scary. I mean,

that string of measures on domestic security, talking about a comic chemical,

biological attacks by terrorists. I mean, that is pretty alarming, isn’t it?


It is, look, on September the 11th the World Trade Centre was demolished

by aircraft hijackers. Now, that is the world’s most powerful economy. We had

to sit down and we had to decide what we would do to enhance security here in

Australia. We have tightened airports, we have plain clothes armed people on

aircraft now. There have been anthrax sent through the mail in the United States,

that could happen here. We need to have a facility to deal with anthrax scares.

We are deciding to stock pile antidotes. No point if you have an anthrax outbreak

writing and saying could you send us some vaccination and get it in, you know,

a week, or two, or even a month or two, you have got to have it on the spot.

Now, I hope none of this is ever needed. I will be the happiest man alive if

none of this is ever needed. But what if it is? Shouldn’t we make some provision?


Well I would have thought as part of your aim to drive this home to people

that it is a real threat, is that why you made such a big thing of it in the



Well, I made a big thing of it in the Budget because we are spending a lot

of money on it. We are spending a lot of money on security, on border protection,

and on defence. People want to know where we are increasing expenditures, that

is where we are increasing expenditures. With defence we increased defence expenditure

for East Timor, we increased it for our White Paper and we have increased it

again for the war on terrorism. But, we have more troops in the field now than

we have had at any time since the Vietnam War. And if you take into account

the naval deployments and the air deployments it is a very substantial commitment

we have going at the moment. We are not doing it for the fun of it, we are doing

it because we think if you can reduce terrorism overseas, you can reduce the

threat at home.


The Labor Party says they agree with all that but they don’t believe that people

who need medicines, including pensioners and people who have been on disabled

pensions, should be the ones to bear the cost burden?


Well, can I make this point. The changes in disability pension, they do not

even start until 2003 and they do not produce a saving until 2004 – 05. So,

that has got nothing to do with border protection or increased security. That

is money spent last year, and this year and next year when this disability thing

is 2004-05. So there is no connection. What we are doing in relation to that

is we are trying to get that on a sustainable basis into the future, as we are

with pharmaceutical benefits. That long-term structural change, that is not

a consequence of this, that would have to be done anyway. But what we are doing

this for is, let’s be clear about it, twelve months ago we were sitting here,

none of us thought the World Trade Centre would be blown up four months later.

And it was when we sat down after that we said, well, there is certain things

we had better do in Australia – I wish we did not have to do them but I think

a Government has a responsibility to its citizens.


The Prime Minister told the Party meeting today that some sections of the Budget

would be very unpopular. I assume he was talking about the increases in prescription



Well, I actually think this is a tight budget. But I would not say that it

was huge expenditure reductions. It is tight. It is what I have been saying

now for months, it will be a tight budget. Why would it be a tight budget? It

would be a tight budget because we are going to increase security, we have got

large commitments on border protection and we are building up our defence forces.

We thought those were the priorities. Now, Laurie, if the war in Afghanistan

ends, if terrorism is defeated around the world, if we feel we can wind back

these measures nobody will be happier than me. But I thought it was a responsible

thing in the current climate.


Now you have produced your Intergenerational report which shows Australia’s

ageing and huge budgetary consequences. I think it says if you do nothing it

will be an $87 billion deficit in 2042…


We’d need another $80 billion per annum each year.


So, you have started to correct the situation you say, with the increases in

the PBS prices, but you obviously have to do a lot more…


This will not fix it. This is an $80 billion projection. Now, it is 40 years



So what other things are you going to have to do…


…and what our Intergenerational Report says that we are okay for the next

10 years. It is the 10 years after that and the 10 years after that. I want

to put that out to the public and I think the public has got to discuss this,

how we are going to cope with these drivers of change. The good news is, whatever

our problems, we are in a better position than other countries. We have got

10 years but if we do not start acting in these 10 years the problems are going

to get worse and the decisions are going to get harder.


Are you going to try and do anything to encourage Australians to increase the

birth rate?


Well, I do not know that you can, Laurie. But if you want to volunteer for

me please go ahead.


Mr Costello, we thank you.