Turnbull Offers Support For Economic Stimulus Package

Malcolm Turnbull, Leader of the OppositionThe Leader of the Opposition, Malcolm Turnbull, has offered support to the economic stimulus package announced today by the Rudd government.

Speaking at a press conference with Deputy Leader Julie Bishop, Turnbull said: “We welcome the Government’s announcement today, especially for Australia’s age pensioners who have been denied justice for too long. This is a significant improvement in their position and we welcome it. Now this is also a very significant economic stimulus; a significant fiscal stimulus. And we trust that the government has taken into account the advice from Treasury and considered the impact that this stimulus may have on the Reserve Bank’s ability to reduce, to continue reducing interest rates, for example. But nonetheless we are not going to argue about the composition of the package or quibble about it. It has our support. It will provide a stimulus to the economy, that’s for certain. And above all it gives justice to Australia’s age pensioners in particular, who have been doing it especially tough.”

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This is the transcript of the Turnbull-Bishop press conference:

TURNBULL:

Well we welcome the Government’s announcement today, especially for Australia’s age pensioners who have been denied justice for too long. This is a significant improvement in their position and we welcome it.

Now this is also a very significant economic stimulus; a significant fiscal stimulus. And we trust that the government has taken into account the advice from Treasury and considered the impact that this stimulus may have on the Reserve Bank’s ability to reduce, to continue reducing interest rates, for example.

But nonetheless we are not going to argue about the composition of the package or quibble about it. It has our support. It will provide a stimulus to the economy, that’s for certain. And above all it gives justice to Australia’s age pensioners in particular, who have been doing it especially tough.

QUESTION:

What do you think about the housing measures? They’re quite a significant boost to first home owners. Have you got any concerns about how… whether that could blow out at all?

TURNBULL:

Well we support it. As I said, we’re not going to argue about the composition of the package. We will get a full briefing from Treasury; we’ve certainly sought one. And the impact of the increased subsidy is obviously something that we assume that the Government has taken carefully into account. When we say we are committed to a bipartisan approach to responding to the economic crisis we are very serious in that. And we have had a meeting today, Julie and I have had a meeting today with officials from the Treasury and Prime Minister and Cabinet, talked very frankly about aspects of the Government’s policy and I think made very constructive suggestions and had a very constructive discussion there.

So we want to help provide support to Australia overall making the most effective response to this crisis.

QUESTION:

I glean from your opening comment that you’re concerned that this may take the impetus away from the Reserve to lower rates any further?

TURNBULL:

Well this is a significant stimulus. Now there was a lot of speculation in the media this morning that the stimulus would be in the order of $5 billion, which is about half a per cent of GDP. This is twice that, so it’s a much larger stimulus and the impact on the Reserve Bank’s ability to continue cutting interest rates is obviously one factor that the Government, no doubt, has taken into account. And we’ll look forward to discussing that with them when we have the briefing.

But, again, we’re not arguing about the size of the stimulus. We support these measures and we are particularly pleased about the measure, the payments to pensioners.

QUESTION:

Do you believe that your highlighting the pension issue over some weeks now contributed to that decision?

TURNBULL:

Well Michelle that’s for others to judge. We have been very committed, very resolute in standing up for pensioners. As you know the Senate passed a bill to give pensioners $30 a week and we brought that bill down to the House not so long ago. And all the Prime Minister had to do was say ‘yes’ to provide support for pensioners.

It’s not something to lament unduly but it is a fact I think that the only reason the pensioners have got what they deserved is because the Prime Minister concluded there was a need for a fiscal stimulus. What was really needed was not just an injection of additional liquidity into the economy but an injection of compassion.

QUESTION:

Just following on from your comments to Mr Coorey and your opening comments, did you raise concerns in your briefings this morning with Treasury about the inflationary impact that this might have…

TURNBULL:

No we were discussing the guarantee, we weren’t discussing this…

QUESTION:

Is there a danger that some of these measures might overheat the housing market which I think has dropped by about seven per cent? Is there a danger do you think that this might actually overheat the housing market?

TURNBULL:

Well if I could just hand over to Julie to comment on this also. But the housing part of the package while significant is a small part of it. It’s $1.5 billion out of $10.4 billion. The bulk of the money of course has gone to pensioners and to families. So that’s where the bulk of the commitment has gone.

And you’re right, the housing market is softening, I think it’s very unlikely that these increased first home owners grants would overheat the housing market. The housing market is slowing, not to the same extent that it has done in the United States but it has been slowing and in some parts of Australia, south west Sydney being a good example that you’ve heard me talk about before, the slowdown has been quite significant.

BISHOP:

The point I was going to make is that this package is obviously highly stimulatory, it’s about one per cent of GDP. We have assumed and trust that the Government has received advice, updated forecasts on the slowing of the economy and growth and also unemployment. And that’s why we’re looking forward to a Treasury briefing this afternoon on this package. We’ve not had the Treasury briefing on this package yet. The briefing was in relation to yesterday’s announcement about the bank guarantees.

QUESTION:

You’ll be asking them questions along this line about whether they feel confident that this isn’t going to over-stimulatory?

TURNBULL:

Absolutely and we’ll be asking those questions, but these are decisions that the Government… the Government has taken these decisions, it will have received advice about the impact of this stimulus on the overall economy and in particular on the ability of the Reserve Bank to continue reducing interest rates.

And the Reserve Bank has made it very clear that it wants to continue, plans to continue loosening monetary policy, reducing rates and that’s certainly what the market expects. So that is a factor and it’s something that the Government should have taken into account and we’ll learn more about that as we all may if the Government is prepared to discuss it publicly.

QUESTION:

You mentioned earlier about your, you would have liked to have seen the increase in the pension being actually an injection of compassion rather than a response to… as it’s been characterised by Mr Rudd. Why did not your proposal to inject compassion extend beyond single age pensioners?

TURNBULL:

Well we were targeting, Matt, a group within the universe of pensioners that were particularly disadvantaged, this is single pensioners. And you’ll recall that one of the problems has been that the ratio between the single pension and the couple pension is very low in Australia relative to other countries and this is…

QUESTION:

[inaudible]

TURNBULL:

No, no, we welcome the whole package. It has our support. We’re not going to, you know, go through it line by line and say if we were in government we would have done this rather than that. It has our support, it has our bipartisan support, but we are particularly pleased that the pensioner issue has been addressed and that pensioners, now the fact of the matter is the pensioners will get this extra money. The fact that it’s been given to them for fiscal stimulatory reasons as opposed to social justice reasons is perhaps a source for a small amount of regret on the part of pensioners but the money will be there and they’ll be able to spend it.

QUESTION:

Would you have… would you have preferred a fortnightly increase to the pension or are you satisfied that you needed a rather large one-head stimulatory measure?

TURNBULL:

Well, we believe the base rate needs to be increased and that of course was precisely what we had proposed. The Prime Minister has made it fairly clear today, I believe, that he is at least open to following the conclusion of the review, or reviews that are underway, open to increasing the base rate and clearly that’s desirable and that’s why we advocated it.

QUESTION:

Mr Turnbull, this equates to an increase in the base rate of about $35 a week for those single aged pensioners that you’ve been talking about. Do you think that now provides a starting position for what the Government’s got to do after the Harmer Review? Can it now offer pensioners anything less than what they’re getting?

TURNBULL:

Well I think it certainly provides a benchmark, Mark. And, you know, we felt $30 a week was a minimum – that was what we were proposing as a down payment. That’s what we were proposing as a down payment. The Government’s $35 a week, well that’s good – that’s $5 more. But I think overall, ideally, we would see an increase in the base rate and that’s a substantial one. So we would certainly support that.

QUESTION:

It seemed bipartisanship evaporated yesterday after Question Time. What did you have to say to…?

TURNBULL:

Well look, I know there’s been speculation about this so I’ll just tell you exactly what transpired. I had written to the Prime Minister earlier in the day proposing that there be a bipartisan motion about the economic crisis and Australia’s response to it, that he could move and I would second, and the Australian people would see the whole of the House of Representatives united in taking responsible action to deal with the crisis. And then we could have a debate about that. And it wouldn’t be a rancorous debate, it would be a debate that enabled us to talk through the issues and discuss them. I haven’t received any response to that any more than I’ve received a response to my previous letter and all I did was ask the Prime Minister whether he had received the letter and he said it hadn’t, so apparently the hand delivery didn’t work so he didn’t get to read it apparently.

QUESTION:

Can I just ask a question? Do you think in this new era of bipartisanship that there is a case to be made for you now to stop your resistance of the other Budget measures in the Senate?

TURNBULL:

Well no, Annabel, and let me just make this point. The Government uses a lot of really, you know, exaggerated rhetoric about these measures in the Senate. Let’s be quite clear. The Government has just announced they’re spending $10.4 billion this year. Now, the only revenue measures that are still being opposed by us that haven’t already been passed in the Senate are the alcopops tax and the Medicare levy surcharge threshold changes. Our best, well based on the Budget papers, our estimate is that they would, if they were opposed and were defeated finally, that would deprive the Commonwealth this year of about a little bit under $700 million. Now that is less than seven per cent of the package announced today.

So I’m not suggesting that the revenue is unimportant but in the scheme of things it is a relatively small amount of money. So in the scheme of the whole Commonwealth Budget you’re basically talking about the alcopops tax, which is estimated to net the Government $3 billion over four years, which would be a very small percentage of overall Commonwealth revenues. And you’ve got to remember these taxes were supported by the Government in their battle against inflation, remember. They wanted to slow down the economy and provide, if you like, the opposite of a stimulus – to actually take money out. Now that they want to put a lot of money into the economy they are still advocating a tax which takes money out. So the fact is if you want to stimulate the economy you are not going to be putting up taxes.

BISHOP:

It’s still bad policy.

TURNBULL:

Yeah. If they were serious about the alcopops tax, if they hadn’t already painted themselves into a corner on it, what they would do is say, ‘well, given that we’re spending money to stimulate the economy the last thing we ought to be doing is raising taxes’. So they would abandon it as well. And as you know, in the nature of things, they’ve painted themselves into that corner and so something that earlier in the year was a key weapon in their fight against inflation and designed to slow down the economy, they will now try to say is a key weapon in their fight to stimulate the economy. Wel, I think all of us can see through the contradiction in that.

QUESTION:

Can I just ask you about the bank deposits discussions?

TURNBULL:

Okay, just two more and then we’ve got to get to Question Time.

QUESTION:

Can I just ask you about the bank deposits discussions this morning? Were you able to be reassured by Treasury about the concerns you obviously had about the scheme? And you mentioned you had some constructive suggestions and I just wondered if [inaudible] on those.

TURNBULL:

Well the conversations, these briefings are confidential, as you know. There are some issues associated with it. Look, I think – let’s be clear – I think the Government has clearly not had time to think it all through. As you saw yesterday in Question Time we asked some perfectly reasonable questions about how the interests of taxpayers was going to be protected because clearly taxpayers are going to be being put at risk with the guarantees, particularly those for wholesale term funding. And I think it’s pretty clear the Government has not finely thought all that through.

Now, we’ve provided them with some input and I think we’ll no doubt have some more to say about that publicly but it is a developing issue. The fact is they made a decision and they’re filling in the blanks as they go along. We’re happy to assist with that but it’s nonetheless, with all due respect to the Prime Minister, he would have served the public interest better if he had actually answered the questions, addressed the questions yesterday rather than being indignant that the Opposition would be so impertinent to ask about how taxpayers’ interests could be protected.

QUESTION:

Mr Turnbull, is your support for this package conditional on you being satisfied in your briefings later today that the stimulus won’t tie the hands of the RBA?

TURNBULL:

No, we will support the package Dennis. I don’t think there is any point us quibbling about it, about the composition of it. I mean, no doubt if, you know, if we were in government we would have designed a package that would look somewhat different but there’s no point getting into that. It has our support, nonetheless the Government has to recognise and I’m sure it does recognise that a stimulus of this size – it’s about one per cent of GDP – will have an impact, they want it to have an impact. Let’s face it, they want it to have an impact on demand and on the overall economy. And they have got to make the right judgment based on the best advice that that stimulus is not going to be more than is required. And that’s the judgement that they’ve had to take and we’ll certainly be, you know, looking at that in the briefing and I’m sure we’ll all be examining the impact of the stimulus as time goes on.

Thank you very much.

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