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Cameron Bagrie: Independent economist on Labour's fiscal plan · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Well, a week after the preview, Labour's finally laid out
• 0:02
  Speaker 1: its highly anticipated fiscal plan. It's promising to return the
• 0:05
  Speaker 1: books to surplus in 28-29. And sticking with the Coalition's
• 0:09
  Speaker 1: $ 2. 4 billion a year operating allowances, there's $ 10. 5 billion left unallocated. Now,
• 0:16
  Speaker 1: the big thing is the pay equity, and Labour has
• 0:19
  Speaker 1: only cost $ 2. 5 billion of the estimated $ 11 billion total
• 0:24
  Speaker 1: over four years.
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  Speaker 2: We're not going to negotiate pay equity settlements through the
• 0:28
  Speaker 2: media or during an election campaign. All right.
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  Speaker 1: So to run his eye over the numbers, Cameron Bagri
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  Speaker 1: joins us now, the independent economist. Hello, Cameron.
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  Speaker 2: Good morning.
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  Speaker 1: Hey, does it stack up or are there too many
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  Speaker 1: grey areas to know?
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  Speaker 2: Well, there's lots of grey areas around these things when
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  Speaker 2: you pull together a set of fiscal forecasts because you've
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  Speaker 2: got one big revenue number and one big expense number
• 0:51
  Speaker 2: and you can see a fair bit of variation between
• 0:53
  Speaker 2: those two. What we know is it doesn't matter which
• 0:56
  Speaker 2: political party gets into power, the kitty's pretty empty. To
• 1:01
  Speaker 2: go from deficit to surplus, which we need to put
• 1:04
  Speaker 2: some money back in the tin to bend the debt curve,
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  Speaker 2: it's going to involve complicated trade-offs. Both the main political
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  Speaker 2: parties have committed now to $ 2. 4 billion operating allowances for
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  Speaker 2: the next four budgets. By the time you whip out
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  Speaker 2: about $ 1. 5 billion of that towards health, there's not a
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  Speaker 2: lot of money left for the rest of the government.
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  Speaker 2: And once again, complicated trade-offs. If we're going to go
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  Speaker 2: from deficit to surplus, you either need more revenue, or
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  Speaker 2: you've got to go pretty hard cutting expenses as a
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  Speaker 2: share of GDP. And both the main political parties have
• 1:33
  Speaker 2: had that within their fiscal plans.
• 1:35
  Speaker 1: Is the lack of detail, particularly around the pay equity, dishonest,
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  Speaker 1: or is that a commercial reality?
• 1:43
  Speaker 2: I think that's more a commercial reality. But look, we're
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  Speaker 2: going to get back into that infamous Stephen Joyce fiscal
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  Speaker 2: hold debate that we saw in 2017. and the finger
• 1:53
  Speaker 2: will be pointed at either side. But if you just
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  Speaker 2: look at Treasury's articulation within the last few budgets, half-year
• 2:01
  Speaker 2: economic fiscal update, the pre-foo, going from deficit to surplus
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  Speaker 2: is going to involve complicated trade-offs. You either need to
• 2:09
  Speaker 2: get expenses down as a share of GDP, or you
• 2:12
  Speaker 2: need to find more revenue out there. So braced for
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  Speaker 2: this election, it's going to be a trade-off, I think,
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  Speaker 2: between tax versus health care.
• 2:18
  Speaker 1: OK, so you say tax. You basically have said... any
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  Speaker 1: government is either going to have to lift revenue, in
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  Speaker 1: other words, lift taxes, or they're going to have to
• 2:27
  Speaker 1: cut spending. This is a party, Labour is a party,
• 2:30
  Speaker 1: with a capital gains tax. They say they've ring-fenced it.
• 2:33
  Speaker 1: Do you think there might be a possibility that they're
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  Speaker 1: going to have to expand that?
• 2:38
  Speaker 2: Yeah, I think so. If you look at, they've just
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  Speaker 2: updated their fiscal objectives because what they had within the
• 2:46
  Speaker 2: document they've released with government expenditure trending down as a
• 2:50
  Speaker 2: share of GDP, but their fiscal objective was to keep
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  Speaker 2: government expenditure at a flat around 33% of GDP. They
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  Speaker 2: just updated that, I think. So now it's a ceiling.
• 3:02
  Speaker 2: So we call it the impossible trinity, Andrew. You want
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  Speaker 2: to demonstrate these things if you're finance minister. You want
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  Speaker 2: to show that you're bending the debt curve, you're getting
• 3:12
  Speaker 2: from deficit to surplus. That's one objective. Number two, you
• 3:15
  Speaker 2: need to find money to invest in the economy, invest
• 3:18
  Speaker 2: in infrastructure. And number three is you've just got to
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  Speaker 2: throw money at core government services because the likes of
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  Speaker 2: health care is a pretty expensive beast to run. Well,
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  Speaker 2: you can hit two out of three. You can't hit
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  Speaker 2: three out of three unless you're prepared to front up
• 3:31
  Speaker 2: and say you're going to lift taxes.
• 3:32
  Speaker 1: All right, Cameron, I thank you so much for your analysis.
• 3:36
  Speaker 2: For more from Early Edition with Ryan Bridge, listen live
• 3:39
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• 3:42
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