ALAN JONES:
Joe Hockey is on the line, Treasurer, good morning.
TREASURER:
Good morning, Alan.
ALAN JONES:
People listening, I suppose, will wonder that given how difficult this job is, whether on Budget night, on the 13th of May, there may not be a gap between the rhetoric, in other words you’re telling us it’s crook, and what you can deliver. In other words, if you are not going to buy growth, you’re going to have to cut large spending programs, will you be doing that on Budget night?
TREASURER:
Well yes, Alan. We are not going to frame a one year Budget. We are going to frame a Budget that is going to deliver over 10 years and, in fact, delivers out to 2050. And I would never have thought that we would have to be in a position to do this. But the structural problems in the Government are so severe that if we do not address the medium and longer term problem then the sustainability of our quality of life is undermined.
ALAN JONES:
Right, now you’re speaking slowly and I think that is important because some of these things have to be said slowly. You talk about structural problems. I tried to raise this before and let me repeat again, you said last night in the speech that between 2010 and 2050 the percentage of people of working age supporting those over the age of 65 will almost halve. So, we are reducing the number of people who are working and increasing the number of people who will depend on all sorts of benefits from Government. That requires some significant readjustment of what those benefits might be doesn’t it?
TREASURER:
Well, it is not just the benefits. It is the attitudes in the community. I know a lot of people over the age of 50, 60, even their 70s, that want to get back to work, but there is an attitudinal problem in business we need to address. We need to change our attitude towards people continuing to work as long as they want, because you don’t end your life when you turn 65 or 70. But we want people to have the opportunity to continue to work.
ALAN JONES:
Just on that, you then said last night between 2010 and 2050, and this is the guts of the structure of the population, the number of people aged 64-84 will double, you said the number of people 85 and older will quadruple.
TREASURER:
And one in three children born today are going to live to 100 and we should celebrate that. But we have also got to make sure that we can give ourselves and our children a decent quality of life along the way. That is why we have to address these structural issues. We will keep our promises, Alan, we will definitely keep our promises. But we are going to lay down a road map that ensures that we can maintain the prosperity and quality of life of Australians over the medium and long term. And for many of your listeners who may be on the pension or over the age of 65, I say to you, it is going to be my generation, a younger generation and those that follow that are going to have a lot of the changes take place as we get older. And what we’re doing is making sure that our aged care system, our hospital system, our pension system are sustainable at their current levels.
ALAN JONES:
OK, now just come back to a sentence you made there because that can solve a lot of worry out there. Everyone knows the job is difficult. You just said we are going to keep our promises. Tony Abbott said on September 5, 2013 before the election, quote: ‘I can assure your listeners there will be no cuts to health, no cuts to education, no cuts to pensions, no change to the GST’. So when you said earlier before, to me, that you’re going to frame a Budget beyond this term, does that mean that you can say categorically here that there will be no cuts to pensions, but you may well foreshadow in the Budget the way that issue will be addressed in later terms of your Government?
TREASURER:
Well, I can say to you, Alan, that we are going to keep our promises. We are keeping our promises.
ALAN JONES:
That means no cuts to pensions.
TREASURER:
And we are going to lay down a plan in the Budget that gets the Budget back on a sustainable footing. Now, if you are asking me what is the timetable? We are honouring our commitments. Now for those people who are concerned about their pension next year, they need not be concerned as an aged pensioner. So, they need not be concerned. And I say to people the year after they need not be concerned and so on. We are honouring our election commitments. But our greatest election commitment was to fix the mess we inherited. And, Alan, I would be negligent not just to your listeners, but negligent in a selfish way to my own children, if I didn’t ensure that what Government provides is sustainable into the future.
ALAN JONES:
Right, no, we all understand that and I think you’ve won that battle. The point is, where is the money going to come from, because we’re not short of revenue? And let me just say to my listeners, by 2016-17 the total, this is what’s frightening, this is why those other mob ought to be locked up, by 2016-17 the total Commonwealth revenues will be up by more than 50% on the revenues of the last Howard-Costello Budget – more than 50%. Personal tax will have doubled by 2016-2017 from $124 billion in the last Howard-Costello Budget, to $215 billion. $124 billion to $215 billion – personal tax. Company tax will be a third higher. So, the Government receipts are higher as a proportion of GDP than they have been at any time since 2007. But the problem, Joe Hockey, is not that but spending is it not? And I suppose people are going to say, well we are going to keep our promises, therefore Tony Abbott said there will be in this Budget; no cuts to health, no cuts to education, no cuts to pensions, no change to the GST. Where, how do you get that $47 billion dollar, which is the last, last, deficit of this mob, you’re announcing that on the 13th May – $47 billion deficit, another one. How do you reduce that and what do you reduce it to?
TREASURER:
Well it can’t be done overnight, Alan. That is the starting point. If I went on a massive slash and burn exercise on budget night for the next 12 months it would unquestionably cause higher unemployment and it would have a very significant negative impact on the economy. So we have got to have a credible plan back to surplus. Now, the previous mob, they always said they’d get there and they never did. In fact, they never would have. In my view, the most important thing is that we have a credible plan that we lay down. There will be cuts. Of course there are going to be cuts in spending and our election commitments were very specific. For example, we said we were committing to four years of Gonski from the time of the last election and not the endless growth.
ALAN JONES:
I wish you hadn’t.
TREASURER:
Well, we did. We also expressed extreme doubt about the commitments to the additional money in relation to hospitals and we are going to be very open and frank about the challenge in relation to hospital spending which is essentially a state issue. But that is growing at 10.5% per annum – 10.5% per annum. The economy is growing at less than 3% but hospitals are growing at nearly 10.5% per annum. The Medicare system is growing at 7.1% per annum, more than twice the speed of the economy. The aged pension is growing at 6.2% per annum, more than twice the speed of the economy and it keeps going.
ALAN JONES:
You were at pains last night to point out, basically, let’s just use simple language, that there should be things called co-payments on a lot of the benefits that people get and hence the Medicare co-payment and so on. Just coming back I want to ask you about this promise because there has been a lot of alarm about it and this Paid Parental Leave scheme, which you’re committed to and Tony Abbott is committed to, that is that these people will go on maternity leave and will get full pay and so on. Now, it’s not new money you are topping up what the Labor scheme is and so on, the argument is ‘oh, well people are getting $200 000 while you are going to put up a $6 Medicare levy if they go to the doctor’. I don’t know too many women of child bearing age who are on $200 000, but the argument that you have used and Tony Abbott has used, which I think is a valid one, is that it is an incentive to keep people in work given those awful figures about the number of people working being halved and the number of people in retirement age or welfare age doubling and quadrupling. What obligation is there, in the Paid Parental Leave Scheme though for these people to return to work at the completion of their leave.
TREASURER:
Well essentially they have to return to work. When you see the legislation it will be clear, there will be a form of obligation.
ALAN JONES:
So you will only qualify for that Paid Parental Leave if you are going to return to work at the completion of leave.
TREASURER:
But most people, Alan, have to return to work. I mean as you know, as you know, a young couple living in Sydney cannot afford a home usually on one income. It is incredibly difficult and the great transition I have seen in the last 16 years of my public life has been the necessity for both parents to go to work, in one form or another, rather than to be in a situation where only one person can earn the income, you just can’t pay the mortgage.
ALAN JONES:
So you are saying there will be language which will impose an obligation on them to return to work at the completion of leave?
TREASURER:
There is mutual obligation that is required in relation to so much of what we are going to do.
ALAN JONES:
One other question; given that there is this issue about quote unquote, retirement the number of people 85 and over is going to quadruple, the number of people 64 to 84 will double, there are fewer and fewer people in the workforce to support those people, a lot of energy and effort and taxpayers’ money has been spent on superannuation. The taxation benefits for superannuation this year will be $35 billion, they will rise to $50 billion by 2016-17. That is, we are only paying 15 cents in the dollar not the marginal rate. $35 billion, how is it that we have provided all that stuff and an industry of $1.7 trillion in super out there and four out of five are on a part pension or a full pension?
TREASURER:
That’s a very good question and it is not changing from now until 2050. That’s the amazing thing; 20 percent of people over the age of 65 are totally self-dependent today and with all the contributions on superannuation, the same ratio, 20 percent, are going to be self-funded in 2050. So, even though what will change over that time is more people will go on part pension and fewer on the full pension, the pension has always meant to be a safety net, it’s meant to be a safety net not a cargo net and I want to say again, I want to say to your audience Alan, this is going to affect my generation more than any others and the heaviest lifting is going to be done, in the Budget, by those who have the capacity to do the heavy lifting.
ALAN JONES:
Good on you that includes you and me. You go, always good to talk to you, we must talk often. Thank you for your time.
TREASURER:
Thank you, Alan.