DAVID LIPSON:
Joe Hockey, thank you for your time. David Cameron, the British Prime Minister, is urging Europe to put in place tier three sanctions against Russia. Now, if Russia doesn’t pressure the Separatists to allow full access to the crash site, would that be appropriate?
TREASURER:
Well, look David you are asking me to speculate on the matter and I can’t do that. I am here in Wellington, New Zealand and I have just met with John Key who offered his praise to Tony Abbott and his fulsome support for what Australia is doing. We are doing everything we can as a nation to pressure Russia to be as supportive and co-operative as possible. So far, it appears that is the case but quite obviously there is a very, very long way to go.
DAVID LIPSON:
France has tried to sell Russia two warships at the moment. Should European countries be supporting arms in Russia at this time?
TREASURER:
Well, David, the starting point is you can’t improve communication by closing communication. And the fact that the Prime Minister Tony Abbott contacted the President of Russia, and also importantly, that Australia drafted and sponsored a resolution before the United Nations indicates that we simply want to get on with the job of securing the site, bringing home to desperate families their slaughtered relatives and loved ones, and bringing to justice those responsible. Now, you’re asking us to go four steps ahead immediately and start apportioning blame, I think the first step is to secure the site and get all the information and recover the bodies.
DAVID LIPSON:
Yeah, clearly the priority for Australia is the repatriation of those bodies and first and foremost the proper treatment of them and then an investigation but there is some talk of potential sanctions. And I just wanted to get your thoughts as the Treasurer, and I know you are not in Australia, but in an already fragile economy particularly in Europe and with Russia drawing so much water, providing so much gas for Europe; would sanctions have the potential to upset an already fragile economy?
TREASURER:
Well, if you’re talking about the Russian economy, there are already sanctions on Russia, but if you’re talking about the Australian economy, that sort of activity wouldn’t affect Australia.
DAVID LIPSON:
But the broader European economy which has an impact on the global economy?
TREASURER:
Well, look, as for Europe, sanctions are a matter for the Europeans. But again, David, it’s really important that we do not try and get four or five steps ahead of the game, because ultimately as we address each step it gives us greater clarity about where it’s heading. At the moment we don’t know where it’s heading, we can’t point the finger, not to any other country without absolute certainty. However, the best way to find out the answer is, as we’ve said before, secure the site, repatriate the bodies to loved ones and importantly have an independent inquiry. Now the Russians have said they’re going to cooperate with all this, so let’s find out if they’re fair dinkum or not.
DAVID LIPSON:
And just finally on this question before I move onto other matters. Does all of this have the potential to derail or at the very least, undermine the G20 later this year in Brisbane?
TREASURER:
Well, I hope it doesn’t, I hope it doesn’t, because rarely are great things achieved by excluding people from the conversation. However ultimately, if a state for whatever reason, whatever state, becomes a (inaudible) in the international community then the whole of the international community needs to make a decision. Now, the decision was made in relation to Russia on the G8, that was made by all the members of the G8, it wasn’t a unilateral decision by one country. It would be the same in relation to the G20 or any other organisation, no single country can impose its will, it needs to be a collective decision.
DAVID LIPSON:
So, clearly you would like to see Russia at the table, assuming it does continue taking appropriate action?
TREASURER:
Well, of course, the best illustration of that is over this last weekend, the Minister for Trade for Russia was in Sydney, as part of a meeting of all the G20 Trade Ministers. Now, the Prime Minister took that opportunity with him in the country to deliver a very explicit message through him to the President that helped to facilitate a phone call with President Putin. You do not improve communications by closing the door. The best way to get answers is to keep an open line in communication and seek the support of the Russians in this case.
DAVID LIPSON:
Well, turning to your trip in New Zealand. You have been meeting with members of the Key Government there over the past day or two. There is an interesting comparison between the two economies – New Zealand and Australia because growth and unemployment are pretty similar between the two nations but here in Australia the deficit is close to $50 billion whereas in New Zealand they are forecasting a surplus. Why is there such a difference when it comes to the Budgets?
TREASURER:
Well, because New Zealand undertook budgetary reform and cut government expenditure a few years ago. Because of those reforms they are now reaping the benefits, in fact it’s quite amazing, New Zealand now seems to be receiving more New Zealanders home than it’s been sending overseas. New Zealanders want to go home because the economy is strengthening; it is a competitive and innovative economy; that’s because they undertook the Budget reforms. Now, I say again to my colleagues in the Australian Senate, if you truly care about jobs and prosperity, you will support the passage of our Budget and the repeal of the mining tax package. If you need any evidence at all of the benefits of undertaking reform look no further than what’s happened in New Zealand where they are getting to surplus and they have a growth trajectory and a jobs trajectory that Australians could be jealous of.
DAVID LIPSON:
New Zealand did indeed get spending under control but they also took action on the revenue side increasing the GST from 10 to 12.5 and ultimately to 15 per cent. Is that an example we should gather something from?
TREASURER:
Well it’s more the process that I am learning from, the fact that they could put a case to the New Zealand people for that sort of change, and as a result of that they got the dividend in terms of tax change. But having said that, there is no silver bullet in relation to tax or anything else. I mean, you know David, we have gone to two elections promising to repeal the mining tax and all of its expenditure - $17 billion in expenditure - and that is hard politics, that is hard policy principals before an election. Not after an election, but before an election. Now the Labor party and the Greens want us to break our promises and the independents in the Senate want us to break our solemn promise to the Australian people. Well, we will not do that. We made a solemn promise to fix the Budget, we are determined to do it, not because we have some ideological commitment to cutting expenditure, it is because if we do not undertake this reform now it will cost Australian jobs. It will cost us prosperity and that is why we promised it before the election and that is why we want to implement it now.
DAVID LIPSON:
So, you say you are particularly interested in the process. Is the Government – your Government indeed going through a process now of moving towards ways of raising revenue, perhaps through the GST?
TREASURER:
Well, there is no easy solution. The more we fail to get our expenditure reductions through the parliament, the less room there is for taxation reform. You cannot on one hand want to spend more money and on the other hand have lesser taxes. It does not work like that. The fundamental principal is that we need to live within our means and only when we have a clear pathway to living within our means by reducing government expenditure, can we then actively consider the more detailed taxation reduction program that many would hope for.
DAVID LIPSON:
So, you are open to more taxes though in the mean time?
TREASURER:
No, because fundamentally taxation revenue is rising. We want to have less tax, that’s what we promised at the election and we are delivering less tax than would have been the case if Labor had been re-elected. So we are delivering on that. But, the solution is not more taxes or more punitive measures in the economy. The solution is less Government expenditure, and therefore give people back more of their tax and more control of their destiny.
DAVID LIPSON:
We have seen the Productivity Commission’s Draft Report into childcare today. It is proposing a simplified model and it is preferred option would see families with a joint income of under $160,000 better off when it comes to childcare and those earning more than that paying more for childcare. Does that sound reasonable to you?
TREASURER:
Well, the report is a draft report, and I would encourage Australians to make a substantial policy contribution to the final report. Ultimately the Productivity Commission is saying if we spend more money on childcare the economy gets the benefit. Well, I totally understand that argument. But the problem is we haven’t got more money at the moment. You see this is the problem. Everyone wants to have their cake and eat it too. You can’t have things like the Schoolkids Bonus remain in place and expect that you’re going to end up with more money being spent on childcare. You can’t have all the payments out of the Mining Tax that raises no money and then expect to have tax cuts, or more money on childcare, or more money on health. I mean, you know, it’s unobtainable. I would…
DAVID LIPSON:
(Inaudible) recommends some of the funds from the Paid Parental Leave Scheme be redirected to help pay for those additional costs.
TREASURER:
Well, then again, the Paid Parental Leave Scheme was a scheme that we took, not just to the last election, but to the election before that, and there’s no doubt it is a core promise of the government to deliver a fair dinkum Paid Parental Leave scheme, that’s what we said we’d do, and we want to do it. And why? Because fundamentally, we believe that women deserve the same opportunity as men in the workplace. Unfortunately the Labor Party and the Greens don’t.
DAVID LIPSON:
Joe Hockey, thanks for your time.
TREASURER:
Thanks very much David, thank you.