JOHN MCGLUE:
Joe Hockey, welcome.
TREASURER:
Great to be with you, John.
JOHN MCGLUE:
Well, Perth today and we will get to Dio Wang in a moment but you were due to meet Clive Palmer last night. What was the upshot of that? How did you go?
TREASURER:
Well, it was a constructive discussion and I think the starting point has to be to clearly articulate the challenge that we have inherited which is what we are doing. I am offering everyone the opportunity to get a full briefing from the Treasury on the challenges we face in the Budget that we have inherited from Labor and also importantly, to see that we need to address them now in order to avoid much greater pain in future years and I want everyone to have the same information. That’s what I am doing – providing them with the opportunity.
JOHN MCGLUE:
And what kind of response did you get from Mr Palmer?
TREASURER:
Everyone has given me a positive response in one form or another. There will be differences of views about things but you would expect that.
JOHN MCGLUE:
And Dio Wang, today in Perth, the WA Senator?
TREASURER:
Again, I found him an impressive figure. He’s certainly smart and articulate and very engaging and his office was very engaging.
JOHN MCGLUE:
The PUP people were saying, ‘Joe Hockey shouldn’t waste his time travelling to Perth because there are certain bedrock philosophies the Palmer United Party has on certain Budget measures’. The Medicare co-payment is one of them and Clive Palmer has said over and over that they are not for moving or for turning in relation to that. Any hope?
TREASURER:
They made a point in the meeting of saying to me that the report by Mr Coorey in the Financial Review was dead wrong and apparently they communicated on social media that that report was wrong. They were very engaging and very pleased that I came over and we certainly had very good and very positive discussion.
JOHN MCGLUE:
So, are they for moving on this?
TREASURER:
Look, that is up to them. I am not going to give blow-by-blow or shot-by-shot or word-by-word analysis of these discussions. I think we have got to be in a position where we can have frank discussions and work through some of the issues.
JOHN MCGLURE:
Treasurer, this Budget has probably moved from the art of the ideal to the art of the possible. So realistically, where can you offer meaningful compromises or changes to your proposals that will see the majority of your measures get through the Senate? What can you do?
TREASURER:
Well, the majority of the Budget has passed through the Senate already. Now, it is a new Senate that started on the 1st of July. They have had two sitting weeks, it is new members that have come in, a lot of new members and they have had to deal with incredibly complex legislation on both the Carbon Tax and the Mining Tax. Sometimes, I think we can have unreasonable expectations of people and for them to be thrown in and expected to make decisions on multi-billion dollar initiatives immediately can be sometimes unreasonable expectations. So, firstly let’s just carefully and methodically go through the process, which is what we are doing. As I say, the majority of the Budget– a vast majority of the Budget has already passed through the Parliament in the form of appropriations. We lowered appropriations in some areas. For example, the biggest cut in the Budget was in relation to foreign aid, that’s already gone through. There has been an appropriation for this year. Let’s just go through issue by issue and consider them carefully.
JOHN MCGLUE:
Given all of the objections to the Budget measures, the new Senator’s (inaudible) but they have been quick to reach judgment in relation to some things, and it is sounding from you and from your colleagues in Cabinet – Federal Cabinet, that some compromises and changes and negotiations around an array of Coalition policies are up for grabs. For example, Christopher Pyne talking about that he is (inaudible) to sit down and talk about the education reforms, all of which reflect and bear on your bottom line. Given the case – the situation that you are now negotiating and you are now willing to panel beat some of the proposals to get a solution, can you tell me now what the case is for pushing ahead with the Paid Parental Leave Scheme against all of that backdrop?
TREASURER:
Well, there are two things about Paid Parental Leave that I think people need to think carefully about. The first is, when you and I were growing up, it was possible to own a home in a capital city and have one household income. I think that has changed in virtually every capital city in Australia. It is now (inaudible) to meet the cost of repayments on a mortgage or even the rent on just one household income and you have seen a massive increase in the amount of – particularly women – having to work, they don’t have much choice about it, they have to work. They should not be penalised at the point of child birth, financially because the mortgage still comes in, that doesn’t go down because they haven’t got work or they can’t go to work, the mortgage still comes in. So, what we are offering is replacement wages, so that they are not financially worse off at the point of having a child because the bills don’t go down and this is the first time it has been done. The irony is, the unions argue this, the public service offers it, big business tends to offer it but small business often can’t afford to offer it. And certainly in the case of farmers, they can’t often cope with it either, can’t deliver it to themselves. So, now we are offering replacement wages so that they are still able to meet their bills. And the second thing is, small business cannot offer those sorts of services to employees that the public service and big business can and therefore, for the first time, we are giving small and medium sized enterprises, the very same employment coverage as big business gets, as the public service gets. We pay their employees full replacement wages when they are on maternity or paternity leave and in doing so, we are not charging them for it because big business is paying for it with a levy. So, small businesses for the first time, is on a level-playing field with big business. So, you have got equality of income and for the first time, you’ve got for small businesses, equality of opportunity. Now, that sounds like a pretty good deal. And by the way, if we increased our workforce participation by women to the same level as that of Canada, we would be able to increase the size of our economy by about $25 billion because compared to many other countries you know, such as Canada and I understand New Zealand, we have fewer women able to engage in the workplace.
JOHN MCGLUE:
Twenty two past three on Drive, you are with John McGlue. My guest is Joe Hockey, the Federal Treasurer. He is in Perth speaking with the Palmer United Party Senator Dio Wang and looking for support for his Budget measures…
TREASURER:
And a few other things…
JOHN MCGLUE:
And a few other, of course, including speaking with us and we are very grateful for your time but this Budget was, in many respects Joe Hockey, an expression of your view that Australia needs to end this ‘age of entitlement’ as you have described it but you have been slapped down a lot when you have tried to prosecute the argument. There doesn’t appear to be a lot of appetite across the community for the medicine that you are prescribing. What does that tell you about the mentality of modern Australia?
TREASURER:
Well, we have to get the balance right. The fact is, we have to get the balance right. Now, when I said that we need to bring to an end the age of entitlement – that applied as much to business, as it does to others in the community. So, it’s easy for, when you have these sorts of public policy debates, it is easy to be stereotyped but you have just got to persevere, you have to push on and get the truth out there and the truth is that there was an entitlements culture amongst some business people, an entitlements culture in some industries and an entitlements culture in parts of the community but ultimately, we all pay because government money comes from taxpayers…
JOHN MCGLUE:
I hear your argument on that but I don’t see the widespread support or acknowledgement of the problem.
TREASURER:
I think people do understand that, I think people do understand that and it encourages me greatly when you know, I speak to people and they say, I am prepared to pay my way, I also need some help’ and I’d say, ‘yes let’s give you the help, let’s give you the support you need. Let’s make sure you have no deterioration in the quality of your life, in fact, you have an even better quality of life’. So, what government does with taxpayers’ money, it targets those people most in need, it helps those most disadvantaged and for others, we don’t create a cargo net in the welfare system, but we create – not even – go beyond the safety net and have it as a trampoline where people can bounce back up, so that they can rebuild their lives or strengthen their lives. There are inevitably going to be times in our life, when we are doing it really tough, there will inevitably be times in one form or another but the fundamental point is that the government and the community has a role to help you during those and times and you have got to do the right thing. We are saying, in order to make sure that we can do the right thing for those people long into the future, we have to make sure those most deserving get the most help.
JOHN MCGLUE:
Treasurer, you mentioned business and the role it plays. I have been interested and observing business in the run-up to the election and in the immediate aftermath of the election, so to speak. Business was screaming for reform across a number of areas and they were banging the door and banging the drum and demanding that the new Government would do something and I think they pretty well (inaudible) with you – with the Coalition. But, things have been pretty tough of late for you trying to prosecute the arguments about the changes you believe in, profoundly. And I have been interested in the way business has been missing in action to some degree, you don’t hear them out on the (inaudible) the big business leaders, the big business organisations supporting what you are trying to do. It sounds like the going has got a little rough for them. Have you been surprised by that?
TREASURER:
Well, it varies John. I mean, the fact is that a number of business leaders have spoken out. In fact, Michael Chaney, the Chairman of a major bank – well known here in Perth, he was on Lateline last night, saying exactly that – ‘we’ve got to get on with the job of fixing the Budget’. Others like Catherine Livingstone and others have done that as well but I think what has happened is that sometimes there is an expectation that all wisdom and knowledge and leadership and opinion only comes out of Canberra and I think there needs to be community advocacy for things like the sustainability of the welfare system and the sustainability of the health system. We all know for example that if the current trends in health continue, basically, state government Budget’s will be almost entirely absorbed with hospital running costs and healthcare costs over the next few decades. Let’s have a proper debate about it; let’s have a proper, mature debate about it. And it is beholden on everyone to participate in that mature debate. You don’t mind having arguments about you know, what is right and what is wrong but you have got to ensure you have a properly informed debate and that it not simply be hysteria that drives peoples motivations. You know, I give you the example, this morning on ABC in Brisbane, I mentioned the fact that it is the case that higher-income households pay more in fuel tax. Now, that is a fact. They are likely to have more cars and they are more likely to drive those cars.
JOHN MCGLUE:
Well, Treasurer let’s just hold you there. You mention the interview on Brisbane radio this morning on ABC; let’s just have a listen to this:
The change to fuel excise, the people that actually pay the most are higher-income people, with an increase in fuel excise and yet, and yet, the Labor Party and the Greens are opposing it. They say you’ve got to have wealthier people or middle-income people pay more. Well, change to the fuel excise does exactly that; the poorest people either don’t have cars or actually don’t drive very far in many cases. But, they are opposing what is meant to be, according to the Treasury, a progressive tax.
That sounded pretty unequivocal to me that you believe people on lower-incomes either don’t have cars or don’t drive those cars.
TREASURER:
No, no, you see this is the generalisation, right. The fundamental point is, as your income increases, it is more likely that you are going to have more than one car and you are going to drive it more often and as you have lower-incomes in the community, you are less likely to be using a car more often and less likely to have more than one car or have a car, right? Now, it varies – of course it varies, that is a statement about the whole country and I have just released data to back this up. It varies from city to city, from outer-metropolitan area versus regional areas and so on but the facts are, as you can you know, form a general assessment of people you might know, higher-income households tend to have more than one car and tend to use them more often than lower-income households. So, that makes a mockery of the Labor Party’s argument about fuel excise and the Greens argument about fuel excise. So, you know, the fact is, it gives me an opportunity to get the facts out there. Others will come back with different facts, they are entitled to do that but let’s have a proper debate about it.
JOHN MCGLUE:
Twenty-nine after three on Drive, you are with John McGlue. The Federal Treasurer is my studio guest on Drive. Treasurer, if we could leave the Budget and talk about a wider issue, which is investment in the domestic economy. On getting elected, Tony Abbott said ‘Australia was open for business’ and the subtext there was that people in the domestic economy would take money out of the bank and start investing that in productive business, creating employment and creating wealth and especially creating sustainable employment. Why haven’t we seen more signs of that?
TREASURER:
I think you have seen a significant increase in economic activity and there are a whole lot of different indicators. You have got consumer confidence indicators – they obviously went down with the Budget, they are virtually back to pre-Budget levels now, contrary to what people were suggesting, business confidence is up significantly and you are seeing a transition in the economy more generally, and you know it here in Western Australian better than most, from a mining-construction phase where there was a massive amount of jobs in mining engineering and logistics support and so on during the construction phase, to the mining-production phase and we are exporting our socks off, which is terrific but at lower prices too I might add, than what we forecasted in the Budget. But mining and resources represent around ten per cent of the economy, we have got to fire up the other 90 per cent of the economy and that’s one of the reasons why we have our asset-recycling initiative, that’s why we are spending so much on new, additional infrastructure including $5 billion here in Western Australia that is going to help to drive the jobs that drive the productive economy into the future.
JOHN MCGLUE:
I guess one of the metrics – one of the indicators that I always look to is the degree to which people are employing cash into the productive economy and I have just looked at Commonwealth Bank who have released their results today, it’s a record profit but if I have a look at the growth of a couple of their individual activities, the business lending growth is running at around 4 per cent and deposit growth is running at around twice that and at times in the last two, three years it has been running at 30 per cent term deposit growth in Australian banks and credit growth has been 4-5 per cent and to me is indicating that capital has gone on strike, to a great degree in Australia. What do you do about that because it is business confidence?
TREASURER:
Business confidence is actually comparatively strong at the moment and it is getting better but what we are endeavouring to do is to roll-out in a methodical and careful manner, an infrastructure program that obviously, combined with an asset-recycling program delivers economic activity that starts to stimulate that confidence even further. Now, converting confidence into investment is the issue and a lot of businesses are sitting on very strong balance sheets. I mean, Commonwealth Bank today is an example of that – very strong balance sheets and what we have to got to do is unleash those. People have to look for opportunities and they have to have confidence that tomorrow is going to be better than today to take that risk. We are seeing a period of interest rate stability; we are seeing the delivery – albeit sometimes it is you know, contentious debate, we are seeing the delivery of the Government’s promises. We said we would stop the boats, we have stopped the boats, and stopping the boats in so far as we can, we said that we are rolling out the infrastructure of the 21st century, we are doing just that, we said we would get rid of the Carbon Tax, we are doing that. These are the things that help to build confidence over time but it doesn’t turn on a 20 cent piece.
JOHN MCGLUE:
Ultimately, you are waiting for local people who are not going to be part of major asset-sales, just ordinary people who have been running businesses, in business to get those people to invest more.
TREASURER:
That’s right and we are removing red tape for those people and most importantly, not creating more red tape, more regulation is a way of helping in that regard.
JOHN MCGLUE:
Treasurer, a final issue I would like to canvass with you: as you know, Western Australia feels pretty brutally treated by Canberra in relation to GST (inaudible)
TREASURER:
I have picked that up.
JOHN MCGLUE:
Well, you would know that Colin Barnett – our Premier, reaches for that incessantly as a reason to explain his Government’s fiscal problems. What is your message to Colin Barnett?
TREASURER:
Well, there are a number of avenues that are available. Firstly, the Grants Commission has just put out a draft paper in relation to the methodology for the distribution and anyone can make a submission to the Grants Commission to help to redress that methodology – what might be seen to be an imbalance And the second thing is, as the Prime Minister has announced, we are going to have a Federation White Paper. We are going to look at the Federation – the structure of the Federation over the next 12 – 18 months. We are also looking at a Taxation White Paper at the same time. So, they are running in parallel. And during those discussions, which will obviously involve the State Government, there will obviously be a lot of opportunity to discuss these sorts of issues. I think…
JOHN MCGLUE:
You know that response is not going to make him happy, nor make West Australians happy.
TREASURER:
But I think you have got – we have got to make sure it doesn’t turn into an us versus them argument. I mean, at the end of the day, we are all Australians and I don’t think it is helpful to say such and such state is a (inaudible) state and we do all of the heavy lifting because at various times over the course of the history of the Federation, states have in one form or another, done heavy lifting and others have been receivers and not givers. So, I think we have got to move away from that and find out how can we take some of the volatility out of the numbers, how can we ensure if there is significant population growth, (inaudible) that that is properly addressed in the weighting and methodology that is laid down by the Grants Commission.
JOHN MCGLUE:
But West Australians will read that as justice delayed is justice denied in terms of the fiscal equalisation across the Commonwealth.
TREASURER:
Well, I understand that but if money goes to one Australian, it is taken off another Australian. And, you know, if you are talking about Tasmania, they have paid a very, very heavy price for well over a decade of a Labor-Greens alliance, which was anti-business and it was anti-economic growth and therefore as Tasmania suffered the pain of a terrible State Government for such a long period of time, they relied more and more on contributions from Canberra, which ultimately came out of the pocket of everyone else in Australia, as every dollar does.
JOHN MCGLUE:
Joe Hockey, thank you for your time today. Good to see you in the Drive studio; always good to see you in Western Australia. Thank you very much for your time.
TREASURER:
Thank you.