MICHAEL BRISSENDEN:
The Treasurer joins us now, Mr Hockey welcome to the program.
TREASURER:
Well good morning Michael.
MICHAEL BRISSENDEN:
You’re talking about reform. You talk about this speech after speech, the age of entitlement is over etcetera, we know all the words you’ve used. But you’ve got deficits going out for years, what is the reform agenda and how are you going to do it?
TREASURER:
We have an economic plan and the plan is being rolled out as we speak. We are reducing the deficit and getting it back to surplus. We are getting rid of the waste, and we’ve been very successful in doing that in the Budget. We have an economic reform program that is delivering more jobs through three new free trade agreements with China, Korea and Japan. We have the largest infrastructure rollout in Australian history which is reaching into every state, every community, delivering more roads, better infrastructure. Importantly, we also have tax changes that are improving the structure of the tax system, getting rid of the carbon tax, the mining tax, 96 other tax changes and there is more work to be done.
MICHAEL BRISSENDEN:
Clearly you think there is still more work to be done and you asked for a sensible, mature debate about tax reform, and then almost immediately you take some of the bigger items off the table like negative gearing and super tax concessions?
TREASURER:
I don't accept that there was an immediate recant. What we actually said was we want to consult with the community. In relation to superannuation, I pointed out that millions of Australians are relying on their superannuation every day, and they're getting lower than expected returns because we’re in a low-yield environment across the world. Labor wants to impose a new tax on those people, thereby reducing the amount of money they have to spend. I say that is the wrong thing to do because we need senior Australians to go out there and consume goods. Household consumption is between 50 to 60 per cent of economic growth, and if you've got a whole cohort of Australians living in fear of another Labor tax, they’ll just cocoon, which will have a negative impact on economic growth and a negative impact on jobs.
MICHAEL BRISSENDEN:
Okay, you talk about taxes. You talk about lower taxes, that's the goal clearly for you, presumably to lower those taxes, things like the company tax and doing something about bracket creep which clearly is a big problem, you’ll have to raise money from elsewhere, raise taxes elsewhere or cut government spending, won't you? Particularly on the current projections.
TREASURER:
Sure, there has to be trade-offs and we…
MICHAEL BRISSENDEN:
Where are they coming from?
TREASURER:
For a start, we are getting government expenditure down over the next four years and beyond, and that's hugely important because the Government is still spending too much money…
MICHAEL BRISSENDEN:
So more spending cuts coming?
TREASURER:
Well, we have to reduce spending, and we have got those built into the Budget, but when you have mindless opposition from the Labor Party and other parties to some of the savings that need to be made it makes tax reform much harder. The challenge we have, Australia has, is that unless we have a tax system ready for the 21st century economy, where people can buy goods and services immediately over the internet which they couldn't do 20 years ago, unless we have a tax system ready for the 21st century, we will never be able to give our children enough revenue to pay for the services that are essential for their quality of life.
MICHAEL BRISSENDEN:
That's understood, but I guess the question is how are you paying for it now? Clearly you have a deficit problem, don't you?
TREASURER:
And what we've got to do is have measured savings where we can, in order to help pay for tax reform. We did that in the Budget, if you recall, of the $5.5 billion in the small business package, more than $5 billion was tax cuts for small business. Now, we were able to pay for that by making savings in other areas, so you've got to get the balance right. We continue to reduce government expenditure because we must, but at the same time if we can have adjustments in other areas of tax, better integrity measures which we're pursuing, particularly in relation to multinationals, then you will see that we can get the revenue that does make a difference.
MICHAEL BRISSENDEN:
But you're relying on growth figures, aren't you, that were described at the time as heroic. The RBA has since revised its growth figures and they've come down slightly. China is obviously in – there is some uncertainty about China, uncertainty about commodity prices, it’s a very uncertain environment to make those sorts of projections, isn't it?
TREASURER:
Well, let's go through a few of those. In the first case, the Reserve Bank has announced a new range for growth, our current numbers sit right in the middle of that range. Secondly, they've revised down the unemployment number. They think that unemployment has peaked, we've defied all the Cassandras, and last month 38,000 new jobs were created in Australia, compared to 3,600 in the same period under Labor. 3,600 under Labor, 38,000 new jobs under the Coalition last month, more than 10 times. That's a great story. Retail sales - twice what the market expected in performance directly as a result, partly as a result of our Budget. Record motor vehicle sales last month. The month of July is always a dead period in motor vehicle sales - highest ever motor vehicle sales, and on top of all of that, you’re going to see by the end of this year, our infrastructure program kick in. It’s going to kick in substantially to soak up some of the jobs that were lost out of the mining construction fall. So, I am more bullish about Australia…
MICHAEL BRISSENDEN:
Yes, you...
TREASURER:
I tell you why, while everyone else was talking about other issues, I spent two days in discussions last week with one of the most powerful figures in the Chinese economy, the second biggest economy in the world, and I have no doubt in my mind that the demand for our resources is going to continue to grow. In fact, iron ore exports are at record levels in volumes, and the prices on iron ore Michael, that we’re getting at the moment, are exactly what we forecast in the Budget.
MICHAEL BRISSENDEN:
So you don't see that this problem with the long-term deficits is something that is insurmountable; something that is not going to put a handbrake on the economy?
TREASURER:
Well, only the Coalition is getting the Budget back to surplus, and we've laid down a plan...
MICHAEL BRISSENDEN:
It’s taking a very long time isn’t it?
TREASURER:
Well, we could go much faster, but there’s two things. One is we would harm the Australian economy if we were to go faster. Secondly, when we make a commitment, we want to be able to deliver it. The Senate last year was very difficult, this year they've been far more pragmatic and all of a sudden you can see the sunshine start to go into the Labor Party Caucus where they realised the mess that they created needs to be fixed and they should support the Coalition.
MICHAEL BRISSENDEN:
You are in a politically difficult position though too aren’t you, because your next Budget will be an election Budget, unless of course you go to an election before May. That's a pretty tough call isn’t it, for someone who needs to rein in spending, to go to a Budget before an election, that’s going to be tough. We saw how your first Budget was…
TREASURER:
We needed to have a first Budget that addressed the mess we inherited. Our second Budget also had some significant savings, but at the same time we were able to give a leg-up to a lot of small businesses and farmers at exactly the right time and in exactly the right way with the $20,000 instant asset write-off. And then the third Budget continues to build on our economic plan…
MICHAEL BRISSENDEN:
So there will be another Budget before the next election?
TREASURER:
Well, three-year election, I’m assuming that will there be another Budget before the election, but Michael, it is important that we stick to our plan and we are sticking to our plan. It is not an accident that you create 38,000 jobs in one month. Government doesn't actually create them to be honest, it’s business that does, but business has to have the confidence to go out there and have a go, and they are as a result of what we are doing.
MICHAEL BRISSENDEN:
Okay just a couple of other issues quickly. The Senate's tax avoidance interim report which is tabled later today; I understand it will urge the Government to take unilateral action against corporate tax dodgers. Will you name and shame as it says you should?
TREASURER:
Well, actually the report hasn't been released, although I note that some media outlets have it which is an extraordinary breach of the Senate rules, but we'll see where that goes. Secondly, Senator Dastyari should be aware that in December, all companies that have a taxable income over $100 million have to disclose how much tax they pay in Australia. Thirdly, in the middle of my Budget speech, I actually tabled a draft bill to crack down on multinationals that are not paying their fair share of tax in Australia, and that is being rolled out and in the next sitting fortnight I will introduce that bill, and that's in partnership with the United Kingdom. But also we are taking a global lead in going after 30 primarily offshore-based companies that are not paying their fair share of tax. And finally, we have more resources allocated in the Australian Taxation Office that has already delivered a dividend of $400 million extra tax revenue going after multinationals that are not paying their fair share.
MICHAEL BRISSENDEN:
Just quickly on the polls, you would have seen them, everybody has seen them. Another one this weekend showing support drifting away. Does it concern you?
TREASURER:
Well, we've got to focus on policy, we've got to focus on what really matters to 100 per cent of the Australian population, and that is jobs and growth and community security, and that's exactly what we're doing. We're focusing - we've got to focus on the things that matter to everyday Australians.
MICHAEL BRISSENDEN:
Treasurer Joe Hockey, we will leave it there. Thanks very much for joining us.
TREASURER:
Thanks very much Michael.