PRESENTER:
Federal Treasurer, Joe Hockey, welcome again to the 891 studios.
TREASURER:
Great to be back. This is turning out to be quite regular.
PRESENTER:
We’re quite happy with that. Thank you very much. Do you have $9 billion for an upgrade of South Road from Gawler to Port Noarlunga?
TREASURER:
Do I have $9 billion? I don’t have $9 billion that is lazy and sitting around, we’re very careful with our money. This is a project that – well we funded the feasibility study because the State Government was dragging its feet. I understand that the final plan was just released yesterday by the State Government so we’ll have a look at it.
PRESENTER:
You’ve had it since last year haven’t you? December last year?
TREASURER:
No we haven’t had the final plan and we’ve been waiting for the State Government to give it to us. I understand Jamie Briggs has been speaking to the State Infrastructure Minister, but only yesterday the final plan [inaudible]…
PRESENTER:
I bet he has, given that they gave it to the media – gave it to [inaudible] from ABC TV first. But the relations between the State and Federal Government, the South Australian and Federal Government, seem to very quickly degenerate into he said, she said. We understand that they gave the plan to the Federal Government back in December?
TREASURER:
That was a draft plan and I understand it had no final proposals. We gave them feedback on that but look, whatever the case may be people want the road built. We are prepared to be constructive and work with the State Government in that regard. So, I’m not going to get caught into that sort of…
PRESENTER:
But do you find it difficult to work with this Government?
TREASURER:
Oh, they’re the most difficult government to work with in Australia.
PRESENTER:
Do you tell your metropolitan radio stations that? In other states?
TREASURER:
No, no.
PRESENTER:
Except the Liberal ones of course.
TREASURER:
Unfortunately they’re keen on playing politics all the time, rather than just getting on with the job of building things. I even had a meeting with the Treasurer of Victoria just last Friday to talk about the cancellation of East West and the $1.5 billion they owe us, and it was – we agreed on where it’s coming out and he was a Labor guy and we agreed and it was fine. But it just seems to be very difficult dealing with the Weatherill Government.
PRESENTER:
So, what do you do then? Here in South Australia?
TREASURER:
Well, we’ve got to push on with the projects and we’re just trying…
PRESENTER:
It doesn’t really matter if they…
TREASURER:
Well it does, because you’ve got to have two parties. I mean ultimately, we don’t build roads, we can fund them, we can fund up to 80 per cent of the roads in the case of these sorts of major projects but in this particular instance we’ve got to work out the funding mechanism. We’ve got to work out whether there’s going to be tolling for heavy vehicles, which there should be when you’re trying to have a $9 billion road. But, ultimately, we actually want to deliver the outcomes, that’s what we’re focused on, I want infrastructure built. We – the Prime Minister wants to be the infrastructure Prime Minister and he is. We will do everything we can to try and make these projects work.
PRESENTER:
So if you want a $9 billion upgrade and you want it done quickly, the best thing you can do is stop playing politics – that’s your version?
TREASURER:
That’s my message to the South Australian Government, yes – stop playing it. I think the Infrastructure Minister has been constructive. I hear from Jamie Briggs that the Infrastructure Minister is being…
PRESENTER:
This is Steve Mullighan, the Transport Minister?
TREASURER:
Yeah that’s right, sorry the Transport Minister, [inaudible] he’s been a constructive player.
PRESENTER:
But you’re problem’s Weatherill and Koutsantonis?
TREASURER:
Yeah, at the moment. Look, I hope we can get a more constructive contribution from them in the future.
PRESENTER:
Okay. Well they’re looking for – Jay Weatherill is looking for great things from this retreat as he calls it with the Prime Minister…
TREASURER:
Oh right.
PRESENTER:
…and the other Premiers and leaders. I don’t think it’s a one on one retreat, I think the other Premiers are invited to it. Including on things such as the announcement we saw yesterday where they want a deal where that doesn’t cost us GST funding.
TREASURER:
Well, what we’ve done for example, in the asset recycling scheme that I announced in last year’s Budget, where a state will sell an asset and then we’ll give them a bonus to then put into new productive infrastructure. We have specifically excluded that from the GST relativities so therefore, it does not do that. I said those things as one off and the infrastructure payments I tend to see as one off as well. So, certainly in the case of South Australia, it would be quite ridiculous to be in a position where you’re putting in place a new grant for a major piece of infrastructure and then you’re penalising South Australia out of that. So, we’re very fair dinkum about this sort of thing, we want to make sure the benefits flow through to the people in the community.
PRESENTER:
Are you kicking yourself and is the Government kicking itself for [inaudible] it’s Budget pitch by creating a very big impression, by implying that women, working mothers who receive both a government benefit and an employer benefit are somehow rorting the system?
TREASURER:
No, that’s not what we said…
PRESENTER:
I think it is what you said.
TREASURER:
No, it isn’t what we said…
PRESENTER:
You agreed with the word that Laurie Oakes put to you.
TREASURER:
No I didn’t. Look, we can get into semantics, we can go over it another day, or we can actually deal with the facts. The facts are that there are people at the moment who are claiming up to $11,500 in paid parental leave from the Government and they’re receiving at the same time a paid parental leave scheme from their employer. Like employees at the ABC or Centrelink or any other government employees. What we’ve said is look, given that we want to put an extra $3.5 billion into childcare, which is a huge amount of money, to make it more accessible and more affordable, then we’ve got to make some savings somewhere. So, we’re saying look, we can’t continue with the idea that you’re having two paid parental leave schemes.
PRESENTER:
See you won’t even use the word double dipping anymore will you?
TREASURER:
But it is double dipping. You dip into one, you dip into the other, it’s…
PRESENTER:
Isn’t that precisely what you were promising before the last election? Tony Abbott went to the last election with a…
TREASURER:
Well we were replacing all the private sector schemes.
PRESENTER:
No, no, no. But went to the last election with a paid parental leave scheme, correct?
TREASURER:
Yes, and you were…
PRESENTER:
Able to get both that and if the employer wanting to continue to give you one you were able to get that?
TREASURER:
But the employers were paying a levy.
PRESENTER:
Yes.
TREASURER:
So why would the employers pay a levy and then have their own scheme on top of it? Unless they were prepared to top it up, but in fact because there was a company tax levy to pay for it, the employers were paying for it.
PRESENTER:
Sure, but…
TREASURER:
Well that’s the difference, this one was coming out of…
PRESENTER:
It was a double dip though wasn’t it? That was a rort under that…
TREASURER:
This is coming out of general revenue, right. This is a general revenue payment. So, this comes out of the pot of tax that everyone pays…
PRESENTER:
But this is an unfunded scheme?
TREASURER:
It’s an unfunded scheme which is coming out of the pot of general government revenue. Whereas that scheme was actually paid by the employers with a levy, a taxation levy of 1.5 per cent from the biggest companies, so that’s the difference, right. So, what we’re saying is, we’ve listened carefully to the parents of Australia who’ve said look, we understand our employers have a paid parental leave scheme, for a lot of small businesses they can’t afford that scheme. Therefore, the Government’s safety net of $11,500 for 18 weeks is there. But, we actually want you to focus on the first six years not just the first six months, so please put more money into childcare, that’s what we promised but we have to pay for it somehow. You can’t keep making promises and spending money unless you get savings and the saving comes from removing the opportunity for people to get both an employer paid paid parental leave and a government paid one.
PRESENTER:
The employer paid – can the employer top up a government scheme if they wish to? To attract good staff or to hold good women?
TREASURER:
Well, I would hope that they would replace it, they would have their own scheme, that’s up to them. I mean individual employers will have their own system but you can’t have both.
PRESENTER:
Okay, you won’t be allowed to – you won’t be able to take the government scheme and take a little bit extra from your employer at all.
TREASURER:
You can’t have both, well there’ll be sliding scales but you can’t have both.
PRESENTER:
And when did you know that Finance Minister Mathias Cormann and Assistant Treasurer Josh Frydenberg’s wives…
TREASURER:
I dealt with that, I dealt with that yesterday.
PRESENTER:
Well not that part you haven’t.
TREASURER:
Well okay, in Adelaide I’ll say what I said yesterday, that is a matter for them. I don’t disclose what’s discussed in expenditure review committees, but I’d just say, even if they had taken it.
PRESENTER:
Well they did.
TREASURER:
They did take it, okay fine.
PRESENTER:
The Government’s minimum wage plus they took a separate entitlement from their employer.
TREASURER:
Given that they took it, it’s all the more important that we actually remove it to prove that we’re not acting out of self-interest, we’re actually acting in the national interest.
PRESENTER:
So Mathias Cormann and Josh Frydenberg, when they found out about this, because you say they probably didn’t know. They said wow, that’s a rort, we’ve got to stamp this out. Did they?
TREASURER:
Look I can’t recall the conversation but it was put forward by the Minister as a saving to help to pay for an extra $3.5 billion in childcare. Full stop.
PRESENTER:
Will Twiggy Forrest get his iron ore inquiry?
TREASURER:
Well it’s not his iron ore inquiry, it’s an iron ore – look Senator Xenophon but a motion before the Senate to have an iron ore inquiry. It was going to turn into some sort of star chamber run by Sam Dastyari again. The Labor Party expressed concerns about their own member chairing that sort of inquiry. From our perspective we’ll speak to the relevant parties, we haven’t made any final decision.
PRESENTER:
But do you agree with former BHP Chairman Don Argus that Australia will become a laughing stock if the Government intervenes in the iron ore market?
TREASURER:
Well the Government’s not proposing to intervene in the iron ore market.
PRESENTER:
Well what’s the point of an inquiry if you’re not going to do anything as a result of an inquiry?
TREASURER:
Well those that have argued for an inquiry have said that given there has been an enormous drop in iron ore prices and it’s been directly linked to both supply and demand issues, that there should be, quite rightly in their view, a parliamentary inquiry to find out what’s going on.
PRESENTER:
Yeah but if at the end of it you find out what’s going on and you don’t do anything, that is you don’t intervene in the market, well what was the point of the inquiry?
TREASURER:
That’s not an unreasonable point, but having said that, we’re consulting with all the parties…
PRESENTER:
Before you set up an inquiry should you at least say to people, this is a fair dinkum inquiry, if it reveals something, if it reveals that Twiggy Forrest has got a valid claim, we are prepared to act.
TREASURER:
This is not about Andrew Forrest, this is about iron ore being Australia’s largest single export. Also the case that it’s gone from around a maximum of near $180 a tonne to around $50 a tonne today, a little bit higher. We’re budgeting $48 a tonne, it’s had a big impact on our revenues as you know. We’ve had to write down our revenues by over $90 billion since we were elected, and when we came in it was $120 a tonne, now it’s a lot less…
PRESENTER:
You seem to know a lot, what’s the point of having an inquiry?
TREASURER:
Well maybe that’s the case. It is currently being discussed with the Labor Party, it’s being discussed with a range of different parties and stakeholders…
PRESENTER:
You don’t sound too keen on an inquiry?
TREASURER:
Let me just say, we are going through a carefully thought through methodical process. We’re not going to just jump at shadows like everyone tends to do from time to time in other places.
PRESENTER:
But, if the inquiry finds as I think Mr Forrest – his concerns are, that the big miners, the two big miners are flooding the market with cheap iron ore…
TREASURER:
Well you’re asking me to anticipate what comes out of the inquiry?
PRESENTER:
[inaudible] I suppose there’s cause and effect. If you’re going to have an inquiry, oh that’s interesting we’ve got an inquiry, put that in the filing cabinet. You know, you assume, if it finds that, and he’s saying it is and it’s putting small miners out of the game. It’s also affecting your Budget bottom line by the way because it’s driving down revenue to the Government. Then, what are you going to do about it?
TREASURER:
Well, firstly, there is no inquiry. Secondly, if there is to be an inquiry it will be considered, it will be measured. The Government has a process that it’s working through with all the stakeholders…
PRESENTER:
No, no, no, we accept all that [inaudible].
TREASURER:
You’re trying to go five steps ahead and I’m trying to bring you back to what’s here and now, and that’s the $3.5 trillion Budget I delivered last Tuesday which is great for small business, great for families, great for infrastructure. I think, you know, I think they’re the things we should be focusing on, not that I’m running the interview of course.
PRESENTER:
No, no, no, that’s fine we’re going to get to that…
TREASURER:
I think it’s important that we get to actually speak about the things that matter to people here and now.
PRESENTER:
You’re listening to Federal Treasurer Joe Hockey here on 891 ABC Adelaide, 13 minutes to 9. He’s in our studios in Adelaide today. Joe Hockey onto the – particularly the $20,000 stimulus, which we’re not allowed to call a stimulus apparently. Do you have a Budget figure on what that is going to cost the Budget?
TREASURER:
Well, yes but let me just say this about the stimulus as you call it. It is – when a business depreciates an item that they buy for the business they do it over a number of years, usually four years right. What we’ve said is, instead of doing it over four years you can bring it forward to one year. That makes it 100 per cent deductable. A business still has to pay for the item and it still has to be work related under the rules and the laws of the Australian Taxation Office, and a small business is not going to go out and spend money on something that actually isn’t productive for the business. If they do, they’re obviously wasting money. Finally, they don’t get 100 per cent of the money back, they get it taken off their tax, potential taxable income at the beginning of July. So, what this does is it accelerates productivity, that’s the thing. It actually accelerates productivity and that’s encouraging. Now, if there’s going to be a greater take up then that’s terrific, that’s terrific. Because it means those businesses are out there buying things and I should point out, South Australia had the best retail sales figures of any state in Australia in the last 12 months. Now you wouldn’t believe it if you talked to some people in South Australia, but the best retail sales figures in Australia in the last 12 months were here in South Australia. So people want to get out there and spend…
PRESENTER:
So why have we got the highest mainland unemployment rate?
TREASURER:
Well, I think because there has been a big structural change in the South Australian economy…
PRESENTER:
So everyone’s going out and buying a tele or something?
TREASURER:
Well, the figures don’t lie, the retail sales…
PRESENTER:
But if it’s not making jobs it’s a worry isn’t it?
TREASURER:
Well, that’s why we want to invest in things like infrastructure, the reason why for example we’re investing in new trade agreements with China and Korea and Japan, which removes tariffs of up to 19 per cent on wine for example, which is a big export out of South Australia. And food as we talked about last time I was up. The reason why we do that is because we want to create more jobs in South Australia.
PRESENTER:
Before you leave us, do you think it’s a good idea to abolish the stamp duty on property and replace it with a broad based land tax? That’s one of the suggestions that Tom Koutsantonis and Jay Weatherill are considering.
TREASURER:
If you’re going to have tax reform, my view is you’ve got to reduce the tax burden. Now South Australia has the highest taxes of any state in Australia. I think that has held South Australia back. We talked about jobs a little bit earlier. You can’t tax your way to prosperity and you know, if the State Government is going to reduce taxes, and I know Steven Marshall took it to the last State Election to reduce taxes, so if they follow that lead and reduce taxes I’d say that’s terrific, I’d welcome that.
PRESENTER:
So you don’t trust them but you say we should trust them to reduce taxes?
TREASURER:
Well, it’s a matter of fact isn’t it? If you’re going to reduce tax you actually have to pass laws, so…
PRESENTER:
I don’t think they’re saying that they’re going to reduce the tax burden?
TREASURER:
Are they? Well that was my impression, that they were going to reduce the tax burden.
PRESENTER:
Well I think they’re going to change the mix and I suppose what I’m asking you. Even if it was revenue neutral, do you think it would be a better idea to have a broad based land tax. So, somebody with a $400,000 home…
TREASURER:
Well, I don’t think anyone that’s already paid stamp duty should be penalised.
PRESENTER:
No.
TREASURER:
I think there’s a trade-off, right. If you’re going to abolish stamp duty for first home owners…
PRESENTER:
But some taxes are more efficient than others aren’t they? Raise the same amount of money and it’s better for the economy…
TREASURER:
Look, I’ll leave it to the South Australians to work out the tax take, but I’d say to them it’s too high.
PRESENTER:
Whatever you do, cut it?
TREASURER:
Cut taxes in South Australia and you get more business and more jobs.
PRESENTER:
Just finally, do you agree with Tim Colebatch? He wrote that had the Government, your Government, simply left Labor’s policy unchanged for these four years the Budget papers imply that we would have run up cumulative deficits of $137.7 billion. Instead the Coalition’s efforts to fix the Budget have resulted in cumulative deficits of $149 billion. In other words, you’ve made the problem worse?
TREASURER:
Well I don’t know where he gets his numbers from, but he’s wrong.
PRESENTER:
Well, from the Federal Budget papers.
TREASURER:
Yeah, well I think he’s wrong.
PRESENTER:
Okay. Treasurer, thank you for coming into the studio.
TREASURER:
Thank you for having me again.