25 September 2013

Interview with Ben Fordham, 2GB

Note

SUBJECTS: Taxation Receipt

PRESENTER:

The Treasurer of Australia Joe Hockey. Mr Hockey, good afternoon.

JOE HOCKEY:

Good afternoon.

PRESENTER:

How’s the job going?

JOE HOCKEY:

Very well.

PRESENTER:

You paused there for a moment?

JOE HOCKEY:

I’m sitting in the office in Canberra thinking I am going to have another late night but it is...

PRESENTER:

It is the job you wanted Mr Hockey.

JOE HOCKEY:

Absolutely, and no apologies for it.

PRESENTER:

You have announced today that you are going to tell all of us where our taxes are being spent. Why do you want to do this?

JOE HOCKEY:

I just think it is important that we have respect for taxpayers and this is something Tony Abbott and myself promised the Australian people before the last election. We are going to do it. The starting point is to thank taxpayers for the tax they have paid each year and to tell them where the money would be spent. I think that is hugely important so that people understand, for example , that if they have paid $20,000 tax in a year that $6,936 would go on welfare, $3,246 would have gone on health and then $1,493 on education and so on.

PRESENTER:

So information is power, as they say. So what is anyone going to be able to do with this information, apart from knowing where it all goes?

JOE HOCKEY:

I think it is going to help to influence community engagement when it comes to Government spending. The community will soon realise their hard earned dollars are going on particular areas of public policy. Foreign affairs and economic aid, for example on a $20,000 tax bill, would represent about $340. Or at a federal level, public order and safety would be only $214.

PRESENTER:

You know what it is going to do? It is going to draw attention to the elephant in the room which is the welfare budget. That’s at the top of the list.  You have based this on $20,000 tax and welfare - $6,936 - is the top of the list. That is the thing that is going to draw a lot of attention to that, isn’t it?

JOE HOCKEY:

It is also going to help people to focus on the fact that we have a generous welfare system which should be more of a safety net than become a crutch that people can never throw away.

PRESENTER:

So this is  a way of drawing attention to something you want to fix, isn’t it?

JOE HOCKEY:

I know where you are going here Ben. It is about transparency and I think it is important that taxpayers know where their money is being spent. It is easy as Treasurer to get up at the Budget in May and have lots of announcements and people think that is alright. But then when they have to pay their tax they find it difficult to draw the link between what has been announced as expenditure and their own tax money. It is also about putting more pressure on Government to stop the waste. I think if we develop more of a culture of respect for taxpayers then Governments of all political persuasions will be more careful about the way they spend taxpayers’ money.

PRESENTER:

When you go through this list there are things that most people won’t argue with - health, education, defence, housing, community - all these types of things. It is the welfare one that really stands out. When you breakdown the welfare at the top of the list - out of the $6,936 that a $20,000 tax payment would cover -  aged [pensions] is at the top of the list. There is not going be too much argument about that. Families next, disabilities, unemployment and then it goes to other. So families are second – that is that middle class welfare, as it has been described as?

JOE HOCKEY:

It is not always.

PRESENTER:

No. Not always. Disability payments. Most people who are on disability payments are disabled but a heap of them aren’t.

JOE HOCKEY:

There are around 800,000 people on disability pensions in Australia.

PRESENTER:

You have touched on this before. You have spoken about the Age of Entitlement and now we need to address the age of entitlement. It is one thing to show it on a piece of paper – I think it is a handy exercise. I think it is good what you have done, but it is going to put some pressure on you and maybe that is what you want. Maybe you want people to know exactly how much money is being spent on welfare so you can rein that in?

JOE HOCKEY:

Yeah, right. It’s not about reining it in. I don’t want to be misinterpreted. It is about ensuring that whatever we spend is sustainable and you will see at the top of the tax receipt we have an illustration of what the Government debt is. This year $300 billion, last year $269 billion. The burden for a taxpayer paying $20,000 tax a year...

PRESENTER:

$12,959?

JOE HOCKEY:

Correct, and that is every taxpayer. It is about making information accessible and properly informing people. This is something I have always had a strong view about. We endeavoured to move this in the previous parliament. The independents would never support us on it, and the Labor Party voted against it. It will pass this time. We have a very clear mandate. It is about transparency.

PRESENTER:

How much is it going to cost?

JOE HOCKEY:

Not a terrible amount of money because effectively it is about a letter to each taxpayer of which there is about 10 million. There will be normal interactions with the Taxation Office at any rate. In a Budget of nearly $400 billion I think letting taxpayers know how they are contributing is money very well spent.

PRESENTER:

What is the estimated cost of these letters going and collating all this information?

JOE HOCKEY:

We are working through with the Tax Office now but it is a minimal cost. It is computer generated.

PRESENTER:

The information is all there.  All they are doing is putting it together and hitting send.

JOE HOCKEY:

It is based on proportion and the information that you pay in taxes is readily available to the Taxation Office.

PRESENTER:

I think it is a smart move. It puts it out there. You hear people constantly saying “where does all our tax money go?”

JOE HOCKEY:

That’s right.

PRESENTER:

There is your letter and there it explains it to you and if you think something is out of whack there like, for example welfare – if you are shocked that welfare is number one on the list, ahead of health and ahead of education then you might have a groundswell of people saying you might need to do something about that?

JOE HOCKEY:

You can also identify that very little is actually spent on infrastructure because Federal Government traditionally has not spent a lot of money on infrastructure. The state Governments have done most of the spending on infrastructure, together with the private sector. One of the challenges for the Federal Government Budget is it is money in, money out. People say “What have I got for the money that we spent?” Obviously it is quality of life through welfare, health, defence and so on but it is also the case that each year, for example, as I show on the tax receipt – out of $20,000 people are paying in tax, the interest they have to pay on Government debt is $625. The question is what are they getting for that? If the Government has just spent it on $900 cheques going out to people or paying Schoolkids Bonus and if you are borrowing the money to do that it is hard to show what you actually got for it. But if you are building physical infrastructure that helps to make the economy more productive then that is a great outcome.

PRESENTER:

I am looking forward to getting my letter even though I am scared by some of the things that appear on that letter. But that is your challenge.

JOE HOCKEY:

Given the amount of tax that you would pay Ben, I am absolutely confident it will be much larger than anything [inaudible]

PRESENTER:

Thank you very much Treasurer, good to talk to you.