CHRIS SMITH:
On the line I have the Treasurer, Joe Hockey. Treasurer, good afternoon.
TREASURER:
Good afternoon, Chris.
CHRIS SMITH:
Now, why are you speaking with me now, weren’t you supposed to be at the Press Club debating Chris Bowen? Forgot?
TREASURER:
No, look, it is the traditional Shadow Treasurer’s right to reply and usually the Shadow Treasurer has something to say but, I’ve just read his speech and he actually has nothing to say. Thankfully, you’re more important.
CHRIS SMITH:
Thank you. He says the Government’s intentions are different from the nation’s intentions. Do you think that because we have been bribed with handouts and benefits for the last six years we have become conditioned to getting stuff?
TREASURER:
Well, look, sooner or later the handouts come to an end. And the fact is that for a number of years there was significant revenue flowing to the Commonwealth Government out of the mining boom and then Labor decided to borrow money from future generations to hand it out; $900 cheques or school halls and a range of other things. And we warned at the time, sooner or later someone has to repay it back, now the time has come. If we don’t start repaying it back now, if we don’t start living within our means now, it is going to be much, much harder in the future as we face the challenge of the re-emergence of Asia, the re-emergence of Europe, and rising interest rates around the world.
CHRIS SMITH:
But what I’m trying to get to here, why hasn’t this message, which you’ve been delivering for about two months prior to the Budget, why isn’t this message sinking in? And why are the polls so critical of what you have done?
TREASURER:
Well, our Budget wasn’t designed to make us popular. Our Budget was designed to do what’s right for the country and the fact is, that if you have a whole lot of people across the community contribute a little then we can get there. We are going to build a stronger economy and create prosperity, but if you just target one particular group, which is what the previous Labor Government would do, they’d target a particular group, like they targeted the miners, the net result is, when it falls apart, as inevitably it will, then you have got nothing. And you know, Labor said that we’ll hit the miners with a mining tax. Well, the miners aren’t paying any Mining Tax, in fact, it’s effectively, we’re giving back to the miners more money than we are going to receive in various places.
CHRIS SMITH:
That was well conceived.
TREASURER:
Oh, it was a disastrous tax. But the problem was that Labor spent money against it. The Schoolkids Bonus, and all these other things, you know, that simply, the money isn’t there now. So, we’ve said, “come on guys we can’t keep paying out money on borrowed money, we need to live within our means”, and if nothing else, I mean, grandparents and parents have taught me over the years that you have got to live within your means.
CHRIS SMITH:
Alright, to pensioners right now, you send them a message, the ones that listen to me and have been ringing; although they’re fans of yours and the Government they are now upset. There is a lot of angst about the $7 Medicare co-payment. Why have you introduced a tax for being sick and what safety nets are there for the elderly? Because I reckon the message has been a little bit smudgy.
TREASURER:
Well, I understand that, I mean there is a lot of conflicting messages, but the bottom line is we are not cutting pensions, that is complete rubbish, we are not cutting pensions. And 80% of the people over the age of 65 receive the Age Pension, the Age Pension is not being cut. You are still getting your pensioner supplements, still getting the clean energy supplement, you still have your entitlements to use your pensioner concession card, to get discounted travel and all the other things. So it is not changing at all. In fact, you’re going to be better off because we are getting rid of the Carbon Tax, which represents $550 a year.
CHRIS SMITH:
And when they come up with, “Oh, I’m going to pay this extra for the next 12 months”; they’re not taking into consideration aspects of savings due to the dropping of the Carbon Tax.
TREASURER:
That’s right, and the fact is, just to provide absolute clarity, the pension will continue to rise. What we have said that in three years’ time, instead of rising at male average weekly earnings it is going to rise at inflation. So it is going to keep rising and every six months you will continue to get an increase in the pension from now for as far as you can see. The issue is, in relation to the pension, that there is a lot of misinformation being peddled about, and I want to address it specifically here and say emphatically, you’re not having pensions cut, that’s just not happening. In relation to the co-payment, we are introducing a user fee. The idea that it’s tax, it doesn’t all go to the Government, it’s actually a fee for service, so you receive a service in return for the $7 you pay. And of the $7 you pay, $5 goes to a medical research fund which is going to invest in a massive increase in medical research to find discoveries for, and cures for, Alzheimer’s and cancer and a range of other things because that’s what we are very good at in Australia. And $2 goes to the doctor, of the $7, the $2 that goes to the doctor ensures that the doctor can provide a safety net for those that are most vulnerable that don’t have the money to pay the $7. Now for pensioners, people that hold a pension concession card, you still have a Medicare safety net. In fact, the Medicare safety net is even more generous than what is the case at the moment, so that is hugely important. We’re not penalising anyone for relying on that Medicare safety net who was on a pension, they still have a Medicare safety net.
CHRIS SMITH:
So what happens if I go more than 10 times?
TREASURER:
Sorry, this is the point, if you are on a pension concession card and you go more than 10 times a year, to the doctor, you don’t have to pay the $7.
CHRIS SMITH:
And prescriptions?
TREASURER:
The prescriptions, well, the Pharmaceutical Benefits Scheme again, the safety net is in place for the Pharmaceutical Benefits Scheme, again, we’re just marginally increasing the Pharmaceutical Benefits Scheme, the costs of drugs, it’s certainly less than a dollar – from memory – in the case of concessional pay.
CHRIS SMITH:
80c I think it was, wasn’t it?
TREASURER:
Yep.
CHRIS SMITH:
When you say pensions are being not cut, you’re not going to cut pensions?
TREASURER:
No.
TREASURER:
You’re linking them to inflation though.
TREASURER:
Yep.
CHRIS SMITH:
And not the average male wage as it is now. Doesn’t that say that they will be cut in real terms?
TREASURER:
No, not at all, because the real value of it is preserved, it is just not increasing at the speed of male average weekly earnings. People shouldn’t necessarily assume the average male weekly earnings are going to increase above inflation. In fact, in a number of cases at the moment there are wage negotiations that are less than inflation. So there shouldn’t be an automatic assumption that it would automatically be more than inflation. But the fact is, they’re not going to have any real reduction at all.
CHRIS SMITH:
Alright, it is funny, today we have got university protests going on, Tony Abbott has bowed out of turning up to one university, the CFMEU have now just joined the university protest today because there weren’t too many students turning up. So the dial-a-riot card has been played, so they’ll be joined by CFMEU as they are now. They’re complaining about education cuts, in particular, cuts to universities. I just wonder where these students were when Julia Gillard gouged out funding to universities to try and get up some kind of Gonski package.
TREASURER:
Well, that’s exactly right. It is kind of ridiculous isn’t it, that there were cuts to universities in order to pay for Julia Gillard’s school education and the response from students was muted and now they’re protesting when they themselves won’t have to pay a single dollar. When in fact, 60 per cent of their education is currently paid for by another taxpayer and where they will not have to pay a dollar upfront for a university degree, not a dollar, they get concessional loans from the Government.
CHRIS SMITH:
And I said to one student last week who rang in on the open line, I said, “why should you be immune to sacrificing a little bit too?” and they couldn’t answer that.
TREASURER:
Well, given they get, over their lifetime, 75 per cent more as a result of going to university in income than someone who doesn’t go to university, it is pretty rich. And look, if the campuses get better, as they should, in order to compete with the new, enormous campuses in Asia, if they get stronger and the value of the degree from NSW or Sydney of Macquarie or wherever it is, is much sought after, that enhances their value when they get a job.
CHRIS SMITH:
Very true.
TREASURER:
If they’ve gone to a better university.
CHRIS SMITH:
I wanted to address that because that will become part of the news regime this afternoon once it sort of hots up in Sydney. Now, back to getting these measures through. How are you going to do that when Clive Palmer is standing in the way, when the Labor Party stands in the way, when the Greens stand in the way? It is almost as if you must feel like blowing the whole joint to bits and going ahead with a double dissolution election.
TREASURER:
Well, our job is to lay down good policy, and that’s what we’re doing. It is obviously going to be a cause for interest and concern in some quarters, but our job is to lay down the policy that we said we’d have to. You know, there were a number of significant promises we made at the last election including; stopping the boats, we’re doing that, getting rid of the Carbon Tax, well, we’re doing that, and building the infrastructure that is going to drive our economy over the next few decades, gosh, we’re doing that in bucket loads, and fixing the Budget. And there was never going to be a popular way to fix the Budget; there was never going to be a popular way to fix the Budget. But damn it, we have to do it. Because if we don’t the pain and cost for Australians in five and ten years’ time is going to be far, far greater, if we don’t take action now. It is like, standing on a rusty nail, either you get a tetanus shot now, which you know, for those who don’t like needles and don’t like tetanus shots, yeah, it is painful. But it’ll be far, far worse if you actually suffer an infection and it deteriorates.
CHRIS SMITH:
That’s a well described analogy. Are you prepared though, as the Treasurer, and maybe even this includes the Prime Minister, to go down in history as one-term-wonders who actually saved Australia.
TREASURER:
Well, we don’t want to go down as one-term-wonders, we’d rather be the people who re-built the economy and make sure that we have a sustainable and affordable future for our children. It is also about our parents, and our partners and everyone else in the community, that if you have a sustainable safety net, if you have a sustainable and affordable system of Government, then you can keep your quality of life. But what happens is, as you’ve seen in Europe, I mean gosh, haven’t we learned the lessons? If a Government just keeps ignoring over time, the pressures on the Budget, then sooner or later it ends in tears. Now, the great irony is, in Europe you’ve got some countries with 40 per cent and 50 per cent youth unemployment and those young people are paying a price because their parents didn’t have the guts to address the problems in their economy. Well, we’re not going to allow ourselves to get into that position.
CHRIS SMITH:
Yeah, The Telegraph today had Bill Shorten on the front page pondering and taking complaints because he’s from the complaint department, which was rather clever, and it pointed to the fact that he hasn’t really come up with solutions to paying off the debt. However you know, you did it, you don’t come up with your policies until about eight weeks out from an election, so we shouldn’t expect that, but it is true that Bill Shorten hasn’t even given us a skeleton of an idea of how he would pay off and save Australia.
TREASURER:
This is the great hypocrisy, that Bill Shorten was part of a team that created the problem and in his Budget-in-Reply speech he said that there is a Budget task, a task, to fix the Budget. But he didn’t say how he was going to do it, in fact he’s making it far worse. Because he’s not only opposing what we’ve proposed in the Budget, which is $18.5 billion of savings, he is not only opposing the things we took to the last election, like closing down the Schoolkids bonus and other things, because they were funded out of borrowed money. He’s not only opposing that and trying to get us to break our promises about what we were going to do to fix the Budget, he is opposing what he took to the last election as savings in the Budget, $5 billion, including – as you mentioned before – savings in higher education that would actually go to pay for Gonski. So, there is no policy consistency from Bill Shorten, he is the national complaints desk at the moment, but sooner or later, he needs to, and it must be sooner, because this is a problem that needs to be addressed now, he has to offer an alternative. And Chris Bowen is now speaking to the National Press Club, talking about how outraged he is that the Government, in his words, is reducing $80 billion in funding for schools and hospitals, but he is refusing to say where he is going to find that $80 billion.
CHRIS SMITH:
I want to get back to two things, firstly, Clive Palmer. Barnaby Joyce calls Clive’s party a cult, but you have to start negotiating with that cult. Will you be negotiating directly with Clive Palmer or does someone get that short straw?
TREASURER:
Oh, I don’t know that it’s a short straw. I mean, I’m ready to speak to anyone to try and get our…
CHRIS SMITH:
… you haven’t yet though, you will?
TREASURER:
Well, there have been early discussions, but you know, Clive Palmer was elected by people who support Governments that live within their means. He was elected, and his team were elected, by people who support smaller Government, bigger enterprise. I would expect that he would be supporting policies that deliver what he took to the last election.
CHRIS SMITH:
You’d hope so; we’ll see how that plays out. I just want to go to a few calls if I can, I know I’ve got a little bit of time left, and I won’t select these calls, I’ll actually take these calls as they came in and Sam was the first caller that rang in when you first got on air; Sam go ahead.
SAM (CALLER):
Hi Chris, hi Mr Hockey, I just wanted to congratulate you on doing something about the condition that this country was in. Labor left us with huge debt and I feel, I know it is going to hit our income and our family are going to have to pay a little bit more, but I feel so at ease knowing that the really difficult issues are being dealt with properly with people that don’t care about, I mean you don’t care about what people are saying about you, you care more about the country than you do yourself. That’s with Prime Minister Abbott as well, and I just want to congratulate you.
TREASURER:
Well, Sam, thank you and thankyou for being prepared to make a contribution, I know it’s hard, I mean we know it’s hard and Budgets are tight, but we want to make sure, and you said your family, I mean that is entirely what I’m focussed on and what Tony Abbott is focussed on, we are focussed on making sure that tomorrow is better than today. And if we don’t do what we’re doing then it won’t be.
CHRIS SMITH:
It could though lead, as I said before, to your demise and the demise of the Prime Minister.
TREASURER:
Well, I didn’t come into politics to occupy the space and hang up a sign in my office to say, you know, ‘I was in for 30 years and did nothing’. That’s, you know, that’s not what I’m about.
CHRIS SMITH:
I hope you’re not in for 30 years, jeez.
TREASURER:
I don’t know if I’d last 30 years, but you know, I think most politicians go in to make a positive difference. I’m not suggesting they don’t. But, you know, you’ve got to do what’s right. At the end of the day, good policy is good politics.
CHRIS SMITH:
Alright, well, Kieran was the second caller to come up on the board; go ahead Kieran.
KIERAN (CALLER):
G’day Joe, how are you?
TREASURER:
Kieran, I’m good, it’s good to be in Sydney for a change, I’m excited to be in Sydney.
CHRIS SMITH:
Go ahead, Kieran.
KIERAN (CALLER):
Oh sorry about that, hit the mute button on the iPhone.
CHRIS SMITH:
Oh yeah, get that mute button off – go right ahead.
KIERAN (CALLER):
Joe, I just wanted to start with saying much respect the other night seeing you on Q&A deep in the left’s red zone. But, my question was, Joe, how does, not just yourself, but any Australian Treasurer, expect to ever pay back our debt with the current monetary system that we use, where our money isn’t worth what it’s printed on? (inaudible) How do we pay back that interest?
TREASURER:
Well, the starting point is you’ve got to actually start running what are known as surpluses, you’ve actually got to collect more money than you spend as a Government. And as you collect more money than you spend, the money you have goes to repay the debt that you owe. Now, the fact is, that the Government issues bonds, and 60 per cent of those bonds – about 60 per cent are held by people living overseas, so we have to repay that money over time and pay them interest along the way. We’re currently spending over $1 billion a month on interest and if things continue the way they are, then we will just be paying every man woman and child in Australia within four years, will be paying about $740 each, just in interest, on the Government debt. Now, that’s a lot of money, but the fact is, Australia as a whole, and some people say, “Hey look, compare our debt to that of the rest of the world”. The difference is, with Australia, is that we have never funded our own growth as a nation. We, each year, import about $40 billion from the rest of the world to fund our growth. For example, in the recent mining boom, 80 per cent of all the money that has gone into building those huge mines and gas plants and so on, 80 per cent has been foreign investment. So, they’re going to want a return on their money. Now, this is the vulnerability over time that builds into Australia and makes us more exposed to what happens overseas.
CHRIS SMITH:
Because of that export/import balance.
TREASURER:
And because we rely on the rest of the world to fund us. Even if the Government’s running a surplus, we still rely on the rest of the world to fund our growth as a nation. So, you know, I want to reduce our reliance on the rest of the world. I want to increase our reliance on Australians and the starting point is, that your Government should not be borrowing money in order to run its daily services.
CHRIS SMITH:
Alright, our third caller – final caller, who came up on the board while you were speaking, was David; go ahead Dave.
DAVID (CALLER):
G’day, Joe.
TREASURER:
G’day, David.
DAVID (CALLER):
Hey look, let me preface this by saying to you that I’m a huge fan of yours and Tony’s. But I want to send you a message from every small business owner in Australia. Now, when I say a small business, I’m not talking about a shoe factory that employs 150 people, I’m talking about a butcher, I’m talking about a hairdresser, I’m talking about a baker, I’m talking about a coffee shop. And with respect, the message is this: shut up for a minute, when you talk the purgatory you talk and have been talking for the last month, people out here in the community respond one way – they keep their wallet in their pocket, because you frighten them. Give some positive news, some positive news, some positive messages and message of outcomes rather than purgatory.
CHRIS SMITH:
This is what Ross Gittins said on the front page of the Herald today Treasurer. He was basically saying, ‘the Budget measures may have talked down the economy and crushed confidence.’
TREASURER:
Well, David, I hear you. My brothers run a small business and I speak to small business people all the time. I come from a family of small business people and I understand exactly what you’re saying about confidence. On the one hand, Chris said a little bit earlier, “are you surprised people didn’t know that we were going to do what we had to do in the Budget”. I suppose, that’s because we didn’t want to go as far as to warn the Australian people otherwise you would have had a much tougher time between the election and the Budget. So we have carefully, methodically gone through this process but we can’t do these things in secret. We actually have to get out there and explain why we are doing it. And, you know, no one’s going to like hearing the diagnosis from the doctor and yes, it does change the mood. But I want to emphasise, it will get much better as a result of what we are doing; the economy will get much better. Consumers will understand that the best way to keep the economy going is to have confidence in their daily lives, but we can only do that by doing what we’re doing, which is going to create job security; which is going to, at the end of the day, invest $125 billion in new infrastructure over the next six years. That it is going to start to build a sustainable story about the Australian economy. So, I understand what you’re saying about last week, this week, maybe next week as well, but by God it is going to deliver a stronger more prosperous economy into the future and that’s going to be the biggest driver of employment in the years ahead.
CHRIS SMITH:
On the subject of telling lies or porkies or breaching promises from election campaigning, can we not stop the spin and why aren’t you and Tony Abbott going to stop telling us, “Oh, theoretically we are not breaching a promise, it’s only one thing we’re breaching”. Why can’t we just say, ‘I had to, to save Australia’ and get on with it?
TREASURER:
I said on Q & A and in various other places, we have to get on with it, we have to do what we’re going to do.
CHRIS SMITH:
Because we have been spun everything in the last six years and we’ve had a gutful.
TREASURER:
That’s right, I perfectly understand that. And yes, the increase in the threshold is a tax increase, but we’re doing it so that everyone contributes over $180,000 and the change in excise which is an extra cent a litre is going to the biggest road building project in Australian history. And it covers a fraction of it but we’ve got to pay our way in order to get our roads that address the challenges of the economy. So, you know, I understand that.
CHRIS SMITH:
Because I think the spin starts to hurt you in the polls too you know.
TREASURER:
Yeah, I understand that but I mean, that ends up being the political commentary and what we’ve got to do is focus on the policy.
CHRIS SMITH:
One last one, the Prime Minister took a call on Melbourne radio, on ABC, from Gloria today, people are criticising the Prime Minister for winking and smirking and stuff, I don’t want to ask you a question about that aspect, but just have a listen to Gloria.
GLORIA:
And I work on an adult sex line to make ends meet. Now that’s the only way I can do it. I’ve worked out, and my maths isn’t crash hot, that it’s going to cost me at least an extra $850 a year with the increases in medical visits and medication. I’m on a number of different medications that might probably increase as my conditions deteriorate, what do you suggest I cut out Mr Abbott? Food, electricity, firewood, Christmas, birthday presents to my grandchildren, or should we all just die and get out of your way?
CHRIS SMITH:
Firstly, the premise – $850 per year – I always look at the premise before we start arguing the point. How would anyone be paying $850 per year more based on their medical visits and medications? Is that possible? At $7 a pop?
TREASURER:
Well, I’m not sure.
CHRIS SMITH:
And you’ve got the safety benefit with the prescriptions and the number of visits.
TREASURER:
You’ve got a Medicare safety net and you have a Pharmaceutical Benefits safety net. I’m not sure, I don’t know what her situation is, but what I do say to her, and I don’t know that this is great comfort to her, but we are trying to create jobs and we are trying to create an environment where there is greater prosperity for every household. And that’s never easy and it wasn’t easy in 1996, when Howard and Costello came in and had to make difficult decisions in the Budget. But it laid down the foundations for a period of great prosperity. Similarly, again, it is difficult now, but that’s the only way we are going to be a more prosperous nation, and I can say to that lady that we really do want her to have a very different job and one that is more lucrative and helps her with her day-to-day bills; that’s what we’re after.
CHRIS SMITH:
Whatever people think of the finer details of what you’ve tabled in Parliament, I think both you and Tony Abbott have been gutsy, keep punching away and you’ve been more than generous with your time this afternoon. Thank you, Joe.
TREASURER:
Any time Chris, thank you and thank you to your callers as well.