CHRIS UHLMANN:
And the Treasurer Joe Hockey has joined me in the studio. Treasurer, welcome.
TREASURER:
Great to be here, Chris.
CHRIS UHLMANN:
Can we just put this into some kind of perspective, what did the Commission of Audit say about the way government spending has changed over the last 40 years?
TREASURER:
Well the fact is that governments have embedded programmes that continue to grow over time much faster than the growth in the economy and when you go through the items that are listed in the Commission of Audit, and this is new information, so when Labor says this is not new, I say to them, why didn’t you do something about it?
CHRIS UHLMANN:
It's a different way of describing a problem that's been known for a while?
TREASURER:
I don't think anyone fully appreciated that the Medicare system was going to grow at twice the speed of the economy over the next 10 years. The hospital system was going to grow at more than three times the speed of the economy or that school funding in the outer years was going to grow at three times the speed of the economy and the bottom line is, if you grow faster than the economy you need to massively increase taxes to pay for it.
CHRIS UHLMANN:
Well, that’s the problem so what is the solution? Is every dollar of government spending, every tax concession going to be questioned by you in the Budget?
TREASURER:
We are looking at every area of the Budget. Now I want to emphasise we're framing not just a one year budget but a 10 year budget and even decisions we're making are having very significant impacts out to 2050.
CHRIS UHLMANN:
So, are you going to be moving up the pension age to 70?
TREASURER:
Well there is an inevitability that at some point, we have to increase the aged pension age, but it is well into the future.
CHRIS UHLMANN:
So that's a yes, that’s what you are planning?
TREASURER:
We should celebrate the fact that we are living longer. We should celebrate the fact that effectively, one in every three children born today are going to live to 100. We should also not see someone's life ending when they turn 65 or 70, they should work as long as they can and I want to emphasise that we want to change attitudes in the business community as well to encourage business to start thinking about employing people who want to restart their careers after the age of 50.
CHRIS UHLMANN:
It's fine for you and I to think about working to the age of 70 but if you're a manual labourer, your body has been hammered by your work, how could you work to 70?
TREASURER:
That's a very good point and that's why we have to start to focus the debate on about how we can have a restart to working life after someone turns 45, 50, 55, after manual labour. What's been happening under Labor is that those people go onto the disability pension and then transition straight onto the aged pension and effectively for many of them their career ends when they turn 50 and their bodies are broken from manual labour. So now, we have to change the framework of the debate to focus on how every generation can contribute to the growth in the economy.
CHRIS UHLMANN:
If you are looking at retirement you also have to look at superannuation tax concessions don’t you? Will you be cutting those?
TREASURER:
And we said we're not going to have any adverse decisions in relation to superannuation in our first term, but clearly, as we have the proper debate about the ageing of the population, we need to look at the role of superannuation and the preservation age and that's something that the Murray Inquiry, Financial System Inquiry is looking at, and will look at in the context of the decisions we make in the Budget but also the Intergenerational Report that comes out…
CHRIS UHLMANN:
So again, the way you are planning this it's the same on pensioners and the same on superannuation is that you will be looking at the long term and taking these changes that you're talking about to the next election?
TREASURER:
We are honouring our commitments and in relation to many of the structural changes that we have to make, the Australian people have the opportunity to make decisions at the next election.
CHRIS UHLMANN:
What about finding money upfront? Are you looking at a co-payment for Medicare?
TREASURER:
Well that is certainly something that is in the mix. The fact is that Medicare is growing at twice the speed of the economy. We all have to make a contribution because nothing is for free, nothing can remain for free and the fact is we have to ensure that the system works for those most vulnerable, the poorest in our community. But when it becomes mainstream, there is a price to be paid. Now I want to emphasise, my electorate in North Sydney has one of the highest bulk billing rates in Australia and I have one of the wealthiest electorates in Australia; for me there is something wrong with that.
CHRIS UHLMANN:
But people might change their behaviour as well and then go to emergency wards so are you going to look at State Governments being allowed to pay for people to...
TREASURER:
We are taking into account all of those issues as we go through the Budget.
CHRIS UHLMANN:
What about Defence? We know now there is a $12 billion Defence spend - that's part of the Joint Strike Fighter programme. There’s another $12 billion through the life of those jets. How are you paying for those? What are you saying to pensioners who say how can we afford that when you're looking at cutting pensions?
TREASURER:
The first priority of the Government is to defend the nation and there is strong deterrence value in having the very best fighter jets in the world.
CHRIS UHLMANN:
Are you borrowing money for those planes?
TREASURER:
No, it's something that's been budgeted over a long period. The $12 billion isn’t coming out this year or next year – it’s over a very long period of time. It is built into the defence capability plans that have been laid down in the past and being laid down for the future through the Defence White Paper. So, it is part of the base funding of defence to be able to pay for these sorts of initiatives but what we do need is to get on with the job of ensuring there is a replacement for the Superhornet and that's what we're doing.
CHRIS UHLMANN:
Just looking at the way you've responded to these problems in the past, of course the Labor Government did try to do some things about means testing. On May 15 last year the Liberal Party released a long list of things - I won’t go through them all but under the heading ‘a brief history of Labor's annual Budget attack on families’: Labor means tested Family Tax Benefits Part B, froze indexation for full payment of Family Tax Benefits Part A and B, moves onto Labor froze indexation for Family Tax Benefits A and B. So, in the past, when the Labor Party has tried to do something about spending you have stood in their way?
TREASURER:
Well that's not quite right. There have been a number of occasions where we actually supported the Labor Party. Some of those decisions were obviously unpopular. In one case, involving single parents – Bill Shorten himself, came to me and asked for me to give him help to get that through the House of Representatives because it was a highly contentious issue and he knew it would be politically difficult. So, there have been many occasions, even we had to swallow hard in relation to private health insurance, which is an article of faith for our Party’s, but we know that fundamentally the Budget needs to be fixed. Now if you want to talk about that and bipartisan support, the question for the other mob now is whether they're going to support it.
CHRIS UHLMANN:
A couple of other quick things, what about the diesel fuel rebate for mining companies? Is that in the gun?
TREASURER:
I'm not going to get into the individual items.
CHRIS UHLMANN:
That will save you $13 billion dollars over four years that’s a fair whack.
TREASURER:
I just want to emphasise that everyone will be making a contribution.
CHRIS UHLMANN:
And your Paid Parental Leave system, of course, that cuts against everything you're trying to say.
TREASURER:
Not at all.
CHRIS UHLMANN:
You have a gold plated Paid Parental Leave scheme at a time when all these cuts are going on.
TREASURER:
I do not accept that at all. We need every generation to get to work. For younger Australians, you're either going to have to earn or learn. For middle income Australians, middle aged Australians, we need you in work and for older Australians we want you to have the opportunity to work.
CHRIS UHLMANN:
Treasurer Joe Hockey, thank you.
TREASURER:
Thanks very much Chris.