CHRIS UHLMANN:
Joe Hockey, what are the concrete measures that countries will take to make your two per cent growth target real?
TREASURER:
There are 1,000 measures, Chris, that are being submitted by countries. Those measures include changes in industrial relations, initiatives to reduce trade barriers, massive commitments to new and upgraded infrastructure, certainly greater engagement of the private sector and the delivery of health and education. So, the list goes on and each country has submitted a plan. The IMF has independently assessed that plan and as a result we’ll find out how much the world economy is going to increase its growth over the next five years by.
CHRIS UHLMANN:
So, it will be measured?
TREASURER:
It will be measured and importantly, it must be monitored. That is, going forward when the leadership of the G20 passes to Turkey at the end of this year, we want to make sure that everyone has their feet to the fire and that the IMF and the OECD continue to monitor how countries are going in delivering on that target.
CHRIS UHLMANN:
Now tax avoidance is also on the agenda – you’re targeting multinationals who use complex structures and tax havens to avoid paying tax that’s due in individual countries. How are you going with that and have you got the United States signed up to that?
TREASURER:
I believe we have got the United States signed up. They were cautious at first, but obviously the United States itself has been missing out on revenue from a number of these large multinationals. Now, with everyone committed to a plan and everyone committed to the outcomes of the plan, I am confident that we’re going to start seeing some very aggressive approaches towards the largest multinationals. Here in Australia, we’ve had the Australian Taxation Office start inspecting the books of 100 multinationals – quite aggressively – in order to understand how they derive their income, to ask the question about whether they are in fact engaging in tax evasion.
CHRIS UHLMANN:
If you’re going to be aggressive why not take Google or Apple to court and test the law?
TREASURER:
The starting point is to find out whether they’re failing to pay the appropriate level of tax and the second part of that is to get tax out of them if they’re not paying the appropriate level of tax.
CHRIS UHLMANN:
And are you sure that what you’re planning will get into those tax havens and make sure that you can get the information that you need to prosecute companies?
TREASURER:
I’m not going to suggest there is a silver bullet here, but we are doing everything we can to put collective pressure on countries that facilitate tax evasion or extremely aggressive tax minimization. Now, sometimes there is a temptation for other economies to set up initiatives – even big economies – to set up initiatives that compete with some of the tax havens. That is unacceptable – that is unacceptable, because then it’s a race to the bottom. Australia is one of the largest – of the OECD countries, Australia has the largest reliance on company tax for its income so we want to make sure there is integrity in the company tax system, not that we engage in a race to the bottom.
CHRIS UHLMANN:
Now, G20 is now the world’s premier economic forum. Climate change is an economic issue, isn’t it? Why isn’t it on the agenda?
TREASURER:
It will be discussed. Climate change will be discussed, but there is a forum for discussing climate change and that is the United Nations forum in Lima in a few weeks’ time which our Foreign Minister is going to. There will also be a major conference in Paris this time next year where climate change will be discussed. [inaudible]
CHRIS UHLMANN:
And you want the momentum to continue, don’t you? So it needs to be discussed at these topflight forums, at every single one of these, in order to get that momentum going towards Paris.
TREASURER:
The best way to deal with issues like climate change is to have strong and prosperous economies, where governments have the money to invest in technologies and a range of things to reduce the overall emissions. Now, the best way to deliver prosperity for governments is to have prosperous economies. And if we take our eye off the ball in dealing with the challenge of economic growth there won’t be the money around to be able to deal with the challenge of climate change or the challenge of Ebola or the challenge of war or the challenges that come up from time to time that must be addressed.
CHRIS UHLMANN:
Now, the Government has only said what it’s going to do until 2020. China and the United States; Europe are now saying what they’re going to do beyond that mark. Is pressure now on you to come up with a higher target beyond 2020?
TREASURER:
As we work towards the Paris conference next year, that’ll be something the Government will consider. In the interim, we have removed the Carbon Tax. I didn’t hear the United States or the Chinese saying they were going to introduce a Carbon Tax. Only Bill Shorten wants to introduce a Carbon Tax again, but we have a Direct Action plan that is delivering on the commitments to reduce emissions by 2020.
CHRIS UHLMANN:
Now, the iron ore price is falling; you forecast a budget deficit next year of $30 billion. Is it your expectation that that will rise?
TREASURER:
We’ll see in the Mid-Year Economic and Fiscal Outlook which is the Budget update, which comes out in December. [Inaudible] iron ore prices have dropped significantly, around 30 per cent since the Budget was delivered. Iron ore represents one in five of Australia’s export dollars. That means it’s our income.
CHRIS UHLMANN:
It means you’ve got a hole in your Budget, doesn’t it?
TREASURER:
It means it has an impact on the Budget. Now, there’s some things I cannot control, I cannot control the global price for iron ore. The things we can control involve reducing government expenditure and the Labor Party’s solution to all of this, interestingly is to say the best way to try and get the Budget back to surplus is to dump your cuts, your savings. Now, that’s why they never got back to surplus. You never get back to surplus by spending more, you only get back to surplus by reducing your expenditure and increasing your income and if your income isn’t increasing, then you’ve got to reduce [inaudible].
CHRIS UHLMANN:
Alright, finally and on that very point, you’ve got $28 billion worth of Budget measures from the last Budget still held up in the Senate. You must be on the verge of beginning the next budget. So what are you going to do about what you haven’t passed so far?
TREASURER:
As in previous Governments, it’s taken time to get budget measures through. I think it took the Labor Party some years to get some of the private health insurance initiatives through the Parliament. But I think the pressure is on Bill Shorten…
CHRIS UHLMANN:
Surely you as well, there must be a bit of heat on you as well. It’s your Budget.
TREASURER:
It is my Budget, but it is Australia’s Budget, and if Bill Shorten is going to block measures that actually fix the mess that he created then he’s got to come up with an alternative. And I’d say to him: give us the alternative. Don’t just mouth off with empty rhetoric about what you plan to do, give us the details of what you’re going to do to make the Budget stronger.
CHRIS UHLMANN:
Joe Hockey, a very busy day for you I know. Thank you for being with us.
TREASURER:
Thank you so much, Chris.