PRESENTER:
Treasurer Joe Hockey, welcome to RN Breakfast.
TREASURER:
Good morning, Fran.
PRESENTER:
Treasurer, the Budget has taken a $6 billion hit, retirement savings closer to $130 billion. It is not cheap doing business with Clive Palmer, is it?
TREASURER:
Fran, if we hadn’t have done this deal the Budget would be $50 billion worse off over the next ten years. So, doing nothing was not an option.
PRESENTER:
Clive Palmer is a billionaire mining magnate with substantial coal holdings. He denies any conflict of interest in scrapping the Mining Tax do you accept that? Should the Government be very careful of doing deals with someone who could stand to profit from the scrapping of a tax like this? How do you consider that?
TREASURER:
How do I consider it? Because hardly anyone was paying the Mining Tax and hardly anyone was going to pay the Mining Tax.
PRESENTER:
Well, the longer it was in the more they would pay, that was clear.
TREASURER:
Not actually, because $660 million was the total estimated revenue of the next few years. This was a tax that was meant to raise billions and billions. It was a complete failure. The fundamental point is that Labor allocated $17 billion of expenditure against a tax over the next four years that was barely going to raise $1 billion. The rest of the money was going to have to be raised through increasing government debt. So, ultimately you cannot continue to spend money against expenditure that continues to improve peoples’ lives or contribute to peoples’ lives today at a cost to future generations.
PRESENTER:
Nevertheless, whichever way you look at it, it was the miners that were campaigning to get rid of the Mining Tax and this deal will put more money back into the pockets of the big coal and iron ore miners – or a very few of them – I take your point there. It does end up taking money out of the retirement savings of ordinary Australians.
TREASURER:
No it doesn’t because the fundamental point is, it is a point that was made in an interesting article this morning, that it comes out of the wages of workers. In fact, the best way to increase the wages of workers in the medium-term is to have a stronger economy, but after that, if you’re not taking superannuation, additional superannuation out of workers’ wages, then it means people have more cash in their pockets.
PRESENTER:
Well, the Government keeps saying this, ‘it’s going to come out of workers’ pockets so they have more cash in their pockets’, but can you guarantee that? That the money saved from freezing this increase will go back into workers pockets by the same amount it would have gone into their super.
TREASURER:
The best authority would be Bill Shorten, who said on radio 3AW on the 21st of March in 2012, that in the case of superannuation, Neil Mitchell said: ‘So you’re saying that the superannuation increases will be paid for by absorbing money out of wage increases.’ Bill Shorten :’That’s the evidence’.
PRESENTER:
That’s what Bill Shorten said; I’m asking, can you guarantee that that money will go back into workers’ pockets because you’re definitely guaranteeing that there will be a hit to their retirement income savings?
TREASURER:
Wages come out of the employer’s pocket and go to workers…
PRESENTER:
Can you guarantee…
TREASURER:
I’m sorry Fran, that’s a negotiation between employers and employees. But I can say to you: given that wages are not growing as fast as what we would like, the net result out of that is that it is almost inevitable that any increase in superannuation would come out of workers’ wages. Therefore, by delaying this, and legislating the delay so it is going to happen over time, but by delaying this we are ensuring that actually, workers get more money in their pockets.
PRESENTER:
Well one thing we do know that we can calculate for certain, and we really can’t calculate how much will go into each worker’s pocket. But we can calculate that, according to the industry, that it will mean $128 billion less into retirement net savings.
TREASURER:
Fran, that’s ridiculous.
PRESENTER:
[inaudible]
TREASURER:
How do you know? Ultimately it comes out of workers’ pockets, in order to calculate that figure the superannuation industry has worked off a basis of what they expect wages to grow at over the next few years. So, I’m sorry, you can’t claim on the one hand it’s one figure and use apples to calculate one figure and oranges for another.
PRESENTER:
But, if it is a guaranteed superannuation, the point I’m making is that you can guarantee that it will be a big dent in the retirement nest incomes of people by 2025.
TREASURER:
But they get it in their pockets, Fran, I’m sorry, they get it in their pockets.
PRESENTER:
And are we going to have anyone monitoring that? The ACCC making sure they do?
TREASURER:
Hang on, either it comes into workers’ pockets or it goes into superannuation, it’s one or the other.
PRESENTER:
Or it stays with the employer.
TREASURER:
If it stays with employers, the best way to grow superannuation in Australia is to have a stronger economy. Because ultimately, superannuation is invested back into the economy; into real estate, into equities, into cash in the bank. The stronger the economy, the more superannuation is in play, the greater the prosperity for people in retirement.
PRESENTER:
So, it is better according to you and Tony Abbott if we don’t beef up compulsory super, if we do leave it [inaudible]?
TREASURER:
I tell you what Fran, it would be far worse for Australia if the Budget and the debt level of the national government were $50 billion worse over the next ten years. That’s the bottom line. If we did not do the deal in relation to the Mining Tax, the Budget and the debt level would be $50 billion worse over the next decade and Australians would be paying for that with higher interest rates and ultimately, they would have to pay higher interest rates on government debt in the years ahead.
PRESENTER:
Our guest this morning is the federal Treasurer Joe Hockey. Treasurer, let’s go to other elements of the Budget: you’ve climbed down and compromised to scrap the Mining Tax and that is a big victory for the Government. Does that signal a greater willingness to make concessions on other Budget measures like the Medicare co-payment?
TREASURER:
We’ve always said, Fran, that we’re prepared to deal with sensible people. What has happened is the Labor Party and the Greens have dealt themselves out of negotiations. We’re prepared to discuss matters with them because we want to deliver stability and certainty and economic growth to Australia. But what’s happened is the Labor party is simply, with the Greens, now opposing absolutely everything. We have nowhere to go but to deal with Independents in the Senate. It’s not just the Palmer United Party, it is the Motorist Action Party, it’s other independents. We need more than the PUP Party to get the passage of legislation through the Senate if Labor and the Greens oppose everything.
PRESENTER:
The figures though, if Labor and the Greens do oppose means you do need some of the PUP party and yesterday when you delivered the deal on the Mining Tax you said ‘it wasn’t your preferred option but it was the only option on the table’ why then, won’t you look at Clive Palmer, presumably one of the sensible people you’re talking about, look at Clive Palmer’s proposed compromise on the Medicare co-payment which we know is one option on the table, the only one we know of so far, which talks about means testing it for low income earners?
TREASURER:
Obviously, our proposal does means test [inaudible] for low-income earners because we ensure that the first ten visits to the doctor by pensioners – after the first ten visits they’re free. So, we are in effect providing a safety net with our co-payment initiative.
PRESENTER:
But the cross benchers are telling you that’s not enough.
TREASURER:
I understand their argument; we’re in discussions with them. We are going to continue to methodically work through the initiatives. Let’s look at what we’ve done in twelve months, Fran. We said Australia is open for business and we are actually delivering through Free Trade Agreements, through $800 billion of approvals, through the biggest infrastructure program in modern Australian history, through getting the Budget back towards a sustainable trajectory to surplus, by getting the debt down, by getting rid of the Carbon Tax and getting rid of the Mining Tax, by getting rid of entitlements for big business, we are actually delivering what we promised – which is a stronger economy. Now, the national accounts come out today and there are low expectations about what they can achieve given we had a pretty strong first quarter this year. I am hoping to see some momentum in the nation accounts that will indicate that the economy continues to recover and we get some jobs created in Australia.
PRESENTER:
And if that happens will that save you from this $6.5 billion hit in the medium-term to your Budget bottom line you’ve just agreed to? Because you have said to us just a few weeks ago that if you don’t get your Budget through, you’ll have to find other measures to make up the savings. Will you find other measures to make up the $6.5 billion?
TREASURER:
Fran, we are working overtime to ensure that we have a sustainable trajectory towards surplus, that we start to pay down the debt but at the same time we are determined to create an environment where jobs are created. We can talk about the Mining Tax, more than 10,000 jobs have been lost in the mining industry over the last 18 months. The best way to help the mining industry to get more exploration going and more development going is to get rid of the Mining Tax, the best thing to help manufacturing and other businesses in Australia is to get rid of the Carbon Tax, to remove some of the tax burden and to give people hope that tomorrow will be better than today and that’s what we’re focussed on.
PRESENTER:
Treasurer, before we go we have had this awful news overnight of what seems to be the beheading of a second American journalist by Islamic State militants – Steven Sotloff is this freelance journalist’s name. The IS militant who appears to carry out this beheading warned, and I’m quoting, ‘those governments that enter the evil alliance of America against the Islamic State must back off and leave our people alone’. Does this give our government pause to think again about how far we follow the US into Iraq?
TREASURER:
It is not about following the US into Iraq, it is about doing what is right. We are absolutely determined to do what is right by humanity, to do what is right by our values as Australians and we will not be intimidated by the threats of murderers. We will never be intimidated, as a nation or a people, by the threats of murderers.
PRESENTER:
Joe Hockey, thank you very much for joining us on Breakfast.
TREASURER:
Thanks very much, Fran.