JAMIE BURNETT:
Treasurer Joe Hockey, good morning.
TREASURER:
Good morning Jamie.
JAMIE BURNETT:
You found some support this morning for your Budget from the head of the Government’s Commission of Audit, Tony Shepherd. I suppose that’s not unexpected but he says, “Reflecting on the Budget, it’s a sad reflection of the modern Australian attitude that we can’t see that all areas have to make a contribution.” Do you agree?
TREASURER:
Well, Mr Shepherd is entitled to his view. The fact is that, we believe it is a fair Budget and if we do not take action now, the pain down the track will be considerably greater. The Labor Party is arguing that we should do nothing. They are factually wrong if they believe, by (inaudible) and waiting for economic growth to improve, the Budget will repair itself. In fact, Dr Parkinson, the Secretary of Treasury, said that you need 5.25 per cent growth – which is almost unparalleled in Australia – to get the Budget back to surplus without doing anything. So the bottom line is, if we are going to start living within our means, we actually have to make these sorts of decisions now.
JAMIE BURNETT:
And that’s the message that we have been hearing from yourself and the Government over the last 10 days but it is coming towards the end of the second week of this Budget; so why haven’t you been able to convince the majority of Australians yet of its merit?
TREASURER:
Well, I think Australians over time, as they see more of the detail of the Budget, will also understand that this is a Budget that is focused on economic growth; about stimulating economic growth which ensures that we have jobs, that ensures that household income actually grows. You can only do that by having a Government that lives within its means because if it is business as usual in four years’ time, we will be paying $740 in interest alone, for every man, woman and child in Australia on the debt that we owe. And the best way to address that is to start getting the Budget back to surplus and where possible, investing in the things that are going to grow the economy like road investments here, in and around Perth and investments right around Australia and infrastructure.
JAMIE BURNETT:
I think that most would accept the point that the financial challenges, with the size of the Budget deficit, are quite large, they’re a problem, but the question I think comes down to…
TREASURER:
The fiercest critics don’t Jamie. They think that business as usual is acceptable but the fact is, business as usual, the status quo, will not work.
JAMIE BURNETT:
But let’s look at the responses as well from the electorate; from the calls that you have been hearing, that you heard on Q&A the other night and you will shortly through our calls as well. But a lot of the questions have come down to fairness. Why have lower income earners been forced to bear the financial load ahead of the top end of town? Why have they been hit harder with these Budget measures than those on higher incomes?
TREASURER:
Well, firstly I don’t accept the premise. The second thing is, for example, 64 per cent of income tax is paid by people over $80,000 in income. So, if you put more of a burden on all those people, and we are asking people on over $180,000 to pay more, but if you put more of a burden on those people, they are simply going to find ways to minimise their tax, but even so, the tax contribution of taxpayers is actually increasing over the course of the Budget with what’s called fiscal drag. That is, people earn more with wage growth and they go into higher tax brackets. Now, the suggestion somehow that lower income people are contributing more; we are effectively freezing for a short period of time, the growth in payments that are going to low income people with some changes to eligibility. But we are simply not increasing some of those payments, rather we are freezing the current level of some of the payments people are receiving, which means, that is in the case of family payments, a supplement to their primary income. We want their primary income to grow and their primary income can only grow by a stronger economy.
JAMIE BURNETT:
Mr Hockey, it is 22 minutes to nine, you are my guest on Mornings Jamie Burnett; let’s take some calls. Joe has called in; I will just get you to pop your headphones on there, Treasurer.
JOE (CALLER):
Joe, good morning.
TREASURER:
Good morning
JAMIE BURNETT:
You have a question for the Treasurer?
JOE CALLER:
Yes, Mr Hockey, I have two kids who earn over $180,000 a year. They figure it is going to cost them $200 or $300 on a temporary basis. I am on a Commonwealth Pension, I might get less than $80,000 and I worked out I am going to lose at least $2,000-3,000 in lost benefits. Is that fair and apt or equitable?
JAMIE BURNETT:
Treasurer?
TREASURER:
Well, I’m not sure how you are going to lose $2,000-$3,000 as a pensioner because we are not cutting the pension; we are not cutting the pension. In fact, the pension is going to increase every six months and will continue to do so. So, I’m sorry sir, I am not sure where you get that $2,000-$3,000 from and the fact is, for your two children who are earning the money, they are contributing to your pension. They are paying their taxes, so if we increase the amount of money we are taking out of their pocket – that’s the money they’ve earnt, the money that you are receiving from the Government comes from another taxpayer, it doesn’t come from the Government. I would just say to you sir, I’m not sure where you get the $2,000-$3,000 in relation to the pension from.
JAMIE BURNETT:
There seems to be a lot of confusion around the Budget and exactly what costs go where and whose going to be hit harder and with what. Do you accept some of the responsibility that the selling of this Budget hasn’t been as strong as you would have liked?
TREASURER:
Well Jamie, you can’t start selling something until you announce it. So, we announced it two weeks ago…
JAMIE BURNETT:
But there has been confusion in that two week period about details within the Budget and I mean…
TREASURER:
Look I don’t accept that. I mean, it is easy for critics, easy for critics, but the fact is, for example, we spend more on the welfare system in Australia at a federal government than we spend on healthcare; we spend more money on welfare than we spend on education; we spend more on welfare than we do on the defence of the nation. The welfare system is very complicated, everyone has a different personal circumstance and you know, for example, the other day a single parent with two children who was studying says to me she receives the Single Parent Pension, Family Tax Part A, Family Tax Part B, gets childcare subsidies and so, I am not sure everyone is in that sort of situation if they are a single parent but they are getting a lot of different entitlements and therefore they will be affected in different ways.
JAMIE BURNETT:
Treasurer, talking about the bear on maybe the lower income earners who were talking about the $7 cost to go and see a GP. One other issue that has been brought up by a few people has been the changes to prices of fuel and fuel excise indexation. Here is James on that; good morning.
JAMES (CALLER):
Good morning Joe or Mr Hockey, I hope you are enjoying Perth.
TREASURER:
Thanks very much. Well the sun has come out now so it’s fantastic but it is good to see some rain too.
JAMES (CALLER):
Fantastic, alright. Look I will be succinct, the fuel excise – really no one wants that to be increased but it is inevitably going to be increased, but there are many businesses that have to deal with the fuel excise and at the moment, it is at a ridiculous decimal scenario where it is 38.143 cents; probably a request on behalf on many thousands of people who have to daily process invoices that there is a cap on the fuel excise – for instance 38.1 cents. It is very difficult for software to go for three decimal points or three decimal places of a cent. So what we would ask of as you, if it is inevitable, that the increase of excise is happening, then you…
TREASURER:
Round it round…
JAMES (CALLER):
Round it out to one decimal point. That will make everyone’s life a lot easier, even if you have to round up, hopefully you round down, but please consider that when you are putting the fuel excise up.
TREASURER:
Well, no one has ever raised that with me before and I’ll tell you what, I am going to go back to the Treasury and I am going to ask them to do that if it is possible and find out all the reasons why it wouldn’t be possible, but I am sure we could find a way through on that. I mean, that is perfectly logical and helps to reduce your red tape burden.
JAMIE BURNETT:
Okay well done there James, the (inaudible), Treasurer Joe Hockey this morning. Now let’s go to Neeta (sp). Now, good morning Neeta.
NEETA (CALLER):
Good morning, good morning Treasurer. You had a caller on regarding how much pension this gentleman was going to lose and you said, ‘you didn’t know where he had got the figure of a couple of a thousands from’. Well I can tell you if you would like me to inform you. The Pension Concession and Commonwealth Seniors Health Cards are for travel, electricity, phone and council rate discounts in agreement with the states but buried in the Budget documents the Government reveals it will be terminating this agreement after July the first, saving $1.3 billion over four years. That means, I, as a pensioner and the previous caller, will lose over $2,000 a year and you will be putting pensioners that live on larger blocks and have probably lived on those blocks for 20 or 30 years, you will be making them sell up and move out of their home because they cannot afford the full council rates on their properties. Now, if the concession, we have all enjoyed, and it has been fantastic, and we thank you for it, but to lose that plus the electricity and this huge council rate discount, Treasurer, I don’t think you realise what you are doing to us.
TREASURER:
Well Neeta, I understand what you are saying. It is an agreement between the Commonwealth and the states, it is not an agreement between the Commonwealth and you and as far as I am aware, those concessions that are provided by the states, have not been reversed by the states. There has been no announcement by Colin Barnett that he is going to close down those concessions or end them. So, the reason why is because the states are actually, in net terms, receiving $9 billion more from the Commonwealth Government over the four years than they would have budgeted, including an extra $4 billion in additional GST revenue. Now I know Western Australia has been I think, disadvantaged in the distribution of the GST, that is quite true and that is something we are obviously focussed on in the Federation White Paper that is coming up. But can I say to you, because the agreement with the states has been terminated, does not mean those concessions do not continue and no state government has said that those concessions are going to end.
JAMIE BURNETT:
Looking here at WA; you are obviously in Perth today Treasurer, will you be meeting with Premier Colin Barnett on this trip?
TREASURER:
Look, I haven’t got a scheduled meeting with the Premier but obviously I do meet with state colleagues and speak to them from time-to-time.
JAMIE BURNETT:
So, not this time around obviously given issues surrounding GST, which we have heard from you and from the Premier as well and funding in the Budget for education and health (inaudible) an opportunity to sit down possibly with Colin Barnett, also a Treasurer new in the job here in West Australia, Mike Nahan.
TREASURER:
Look, I have spoken with Mike Nahan he, just after he was appointed, he came over to Canberra for the meeting of the Treasurers. We had a very lengthy conversation, he is an impressive character I must say and very much across his brief. But we have continuing discussions with our state colleagues and certainly as they know we are putting a lot of money into roads here in West Australia and particularly in Perth.
JAMIE BURNETT:
Fourteen minutes to nine; my guest is the Treasurer, Joe Hockey. You are listening to Jamie Burnett filling in for Geoff Hutchinson this morning. The Prime Minister did say, that he hoped this Budget, however tough, however criticised across the board, would be one that was respected. Do you think there is evidence of that at this stage?
TREASURER:
Well, Australians do know that we have to fix the Budget, Australians know that and Australians know that the previous Government left a mess; someone is going to have to fix it. Now the challenge is, how we do that and only by everyone making a contribution in one form or another are we going to get the changes necessary to fix the Budget. Now, there has been a lot of misinformation in the media and a lot of media is representing misinformation peddled by our critics and our opponents – they are entitled to do that but we’ve just got to keep ploughing on, focusing on the fact – that what we are doing is right for the country and right for the economy.
JAMIE BURNETT:
You said there was stunned silence in Cabinet when you first briefed your Party colleagues about the scale of budgetary problems. What reaction are you expecting from your colleagues when you all head back to Canberra next week and you meet, following the past two weeks being out and about talking to members of the electorate and voters as well, over the last couple of weeks?
TREASURER:
Well look Jamie, my colleagues understand the challenge. There will always be some people, wherever they may be, who offer, you know a different view but my colleagues understand that we have to fix the mess that we inherited. Now, if anyone has a different approach or a better approach, let them put it forward. But, for all the criticism we have received, no one is offering an alternative that, on the one hand keeps our election policies such as no changes to superannuation and no changes to major taxation without going to another election. No one is providing an alternative that fits in with what we made as a commitment at the last election and repairs the Budget. And what’s happening is, we now have our Labor opposition not only opposing key measures in the Budget that are going to fix the mess they created, not only opposing what we took to the last election as savings, they are opposing what they took to the last election as savings. So, they are being reckless and indifferent to the mess that they created and from our perspective, it is now time to fix the Budget, to strengthen the economy and to give people more control of their destiny, otherwise we are going to pay a bigger debt and have bigger challenges down the track.
JAMIE BURNETT:
Treasurer, we have had plenty of callers this morning. I might just get to a couple more to give everyone the opportunity today.
TREASURER:
Sure.
JAMIE BURNETT:
This is Christine; she wants to talk about welfare and Budget restrictions. Good morning Christine.
CHRISTINE (CALLER):
Yes, good morning. I really just wanted to ask the Treasurer to consider the true meaning of the world welfare, i.e. fare well. (inaudible) somehow made into a disparaging adjective and what happened to social security, which is a much nicer word. We seem to be going down the American path where welfare is a disparaging comment.
JAMIE BURNETT:
Thanks Christine.
TREASURER:
Well Christine, it is certainly not meant to be disparaging at all. It is a fact, according to an OECD analysis, that Australians have a higher income from welfare for those on about the lowest 20 per cent of income. We have a higher dependence on contributions from other taxpayers than almost any other country in the OECD and a smaller reliance on private income than almost any other country in the OECD and I think what we need to focus on, is making sure that those most vulnerable have the best support available. So, the broader individual payments become, the less you are able to target help for those most in need and this is the fundamental challenge. If you have more and more people, for example going on to a Disability Support Pension and it becomes a broader and broader net, there is less capacity for government in the future to help those people who most need help. Now, it is okay if you have got a substantial amount of income coming from a mining boom or a strong economy, or in the case under Labor, you borrow it from future generations. So you borrow money today to hand out and expand the welfare system, but sooner or later, you can’t rely on money coming in, you can’t rely on money from tomorrow, you actually have to live within your means today and that is where we have got to make sure that we reduce the breadth of individual schemes and ensure at the same time, that those most vulnerable have a strong and robust safety net.
JAMIE BURNETT:
Thanks Christine, let’s go to John now. I want to get through a few of your calls on 1300 222 720. Good morning John.
JOHN (CALLER):
Yeah how are you going Joe?
TREASURER:
G’day John.
JOHN CALLER:
And Jamie. Yeah Joe, I know you guys don’t big note yourself on performances but very good on Q&A the other day mate, quite impressed. Just a living…
TREASURER:
Thanks very much.
JOHN (CALLER):
Okay, just living beyond our means – you have brought that up several times already this morning. This type of thing unfortunately, I’m just in my sixties and I can see this for the last 20 years; people are just living far, far too well. We are far too well off and I think the bubble has just burst. That’s the way I just look at it as just a punter out here and I just think the bubble has just burst. Labor definitely handed out too many benefits, we’ve been through that so, really just generally Joe, I think you have done a pretty good job with the Budget and there isn’t really too many bad measures in it. I would just like you to re-comment on a couple of those little issues.
TREASURER:
Well, I appreciate it. You know, in a sense, some of the things that we really believe are going to strengthen the economy and lift the capacity of the country to maintain its quality of life have been a bit lost in the commentary. For example, when it comes to health, every dollar in savings in health, including the savings associated with the co-payment, go towards a Medical Research Future Fund, which is going to invest in Australian research and Fiona Stanley is the most obvious example here in Perth; investment in that sort of research, which is going to help to develop the cures for the diseases that are going to be a massive challenge into the future like dementia, and Alzheimer’s and cancer and so on. We are asking people to contribute now to build something that is going to deliver a better a quality of life in the future and everything we are asking now has a purpose. It is, it is not just about the numbers and living within our means, it is actually the purpose of building something. So, in higher education we are building a better medical system, sorry in higher education we are building a better university system with broader opportunities for people who do not go to university. In our health changes, we are building the Medical Research Future Fund. In our welfare changes, we are actually building a more robust system, that for example, you said you are in your sixties; we have a Restart Program where we are going to pay employers, over a two year period, $10,000 if they employ someone over the age of 50 who has been on Newstart or Disability Support Pension for six months and they employ them. Now that is about changing the culture of business towards people over the age of 50, to ensure they actually start to think about employing people from a broader cohort across the community, in order to grow their business.
JAMIE BURNETT:
Its five minutes to nine, we are getting close to news time, Treasurer. We will take one more question from Simon before we get there; Simon good morning.
SIMON (CALLER):
Good morning, good morning Treasurer.
TREASURER:
Good morning Simon.
SIMON (CALLER):
It pains me to say this but there is one aspect of your Budget that I really support and that is your reassessment of Youth Disability Support Pensions and the move to push people with disabilities, well I shouldn’t say push, but motivate people with disabilities who are young into the employment sector. I was a person with a disability, I went and got support from the DSP and went into education and got a job. It was a great support for me; it is a big motivator for people who are young and people with disabilities to get into the sector. My question to you is: I understand you are going to go through a reassessment but what are the mechanisms you are going to use to actually find employment, cause I support the policy and support the idea. I just want to know how you are going to get the jobs? Thank you very much.
JAMIE BURNETT:
Thank you Simon.
TREASURER:
Well Simon, it is a really interesting case example you have provided. It is the case that a number of people on the Disability Support Pension do want to participate in work, doesn’t matter what their age and there are more than 800,000 Australians on the Disability Support Pension. You are right, people under the age of 35; we are assessing where they would have some work capacity, we are reassessing them against them impairment tables and we have Centrelink who is going to help to get them into work up to their capacity; that is very important. So, it is not about pulling people off the Disability Support Pension, it is about helping them go into work. Now, you know, the case example I used in the Expenditure Review Committee was a fellow I went to school with broke his neck playing rugby and he became a quadriplegic and the whole community came around to help him, but he really wanted to work as well and he worked for a few hours a week, as a quadriplegic and you know I think that kept him going for a long period of time. We’ve got to – part of our compassion is about helping people to lift and where they want and where they have the capacity to and the National Disability Insurance Scheme is exactly that, it is about helping people with a disability go into work; we didn’t cut any funding for that but we want to make sure that it operates in a meaningful way; at its best.
JAMIE BURNETT:
Treasurer just finally, it has been a big two weeks. This is your first Budget, what have you learnt over the last 10 days?
TREASURER:
Well, you can’t be put off by the criticisms, you can’t be put off by the personal (inaudible), you have got to focus on the policies and you have to focus on what’s best for the Australian people. Not that that is a lesson, but it is a reminder; everything we are doing is for the benefit of the Australian people not for ourselves but for the benefit of the Australian people. That’s why we are in business, that’s why we are in government and I think the Australian people expect no less.
JAMIE BURNETT:
Any expectation that it will make Budget number two an easier scenario?
TREASURER:
Well, I don’t know. I want to see the economy grow, I want to see prosperity; one Budget at a time Jamie, I’m still on this one.
JAMIE BURNETT:
Treasurer, thanks for your time this morning.
TREASURER:
Thank you sir, thank you very much.