PRESENTER:
On the line I have the admirable Joe Hockey. Joe Hockey, good morning and welcome to the program.
TREASURER:
Good morning, John Laws.
PRESENTER:
Did you like that, the admirable Joe Hockey?
TREASURER:
Admirable? Well, I knew you were a smooth talker but that takes it to a whole new level.
PRESENTER:
In the lead up to the last Federal Election you were at pains to point out that you don’t solve a problem of debt by simply adding more debt to it. But now you seem to have changed your mind.
TREASURER:
Not at all.
PRESENTER:
Yet you have?
TREASURER:
Not at all. No I have not. The bottom line is we need to deal with what we have inherited at the moment and we inherited a debt that was going to $370 billion but the Government had a debt limit of $300 billion and we are hitting the debt limit on the 12th of December.
PRESENTER:
But weren’t you aware of the problems you were confronting when you got yourself into Government?
TREASURER:
Yes. Wayne Swan was asked about this when he delivered the Budget and said the debt was going to go to $370 billion. He said that will be someone else’s problem after the election. Well, meet ‘someone else’, he’s on the phone with you. I am not going to let Australia default. I have to increase the debt limit. I have no choice, it is Labor’s legacy. Now I have been advised that it is not going to peak on current trends at $370 billion. It is going to peak at over $400 billion. I have also been advised that given what is happening in the United States and a number of other factors, that we need to have some headroom on the debt limit of between $40 billion to $60 billion. That is because sometimes you have to refinance before you can pay off. Therefore the Cabinet has made the decision that we have to have a debt limit of $500 billion, which is Labor’s legacy, at the same time we have got to have a plan to start paying it down and getting rid of it. That is why we announced a Commission of Audit yesterday.
PRESENTER:
You are aware that people get pretty weary of hearing the Government that is in power complaining about things that went wrong when it was in Opposition. You knew what the situation was.
TREASURER:
I said at the time - I might have said it on your program - that if we are elected we are going to have to increase the debt limit. I don’t like this. I don’t like going back to the bank and saying “please increase the credit card.” If I know the bills are coming in and I have not got any way to pay those bills other than increasing the credit card I cannot stop the economy. I can only start putting in place the mechanisms that help me to start to address this problem.
PRESENTER:
The Final Budget Outcome shows the underlying cash deficit was about $18.8 billion?
TREASURER:
That was last year. That was meant to be a surplus you remember - that’s the one they promised they were going to have a surplus.
PRESENTER:
If it wasn’t so serious it would be funny. My god they told a lot of fibs didn’t they?
TREASURER:
You know what else? I have not spoken to anyone yet about it, but today I put out a statement that I had to put $8.8 billion into the Reserve Bank. It is a significant announcement. I have done so because we need to make sure that the central bank of Australia is in the very best position to be able to deal with what could be some volatile times in the global economy in the days, weeks, months, years ahead. That is something that if you look at the press release that I put out with the background notes, you will see that the previous Treasurer took a massive dividend out of the Reserve Bank. The Reserve Bank have not had enough in their Reserve Fund to deal with some of the challenges. These are things I am doing - I am fixing the joint. I need to make sure that we do it right, in a sensible way, to make sure that we can cope with the challenges ahead.
PRESENTER:
Ok, I know you have got other commitments, but just very quickly, you said the age of entitlement should be over. I agree with you, but if that’s the case why are you keeping the carbon tax compensation? That’s a $4 billion hit to the Budget.
TREASURER:
It is a hit to the Budget, but we have found other savings that are going to help pay for that hit to the Budget. What we have said is that the compensation is actually tax cuts and pension increases and we are not going to do it - we are not going to cut pensions and we are not going to increase personal income tax. If we were to get rid of that so called compensation then people’s taxes would go up and their pensions would fall. We are not doing that, we are not going to do that.
PRESENTER:
I presume you are also not going to take Clive Palmers advice and give him money back that was going to …
TREASURER:
No. It is not going to be retrospective. I know Mr Palmer has a sizable carbon tax bill but he has to meet his obligations as they exist at the day like every other tax payer.
PRESENTER:
Yes, do you think that Mr Palmer is a walking conflict of interest?
TREASURER:
I will leave that to you.
PRESENTER:
You can use that line if you like Joe.
TREASURER:
He may well be a parliamentary colleague.
PRESENTER:
You’ve got to be careful.
TREASURER:
Not careful, but I think Mr Palmer will be the first to say he should not be treated any differently to anyone else.
PRESENTER:
I think he probably would be, nor should he be, I agree. Good to talk to you Joe. Thank you, you have given me more time than I deserve.
TREASURER:
Any time John, you deserve a lot, thank you.
PRESENTER:
Joe Hockey, a good bloke to talk to because he is such a sort of ordinary everyday kind of fella with a very big brain let me tell you. No slouch when it comes to mental capacity, Joe Hockey, he’s our Treasurer and a good one.