TREASURER:
Good morning Laurie.
OAKES:
Morning Cam. Mr Hockey welcome to the traditional Treasurer's Mother's Day interview.
TREASURER:
Well thank you Laurie and if I might be a little indulgent, can I wish my mum and my wife a happy Mother's Day because I won't be seeing them but I wish them all the best and thank them for what they do.
OAKES:
Yeah they put up with a lot.
TREASURER:
A lot - a lot in my case!
OAKES:
Now the Government is freezing MP’s salaries and those of senior public servants for a year, tell me why?
TREASURER:
Well, I think we have got to send a clear message to the electorate that whatever we are asking the electorate to contribute, to the Budget repair task, we are going to contribute ourselves as well and I think that's an important message to send.
OAKES:
So what's the mechanism for freezing salaries?
TREASURER:
The Prime Minister will be writing to the head of the independent remuneration tribunal and asking for any pay increase for MPs and senior public servants…
OAKES:
He's not done that already?
TREASURER:
He may have done it by now, I haven't asked him about the exact logistics of it but it's certainly happening now.
OAKES:
And when do you expect an answer from the Tribunal?
TREASURER:
I am sure they will agree to it in due course. I think it is hugely important Laurie that we illustrate, that we show that whatever we are asking of the electorate to repair the Budget, to build a stronger Australia; whatever our asking of the electorate, we have to do ourselves and in this case more.
OAKES:
Now, when Kevin Rudd froze MP’s salaries during the Global Financial Crisis, Tony Abbott sneered that it was just a populist stunt?
TREASURER:
Well it was then.
OAKES:
Not now?
TREASURER:
Well Kevin Rudd did it before the Global Financial Crisis. He was elected into Government, he got a big pay rise and then he declared a war on inflation and said “well we are going to take a freeze on MP’s pay for 18 months”, but then he went on the biggest spending spree in Australian history. We are not going on the biggest spending spree in Australian history, what we are doing is asking the electorate to contribute so that we can help to build a stronger Australia, and we’re going to contribute ourselves and that's appropriate.
OAKES:
Paul Keating and Peter Costello used to be able to sum up their Budgets in a pithy phrase. I remember one Keating Budget he said, “This is the one that brings home the bacon”. How would you describe your Budget?
TREASURER:
Well this is a ‘contribute and build’ Budget. It is a Budget that asks the Australian people to contribute to a stronger Australia and more prosperous Australia with more jobs, and a greater sense of security. The fact is Laurie, we determine our future now. We are going to shape the future of our country now and if we don't take action we will suffer down the track. Whatever we do in the short term will be mild compared to the cost of inaction into the future.
OAKES:
And yet you are breaking promises. Doesn’t that reduce your chances of the public accepting what you want from the Budget?
TREASURER:
I don't accept that we are breaking promises, I really don't because what you will see on Tuesday night is that taxes will be lower under the Coalition than they would have been if Labor were re-elected. Now, that is a very significant commitment we made and we’re sticking to it. Taxes are lower under the Coalition than they would have been under Labor if they were re-elected. That's the commitment we made and we are delivering on Tuesday night.
OAKES:
Tony Abbott’s specific commitment, quoting directly, "What you will get under us are tax cuts without new taxes"…
TREASURER:
Well we are getting tax cuts, we are getting tax cuts…
OAKES:
But we are getting new taxes?
TREASURER:
Don't assume they are new taxes. We never said that we were never going to, never change a tax, or alter a tax, in fact we were left with 92 announced but unlegislated tax changes by Labor which we have been methodically going through, and we have been getting rid of the ones that are simply un-implementable. So the fact is we are simplifying the tax system, what we are doing Laurie, is we are building. And this is a Budget that builds a stronger economy and when people see the details on Tuesday night they will understand that the contribution they are being asked to make is going to a significant cause and It won't be just about the numbers, it is about the outcomes, the outcomes that drive a more prosperous community.
OAKES:
You can't deny can you, that imposing a deficit tax, a 2 per cent rise on incomes over $180,000, you can't deny that that's a new tax?
TREASURER:
Well I'm not playing word games, I mean we have got a huge task ahead Laurie. We are going to have less tax than you would have had under Labor, That's our absolute commitment. But of course everyone has to make a contribution. If everyone makes a contribution to the heavy burden of Budget repair, then the benefits of that contribution will be far greater.
OAKES:
But you are also raising the tax on petrol - you are re-introducing indexation that was abolished 13 years ago and now the Finance Minister comes out and then says, "Trust us". Why should people do that when you are breaking promises?
TREASURER:
Well I don't accept the premise about broken promises but even if that's the case Laurie - and people will say that no matter what, they were saying it before we have even delivered the Budget, so there is some irony there, but Laurie we are keeping to our policies that we took to the last election, and we are dealing with the challenges that lay before us. Now we never knew we were going to inherit $123 billion of deficits, we never knew there we were going to be left with $667 billion of debt. Those numbers became apparent after the election, and the trend of expenditure by the previous Government was simply outrageous. Now the fact is, someone has got to do it; we are prepared to do it. We didn't create the mess but we accept responsibility to fix it.
OAKES:
Let me give you one more Tony Abbott quote. He said before the election, “The condition of the Budget when you came to office, would not be an excuse for breaking promises.”
TREASURER:
Well he also said that we have an obligation, our primary obligation is to deliver a stronger, safer, nation that fixes Budget, fixes the economy, they were the commitments we made.
OAKES:
He said a lot of things he shouldn't, didn't he?
TREASURER:
Look, you know, he's an honourable man Laurie, and he knows that the most solemn promise that we made to the electorate was to fix the Budget and fix the economy so that people can have jobs and we are going to do that.
OAKES:
Alright, well let's get to the nitty-gritty of the Budget. Will all the extra money from reintroducing the twice-yearly indexation of petrol excise; will all that money be spent on roads?
TREASURER:
Well, we will go down that path. If there is going to be an increase, I can't give you the exclusive measure tonight - today, but if we are going to make any changes to fuel excise it will go into roads and we are laying out a plan for the biggest increase in road expenditure in Australian history, that's going to be there on Tuesday night.
OAKES:
How big?
TREASURER:
Well Laurie, over the next six years we are going to spend in excess of $40 billion on roads and that will be matched by the states and the private sector with an additional $42 billion. So it is a massive amount of money, think about it…
OAKES:
More than $80 billion?
TREASURER:
Think about it, every time you spend $1 billion it's like building a brand new major teaching hospital. Over the next six years the Australian Government, in partnership with the States and private sector will spend over $80 billion on new road construction. That is tens of thousands of new jobs, but most importantly Laurie, it is going to address the significant drop-off in investment in construction in Australia, associated with mining investment coming off. Now we are going to put it into the other parts of the economy and we are going to build the other parts of the economy to strengthen our overall economy.
OAKES:
Well that drop off in mining investment, it’s going to happen in the next two years or at least a large amount of it. Can you get the road program up and running that quickly?
TREASURER:
Absolutely, we have struck deals with the States to get on with the major projects. For example in NSW, we are not just building WestConnex stage one but also now WestConnex stage two; that's in the Budget on Tuesday night. That is a massive project involving thousands of jobs and work starts July next year. In Victoria we have struck a deal with the Victorian government to get on with the east-west project, a massive project, thousands of jobs and work starts next year. It is hugely important Laurie that we move quickly to build this infrastructure to address some of the challenges the economy is going to face over the next three years.
OAKES:
I read somewhere that you don't think there this is a slash and burn thing, in fact I wrote it - you don't think this is a slash and burn Budget, you think it is a growth Budget. Is that fair?
TREASURER:
There is no doubt it is a growth Budget and on Tuesday night we will show how it will increase the size of the economy. It is unquestionably a growth Budget, it is a building Budget, but it's also a Budget that asks everyone to make a contribution.
OAKES:
That's where the slashing and bushing comes in.
TREASURER:
Well we are not into slash around burn for the sake of it Laurie. I want to say to you emphatically, there is no ideological commitment to ask people to contribute. It is about making sure that our quality of life in Australia is sustainable, that's what it is. And if we don't all contribute to the sustainability of our quality of life, we are going to leave our children with a lesser quality of life than we have. That's outrageous and I won't do that Laurie, I won’t do it.
OAKES:
But a large part of the Budget apparently is clamping down on welfare including means testing various items including family Benefits. Now that’s going to produce a horror Budget for many people isn't it?
TREASURER:
No, if people look at the Budget and assess it how it affects ‘me’ or ‘them’ then they will say yes, it's a painful contribution. But if they look at the fact that it actually builds a stronger nation, every individual over time will benefit out of this Budget.
OAKES:
Look one of the reasons I like Tony Abbott is because he said so many interesting things in the past. Let me quote another Tony Abbott line from 2011, "A dumb way to cut spending would be to threaten family benefits or means test them further". Do you agree with that?
TREASURER:
Well Laurie I say to you, we are asking everyone to make a contribution because we have to, because we have to and the fact is, Labor left us with a mess and we have got to fix it.
OAKES:
Tony Abbott wrote a book called 'Battle Lines'…
TREASURER:
It’s a good read I hear.
OAKES:
Yeah and a large section of that book rubbishes the idea of means testing. What's changed apart from the Government?
TREASURER:
Well the fact we inherited a mess Laurie. We have to fix it, we have to fix it otherwise we will leave people with a lesser quality of life and we are not prepared to do that.
OAKES:
But I mean the Labor Party had a revenue problem too and the Coalition…
TREASURER:
They had lots of problems.
OAKES:
The Coalition opposed and bagged them every time they wanted to means test something and now you have embraced means testing?
TREASURER:
Well that's not necessarily right at all. In fact a number of measures that the Labor Party introduced, we ended up supporting and facilitating through the Parliament and now we have the Labor Party in Opposition, not only opposing what we do, they’re this you are opposing what they did only six months - twelve months ago. They went to the last election saying they were going make changes in a range of areas to save the Budget money. Now the Labor Party has gone into Opposition, they are opposing what they promised at the last election. So they not only want us to break our promises, they want us to break their promises as well.
OAKES:
But when Labor tried to first propose means testing the health insurance rebate, Tony Abbott said "Hands off our health system, we have a very good health system".
TREASURER:
And Laurie we do have a very good health system but now we need to make it better and I am very confident that what you will see on Tuesday night is going to show a path to a much stronger, a much stronger health system in Australia.
OAKES:
But the bloke who said "Hands off our health system" is now heading a Government that is going to introduce a $7 co-payment for going to the doctor?
TREASURER:
Well Laurie, you will see on Tuesday night again, I say to you, there is a purpose in everything we are doing. And the purpose is to build a stronger health system, stronger education system, a stronger more robust and fairer welfare system to focus on jobs and to focus on prosperity.
OAKES:
But you are hitting people on welfare, you are going to hit pensioners by changing the...
TREASURER:
We are not hitting anyone Laurie, in particular. We are asking every Australian to make a contribution so we can actually build a stronger nation.
OAKES:
But the poor old pensioners are going to get smaller increases because of the changes you are going to make to the way their pension is increased?
TREASURER:
Well we are sticking to the policy commitments and promises; we are not changing pensions for the first time in Government but we have to show…
OAKES:
Will you change the indexation system?
TREASURER:
We have to show the Australian people a pathway to sustainability. I don't like the idea; in fact I will not accept the suggestion that we are just going to pass the buck in relation to the Budget or in relation to the future. We accept responsibility for what must be done and we are going to do it.
OAKES:
What is the bottom line effect of what you are planning? I mean how much spending are you going to cut and how quickly will that now get us to a surplus?
TREASURER:
Well Laurie, we were never going to get it to a surplus under what we inherited. There is a clear pathway to a surplus of 1 per cent of GDP by 2023-2024 but at the same time I want to emphasis we are stimulating growth, we are building growth. And you can see over the medium term, the ways we are fixing the Budget in a structural manner but at the same time the economy is going to grow.
OAKES:
You say the economy will grow, what does that mean for unemployment? The forecast for the next financial year is 6.25 per cent, are we going to hit 6.25 per cent?
TREASURER:
Well I hope not Laurie and I tell you everything we are doing on Tuesday night is going to be about jobs and about prosperity. Now, I inherited a rising unemployment rate to 6.25 percent, we are going to do everything we can to make sure we never get there.
OAKES:
We are out of time but one last question, for some reason there has been speculation on Twitter about the impact of the Budget on the price of cigars. Will tobacco excise go up?
TREASURER:
Laurie I'm not commenting on that but I do note that I think in the first Budget in 1901, they had taxes on opium, so I can assure you that's certainly not in the Budget. There is certainly nothing to tax there.
OAKES:
Mr Hockey, we thank you.
TREASURER:
Thank you.