LAURIE OAKES:
Mr Hockey, welcome to the traditional Mother's Day Treasurer's pre-budget interview.
TREASURER:
Good morning. I have not had a chance to ring my mum or wife so I say to them happy Mother's Day and I love you very much.
LAURIE OAKES:
Last Mother's Day when we did this interview, you were riding high, portrayed as the person who would take over if Tony Abbott fell under a bus. Now you seem to be a bit on the nose. People are calling for your head. What happened, in your view?
TREASURER:
Well Laurie, we’ve all got to make the right decisions for Australia and that’s what we’ve been doing. As a team we’ve been focused on building a stronger economy, helping to create a more prosperous society, that’s what we’ve been doing. It’s always hard effort and there’s lots of criticism but we are doing what is right for Australia.
LAURIE OAKES:
Do you think, though, that you blew it last year? Any regrets?
TREASURER:
Well, as we have said previously, we were trying to do too much in one Budget. But the need for Budget repair, the need to strengthen the Australian economy hasn’t passed. We still need to do it. Someone has to stand up and do what is right for Australia. That’s what we are doing. Politically the rewards do come, the electorate sees it. You’ve seen it in the United Kingdom this week, where the Prime Minister and the Chancellor, my equivalent in the UK, went through a similar period to what Tony Abbott and I have gone through, but the electorate recognised at the end of the day that good policy needs to be implemented and they recognise that it is hard.
LAURIE OAKES:
Well, I suppose the question people are asking after the last fortnight is, will Tuesday night's effort be Joe Hockey's Budget or Scott Morrison's?
TREASURER:
It is definitely Joe Hockey's Budget and it’s the Coalition Government's Budget, everyone's Budget, because we’re focused on creating more jobs, building opportunity and we’re focused on giving Australians the opportunity to have a go, to build a stronger and more prosperous future.
LAURIE OAKES:
It is a rotten thing to do, but I want to read to you what Samantha Maiden wrote in the Sunday Telegraph this morning. She says that your Budget has been adopted out to Scott Morrison and describes him as the phantom Treasurer and she said of you, the poor bastard has been hidden away during the pre-budget week like some sort of pregnant unmarried teenager in the 1950s. Now, how do you feel about that?
TREASURER:
Well, you know, it’s just another critical voice Laurie. There are people on the sidelines that like to heckle when someone is kicking for goal to try and distract the kicker, but this kicker is going to kick it through the posts.
LAURIE OAKES:
Now, I think you said there’ll be no tax increases in this Budget, no new taxes?
TREASURER:
There’s no new taxes Laurie, no new taxes on Australians because we are focused on giving Australians the opportunity to have a go, to get ahead. You can’t tax your way to prosperity, you need to build. What we’re doing is redirecting our effort, redirecting our effort towards growth, to facilitate growth, to help small business, to help families... [inaudible]
LAURIE OAKES:
But you are not going to do anything about those big companies that we’ve heard about in the Senate…[inaudible]
TREASURER:
Well, we do have integrity measures and I’ll have more to say about that on Tuesday night. We are absolutely determined that people have to pay their fair share of tax. Where people are getting unfair advantages we’re going to bring that to an end.
LAURIE OAKES:
Including Google and BHP?
TREASURER:
We’ll have more to say about that on Tuesday night, but I am absolutely determined to build on the work that I initiated in the G20 last year and Tony Abbott followed through in Brisbane. We are leading the world on tax integrity and it has come about through a lot of effort in a short period of time, but we’ll have more to say about that on Tuesday night Laurie.
LAURIE OAKES:
One of the things I have been told is that you’ve got an integrity measure about double dipping to do with paid parental leave? Can you tell me about that?
TREASURER:
Well, that is right. That is right, Laurie. At the moment people can claim parental leave payments from both the government and their employers so they are effectively double dipping. We’re going to stop that. You can’t double dip, you can’t get both parental leave pay from your employer and from taxpayers. That represents a saving of nearly $1 billion in the Budget and I think most Australians would know that is unfair. So for people on the minimum wage they will still get $11,500 for the 18-weeks that they’re off on parental leave but people will not be able to claim it both from their employer and from the taxpayers.
LAURIE OAKES:
So you’re saying that people are getting paid parental leave twice, they cop what they get from their employer, then they claim from the government scheme?
TREASURER:
Yes, and that is patently unfair. Given we are putting so much more into childcare, given that we are spending nearly three times the amount on family payments than we do spend on childcare, the money has to come from somewhere. Whenever there is duplication, whenever there is something that is unfair, we have to bring it to an end.
LAURIE OAKES:
But this is basically fraud, isn't it, taking an allowance twice effectively? Who is doing it?
TREASURER:
Well, it is, in many cases it’s mostly people who go on parental leave that earn more than $90,000 a year. But there are people at various levels who have been claiming parental leave payments from taxpayers, as well as from their employers. Given that our own paid parental leave scheme is not proceeding, we want to make sure that the system is fairer and that’s exactly what we are doing.
LAURIE OAKES:
But the Government has a paid parental leave scheme for public servants. Have they been double dipping and claiming the other one as well?
TREASURER:
Well that’s right, they have, there has been that opportunity available and that is going to come to an end on Tuesday night.
LAURIE OAKES:
How many people have been doing it?
TREASURER:
Well, it would be thousands, Laurie. We have not put a specific figure on it at this stage, but obviously it is making a big difference to the Budget because the savings out of this, which are effectively being redirected into other priorities in the Government to help to create jobs. The savings amount to nearly $1 billion over the next four years.
LAURIE OAKES:
That’s going to astonish people. Look, childcare reform seems to be at the centre of this Budget, I mean it obviously is. Can you tell us how the new scheme will work?
TREASURER:
Well, we’re simplifying the system Laurie. It’s vitally important that we make childcare more accessible, more affordable and more flexible for everyday Australians. Now, this builds on the work in the Intergenerational Report that I have been talking about. If we can encourage more mums to go back into work or give them the choice to work longer as around 165,000 parents want to, then having more affordable, more accessible childcare is going to make a big difference. So we are simplifying the system. Importantly, it is targeted at lower income people but at the same time we are not walking away from everyone that wants to participate in work but finds that the constraints of childcare prevent them from working more.
LAURIE OAKES:
Well tell us the details, what will it cost?
TREASURER:
Well, I’m going to leave that to the Prime Minister and to the Minister responsible today.
LAURIE OAKES:
Are you leaving it to Scott Morrison? It’s not your Budget?
TREASURER:
It is Tony Abbott's Budget as well. It’s a career limiting to move to release something on the same day the Prime Minister is, Laurie.
LAURIE OAKES:
Well, it’s been released. It was announced to one newspaper chain overnight. The rest of us had the announcement today. So surely you can talk about it.
TREASURER:
Well, I can say to you Laurie it is a multi-billion dollar package that is fully funded…
LAURIE OAKES:
3.5 billion?
TREASURER:
Fully funded by offsets from other areas…
LAURIE OAKES:
That is the announcement that we read in News Limited, a $3.5 billion family and jobs package.
TREASURER:
Well, Laurie, it is vitally important, vitally important. I can see you are upset [laughter]. It is vitally important Laurie…
LAURIE OAKES:
I think it is funny really that you can’t talk about your own Budget, but…
TREASURER:
Well, I can talk about my own Budget. It is vitally important that you understand that wherever the money comes from we need to save. So in every new spending measure, we actually have savings in other areas. It is the family tax benefit savings that are going to help to pay for this new Productivity Commission inspired program on childcare. Because we have been working at this for a while. We commissioned a Productivity Commission review. They came back with a program. The program that they came back with wasn’t going to deliver what we wanted, which was a greater choice for parents. So we’ve refined the system, we’re putting it in place, it’s being announced today with a multi-billion dollar price tag. But most importantly, it’s about jobs Laurie.
LAURIE OAKES:
Now, the pension reforms have been sold as also about jobs, about getting more elderly Australians into the workforce. Is this the key theme of the budget?
TREASURER:
It is, it is a key theme because in order to prepare for our economic future, and we’ve seen a significant transition in the Australian economy, we need to give people more choice to work. Whether they be older Australians, whether they be younger Australians, and certainly as parents. For a lot of parents Laurie, they haven’t got a choice. The cost of a mortgage in a capital city these days means that it is very, very difficult to pay the bills on just one income. So what we have to do is facilitate this change in the nature of work, facilitate the change that’s happening in our society and give people the chance to get ahead. The budget on Tuesday night is about giving people the chance to get ahead, to have a go.
LAURIE OAKES:
Now, in last year’s Budget you tried to whack all pensioners by changing the indexation system and slowing the rate of pension growth. The Senate saved pensioners from that. Now, pensioners are going to benefit from this Budget. How do you justify the contradiction?
TREASURER:
Well it’s not a contradiction, Laurie. What we endeavoured to do was to slow the rate of growth in the pension. It is still more than 10 per cent of our total outlays and importantly, the pension always was growing. It was growing by inflation, and inflation is actually higher…
LAURIE OAKES:
Pensioners loathed it, they complained very loudly...
TREASURER:
Inflation has actually been higher than the growth in male total average weekly earnings, which is the other benchmark. What we said is okay, we hear what you say, but we want to make the pension fairer and at the same time make sure that people who saved for superannuation are not going to be hit with new taxes, which is exactly what Labor wants to do. We’re going to say okay, if you save for your retirement you can use your money, but at the same time the pension is a safety net and we want to make sure the pension is sustainable for the future.
LAURIE OAKES:
Now, elderly Australians tend to vote Coalition more than they vote Labor, is this about trying to shore up the base that you alienated in last year’s Budget?
TREASURER:
Well Laurie, we have to act on behalf of all Australians, all Australians. There is no easy path to Budget repair but we are on track, our plan is working. Last year's Budget laid the foundations, this year's Budget is going to build on those foundations. If we hadn’t made some difficult decisions last year, we would not be in a position to withstand everything that’s happened over last 12-months. The biggest falls in the terms of trade in half a century, massive fall in iron ore prices, weaker global growth. We’ve faced all of that and we are beating it. We are doing so on the basis of the decisions that we have made as a new Government.
LAURIE OAKES:
The Fin Review on Thursday had an article by an economist, Steven Anthony, who began it by saying, we stare down the barrel of a recession in 2016. Is the economy that bad?
TREASURER:
No, no. It’s complete rubbish.
LAURIE OAKES:
[inaudible] this would happen if your Budget does not inspire confidence, a clear pathway to surplus?
TREASURER:
That suggestion is ridiculous. We are going to have strong economic growth this year, we want it to be stronger. We’ve got one of the fastest-growing economies in the world Laurie. One of the fastest-growing major economies in the world. We’re keeping unemployment, unemployment below the 6.5 per cent level. Importantly, we have opportunity at our feet in Asia that is going to inspire generations of Australians to export, to build, to innovate. We are going to see prosperity in the future that Australia has never seen in the past. We are laying the foundations for it. I mean I'm very optimistic about Australia's future.
LAURIE OAKES:
So why is there this lack of confidence?
TREASURER:
I think Laurie, sometimes it’s easier for people to look at a glass as being half empty. I mean it’s, you know, I see a glass as half full. I see opportunity. Opportunity through our free trade agreements in China, in Japan, in Korea, I see opportunity in our region. There’s two billion people coming to the middle-class and they’re going to want all the things that we produce. It’s not just iron ore and gas, but importantly, health services, education services, tourism services, architectural and accounting services, construction services. 70 per cent of our economy Laurie, is services, but it’s only 17 per cent of our exports. If we can lift that export, that export level in services, we are going to not only create more jobs, we are going to be an incredibly prosperous nation. It is right at our feet, it is right at our feet, as long as we hold our nerve, we continue with our economic plan and we make sure we do not get distracted by the critics.
LAURIE OAKES:
That’s pretty up beat. Will the Budget provide a clear pathway to return to surplus?
TREASURER:
Yes, it will. Yes, it will.
LAURIE OAKES:
How?
TREASURER:
Well, Laurie, I know you’ve got a full Budget before budget night previously but I can’t give it to you today. But I say to you Laurie, the Budget is on track and we are doing everything we can to make sure we get to the point where we as a nation live within our means.
LAURIE OAKES:
The Reserve Bank the other day issued its forecasts, which were worse than Treasury's. Growth was only 2.5 per cent instead of 3. Unemployment up to 6.5 and staying there a long time. Are they the same as Treasury’s figures and if so, how do you overcome that?
TREASURER:
But the Reserve Bank is up beat, it is up beat. We have faced significant headwinds. We have. There is no doubt about that. I am not going to gild the lily and say it has been easy, it has been difficult but we are coming through it because our economic plan is working. As the Reserve Bank said, when they cut interest rates, we’re seeing growth in employment, that’s a good sign. We’re seeing retail sales pick up, that’s a good sign. Housing construction is at record levels. We’ve just got to build on it Laurie.
LAURIE OAKES:
What happened to the debt and deficit emergency, the crisis that you and Tony Abbott were talking about, why did that suddenly disappear?
TREASURER:
Because we got into Government and we started the Budget repair job, that’s why.
LAURIE OAKES:
Simple as that?
TREASURER:
Well, we’ve made some difficult decisions Laurie. You look at last year's Budget and the structural reforms such as ending the handouts to business...
LAURIE OAKES:
A lot of which hit the wall in the Senate?
TREASURER:
No, I’m sorry that’s wrong. We said, we’re not going to continue to hand out money to business and we are delivering on that. We said that we need to make sure that the welfare system is sustainable and affordable, we’re doing that. We said that the health system needs to be sustainable and affordable, we’re working on that. We couldn’t continue to hand out vast sums of money to the States for hospitals. We couldn’t continue to hand out vast sums of money to the States for the Gonski reforms that were never funded. So we’ve made those decisions. We had to cut foreign aid. We had to make a range of different decisions, but at the same time build the economy. Our infrastructure plan is in place, it’s running on time. Importantly, we are building, we are building the base that is going to make Australia more prosperous.
LAURIE OAKES:
So, will this budget save Joe Hockey?
TREASURER:
It’s not about saving Joe Hockey…
LAURIE OAKES:
Is it about saving Tony Abbott?
TREASURER:
No, it’s about delivering jobs, growth and better opportunities for every day Australians.
LAURIE OAKES:
It’s not about the leadership spill and the scare the Prime Minister got?
TREASURER:
Laurie, that’s Canberra static, what we’re focused on…
LAURIE OAKES:
Even though you’ve dumped a whole lot of last year's Budget measures since that spill motion?
TREASURER:
We haven’t, we are on track Laurie, we are on track…
LAURIE OAKES:
Are you saying you haven’t dumped major decisions in last year's Budget?
TREASURER:
We have moved on from last year's Budget, but the foundations of last year's Budget are helping to deliver stronger opportunities into the future.
LAURIE OAKES:
Now, you talked about the Tory win in Britain. Given, when this Budget comes down, after this Budget, could the Government fight an early election and win?
TREASURER:
Well Laurie we are focused on delivering better outcomes. I mean, we can speculate about the next election…
LAURIE OAKES:
Could you win an election with this Budget?
TREASURER:
I am a focused on Tuesday night. I'm very focused, Laurie, on making sure that we give people the chance to have a better future on Tuesday night.
LAURIE OAKES:
It’s not about votes?
TREASURER:
It’s not about votes. It is about prosperity for all Australians.
LAURIE OAKES:
Mr Hockey, we thank you.
TREASURER:
Thanks Laurie.