PRESENTER:
Joe Hockey, thank you for joining us today. Look, this has been a discussion that has been at the G20 for a while. Are we going to clamp down on this?
TREASURER:
We are chairing the G20 next year. Tony Abbott and myself are chairing meetings in Sydney, Brisbane, and Cairns. One of the agenda items that I have laid down on the table for the G20 Finance Ministers is to address this issue of transfer pricing and tax minimisation by using other jurisdictions. It is something that affects the whole western world. Australia is not immune as it is clearly unsustainable for companies to be in a position where they earn a lot of income in Australia and reduce their tax by using other places to try and place the revenue.
PRESENTER:
Well there are some very glowing examples of that, as you well know. Tell me, the foreign ownership threshold, is that going anywhere? You went to an election with a commitment to reduce it for agricultural land purchases to $15 million.
TREASURER:
We are going to introduce that legislation. We are in the process of drafting it. We are also going to set up a register, which is hugely important for properly identifying the level of foreign ownership of land in Australia. That is part of our list of many things to do..
PRESENTER:
Joe, on the whole business of foreign ownership and so on. Where is the register that former PM Gillard committed to and was supported by the Opposition? Are we getting anywhere with that?
TREASURER:
Yes. We are starting work on it. The first challenge for me has been to try and find out exactly what the state of the Budget is. I must say that has taken a great deal of time. Every cupboard I open, there seems to be spiders. You mention the ACCC.
PRESENTER:
Yes, tell us about that. When Ross Greenwood, who will be with us shortly, when he told me about that, I nearly fell over.
TREASURER:
They run out of money in April - in April next year. Chris Bowen was interviewed this morning and he said, 'It's not unusual to have entities run at a loss.' Well, actually, it is. That is probably why the whole Budget is running at a loss, because the Labor party just did not get it. You cannot continue to just keep providing services and have entities that keep running at losses. If I were him I would just go and hide away and hope the storm passes. The fact is I have to deal with it. Not only has the ACCC been running at a loss for four years, and as Treasurer he did not even know it, but the fact is, they have not got enough money now to even for this financial year, let alone for the next three years. They have come asking for over $100 million, just to continue doing their job. Frankly, I'm just not happy about it.
PRESENTER:
I bet you're not. Are there other departments where this has happened?
TREASURER:
Yes. It seems as though there are others. As my colleagues in the Ministry work their way through we are discovering more of these sorts of buried problems that Labor, either did not know about them - which is just outrageous and lazy - or if they did know about them, then clearly they were deceitful.
PRESENTER:
Look, I want to talk about superannuation for a second, because governments of all persuasions tend to play around with this. And, as many financial commentators make the point, very obvious, it is actually the people's money. What is going to happen with super? There are all sorts of unusual headlines about super being raided, what's your position on this?
TREASURER:
Our position is that we do not want to change the rules for the next three years. We want to have a proper dialogue about stability and certainty for superannuation with the community, which we are going to do through our financial system inquiry. I think the key thing is to recognise superannuation is funding our future and the more it is tinkered with the more damage you do to confidence in superannuation. What happened was the previous mob would say, 'It is outrageous to attack superannuation.' Then they attacked it with nine different tax changes. Then they beat their chest and say, 'Look we are going to set up this Committee of Guardians so that no Government plays with it in the future.' Cut me a break. That is what we inherited.
PRESENTER:
Now, let's look at Holden for a sec. What's the position - and I'll put this to you and I put it to Ian McFarlane - and that is that we obviously, there's around $275 million up for grabs, maybe more, maybe less. But putting that aside for a sec - because that's a semantic detail nevertheless important - but the fact is this, we have got these free trade agreements with countries like Thailand that are terribly uneven and it is almost impossible or very difficult to get any kind of vehicle from our shores into theirs when they can get vehicles here at virtual zero tariff. Is it not a little disingenuous to go to a manufacturer and say 'Okay, we will give you whatever money we're going to give you, but we want you to export more,' when for example in the United States, once you hit 20 000 cars you have got to jump through a whole heap of hoops to get any more. So, if there is the big police car purchase for Holdens then we are going to have Buckley's or no chance of getting more vehicles into that country and we can go to Thailand and a whole stack of other places. Is that not a little unfair to be saying that, okay do exporting, knowing that many of these arrangements are very one-sided?
TREASURER:
There are a range that are one-sided and I suppose that is the world we inherited and the world we live in. There is nothing fair about commerce in the world. But if you do not engage and compete you are left behind. From a motor vehicle perspective, we want Holden and Toyota to keep manufacturing cars in Australia. But Mitsubishi and Ford have left under Labor and now there is deep speculation about Holden. That is a decision that will be made in Detroit. It is not a decision that is made in Canberra. It is a decision that they make in Detroit, where they run a global company and one, out of many factories, are in Australia. I just want to emphasise this - this is not our decision in Canberra. It is a decision that is made in Detroit.
PRESENTER:
But, consideration will surely be given to the cost circumstances that exist in Australia?
TREASURER:
That is absolutely right. That will be a long term decision, not short term. These guys were not massively increasing their exports when the Australian dollar was 50c to the US. They were not actively saying "We are going to increase our exports here, there and everywhere." The Australian dollar is high at the moment, which makes it an expensive place to manufacture when compared with other jurisdictions that have low currencies, including the United States. Currencies do have an impact, but manufacturing industries should be around for the long haul. They are not short haul. There are a whole range of factors, including labour costs and including domestic demand.
PRESENTER:
I want to ask you though, in your party there are obviously some who have the view if the industry can't survive on its own two feet, then that's the way it's got to be. But, Joe, you know as well as everybody listening today, that every major car seller around the world and nations with whom we trade, subsidise, more than we do, substantially, their auto-industry.
TREASURER:
Absolutely, and just when you say my party, the Labor party has people as well who do not believe that there should be any subsidies for …
PRESENTER:
Absolutely, but, except you're in Government now.
TREASURER:
I accept that, and thank God for that. I just say to you that yes, it is recognised that to have car manufacturing you have to have support from the government. The question is how much? The less viable it is the more support you need from the Government. Effectively, if you want to get more money to the last two that are left - Holden and Toyota - and the subsidies to Ford continue until they leave in 2016. If you want to increase the amount of money you give them you have got to increase the tax on someone else.
PRESENTER:
As Treasurer of the new Government, what is it that you can do to exert the most positive influence on Detroit to want to remain here?
TREASURER:
To have a strong positive story about economic growth in Australia. If our economy is stronger, people will want to buy more motor vehicles. The second thing is I think the new Commodore is a terrific car. I am hoping that I will get one next year. They have got to produce vehicles that people want to buy. That is a key point. We can shoot it home to Canberra or to the Government in Adelaide to be fair. We can shoot home responsibility. The bottom line is, Australians have got to want to buy those cars. It is not as if Australians are not buying motor vehicle. It is still roughly around a million new motor vehicles sold in Australia every year.
PRESENTER:
But because of, you know, some of the high end vehicles now getting dealers rebates and manufacturers rebates that are like $10000, $15000, $20000.
TREASURER:
Not even at the high end. One of my staff has a son living in Dallas. He bought a brand new car at 11pm the other night Dallas time. Why? Because the dealers are so desperate to get cars out the door they are staying open until midnight. As the Finance Minister of Canada said to me the other day, he said, they are giving away cars in North America interest free, zero interest, do not pay anything. Zero interest cars are effectively giving them away and financing them. How do we compete with that?. Maybe we can't compete with that. But if we have got a good product, we can. The fact is, the Commodore is a damn good product. It is an outstanding motor vehicle. Great credit to Holden, and Toyota is an outstanding manufacturer, but Australians have got to want to buy these cars.
PRESENTER:
When is it your opinion that a decision will be made?
TREASURER:
I do not know. From our perspective there are many complicated factors at play in relation to the motor vehicle industry. That is why we are having a proper Productivity Commission inquiry into the motor vehicle industry. I have asked them to move quickly in providing us with an interim report before Christmas. You know we have barely been in Government more than 50 days and this is one of the many challenges that we have but we are moving as quickly as we can. You do not make multi-billion dollar decisions without having a proper platform on which to make those decisions.
PRESENTER:
The media have been headlining today, that the May Budget is going to be a shocker.
TREASURER:
I hope it is not a shocker. I think we have got to have a pathway to growth. I have got to deal with the problems that we have got. Before Christmas, people will see the true state of the Budget. Next year we will lay down a road map to get us back into a period of prosperity.
PRESENTER:
Just quickly, the future for South Australia, what do you see?
TREASURER:
I love South Australia, the future is as bright as you want it to be. It is just a question of how big your ambitions are. I would just say to the people of South Australia, that your state is bountiful in so many ways - the resources, the natural environment. I have long loved the quality of tourism in South Australia. As you well know, it is a question of being flexible enough to adapt to change. You should never rely on any one industry in any State. No matter how good the industry is, Western Australia is going through a number of significant challenges because the mining boom is coming off. The great lesson is that you diversify what you have. Even when the times are good for one industry do not let the others fall by the wayside. I would just say to you that South Australia is a broad innovative state and is made up of people who are prepared to have a go and I am very ambitious for your state as I am ambitious for my nation.
PRESENTER:
Joe Hockey, thank you.