TREASURER:
Good morning, Leon. It is great to be here and you should be pleased I brought the rain with me I suppose.
JOURNALIST:
Well you did, yes, we’re probably going to get about, what was in the old scale, about five inches. Look, I’ve heard rumours the Government is considering topping up the car assistance package as a result of the Toyota announcement. Is that being considered?
TREASURER:
Well, you should not respond to rumours. But we are looking carefully at what needs to be done to ensure that the components industry in particular has some level of sustainability through exports. Now, Ian MacFarlane is heading up a taskforce focussed on the South Australian economy, together with Christopher Pyne, Simon Birminghamand a number of business leaders including Robert De Crespigny. We have got to go through a systemic process. We will get it right because I am very positive about the future of South Australia, particularly if there is a change of Government in the upcoming election.
JOURNALIST:
I’ll get to that in a sec. But the unemployment rate has hit 6% for the last month. And this figure doesn’t include the job losses still to come as a result of the problems in the car industry. How bad can it get?
TREASURER:
Well, the previous Government forecast a rise in the unemployment rate nationally to 6.25%. That is where it is heading. Having said that, what we have got to do, to start to reduce that is to have stronger economic growth. To have a stronger economy. Because that is the only way that you create the new jobs. The best way to strengthen an economy, to get it growing, is to remove things like the carbon tax and the mining tax. Get rid of regulation.
JOURNALIST:
What sort of regulation are you talking about to get rid of. Give me an example.
TREASURER:
For example, in financial services there is a raft of regulation that financial advisors, financial planners, insurance companies, superannuation companies, have to comply with which does not add…
JOURNALIST:
So you’re going to unravel those are you?
TREASURER:
Well we are going to have the appropriate safe guards but we are not going to have the constant reporting and form filling that is part of everyday life. We are looking at the Australian taxation office pre-filling the BAS forms for small business and just sending it to small business every quarter and saying: ‘look, does this look right to you? You don’t need to fill out the form, just remit to us the GST that is being collected’. Which means small business would not have to fill out a BAS. Now they are the sensible things that lift the regulation.
JOURNALIST:
When are you going to do that? Is that done by regulation or do you have to go to the Parliament to get Senate agreement and all that stuff.
TREASURER:
No, it can be done by administration. That is a classic example of what we are trying to do. Labor, when they were in Government, introduced 22 000 new regulations. We are focussed on getting rid of them.
JOURNALIST:
Alright, the unemployment rate is about 6%, set to get worse. Does this mean that you might have to reconsider the severity of your Budget?
TREASURER:
We are going to have a Budget that does not in any way hamper growth. In fact, it will help growth in the economy. You can have a readjustment of Government expenditure and you can adjust or deal with the significant increase in government spending over future years in the budget without harming the economy. I’ll give you an example, Labor promised there would be only two percent growth in Government expenditure above inflation for the next few years. What they left behind was 3.5% growth. Which means the either the Government has to quite dramatically increase taxes or we have got to cut spending.
JOURNALIST:
Where do you see the new jobs coming from? I mean, we often hear about this transition from the car industry. Transition to where? To what?
TREASURER:
A vast number of job opportunities. Particularly in exports but; health services, health exports, health technology, education services, look at the number of foreign students studying here in South Australia, export industries in high technology. In a range of different services; accounting and legal services. And in manufacturing. San Remo, I understand is based here in South Australia, it exports to the world. How good is that. Provided we have got the right technology we can do it. There is no argument about that.
JOURNALIST:
Earlier this month, the Prime Minster told the party room that they should prepare for more economic shocks ahead. The comments come on the back of Toyota’s decision to shut shop. What are some of the shocks? Do you know what they are?
TREASURER:
Well, if we knew where they were coming from they would not be shocks.
JOURNALIST:
What’s coming? What kind of things are we talking about here?
TREASURER:
Quite obviously what has happened over the last few years is we had a massive increase in mining and resource investment. So they were building a lot of mines, Australia was building a lot of mines. and a lot of the energy and effort of Australia went into the construction of all these new mines and gas rigs and a range of other things around the country. Now we are going into the production phase. So those mining investments are now starting to produce an export, which is terrific. But what has happened is a lot of the construction jobs in mining have gone and what we have got to do is find new projects in other parts of the economy that are going to suck up those jobs. That is why the Coalition is focussed on infrastructure, new productive infrastructure. That is why, for example, Steven Marshallis going to this election promising to reduce payroll tax so there is an incentive for businesses to come to South Australia and there is an incentive for small businesses to employ more people.
JOURNALIST:
But that in and of itself is not enough though. Because, you know.
TREASURER:
But it all pushes in the right direction. If you were to ask me, ‘name the 3000 jobs in any individual business that are going to be created today’, I can’t because what we have seen is the massive growth of small and medium sized businesses over the last fifteen years and every large business starts as a small business.
JOURNALIST:
Yeah, look, the Government at the moment, the Federal Government, are going to contribute about $60 million as part of the transition package for Holden. But that’s, of course, before the Toyota announcement. Are you tempted to add to this transition package, and what kind of contribution would you be wanting from the states?
TREASURER:
I am not going to just pluck a number out of the air and say, ‘look, spend it as you want’, that is the Labor Party approach. Our approach is, what do we need to do to get the economy going, and we will spend what we need to spend. The fact is that there are tremendous opportunities here in South Australia.
JOURNALIST:
Like?
TREASURER:
From a range of things from, obviously there is a great history of ship building here and also there are great technology initiatives.
JOURNALIST:
That depends a lot on contracts and where the Federal Government decides they ought to go.
TREASURER:
We are looking carefully at that. We are looking carefully at defence contracts without in any way suggesting that we are going to roll out a rolled gold Rolls Royce program. I think you can address challenges by having a consistent predictable line of business and then people will relocate.
JOURNALIST:
Holden and Toyota are saying at the moment that they are going to leave by 2017. But many people are saying that there’s a chance that operations will shut down and move much more fast so that by that year they will almost be out. How are we going to deal with an outcome like that? Or you don’t expect that or you do?
TREASURER:
That is a matter for the companies. We are working with the companies, the Minister for Industry is working with the companies. But it is not the end of the world. I want to emphasise – it is not the end of the world. We always recover. We have lost lots of industries over the years. Car manufacturing right around the world has completely changed. Major factories have been closed by General Motors in the United States.
JOURNALIST:
They are all going to South East Asia where it is cheap.
TREASURER:
Exactly, the same in Europe. In those factories they are producing at times 300 000 or 400 000 cars per factory. Here in Australia, the best that was occurring was about 70 000 to 80 000 or maybe 100 000 if you were pushing it, of recent days in some of these factories. What we found is that Australians did not want to buy Australian cars, they wanted to buy other cars. That was the consumer’s choice. Consumers have determined the fate of the manufacturing industry in Australia.
JOURNALIST:
Well, there is the free trade agreements which Toyota referred to in their statement the other day. A lot of them are not fair. They are very much skewed the other way.
TREASURER:
The Korean free trade agreement was terrific for Toyota and for Holden in particular as well.
JOURNALIST:
Even with the United States, with whom we signed an agreement some years ago, once you hit 20 000 vehicles exported you have got all sorts of hoops to deal with.
TREASURER:
Holden’s last gasp was exporting cars to the United States, believe it or not. In fact, I think it was NASCARs.
JOURNALIST:
I want to get to agriculture, because this is the area that is really important, because I know you, the Prime Minister and Barnaby Joyce are going to be embarking on a tour of drought affected areas this weekend.
TREASURER:
They are, I am not quite joining them at this stage.
JOURNALIST:
The thing is, there is obviously calls for an assistance package. I know there are those within your party that are called, ‘dry’. Dry at the moment is not in South Australia we are very wet because of the rain. But they have this view, hands off and let the market decide. But you know as well as I do, I have got some figures from [inaudible], who is an expert in globalisation, you know this, I don’t have to tell you. He said the support for agriculture globally is much higher than us in terms of what is produced. Do you see, would you consider, such an assistance package?
TREASURER:
A drought is, at its worst, a complete natural disaster. There is no arguing about that and Governments have an obligation and will step in where there is a natural disaster. Now there are a number of factors at play in relation to the drought. One of the factors is that the single worst policy decision I saw out of the Gillard-Rudd Government was the immediate overnight banning of live cattle exports to Indonesia. It takes years to build up a national herd, and it takes years to get the cattle at the right size and right moment to get on the boat. This is hugely important. What happened was, Julia Gillard woke up, saw Four Corners, and stopped immediately – the export of those cattle. Farmers had to take back the cattle, they had to send cattle to the meat works and hold on to other cattle. Now, as the drought hits, a number of farmers are massively overstocked because they couldn’t get them away years ago with live cattle exports. Now the cattle are too old or too emaciated to be able to get on a boat and there is an enormous herd and not enough feed. Normally, farmers would be able to send them to South Australia or Victoria, but there is no feed around the place. So they are sitting on cattle. Now I will give you one example. This is a very sobering example. A mate of mine is a farmer west of Tamworth. He rang me the other day and he said another farmer in Chinchilla had rung him and said, ‘Mate, I have 2000 head of cattle, they are yours for free if you can pick them because I have no money to feed them and I’ve got no feed in the ground’. For free. My mate couldn’t pick them up because he had hay he had no food.
JOURNALIST:
As the Treasurer do feel any obligation to do something about that?
TREASURER:
Of course I do. I must declare, as someone who owns a farm as well, in far north Queensland. I know exactly, and the telling thing is there was not one single farmer in the entire Parliamentary Labor Party. Whereas there are a number of us.
JOURNALIST:
As long as you listen to them it will make a difference. Having them there is nice, but you have got to take on board what they say.
TREASURER:
You have got to understand agriculture in Australia. The fact is, you cannot turn Agriculture on and off like a tap. It takes years to build.
[Commercial Break]
JOURNALIST:
I’m joined by Treasurer Joe Hockey in the studio, Ralene you are talking with Treasurer Hockey, good morning.
CALLER:
Hello, how are you guys? I’ve just turned on the radio and heard about the comment about Australians not buying Australian cars. It is because of the cost. But so many imported cars are coming in, there is no tax on those cars to come in to Australia. If we had a tax on imported products then maybe our Australian products could be around about the same price as the cars that are coming in that we are getting cheap throwaway cars. If you buy a Commodore you can have it for twenty years and it will still keep running. But buy a little one for $13 000 dollars in five years’ time it has got to go in the dump.
TREASURER:
There are taxes on imported cars – 5% tariffs.
CALLER:
5% compared to what?
TREASURER:
And there are luxury car taxes and there is a range of reasons why we have expensive cars. I mean we have these local standards for motor vehicles that do not apply to cars in Britain and various other places and yet they have to modify the cars, which in the end of the day costs more money. The fact is our cars should be cheaper where they can be cheaper. But if you keep imposing penalties on the production of Australian cars, for example, the carbon tax. The carbon tax, even by the admission of Toyota and Holden, added to the cost of production of motor vehicles here in Australia. When you remove those taxes then you remove the high costs of the car.
JOURNALIST:
How do you feel about stuff coming in from a Chinese cannery that is on the mouth of a river that is polluted with petro-chemicals, where there is lead content in the food. Do you know about this?
TREASURER:
I cannot talk about the specific example. We have appropriate, we should have appropriate…
JOURNALIST:
Should.
TREASURER:
I accept that, I cannot claim that I have checked every can of fruit.
JOURNALIST:
There are a lot of shoulds, Joe, trust me. There is going to be a national story shortly about this. It is serious stuff.
TREASURER:
It takes people like you to raise it.
JOURNALIST:
If we are going to compete with people, we want to compete with people that don’t send us stuff that is not only cheaper but damn well unsafe.
TREASURER:
Well if it is unsafe we have got to track that down and any information about that…
JOURNALIST:
Well there are people in your party that know a lot about this. Let’s talk to Brad, good morning you’re talking to Joe Hockey.
CALLER:
Good Morning, Joe, how are you going there mate?
TREASURER:
I’m fantastic.
CALLER:
Nice to get a bit of rain.
TREASURER:
It is.
CALLER:
You need it up in Queensland, too. Apart from that. You seem like a pretty decent sort of bloke who understands what is going on. Now this free trade. Both you and the Labor Party both endorse, should be renamed ‘unfair trade’. As you know, we want to send products, cars and that that go to Korea and these joints that impose all these tariffs and taxes on it but we just roll over and let them in. Their manufacturing industry is [inaudible] because of this. Now what are you and your Government going to do about this unfair trade?
TREASURER:
We just negotiated a deal with Korea which actually gave us greater opportunity to get into Korea, which is a closed market. The Americans, for example, and the New Zealanders, one of the reasons why the New Zealand economy is doing well is they negotiated all these agreements to get their dairy products in and they are getting it in much cheaper than us. Now if you look at the Korean agreement. The taxes that they imposed on our exports to them are being eliminated. For example: a 304% tax on our chipping potatoes, a 40% tax on the beef that we sent there – it was one of our biggest markets for beef, 22.5% tax on our lamb, a tax our dairy products going to Korea of between 36% and 176%. All these being eliminated out of this free trade agreement. A 3% tax on our sugar is immediately eliminated, which is a $500 million export to South Korea and they are also getting rid of the taxes that they imposed on our wheat, our wine, our beer, and I know how important that is here in South Australia, and also canned fruit tariffs.
JOURNALIST:
What do we give them?
TREASURER:
We are giving them greater access to Australian markets for their produce, we are also giving them the opportunity to invest in Australia, to build in Australia, I accept that. They are still subject to the appropriate safeguards - particularly in agriculture.
JOURNALIST:
I want to ask you about this. The Coalition, in opposition, were very keen to do a review of the Foreign Investment standards of how much.
TREASURER:
We are doing that.
JOURNALIST:
It seems remarkably slow.
TREASURER:
It is not slow.
JOURNALIST:
It’s not slow?
TREASURER:
I see all of these investments.
JOURNALIST:
No I’m not talking about the investments I’m talking about the rules.
TREASURER:
It is a process that has started, we have only been in Government for four months. I promise you. But having said that I was criticised from one end of the country to the other about my decision on GrainCorp, knocking back ADM. We are looking at everything on a case-by-case basis and we are making decisions that are not contrary to the national interest.
JOURNALIST:
What’s happening with Qantas, they are working in a situation where they are competing with state owned enterprises. Who have a very different financial ability to go out and borrow. Whereas Qantas, being not state owned can’t do that. Are you considering favourably helping Qantas in any way?
TREASURER:
As I said yesterday, we have a number of criteria that we are applying to this situation. Number one; has the Parliament imposed specific legislation that restricts the ability of that particular business to do its job? The answer in relation to Qantas is yes – the Qantas Sale Act which restricts ownership. Number two; is it an industry that is an essential service in the community. Yes, aviation is an essential service for the community. If aviation closed overnight it would have a big impact on the economy. Unlike the old pilot strike years ago which went for 12 months, we could not cope with that for a day or two days, without having quite an impact on the economy. Number three; are other governments actively competing against this enterprise. In the case of Qantas, of course they are. I fly Virgin, it is a terrific airline and it employs lots of terrific Australians and it does a great job. It also has a majority foreign ownership by foreign Governments. Number four; it is absolutely crucial this, the company itself has to undertake the changes. We are not going to tell them whether they have operations in this city or that city. We are not going to micro-manage the business. But the business needs to run efficiently and the management and the board…
JOURNALIST:
But it needs an environment in which it can fairly do it though.
TREASURER:
It has had an environment for years. As I said yesterday, we are being dragged kicking and screaming on this, but we recognise that in the case of Qantas, there are extraordinary circumstances that necessitate action in the national interest.
JOURNALIST:
Thank you for coming in today, we will keep a close eye, and I want you to keep us in the loop.
TREASURER:
Of course I will.
JOURNALIST:
Because I’d like to think that when you come to transition from the auto-industry to what you believe show great opportunity, that we get our fair share.
TREASURER:
You will get your fair share, but also, South Australia, like every other state, has to take control of its destiny. That is why I am down here campaigning with Steven Marshall today because the best thing that can happen in South Australia is a change of Government in the upcoming state election.
JOURNALIST:
You would be aware of the current Galaxy Advertiser poll? 55-45.
TREASURER:
I saw it, but at the end of the day, I have seen polls before and I know that the seats in South Australia are skewed, their design is skewed in favour of the Labor Party. So you need to have an emphatic vote for the Liberals in order to have a change in Government and give hope that tomorrow you are going to get the jobs.
JOURNALIST:
Federal Treasurer, Joe Hockey.