PRESENTER:
Good morning.
TREASURER:
Good morning.
PRESENTER:
Well the ADM decision, I think was good, but you would be aware of all the kerfuffle about ADM?
TREASURER:
Yes.
PRESENTER:
You properly even saw the informant didn’t you?
TREASURER:
No. But quite a few people sent me books about ADM. It was a decision that was based solely on the transaction being contrary to the national interest. There has been a lot of expert commentary, so called expert commentary, since then. People forget that Commonwealth Serum Laboratory – CSL – was knocked back by the Americans for a takeover in America on the basis that it would have meant that an American monopoly would have gone into the hands of an Australian company. Frankly, I think people need to be properly informed about these things.
PRESENTER:
Absolutely, so in a nutshell, before we get to this business of debt ceiling and a couple of other issues, Joe, can you just cut it down for people. Why did you make that decision? Why was it not in Australia’s interest?
TREASURER:
The grain industry is going through a significant transition at the moment. In the course of that transition there is emerging competition which is something that farmers want. What would have happened is ADM was potentially bringing to the table a capacity, in my view, to restrict competition and a capacity to potentially leave farmers in a worse position if they wanted to try and find alternate ways to get to market.
PRESENTER:
This business, the email that Peter sent me, I’m just interested as an aside. A $180,000 committee to investigate what chair is the best chair. I would have thought if you go to a reasonable retailer who know their product, they could give you the information couldn’t they?
TREASURER:
That was our advertisement during the election. I was saying that we were getting rid of the waste and we are. We have set up a Commission of Audit, headed up by a number of people with experience from the public and the private sector. We have said to them we want you to go through every draw, look through every paperclip across the entire Federal Government, because we need to get rid of the waste. We have got a real process. The first thing is we are now going through, methodically, every area of Government to find out the problems that Labor has buried. We are doing that. In the next few days I will release the Budget update, which will illustrate exactly what we have been left with by the Labor Party when it comes to the state of the Budget and the state of the economy.
PRESENTER:
Is it worse than what we thought?
TREASURER:
Yes.
PRESENTER:
Much?
TREASURER:
Yes.
PRESENTER:
Much worse?
TREASURER:
Frankly, it is a mountainous challenge but I want to say to the people of Australia – we are up for it. Over the next six months, as our Commission of Audit reports back to us, when I deliver the Budget next year in May you will see a pathway that shows how Australia will get through this. We will get through it.
PRESENTER:
I want to ask you quickly about this Trans-Pacific Partnership. There is a big ad in the paper today from Choice Magazine – people are starting to – we have had Dr John Bruni from Sage International, some fairly heavyweight competent commentators talking about the dangers of agreements like this where, for example, were we to sign it, companies could still sue us for protecting our own interests. I mean, you surely would not be in favour of that.
TREASURER:
There are always some exclusions. These agreements end up with general principles, but usually there are negotiated exclusions. This, I suspect, has some way to go – it is a multilateral agreement …
PRESENTER:
Why can’t it be public?
TREASURER:
It will be public, they are still negotiating, though. There are a number of countries.
PRESENTER:
We need to know what is in the agreement before we sign it, not after.
TREASURER:
Free trade is Australia’s friend - because we produce much more than we consume. If we do not have markets to send our produce to then we will be a poorer country.
PRESENTER:
Does that mean you are going to help our growers to get butternut into New Zealand? Right now, we can’t.
TREASURER:
I am not familiar with butternut in New Zealand but cut me a break there. But I do know Andrew Robb is doing an outstanding job. I am hopeful that there is some very good news not far away in relation to trade agreements and our capacity to be able to enter into new markets. We are competing with a very aggressive world.
PRESENTER:
Yes, we are and a world that is subsidising its end of the bargains. In principle, trade is awesome, got no problem with it. But, you know, when you have got the European Economic Union and China and America subsidising heavily, many industries more than we do, that means that the companies that are trading with us have a huge advantage before we do anything.
TREASURER:
You are right. What we have to do is try and break those down.
PRESENTER:
How?
TREASURER:
Part of it is the negotiation.
PRESENTER:
You won’t talk them out of it.
TREASURER:
Part of it is a negotiation. Part of it is making sure they know that we are not a rollover when it comes to some things like foreign investment.
PRESENTER:
Are you a hard bargainer in these things? Do you instruct bureaucrats to be hard bargainers in these things?
TREASURER:
We put Australia first.
PRESENTER:
Do you?
TREASURER:
Yes, you would expect that. You are not questioning that are you?
PRESENTER:
Yes.
TREASURER:
Really? Come on.
PRESENTER:
Look at the Thailand agreement, where a hundred cars at 100 000 with 50% tariff and we take 130 and there is none. I could give you dozens of them.
TREASURER:
Free trade is Australia’s friend when you produce a lot more than you consume. That is the bottom line. We have got a vast continent with not enough people. The bottom line is every year we import money from the rest of the world to go and build the mines to build the car plants in the first place. To build our manufacturing we import the machinery and the money. We cannot produce it here because we do not have a big enough population.
PRESENTER:
Are you confident that Holden will want to stay here – long term?
TREASURER:
I do not know. That is a matter for Detroit. We can only do so much. Whether it is Federal or State Government, the community can only do so much. I want to order one of the new Calais because I hear there are damn fine car.
PRESENTER:
But see, for example, once you get car exports into America at 20,000. There are all these barriers there that mean that it makes it much harder for us, and yet they are supposed to be a free trade partner, a friend.
TREASURER:
But they also own Holden. If we cannot get into America they are cutting off their nose, to spite their face.
PRESENTER:
Well, they are still doing it. Because you can check this out. I have had a lot of information on this, you probably know it. Once you get to 20,000 exports, which you can easily do with a few police cars and we make good quality materials…
TREASURER:
… and NASCARs, I think Holden make the NASCARs.
PRESENTER:
This is my point, once we get to that magic number, then we get all sorts of shenanigans going at their end. I just do not think that, no matter how you look somebody in the eye, if they have a mind to subsidise their people more than we do, we have got a few issues and talk is not going to fix it.
TREASURER:
I agree, there are a number of ways we can be better at things. There is no doubt about that. But I want you to know we are trying.
PRESENTER:
Alright, now I want to talk about the debt ceiling. For me, you have heard about this Tea Party stuff in America, which is different here because we do not have the same structures, you have got a legislated amount of money for which we can go into debt or put on the credit card. Ross Greenwood the other day, Channel 9 finance commentator, made the not too clever point because I think it is pretty obvious it out there that we have already exceeded to a large extent the money that we owe in the debt ceiling. So how come the debate when theoretically we have already put it on the card?
TREASURER:
Correct, that is exactly right, Labor has put on the card more than $430 billion of debt. They are saying we want to stick with a debt limit below that. Go figure. This is the absurdity of it.
PRESENTER:
How did you get the Greens to come on side? What did you offer them?
TREASURER:
They, in fact, raised the issue publicly. We obviously had the legislation in the Senate, so I rang them and I said what are you going to do? They said we do not necessarily like a debt limit. I said, our preference would be to have $500 billion, to have a limit, because the debt’s going up and what are we meant to do… this is what we have inherited. They said, “well, we would get rid of it.” Bill Shorten and Chris Bowen refused any briefings. They demanded to be informed. We offered them briefings and then they rejected it and they have been playing a silly game and now they have become irrelevant.
PRESENTER:
The Greens have agreed to what? You can raise the limit?
TREASURER:
They are abolishing it. Until 2008, there was no debt limit in Australia.
PRESENTER:
So you have now told us that Australia’s economy is like a sports car with the roof down there is no limit to the overhead. That is one way of putting it, isn’t it?
TREASURER:
At the end of the day whether you have a limit or you do not, what matters is the amount of debt that you have and you and I know that. Just because the bank will give us a line of credit for $100,000 does not mean that we have to spend $100,000, that is the point. Whereas, Labor always went for the $100 000 and then asked for $150 000 and then $200 000. From our perspective, we are saying it is taxpayers’ money at the end of the day. If the Government falls over, taxpayers have to pick it up. Therefore, what matters is how much you owe and how you are going to repay it. That is the bottom line.
PRESENTER:
So we will know this plan of yours once you release how bad the Budget figures are. Will that we before Christmas?
TREASURER:
Yes.
PRESENTER:
OK, the other question is, I want to ask about the GST. It was obviously, during the campaign, there was a bit of mischief about the GST and what might happen with it. We have had a push to put a GST on purchases under $1000. Has that all been sorted out?
TREASURER:
It is up to the states.
PRESENTER:
Yes.
TREASURER:
We have put it to the states. I was stunned that Jay Weatherill walked out of the meeting of national Treasurers the other day and talked about the Coalition and the GST. He must have been in a different meeting.
PRESENTER:
Well, he gets $1.26 for every dollar we spend. So are we going to put taxes on internet purchases or not?
TREASURER:
This is up to the states.
PRESENTER:
But the GST is a federal tax.
TREASURER:
Yes, it is.
PRESENTER:
It is collected by the Feds.
TREASURER:
It is, but on behalf of the states. So I said to the states, if you want us to move on it write to me and explain that. I am waiting for the letter from Jay Weatherill.
PRESENTER:
Has anyone written to you anywhere else?
TREASURER:
Yes.
PRESENTER:
Have they?
TREASURER:
Yes.
PRESENTER:
So what do they want to do put it up?
TREASURER:
Yes, they want the GST to apply to internet purchases overseas of less than $1000. But Jay Weatherill has not written to me, as far as I am aware.
PRESENTER:
OK, we have been told by Barry Urquhart from Marketing Focus that most of the internet purchases are actually Australian small businesses and we understand…
TREASURER:
They would pay the GST then.
PRESENTER:
But we are also told that there is a report suggesting that the money it would cost to implement it would probably outweigh what you would get. Is that true or not?
TREASURER:
Yes.
PRESENTER:
So why would you do it then?
TREASURER:
Well the argument is that it closes a loophole and the loophole is going to grow bigger and bigger. So over time, the costs will come down of collecting it, but the revenue will be bigger. It is also a case of neutrality. If you are going to buy a phone from a local store that employs Australians and pays rent in Australia, or buy a mobile phone overseas from another company - in Australia you have to pay tax and therefore it is to the disadvantage of the local store, where as overseas, there is no tax.
PRESENTER:
Well, look, thank you for joining us today, Joe.
TREASURER:
Any time.
PRESENTER:
I just wanted to know, so we will get sort of a budget update before Christmas. You presumably have a strategy to deal with it without putting taxes and charges up?
TREASURER:
We are trying to reduce the number of taxes that the Australians have to deal with. We do not want to increase the amount of taxes. I am offering stability in taxation law and trying to get on with the job of reducing expenditure and cutting waste.
PRESENTER:
Joe Hockey, thank you.