6 March 2015

Interview with Michael Brissenden, AM, ABC

MICHAEL BRISSENDEN:

Treasurer Joe Hockey joined me a short time ago. Treasurer, welcome to the programme.

TREASURER:

It’s great to be with you, Michael.

MICHAEL BRISSENDEN:

The first Intergenerational Report under Peter Costello showed the number of elder Australians would increase dramatically – the big demographic challenge if you like. Isn’t it true that’s the only really reliable forecast because these documents do make assumptions on economic modelling and scenarios that will inevitably change?

TREASURER:

Well, yes, the demographic change is the strongest and most robust figure in the document but all the other figures indicate trends and if trends continue for the next 40 years it shows what the end scenario is. So, if we don’t get our settings right now we pay a price which continues to grow over the next 40 years. Now, when Peter Costello delivered the first Intergenerational Report technological advances like Facebook had never even been thought of. So, the world’s changed quite dramatically since that time.

MICHAEL BRISSENDEN:

I guess that is my point. I mean, the assumptions are made that a government will do nothing. In a sense that what is happening now is what is going to be happening in 40 years’ time.

TREASURER:

Well, that is right. That is why at the moment, as it stands, for the Government, for whoever’s in government, the status quo is not an answer. The status quo is not an answer because over time we certainly will not be able to afford the quality of healthcare, the quality of aged care, the quality of education that we have today.

MICHAEL BRISSENDEN:

Okay, obviously, we need to keep people working…

TREASURER:

Well, we want, we want to keep people working. I don’t want this idea that we are forcing people – the grey army –  to go to war; it’s not the case. We want to give older Australians the chance to continue working and we have got to think about how we restructure our lives, how we restructure laws to facilitate people remaining in the workforce if that’s what they chose to do.

MICHAEL BRISSENDEN:

Of course, but unless we do that, unless more people are remaining in the workforce then we do face a real economic demographic challenge – don’t we?

TREASURER:

We do because certainly we have fewer people of traditional working age around to support the larger population that is going to exist over the age of 65 over the next 40 years.

MICHAEL BRISSENDEN:

The Age Discrimination Commissioner Susan Ryan said yesterday that lots of people would like to be working – and of course they would – beyond the age of 65 but the jobs just aren’t there and there is discrimination from employers, inflexibility in the workplace and no easy pathway to getting yourself retrained for another ten or twenty years work in a more suitable occupation. 

TREASURER:

And that’s why we’ve got to start this conversation about how do we change attitudes in business and, in particular, hold up businesses that do well. I know it’s the ABC, but I do want to give Bunnings a plug because a quarter of their workforce is over 50.

MICHAEL BRISSENDEN:

Yeah, but it’s more than just Bunnings, isn't it? As you've said, I mean Facebook didn't exist when the first IG report came out.

TREASURER:

Correct, yeah.

MICHAEL BRISSENDEN:

I mean, we're now talking about online operations; we're talking about businesses that hire young people that know how to deal with this new technology.

TREASURER:

Well, I wouldn't underestimate how many older Australians are actually using things like Facebook and using apps and obviously…

MICHAEL BRISSENDEN:

How many people over 60 in your office?

TREASURER:

Oh, I've got two.

MICHAEL BRISSENDEN:

Okay, and are they as good at using the apps and the mobile technology as the younger people in your office?

TREASURER:

Well, they've got a great deal of wisdom, I must say, and they're also not afraid to use technology, – but the most important thing is, they've been very keen to learn. And whether you're young or you're old, if you've got the same enthusiasm about learning then the wisdom is of great advantage to the older worker. Now, I think it's really important from an attitudinal perspective, we focus on how we can, you know, work with the business community to change the perception of the older worker, but also how we can lead the debate about how we are going to have to change our laws, change our systems to cope with what is the changing demographic. Now, the question for example is, we're going to for example –  the life cycle at the moment is, you know, it's expected that you'll study when you're young, work during your middle years and then retire when you're older. Well, if we're having longer lives, there are going to be many points during our lives when we go back to study, to retrain. There are going to be many points where we might step out of the workforce – whether it be for a woman after childbirth or it could be a woman having a break in career or change of careers, or a man in that case. So, we've got to reshape our superannuation system, our workplace…

MICHAEL BRISSENDEN:

And as an employer, as the government, how many people in the public service for instance are encouraged to stay more than 65?

TREASURER:

Yeah, that's a very good question and there is inbuilt discrimination at various points. I'm not saying everything's been solved overnight. I'm not saying that in the next three months we're going to completely change all this. But this is the conversation we want to have with the Australian people.

MICHAEL BRISSENDEN:

Okay, the projections of a population of over 40 million; assumptions are the fertility rate will remain at 1.9, basically what it is now. Is this an argument for more immigration?

TREASURER:

Well, no, I mean, everything depends on the composition of the immigration. So, we want to have an immigration program where people are contributors and that means over the last few years, even under Labor you've seen a readjustment of the immigration program towards working visas and working age immigration rather than family reunions. So that composition has changed. Having said that we are forecasting a drop in immigration as a percentage of the total population. Immigration is, you know, is a rather lazy way to try and grow your economy. What we've got to do is increase our output per hour. Now, Australia has doubled the amount of output per hour it's been able to achieve since 1970 and technology as you say, infrastructure, education have all had a big role to play in that. So, those guiding principles of infrastructure, technology and education are going to be very helpful for us over the next few years.

MICHAEL BRISSENDEN:

You're obviously going to use this to back up the last Budget, the arguments that you've still got, the Budget that's yet to come. Medicare services particularly are projected to be the fastest growing component of healthcare, yet you've dropped the Medicare co-payment. Is that a good idea?

TREASURER:

Well, we can only do what we can do. We, we – you know, there is no argument – you know, universal free health where no one pays a dollar to visit the doctor hasn't been around for 30 years. I mean, there are many doctors out there that do charge for GP visits. So, the concept of having absolutely free healthcare for every single person under all circumstances is not real. Having said that, we need to have a safety net for those most vulnerable. We need to ensure that there is a equality of opportunity in healthcare, and at the same time whilst we’ve got an ageing population, there's going to be greater demand. Now, we are working with the doctor community, with the medical professions more generally to find ways to make sure that Medicare is sustainable.

MICHAEL BRISSENDEN:

Sure, but isn't this the political catch-22 here? I mean the Government had said –  after the Victorian and the Queensland election, for instance, you said that voters don't like governments clearly who make bold reforms or there was a danger that that was the case. Aren't you, as Paul Kelly says today in the Australian, trapped between the political imperative to retreat and the financial imperative to stand firm and isn't the Medicare price signal an example of that?

TREASURER:

Well, you have to find another way. I mean, what we want to do is work with the Labor Party, the Greens, the independents to lay down a pathway that ensures that tomorrow is as prosperous as today.

MICHAEL BRISSENDEN:

And you've got to bring the people along with you and…

TREASURER:

Well, that's exactly right and…

MICHAEL BRISSENDEN:

…and you failed to do that up to this point.

TREASURER:

…we're going out to the community. We’re involved directly with the community in engaging in that conversation about how we actually have a pathway to prosperity. But you know, Michael, the interesting thing is the muted response from our opponents about all of this. I say again, what yesterday's report shows is that when it comes to the Government's Budget – whether it's a Liberal government or a Labor government, whatever the case - the status quo is not an option. The status quo is not an option because that would see a deterioration in the quality of life of Australians. So, at some point our political opponents have to come to the table and we're ready to negotiate, we're ready to discuss, but we need to solve the problems now so we can have a more prosperous future.

MICHAEL BRISSENDEN:

Surely any discussion about the nation's future has to look at superannuation, as well? Treasury estimates the superannuation tax breaks cost the Budget about $32 billion a year. Is that an effective and fair use of taxpayer money?

TREASURER:

Well, superannuation is the money that actually belongs to the individuals that have contributed over the years and it has discounted rates of tax compared to normal income. Now, we need to have a proper conversation about not just retirement income, but how during the course of our lives, superannuation can be used as a way of supporting our various points of retirement or our various points of exiting the workforce. Because again, I come back to that stereotype that you study when you're young, you work in the middle ages and then you retire on your super at the end or you know, in your later years. That's changing because people are going in and out of careers all the way through. So, I think we need to have a broader discussion about how we can use our pool of savings to maintain a good quality of life throughout our lives, rather than just have a stereotype …

MICHAEL BRISSENDEN:

So, no changes to tax base?

TREASURER:

Well, I think what we're going to do is have the conversation with the Australian people first and engage the community. I think that's where we've got to start and I would urge everyone to be part of this conversation using the Intergenerational Report as the basis for it.

MICHAEL BRISSENDEN:

Okay, Joe Hockey, thanks for joining us.

TREASURER:

Thanks very much Michael.

MICHAEL BRISSENDEN:

Treasurer, Joe Hockey there.