MICHAEL BRISSENDEN:
Could it be that is a much more politically friendly Budget but one that fails to address the fundamental economic problems. Isn’t it the case from what we seemed to have learnt from your first two Budgets is that a political crisis will trump an economic crisis?
TREASURER:
No.
MICHAEL BRISSENDEN:
What about some of the commentary? What do you think of…
TREASURER:
Well, commentary comes from critics and people on the sideline. Those of us that are actually framing the Budget – last year’s Budget, the first step in trying to repair the mess that we inherited, which was daily spending of over $133 million a day that the Government had to borrow to pay the daily bills. We’ve got it down to $96 million a day, there’s still work to be done, but the Budget repair task continues. At the same time, we are working hard to give Australians the opportunity to have a go, and in doing so, we are empowering Australia’s small businesses to go out, to invest and hopefully to create more jobs which I’m absolutely confident they will do.
MICHAEL BRISSENDEN:
Okay, you have to accept though the rhetoric has changed a bit. What about smaller government and paying down the…
TREASURER:
We’re actually doing that Michael. If you look at the Budget papers…
MICHAEL BRISSENDEN:
The deficit is still forecast to be around $40 billion.
TREASURER:
Well I’m sorry, if you actually look at the Budget papers, it’s not around $40 billion, it’s $35 billion next year which is in fact…
MICHAEL BRISSENDEN:
And the year after?
TREASURER:
And it goes down after that. And it goes right down to $7 billion over the forward estimates. If I can come back and point out, we actually reduced the size of government by half a percentage of GDP every year. We’re reducing government expenditure as a percentage of GDP, going down. As you can see, in the Budget papers, the $35 billion deficit which we’re actually delivering next year, is less than the $40 - $41 billion that the market expected. So please, let’s deal with the facts.
MICHAEL BRISSENDEN:
Okay, well let’s deal with your Budget papers, because spending on those charts is still sitting at 26.2 per cent of GDP.
TREASURER:
No, it’s actually 25.9 per cent of GDP. 25.9 and it’s coming down.
MICHAEL BRISSENDEN:
But it doesn’t ever get down to the 50-year average of 23.2 per cent.
TREASURER:
No, and there’s much more work to be done, absolutely. We’ve been saying that. That’s one of the reasons why you have to reduce government expenditure, and that’s why we have a number of Bills that are going to the Senate to reduce government expenditure. Mr Shorten is saying well, he wants to reduce government expenditure but he wants to increase government spending. He wants to reduce government debt, but he wants to increase government debt.
MICHAEL BRISSENDEN:
Are you doing it fast enough for your own liking? Because, your own words will come back to you again and again. I will have a surplus in the first year and every year after that.
TREASURER:
Yeah, yeah you remember the words that went before that? If you’re going to quote it, please quote the words that preceded that. Based on the information available today, and when I said that, based on the information available today, the Labor Party was claiming that they were going back to surplus. You see this is the twisting that has been given to you by some people, I said at that time, based on the information available today we will deliver a surplus in our first year and every year after that. When we came in, Labor had said oh don’t worry, it will be around an $18 billion deficit, it turned out to be $48 billion of deficit.
MICHAEL BRISSENDEN:
You base your information on Treasury figures don’t you?
TREASURER:
Well, of course, we always base our information on Treasury figures.
MICHAEL BRISSENDEN:
But you were critical of those figures when Labor was in power?
TREASURER:
Well at the time I didn’t believe them and gee I was absolutely right, I was absolutely right.
MICHAEL BRISSENDEN:
So you believe the figures now?
TREASURER:
Well, what happened was Labor locked in expenditure beyond the forward estimates. They locked in a National Disability Insurance Scheme that was never fully funded, and you can see that come into the Budget for the first time this year. They locked in bonus payments to the states for schools and hospitals that were never funded, never funded. We only found that out when we came in and that’s why we were very cautious and said we will pay Gonski for the first four years, but after that we can’t continue to have those bonus payments. Fifth year, in relation to hospitals, the same, we can’t have bonus payments because we can’t see where the money is coming from.
MICHAEL BRISSENDEN:
Okay, now the figures that you’ve based this on, the growth figures have been described as heroic by some…
TREASURER:
Well that’s a foolish comment because…
MICHAEL BRISSENDEN:
They are Treasury figures as well, aren’t they?
TREASURER:
Well they’re not just Treasury figures, they’re in-sync with the Reserve Bank. Credible economists, like Bill Evans at Westpac and Alan Oster at the National Australia Bank are saying they look perfectly credible.
MICHAEL BRISSENDEN:
Okay, well let’s talk to some other economists…
TREASURER:
And one of the reasons, can I explain why they are. That is because we have historic low interest rates at the moment, we have increasing exports, we have low petrol prices. The Australian dollar is bouncing around but it’s still much lower than it was this time last year. We’ve taken a conservative approach to the iron ore price of $48 a tonne, today it is $57 a tonne.
MICHAEL BRISSENDEN:
Okay, now Budgets obviously are about choices aren’t they, as you discovered last [inaudible]. Can you explain the fairness in keeping billions of dollars in superannuation tax breaks for the wealthy?
TREASURER:
Well, again as the Governor of the Reserve Bank pointed out the other day, superannuants are in for a fairly long period of potentially low returns. Because, you’ve got very low yields around the world. I mean, in some countries you’ve got negative interest rates, for people that have got money in the bank at the moment, they’re getting a very low return, much lower than they would have expected. So now’s not the time to hit those people. I can’t see any time that you should hit those people with superannuation with a new tax, which is what Bill Shorten wants to do, he wants to hit anyone with $75,000 from their super with new taxes. Now is not the time to do that, it’s patently unfair, and we are saying no new taxes on superannuation under us.
MICHAEL BRISSENDEN:
I know that’s what you’re saying, but there is an opportunity there isn’t there to rein in spending, because that is the one area of agreement that you have with the difficult Senate that you’ve got?
TREASURER:
Well, the difficult Senate hasn’t looked at the details, the difficult Senate as you call them, hasn’t looked at the details of exactly where it is. The people that have a lot of money in super at the moment, have accrued it under the previous Labor Government and the Keating Government rules, where you can put in as much as you wanted, and other governments – previous governments said look you can put in in some cases as much as you wanted, then governments started to put the brakes on, but on a prospective basis. So, if you were to go back and impose new taxes on people that have accrued quite a bit into their superannuation now, it would be a retrospective tax…
MICHAEL BRISSENDEN:
So have you dumped plans for the inquiry into retirement incomes as reported today?
TREASURER:
Well, no, what we said was we’ve got a tax inquiry at the moment and we’ve got a federation inquiry, I think we’ve got our fills of inquiries and I think Australians just want a period of stability and certainty. But we’re obviously, through Minister Morrison and indeed myself, always in contact with the various sectoral interest and we’re speaking with them and we do want to provide stability and certainty.
MICHAEL BRISSENDEN:
But isn’t it true that even your own white paper warned that the tax free status of super withdrawals was unsustainable?
TREASURER:
Well, we haven’t delivered a white paper, which white paper are you referring to?
MICHAEL BRISSENDEN:
I mean, is it the case that the tax free status of these is unsustainable?
TREASURER:
Well, no. The question is, at the moment are we going to keep stability and certainty for people with superannuation? Yes. Are our political opponents going to impose new taxes? Yes. So, it comes down to a very clear line. Who is offering stability and certainty for older Australians? Well it’s the Coalition. Who wants to change tax again, even though they pledged they wouldn’t change it for five years, just two years ago? The Labor Party.
MICHAEL BRISSENDEN:
Okay, let’s have a look at some of the losers, because there are some. Quick question, why has only $30 million been set aside to combat domestic violence while there’s been another big boost for spending on security?
TREASURER:
I don’t see them as related, be very careful here…
MICHAEL BRISSENDEN:
Rosie Batty yesterday she made the connection, she said that perhaps we need to start talking about family terrorism so the issue is treated as seriously.
TREASURER:
Well, be very careful here, please. I was asked this yesterday and again, I do not see a link between terrorist activities in Australia and domestic violence. Domestic violence is evil, and we have further announcements to make about domestic violence and as I said yesterday, we have more available in the Budget which we haven’t announced, that we’ve appropriated for…
MICHAEL BRISSENDEN:
So $30 million isn’t the end of it?
TREASURER:
Absolutely, that is not the end of the story, we have more there. But, the Prime Minister wants to consult with the state premiers and territory leaders. In relation to counter-terrorism, if we need any evidence of the threat just look at what happened last weekend. It was very real. We cannot, cannot, take any shortcuts in relation to terrorist activities and we need to give our agencies all the resources they need to stop a terrorist event happening in Australia.
MICHAEL BRISSENDEN:
Okay and just quickly on foreign aid cuts, we’re sending troops to Iraq but we’re now not sending any aid? Is that right?
TREASURER:
Well, I’m not aware of specifically the situation in terms of aid in Iraq but I would say to you Julie Bishop has appropriately looked at our foreign aid budget, considered the fact that we should be helping those countries in our near region which we have primary geopolitical responsibility for. Looking at countries who are themselves giving foreign aid and asking why we’re giving them foreign aid for them to give foreign aid themselves? Thirdly, looking at the speed of their economies and saying well if they’re doing really well why are we giving them more foreign aid.
MICHAEL BRISSENDEN:
So the foreign aid contribution is right.
TREASURER:
We have had a reduction in foreign aid, but the actual distribution to individual countries I haven’t looked at the table because Minister Bishop has managed that but I’d say to you we have done it on the basis of taking care of our immediate geopolitical interests.
MICHAEL BRISSENDEN:
Treasurer Joe Hockey, thank you very much for joining us.
TREASURER:
Thanks Michael