MICHAEL ROWLAND:
Joe Hockey joins us now from New York. Treasurer, good morning.
TREASURER:
Good morning, Michael.
MICHAEL ROWLAND:
At this meeting of G20 Finance Ministers, how confident are you that the will will still be there to boost economic growth by an additional 2% by 2018?
TREASURER:
There's no doubt that what was the Brisbane Declaration is alive and well and there is a steely determination amongst Finance Ministers to do everything we can to collectively grow the world economy, and infrastructure as you rightly identify, is a key part of that. The global infrastructure hub is being set up in Sydney, which is a great coup for Australia. And at the same time, we recognise that Asia's going to need $7 trillion of new infrastructure over the next decade, so we'll be working with all the other countries to build that infrastructure and create jobs for Australians, and obviously create hope and prosperity right across Asia.
MICHAEL ROWLAND:
How quickly do you hope to have this hub set up?
TREASURER:
We expect the hub will be set up within the next month. We've been going through interviews for a CEO and it looks as though we have been able to appoint a CEO from Great Britain to head-up the agency. Of course, it is being funded by a number of countries so it's not an Australian entity, but we are driving it hard and it is based in Sydney which is a source of great pride to us. Now it's got to deliver the infrastructure.
MICHAEL ROWLAND:
Back home, Treasurer, on matters political, two different polls out this morning. The Newspoll more favourable to the Government, the Ipsos poll and Fairfax papers more favourable to the Opposition. The Ipsos poll in particular though looks at your performance and shows your approval rating has dropped 22 per cent in just 13 months. How does anybody claw back from that?
TREASURER:
It's not about me, it's about what is right for Australia and, you know, it's easy to be popular if you say things that people always want to hear, but when you do the things that are necessary for the country then sometimes you cop flack for it. But, my God, we are in this business to do what is right for Australia and personal popularity or not, it is about doing what is right.
MICHAEL ROWLAND:
So you're not worried about that rather precipitous fall in your approval rating therefore dragging down the Government's fortunes?
TREASURER:
Well, I have to do what is right for Australia and ultimately I've got to level with the Australian people about the mess that we inherited and the fact that we need to have a responsible and measured approach to fixing the mess that we got into but, most importantly, we've got to be able to illustrate that Australia has a better future and it does under the Coalition.
MICHAEL ROWLAND:
Speaking of economic futures, in an interview in the Financial Review this morning, Treasurer, you have expressed deep concern about those falling iron ore prices and the effect they'll continue to have on our Budget bottom line. How deleterious is that to the Budget and how big will the deficit blow out if the iron ore prices keep falling?
TREASURER:
Well, there's no doubt it has an impact on our Budget because iron ore has been our biggest export. When we came to Government it was hovering around $100 a tonne. Now, it's close to $40 a tonne. Everyone said that I was being way too conservative writing down the prices. I'm glad I was prudent, with the benefit of hindsight I could have been even more prudent. But we are not going to chase the fall in revenue associated with falling iron ore prices down. We're not going to be imposing new taxes in order to try and recover that lost revenue. What we want to do is to grow the export opportunities in Asia, particularly for services exports, but whatever the case, we've got to be able to have a very clear, predictable trajectory back to surplus based on reducing expenditure and living within our means.
MICHAEL ROWLAND:
But the iron ore prices still mean a lot to Australia, iron ore exports mean a lot to this country. How big could the deficit blow out if that plunge continues?
TREASURER:
Well, we'll wait and see. I'll be in discussions with Lou Jiwei, the Finance Minister of China, this week. And I'll also be in discussions with a number of other markets that are both our customers and also our competition. I'll have a better understanding of some of the inputs into the Budget at the end of this week after further discussions from both New York and in Washington.
MICHAEL ROWLAND:
Looking at the Budget, Treasurer, the Prime Minister has told us compared to last year it's going to be, in his words, a dull Budget. Has the Government lost the appetite for structural reform?
TREASURER:
No, we need to undertake structural reform, we must. There is no choice in that regard, and it's vitally important that we maintain our path to get the Budget back to surplus as soon as possible. We're not going to have easier monetary policy and tighter fiscal policy in an arm-wrestle. We are going to have a reasonable level of Budget tightening, but it's certainly not going to be in an arm-wrestle with what the Reserve Bank is doing on interest rates. So we've got to get the balance right but ultimately what we are going to be able to show is that we are reducing the deficit despite losing revenue. We are reducing the deficit and we have a very credible continuing path back to surplus.
MICHAEL ROWLAND:
When you say reasonable level of budgetary tightening, does that foreshadow more cuts in next month's Budget?
TREASURER:
We are endeavouring to do more with less. We have already flagged that we are going to have a small business and jobs package and we are going to have a families package in the Budget. There are a number of other initiatives that we are very focused on, but of course along the way we have to pay for these initiatives. So we'll have reasonable savings that will not hurt the family Budget, but at the same time we are going to spend money that should be appropriately spent to make sure that the economy continues to grow.
MICHAEL ROWLAND:
Looking at the last big remaining so-called barnacle from last year's Budget, is the Government preparing to ditch that controversial change to the way pensions are indexed?
TREASURER:
No, Scott Morrison is in detailed discussions with key stakeholders. The Budget is obviously reliant on a number of structural measures. Changes to the pension which occur in the future are one of those changes we rely on, but we want to make sure the pension is sustainable and it continues to increase, and it is exactly what we are doing. We are putting in place measures that ensure that the pension is sustainable and continues to increase into the future. We'll see where those discussions get to, but because the pension is 10 per cent of our Budget and it is growing as the Intergenerational Report illustrates, associated with our aging demographic, we've got to make sure it's affordable and accessible and it ensures that those people most vulnerable are fully covered into the future.
MICHAEL ROWLAND:
Just before we go, Mr Hockey, going back to that Fairfax Ipsos poll, it shows a rather large jump in the number of people willing to wear a rise in the GST rate. Does that give you heart should you consider campaigning for that at the next election?
TREASURER:
Well, no. You can't respond to polls on policies such as GST. You have to actually lay down the policies that are right and what we have done is to launch a taxation discussion paper. We're inviting feedback from the broader community. As I've said on numerous occasions, if the taxation discussion is limited to simply an argument about whether you’re going to increase the GST or broaden the GST, then we're going to go nowhere. It has to be a much more detailed and broader discussion about all the issues relating to tax. We've said repeatedly that if there isn't bipartisan support in relation to changes to the GST, then we're not going to proceed with them. Clearly there is no bipartisan support, so that's the end of the matter.
MICHAEL ROWLAND:
Just before we go, to the topic de jour in America at the moment, everyone else is being asked about it so I may as well ask you while you're there. Hillary Clinton has announced her plan to run for the Democratic nomination. Would a US President Hillary Clinton be good for Australia?
TREASURER:
Well, the United States is our closest ally and it's our friend and we work with whoever is in the White House. Obviously Hillary Clinton is very familiar to the Australian people and importantly, Australia is very familiar to her and I have no doubt she will be a formidable candidate for the Democrats. But from what I hear she's not going to have a particularly easy run in either the primary or necessarily in the election. I think Americans on the ground, particularly here in New York, have a view that it's not a lay-down misère for Hillary Clinton.
MICHAEL ROWLAND:
Joe Hockey in the Big Apple, thank you very much for joining us this morning.
TREASURER:
Thanks very much for having me.