PRESENTER:
On the line in Canberra, Federal Treasurer Joe Hockey, good morning.
TREASURER:
Good morning, Neil.
PRESENTER:
Is the Toyota decision forced by a deal that is too generous for the workers?
TREASURER:
I saw the report this morning and it is accurate. It was a private conversation, but it is an accurate report.
PRESENTER:
So it was a conversation between you and who?
TREASURER:
Max Yasuda at Toyota. The fact is, they were very concerned about the conditions that existed at Toyota in Australia. It is not something new. Max Yasuda had previously been on the front page of the Financial Review about it.
PRESENTER:
Max Yasuda is the president of Toyota Australia.
TREASURER:
He warned that it was proving to be very difficult to sustain the business with those sorts of conditions. I stood in Parliament and said it quite bluntly: ‘if the AMWU continue down this path it will be very hard for Toyota to staying in Australia’. Time has proven that to be correct. To give you one example, 70% of the production out of Toyota was going to the Middle East, and Toyota Australia was allocated the Middle East market by Toyota in Japan. So they supplied that market with the Camry. As it turned out the Australian plant closed for 21 days over Christmas. The Middle East does not close from Christmas quite obviously. Therefore there were problems with supply into the Middle East for Toyota dealerships because Australia decided to close down for 21 days. Understandably, Toyota Australia said they wanted to go to their workers and say come on guys, let’s close for 10 days and send a message to Tokyo that we can meet the demand. The AMWU took them to court to stop them putting the proposal to the workers and now you see the result.
PRESENTER:
So who provided the cars to the Middle East?
TREASURER:
That is a matter for Toyota. I would expect it will be somewhere like Toyota in Thailand which can produce cars much cheaper than here in Australia.
PRESENTER:
That’s interesting, I was looking at the Thai figures. The average weekly manufacturing wage in Thailand is $96 a week, Australian Dollars. We can never compete with that.
TREASURER:
No we can’t, and nor should we. We have got a be looking at ways that we can be competitive in other areas. Our workers are far more technology savvy. Our strong dollar actually means you can bring in the plant and the equipment cheaper, so there is an advantage in a strong dollar. The disadvantage that it is certainly more costly to export.
PRESENTER:
I understand are talking about a private conversation, do you believe in the end, Toyota is pulling out because of the unions and the workforce?
TREASURER:
When they say in their statement that costs of production are part of it, that is pretty explicit isn’t it. At the end of the day, costs of production include a whole range of things and part of that is the cost of labour. You look at the agreement, the workplace agreement, which the AMWU prevented Toyota from revisiting. For example, I understand there are more than 60 union reps in the Toyota manufacturing plant. Those 60 union reps get 10 days paid education leave for union training per year. Each one. That is 690 days of training. And you know what, they can pool it, so that two or three people may not actually work each year, but Toyota have to pay their wages.
PRESENTER:
It is too generous. You are not even talking about wages here you talking about conditions.
TREASURER:
They are conditions. Currently, employers can take up to five days of paid sick leave per year, without providing a medical certificate. Up to five days a paid sick leave. Toyota said, can we make it two. The last day before shutdown at Christmas employees work five hour shifts but get paid an eight hour shift.
PRESENTER:
In fairness this went to the court, didn’t it? An injunction was issued.
TREASURER:
The AMWU took Toyota to court to prevent them from going to the workers and the AMWU won in court. So Toyota was left with nowhere to go. They could not talk to their workers, they could not put the proposal to their workers and they could not send a message to Toyota in Tokyo that they are actually doing everything they could to make the plant more efficient.
PRESENTER:
So have we effectively driven Toyota out?
TREASURER:
That is a matter for Toyota. But the fact is, this is where the rubber hits the road. This is where things come into play. Excessive regulation taxes like the carbon tax, conditions that might seem like a good idea at the time, it all comes home to roost when head office in Tokyo or Detroit or someone else is comparing the production costs in Australia versus Brazil, Thailand, Europe. This is where we lose out. We all have to do the heavy lifting her and the militancy of some of the union reps, not all of them, but some of them needs to be addressed by the unions themselves. They have got to understand that we have got to compete with the rest of the world. We are not an isolated economy that is just in a glass jar. We have to compete with the rest of the world. We need to export for the rest of the world.
PRESENTER:
Is it correct that there could be 50,000 jobs on the line nationally?
TREASURER:
No, I do not accept that at all.
PRESENTER:
What would you say?
TREASURER:
Significantly less than that. By the way, at any one time during the course of the last 12 months there was 143,000 job vacancies advertised – and that is a business survey from the ABS – and between now and 2017 the Australian economy will produce a least 630,000 new additional jobs.
PRESENTER:
So do you reject that there is a danger of Victoria and also possibly South Australia going into recession?
TREASURER:
Totally reject it. That is ridiculous talk.
PRESENTER:
What are the industries we grow? I was talking to the Premier about this yesterday. We accept, the car industry is gone. Manufacturing is staggering. What do we do? Where do we go? How do we ensure that we create jobs?
TREASURER:
If you look at the employment change by industry over the last 10 years manufacturing has declined but health care has improved and obviously healthcare is one area where we have got tremendous innovation and particularly out of Melbourne you have got the best hospital in Australia and arguably the best campuses in Australia for university and that includes scientific research and technical services. In construction we have seen significant growth, particularly in the mining sector. We have got to channel it into infrastructure that is productive in the cities now, we had an excellent meeting with Denis Napthine yesterday about that. Education and training exports - we are amongst the best in the world at education, and we have got to do more there.
PRESENTER:
Will you provide tax breaks? The head of the ANZ Mike Smith wants tax breaks the businesses that are willing to set up in the area was hit by the demise of the car industry. Will you look at providing tax breaks to encourage that?
TREASURER:
The thing about tax breaks, and this comes from my own life experience when world competing with Singapore and Hong Kong to try and build Melbourne and Sydney is financial centres. I kept saying to the serious players we are not running a caravan park in Australia. You are not going to come set up your business on the basis of a tax break and when things turn move. That is unacceptable. The bottom line is we have got a make things more attractive. I can tell you, a mate of mine in Melbourne that employs hundreds of people is looking to set up a call centre in regional Victoria, employing 40 or 50 people to sell products to the rest of the world. He is keen to go to regional Victoria, because in places like Bendigo on Ballarat they have got stable workforces for a call centre. The call centre is a sophisticated facility. It is not a simple product. What you get out of regional areas that have faced tough times is consistent predictable workforces. What we have got to do is make sure that the cost of doing business out of those sorts of centres is reduced.
PRESENTER:
So, will you look at tax breaks or not?
TREASURER:
I have not got any tax to give away. I am not going to pretend that. The taxes that we are trying to get rid of, the mining tax and the carbon tax, are going to save those disadvantaged areas significant sums of money because at the moment they are taxes on energy usage and they are taxes on enterprise.
PRESENTER:
What about tariffs on the luxury car taxes? They are worth about $1.4 billion. What are we protecting? There is no car industry to protect why not take that off and make cars cheaper for people so people have more money to spend.
TREASURER:
The car industry is not going until 2017 but this is something that will certainly be considered by our review of taxation which will occur in the next 18 months or so, and certainly before the next election. This is one of the things that obviously needs to be considered. The tariffs, obviously, we are negotiating a free trade agreement with Japan now and this is something we need to consider in that context.
PRESENTER:
Would that include the implication from the fringe benefits tax which you reversed because there is now no industry to protect?
TREASURER:
That was the biggest hit on the industry in years.
PRESENTER:
But you don’t need it any more do you?
TREASURER:
We reversed it, we said we couldn’t do it. If Labor had have gone ahead with their $1.8 billion hit on fringe benefits tax on motor vehicles, let me tell you, they would’ve walked out the door in January rather than in 2017.
PRESENTER:
So there is a prospect of those tariffs coming off, but not for several years?
TREASURER:
There is a legitimate case put forward to remove tariffs where there is no local motor vehicle manufacturing industry, I understand that. But I am not going to go down the path of policy on the run, rather we will send it to our review of tax, which is something that we have thought about long and hard.
PRESENTER:
On the unions, just to finish, would Toyota still be here if the unions had given a little?
TREASURER:
I don’t know, that is a matter for Toyota.
PRESENTER:
What do you do now to ensure this doesn’t happen again? You said there was nothing you could do to stop Toyota going, this union approach may well apply to other industries. What are you do to make sure doesn’t happen again?
TREASURER:
The last thing we should do is put our heads in the sand and think that there aren’t lessons out of what happened to the motor vehicle industry for other industries. We have got to be realistic about the way we approach, not just workplace relations, but the way that we approach the regulation of industry the way we approach taxation.
PRESENTER:
So how do you do that though? How do you change an entrenched attitude which you say exists in the union movement?
TREASURER:
We have got to change the culture. The culture of enterprise. It is not a case of workers versus employers. It is a case of Australia challenging the rest of the world. We have got to be aspirational. We want to compete with the rest of the world.
PRESENTER:
You sound like Paul Howes.
TREASURER:
If I do, then he’s right. We are not a closed economy any more. At home people are buying goods over the Internet 24 hours a day from the rest of the world and people in the rest of the world are buying from us in other countries. So let’s embrace that. Because distance is no longer a barrier to the enterprise of Australia. Therefore, let’s embrace it. Let’s not be challenged by it, let’s meet it head on, let’s get rid of the taxes, let’s get rid of the regulation, let’s stop the industrial militancy and lets focus on how we can grow the economy.
PRESENTER:
All that is true, as long as it doesn’t equate with screw the workers.
TREASURER:
Well, it is not screw the workers because the only way we can advantage the workers is to lift the tide so that all boats rise. To lift the tide so that all employers, whether they be plumbers or sparkies or retailers or manufacturers, everyone has a chance. Everyone is got a have an equal opportunity. For too long, the previous government the Labor Party have focussed on equality of outcomes. We have got a focus on equality of opportunity. The best way to do that is to remove the handbrake of taxes like the carbon tax, like the mining tax, remove the regulatory handbrakes. The financial services reforms that were put in place by the previous government, we have got to get rid of that stuff and allow our businesses to compete, because pound for pound I would back Australian enterprise against the rest of the world every day.
PRESENTER:
Thank you for your time, do you have any update on Alcoa? We are told Alcoa could fast track its decision now the Geelong smelter.
TREASURER:
No, I haven’t. Again, it is tremendously sad to hear any business that may be considering closing or is unable to compete. That is a classic example. Alcoa has got a massive carbon tax bill. These things cost jobs. What we have got to do is reduce the cost of production in Australia, particularly for energy and allow enterprise to get on with creating jobs and growth.
PRESENTER:
And let everybody get a fair wage.
TREASURER:
Exactly right. Can I tell you I want people, and Tony Abbott has said it repeatedly, we want Australians to have excellent wages to have higher wages, but our wages will fall if we do not produce what we need to produce to be a productive economy.
PRESENTER:
Thank you to your time.
TREASURER:
Thank you very much.