NEIL MITCHELL:
Federal Treasurer, Joe Hockey, good morning.
TREASURER:
Good morning, Neil.
NEIL MITCHELL:
What did you think of the burning of the flag; does that offend you?
TREASURER:
Personally it does, yeah. The question is whether it should be made unlawful and look, you know, I am inclined to think that whilst I find it really offensive given so much that has been sacrificed in the name of our country, I think people are entitled to do as they choose – it reflects on them, more than anything else.
NEIL MITCHELL:
Okay, now the G20 first and then I’d like to talk quickly about free trade. But the G20, we are talking about growing the economy by 2.1 per cent. (Inaudible) set that target but how do you achieve it?
TREASURER:
Well what happened was, at the beginning of the year when I convinced Finance Ministers to have a target of two per cent, many of them were critical of that, it was very hard to get the Germans and the Americans across the line to actually put a number on it but they agreed. Then I said righto, well you have to show everyone how to do it and we lodged our policy commitments and governments have announced them. In our case, we have announced things like Paid Parental Leave and so on, which actually help to contribute to improving productivity, but each country had to lodge them. In the end over 1,000 were lodged. The IMF and the OECD checked them out and said, ‘look, some of these are just re-announcements, they are not real, others are real and combined, they will increase world growth by over $2 trillion; probably around 20 million new jobs.’ What does that mean for the corner store in Lygon Street? Well it means that ultimately, there is potentially more customers coming in, including tourists, it means that you can have lower costs perhaps with you know, more efficient productive inputs into your business, you…
NEIL MITCHELL:
So, it means jobs in Australia?
TREASURER:
Absolutely, of course it does.
NEIL MITCHELL:
How many – (inaudible) two per cent, how many jobs do you get?
TREASURER:
Well Australia isn’t at two – isn’t two, it was a global growth figure and you know, the IMF said that they are looking for an additional 1.2 per cent out of Australia to contribute to that two. The biggest contributions have actually come out of China and Korea and look, their growth flows directly through to us because they buy a lot of our resources.
NEIL MITCHELL:
But I don’t understand, we look at the European economy, some of them are struggling – some are in recession, some are just coming out of recession; how do they talk about two per cent growth when they are in recession?
TREASURER:
Well, that is right. You see, what they have got to do is they have got to have structural reform. So, for example in Italy, they have some of the oldest, most antiquated labour laws, and they are now passing through their Parliament, laws to free up their labour market. That is going to improve their productivity. Spain, which was an absolute basket case, is coming back, as is Ireland and they are doing so because they undertook the sort of structural reform that’s very difficult, and you know, they are the structural reforms, for example, in Australia with higher education reform. We know it is difficult, we know it is hard but if you don’t do it, you are not going to get the growth and you are not going to get the jobs.
NEIL MITCHELL:
And when – when if – when does this happen?
TREASURER:
Well, it starts straight away and that is an increase over a five year period. Now, that is the equivalent of adding a combined Australia-New Zealand economy to the world, over the next five years. And look, the world lost, as a result of the Global Financial Crisis, the world lost over 60 million jobs, Neil. So, this is a step back and as I said to Finance Minsters on Saturday, in Australia, you teach your children to go into the surf and it is rough and you will be hit by a dumper but you have got to convince them to get back into the water and that is what we have got to convince the world to do – get back in the water.
NEIL MITCHELL:
You have talked about the concern about tax revenue collapsing in Australia, why is it collapsing?
TREASURER:
Well, it is not collapsing. I mean, it has come off and why? Because $1 in $5 that we actually earn come from iron ore exports. Now, iron ore prices have fallen about 30 per cent since the Budget. So, naturally enough, that means our income is less as a nation and therefore, our revenue falls.
NEIL MITCHELL:
But do you seriously say with this G20 decision and with the problems we are facing, that we are heading into a particularly buoyant time?
TREASURER:
It is going to get better for Australia…
NEIL MITCHELL:
When?
TREASURER:
Well, it is getting better for Australia and I will tell you why: you know, mining and resources are only around 10 per cent of our economy but they are a massive part of our exports, agriculture is about two to four per cent of our economy, but again, it is a big part of our exports. The biggest part of our economy is services – health, education, tourism, financial services, architectural services, building services, that is 70 per cent of our economy but it is only 17 per cent of our exports. So the big opportunity for Australia, Neil, is the emergence of two billion people in the middle class in Asia who want our health services, architectural services, education and you know it better than anyone in Melbourne, where you see so many foreign students coming into study, this is what the world wants from us now as they become more affluent.
NEIL MITCHELL:
You mention Paid Parental Leave, is that part of the deal then? Now we’re locked into the Paid Parental Leave Scheme as part of this G20 deal?
TREASURER:
Well, there’s a whole range of things. I mean, that was already part of our commitment…
NEIL MITCHELL:
Yeah, but there has been pressure on to back off it, now you can’t back off it.
TREASURER:
Increasing female participation is hugely important.
NEIL MITCHELL:
But are we locked in as a result of the G20 thing?
TREASURER:
Well, we’re only locked in when Parliament passes it, and we want the Parliament to pass it…
NEIL MITCHELL:
The Government is locked into it because some within your Government have been trying to get you to dump it and now you’d say you can’t.
TREASURER:
Yeah, well, we took it to two elections, Neil.
NEIL MITCHELL:
Okay.
TREASURER:
If we can increase the number of women in work in Australia it lifts the size of our economy. It actually increases the size of our economy and it means we become a richer nation.
NEIL MITCHELL:
Can I ask you just quickly about the Free Trade Agreement? I know this is Andrew Robb’s thing but the ACTU says that this could be devastating for the economy, that’s your area, devastating for the economy is the way they describe it today. What do you say?
TREASURER:
Complete rubbish, absolute rubbish. China is our biggest trading partner. It is our biggest trading partner. You know, in the year 2000, our exports to China were 6.2 per cent of our exports, now they are 31.8 per cent. If you want to see why Australia has got through the last few years without going into recession, look at China, look at their demand for what we produce and I just think that is a ridiculous argument from the ACTU.
NEIL MITCHELL:
I’m sitting in traffic at the moment in Melbourne, there’s a bit of it jammed up; what is the benefit to me with this Free Trade Agreement? Where do I notice it? Because I mean, the ACTU is talking about it costing jobs.
TREASURER:
You will see cheaper goods that you buy. So, we want to get rid of the tariffs that apply, the taxes that apply to goods coming into Australia which we buy, like television sets and so on, they get cheaper, but the big thing is, the big thing for Australia Neil, is that we get better access to China, and you know why it’s a bit different, this agreement? Because they need us. They want what we have in terms of our ability to provide financial services, healthcare services, for example, under this Free Trade Agreement, an aged care provider in Australia can expand their operations into China, and why is that good? Because every Australian business wants to expand its market and become bigger. China has the biggest demographic bubble in the history of humanity, with a one child policy. Can you imagine the opportunities for Australian healthcare providers and aged care providers to expand their businesses into China, it’s immense.
NEIL MITCHELL:
Okay and the G20, a bit embarrassing on climate change, wasn’t it? Even David Cameron gave you a bit of a touch up on climate change.
TREASURER:
Well can I tell you, I sat in the room right behind the Prime Minister and President Obama. I was in the room, the reports, frankly, of this sort of conflict and battles on climate change – absolute rubbish.
NEIL MITCHELL:
Even David Cameron, the British Prime Minister said Australia has got to do more.
TREASURER:
Well, I didn’t hear him say that and he didn’t say that in the room I can promise you. I mean, Australia is doing the same amount as the United States. We are actually, over a 30 year period, we’re reducing our emissions by the same amount over a 30 year period, as the United States, and we’re certainly doing more than most other countries, so I don’t buy that.
NEIL MITCHELL:
Just on something else very quickly, I read that you’d visited Australian Air Force personnel in the Middle East who are carrying out the attacks on the Islamic State. What were they like? How are they coping?
TREASURER:
They’re outstanding individuals, Neil. The fighter pilots are true professionals, and they are very, very professional, very focused on the challenge, and our Special Forces guys are inspirational. They are very knowledgeable. You know, we tend to have that perception that they are sort of Arnold Schwarzeneggers or you know, Sylvester Stallone Rambo types – they’re not. They are smart, they’re focused, they’re fully aware of everything that’s going on. They know they are on a mission to make Australia a safer place and they have a steely determination to do it.
NEIL MITCHELL:
Thank you so much for your time. The Federal Treasurer, Joe Hockey.