PATRICK CONDREN:
Mr Hockey, what are you doing back in Queensland? We can’t keep you away, we might have to put a fence up at the border.
TREASURER:
Ease up, ease up. I’ve got a long-standing interest particularly in Far North Queensland. So no, it’s good to be back. I’m speaking on the Gold Coast at a Tax Institute Conference and we’re also going to have a community forum about the Intergenerational Report, which is certainly something that is increasingly top of mind for people, the challenges of the years ahead.
PATRICK CONDREN:
Now, in terms of your Budget this year, what will you be doing differently to sell it as opposed to last year’s Budget, which your salesmanship got a bit of stick about…
TREASURER:
Well, if I can just make the point: what matters is the substance of a Budget, and everyone seems to be a commentator on salesmanship but the bottom line is we’ve got to have the policies that are right. In last year’s Budget, we tried to fix 40 years of looming problems in one year and Tony Abbott and I fully accepted we perhaps bit off too much in trying to fix all the problems we inherited, in one Budget. This is going to be a reasonable Budget; a fair Budget. It’s going to be focused on the interests of families and small business. Importantly, it’s going to be a Budget that helps to build economic growth, stimulate job creation, and ultimately, it is going to show that we have a credible path back to living within our means.
PATRICK CONDREN:
Businesses express some concern that the tough decisions won’t be made in this Budget. How can you alleviate those concerns for the business community?
TREASURER:
Well, it’s not about the business community; it’s about what’s in the best interest of all Australians. Quite honestly, we cannot be in the position where you’ve got a Budget working in an entirely different direction to the way the Reserve Bank is going with interest rates. We’ve all got to paddle in the one direction, which is, to ensure that we create growth; we generate an environment where business can go out and employ more people. Now, running the country is not exactly the same as running a business. For a start, you’ve got, you know, 10 per cent of our Federal Budget is spent on the age pension which we are appropriately putting up today. Scott Morrison will be announcing an increase in the pension today – as we’ve increased it every six months since coming into Government. So, business does not have those sort of commitments the same way we do. So, I would urge them to understand that what matters most is that we have a credible trajectory to get back to the point, where we are running a surplus, we’re living within our means, and we’re dealing with a Senate that unfortunately is not prepared to see common sense in a lot of the initiatives or a number of initiatives that are going to improve the Budget bottom line.
PATRICK CONDREN:
Well, we could – what about the possibility of clearing out the Senate with a double-dissolution election then?
TREASURER:
Well, as Tony Abbott said yesterday we want to run a full term. That’s where we’re at. We’ve got an agenda that is still being rolled out. We have got on with the job of getting rid of the Carbon Tax and the Mining Tax, and stopping the boats. We are dealing with major national security issues as we stand. We are still absolutely determined to get on with the reform of the higher education sector, so that we can meet head on the challenges of the 21st century. Importantly, we are rebuilding the Australian economy; rebuilding confidence in the Australian economy even in the face of some headwinds from activity offshore.
PATRICK CONDREN:
Have you had any conversations – any serious discussions behind closed doors about a double dissolution election?
TREASURER:
No, we have not. We obviously want to get on with the job of running the country…
PATRICK CONDREN:
You talk of Scott Morrison announcing an increase in the pension this year. There’s a story this morning that Centrelink payments make up almost half of white goods leasing market leader, Radio Rental’s revenue last year via the direct debit centre pay system. Do you think that’s appropriate?
TREASURER:
Well, look I haven’t seen the story, Patrick, but you know it is what it is. If people are in a position where they are leasing white goods rather than buying them, that is their personal choice. That is the situation where they may not have the money to buy them, I fully understand that. And that’s one of the reasons why we need to strengthen the economy, create more jobs and give people a chance at prosperity.
PATRICK CONDREN:
But the leasing comes via direct debits through their Centrelink payments, and they end up paying significantly more via this leasing system product rather than buying it off the shelf with their own money.
TREASURER:
They might not have the money. They might not have the money, Patrick. I’m entirely speculating on that but not everyone has money available to go out and buy a fridge. Leasing products is entirely understandable and you know that is what it is, it’s a form of commerce, a form of business, but not everyone has the money I can assure you to be able to go out and buy a new fridge, a freezer, or a washing machine. But you know people do it, and a lot of Australians are doing it pretty tough. What we’ve got to do is find the jobs that help them to get into the workforce, earn a bit more money, and if they do that, they pay tax along the way which gives us more money to be able to help those most vulnerable.
PATRICK CONDREN:
Given some events down south recently, I’m loath to quote the Sydney Morning Herald to you, but the front page this morning has an exclusive saying that Australia is to sign up to a new Chinese Development Bank. Can you confirm that?
TREASURER:
No, I can’t because no final decision has been made but what’s happened is, there are various international banks around the world, the World Bank, the IMF is effectively a bank, the Asian Development Bank. Each one is, you know, in the case of the World Bank lead by America, the IMF lead by Europe, the Asian Development Bank lead by Japan. China has said, ‘we are concerned about the lack of infrastructure in the Asian region and the massive demand coming out of countries like Indonesia and so on. Why don’t we all get together in Asia and Europe and raise some money that helps to build infrastructure.’ Now, Australia has been thinking carefully about this. More than 30 countries have already signed up. The United Kingdom and New Zealand have announced that they’re going to participate in joining. Germany, France and Italy have announced they’re going to participate. This is going to operate in our region, in our neighbourhood…
PATRICK CONDREN:
So, it makes sense for us to sign up to it?
TREASURER:
Well, there is a lot of merit in it, but we want to make sure there are proper governance procedures. That there’s transparency; that no one country is able to control the entity and we’ve been working with the Chinese Government but also I’ve been speaking to my counterpart fellow Finance Ministers in Europe and around the world, so that we can all make sure that this works.
PATRICK CONDREN:
Are there any implications for the US alliance?
TREASURER:
No, because you know the United States Congress has been dragging its feet on the reform of the IMF, and the United States understands that this is a bank that’s going to be operating in our region. It‘s going to be using contractors in our region. We want Australian contractors involved; we want work for Australians out of this bank. And because it’s operating in our region, in our neighbourhood, it is important that Australia fully understand and look at participating in this Bank.
PATRICK CONDREN:
Can I just return to the Budget briefly for a moment? How to you plan to balance the books within five years, given iron ore prices continue to fall dramatically?
TREASURER:
Well, there’s no doubt, Patrick, it’s had a real impact. When we came to Government, our biggest export which was iron ore, was around $100 a tonne, and then in the first Budget I wrote it down to $90 a tonne. Then at the end of last year in the Mid-Year Economic Update, I wrote it down to $60 a tonne, now it’s closer to $50. That’s had a big impact on our revenue, a big impact on our revenue. But, fundamentally we are heading in the right direction. We are getting – we’ve got rid of waste, importantly, in government spending. We’ve had to reduce the wages bill of the Commonwealth Government, which has been very difficult for a lot of people, but we’ve had to do it. We are on track with improving our bottom line but the challenge is, when you’ve got falling revenue and you’ve got rising costs, at the moment we have to borrow $100 million a day. $100 million a day just to pay our daily bills. Now, clearly that is not sustainable in the future. I mean, $100 million a day that we borrow is the equivalent of 40 kilometres of new road, or two new schools every day. And we’re borrowing that money just to pay our daily bills as a Commonwealth Government. That is not sustainable.
PATRICK CONDREN:
Mr Hockey, thank you for your time this morning. Enjoy the Gold Coast; will you be hopping down for a swim?
TREASURER:
No, I’ve got meetings all day, but, mate, what is it with the weather here? The last few times I’ve come up its muggy, it’s overcast, it’s raining. I thought Queensland was beautiful every day?
PATRICK CONDREN:
Well, hang on a second, if the bad weather coincides with you turning up then maybe you should just bloody stay away!
TREASURER:
I’ve brought it from Canberra.
PATRICK CONDREN:
I’ve got to tell you yesterday was perfect – it was glorious. It was a little bit hot, it was beach weather!
TREASURER:
Okay, I walked into that one.
PATRICK CONDREN:
Then cyclone Joe turns up, and it’s buggered!
TREASURER:
Oh, Lord, I won’t use that one again.
PATRICK CONDREN:
Back to the drawing board. Good on you, thanks for that.
TREASURER:
See you mate, thanks Patrick.
PATRICK CONDREN:
See you, bye.