PRESENTER:
First up the debt limit, does this imply that the Budget is perhaps in even worse shape and you cannot turn it around in the sort of speed you predicted before the Federal election?
TREASURER:
There has been deterioration in the Budget bottom line. Labor was not upfront about the real state of the Budget. We all suspected that but the truth is emerging and when we release the Mid-Year Economic and Fiscal Outlook it will clearly show that there has been deterioration in the Budget. The peak debt limit, contrary to what Labor claimed as $370 billion, will exceed $400 billion.
PRESENTER:
So why do you need a $500 billion limit?
TREASURER:
We have been advised, as I am sure the previous government was, that you need to have a buffer of $40 to $60 billion because of the lumpiness of the refinancing of government debt. The fact of the matter is we do not want to go through what the United States have gone through in relation to the debt limit. This $500 billion debt limit is Labor’s creation. It is a direct result of what they have been doing and their failure to address some structural challenges facing the budget.
PRESENTER:
Do you think now given what appears to be a relative lack of assets the government is able to sell such as previous governments sold Telstra to be able to pay down and off that debt - do you believe now that it is inevitable that Australia will continue to carry this debt for a very long period of time?
TREASURER:
I hope not. The first thing is you have got to look at the actual debt. We are very determined to get the Commonwealth Government’s debt down. The best and only way to do that is to run surpluses. To get to surplus you have got to have stronger economic growth. The fact is the economy is not growing at the speed we want or the speed that is necessary to start getting the debt down. There is a lot of work we have to do as a new government but we are absolutely prepared to do it.
PRESENTER:
Then we go to the National Commission of Audit. Now, that has been done before you got Tony Shepherd who people acknowledge has been a terrific head of the Business Council of Australia to chair this Commission. Are the recommendations of a national Commission of Audit likely to be followed through on? In situations in the past they have not been.
TREASURER:
It is important that you have an independent audit made up of people who understand how government works and can have a look at everything with fresh eyes. There will be some initiatives that we will put into a timeframe over a number of years. There will be a number initiatives that we will undertake straight away. That is the job of the audit, to be full and frank, and it will be. Certainly with Tony Shepherd and people like Peter Boxall and Tony Cole on it I can be absolutely assured that it will be a full and frank piece of advice.
PRESENTER:
So for people, just so they can understand exactly what that will do. The recommendations it will give to governments are what, assets that can be sold? Or is it where there is doubling up inside government?
TREASURER:
It will look at every area of government, every single area of the Federal Government. It will look at the relationship we have with the states. It will seek to identify ways that we can spend taxpayers money more wisely. Hopefully spend less taxpayers money. Most importantly it will look at ways we can better deliver the services that Australians expect from their Federal Government. This is the sort of thing that so many companies go through on a regular basis. As you correctly point out the last time it was undertaken was 1996 under John Howard and Peter Costello. Labor never did it - that is why you saw so much waste under Kevin Rudd and Julia Gillard. We are doing it again and it is going to be a very fair dinkum assessment of where we are at.
PRESENTER:
Will it also give you a blueprint to lay off more than the 12,000 public servants that you talked about before the election?
TREASURER:
We had a plan, to reduce by natural attrition, the size of the public service in Canberra which had grown by nearly 20 000 more under Labor. I am not going to pre-empt any of the outcomes but I would say to you that there is so much opportunity to get rid of waste in federal government spending and importantly to remove duplication and get rid of red tape to make processes simpler. When you are spending nearly $400 billion a year, the suggestion somehow that you cannot do things more efficiently is absurd. The fact that Labor never did it illustrates that what we are doing today and what we are announcing today is absolutely right. This is the tool that helps us to address the massive increase in debt that is the legacy of Labor.
PRESENTER:
Just one final thing, with interest rates being relatively low, obviously debt has risen, it is not having the massive cost on the taxpayer had it might have had the interest rates been say double what they are today. So long term bond rates rather being 4%, being 8% say. But the truth is in order to be able to clear this debt there are cost savings but also selling assets is another part of it. Is one of the real issues with you now, with interest rates so low, is it almost counter-productive to try and contemplate selling assets?
TREASURER:
The return on investment with a number of government assets is better than any savings you might get from paying down debt. Having said that, the government should not be in the business of business. It is not what government should do. It should not be competing with the private sector across business lines and that is one of the reasons why we said we should not be in the business of owning a private health insurer. That is a private sector operation, a private health insurer, as it should be. Having said that, the Commonwealth Government does not have the assets to sell that it had 15 years ago. There is no Telstra, no Commonwealth Bank, no QANTAS. The Commonwealth Government has not got the assets. The states have significant assets to sell and that is something that we will work through with the states. Ultimately what we need to do is be more efficient, more careful and more prudent when it comes to using taxpayers money.
PRESENTER:
Is that the reason why the National Commission of Audit is such a priority?
TREASURER:
Absolutely. This is essential for the business of good government. It is going to have all the fire power and resources it needs to deliver the outcomes that are going to make Australia stronger. It is essential that we do it now and it is essential that we move quickly to try and drive a real growth agenda over the next few years.
PRESENTER:
Joe Hockey, thanks for your time.