PRESENTER:
For the first time in 2014, Treasurer Joe Hockey. Good morning to you. Welcome back to Brisbane.
TREASURER:
Great to be here Steve, and Happy New Year.
PRESENTER:
Same to you. You're looking well – trim, tall and terrific. Not too stressed.
TREASURER:
It's been a good break for Australia, I think.
PRESENTER:
Did you go away overseas?
TREASURER:
No. I was at home and reacquainted myself with my three young children, 8, 7 and 4.
PRESENTER:
Did they say "Who are you?"
TREASURER:
No. But I am happy to be back at work I must say. There was the odd day that I rang up and said "There must be meetings back in the office".
PRESENTER:
You're not much of a stay at home dad?
TREASURER:
I don't know how Mums - in the main it's Mums, some Dads do it - but I just don't know how they do it with young children. Christmas is a good time to remind yourself of how hard Mums, in particular, work.
PRESENTER:
You're back into it now, and I know you're here for reasons like the by-election in Griffith. I don't want to ask you about the by-election in Griffith this morning. I want to ask you about Barnaby Joyce. It's reported he wants Cabinet to approve a $7 billion drought assistance package. Will it get your support?
TREASURER:
I spoke with Barnaby this morning. The report is not accurate. The fact is that there is a new drought package/farm assistance package that is starting on 1 July 2014.
PRESENTER:
That's a long way away for those guys.
TREASURER:
There is currently capacity to provide drought assistance through exceptional circumstances. I want to start by saying - I know and the Prime Minister knows - we're all very aware of what is happening in regional and rural Australia. What is looming as a very significant drought represents a challenge not just for the farmers but for the economy more generally and we're very, very aware of it.
PRESENTER:
If the $7 billion figure is wrong, what exactly is Barnaby Joyce asking Cabinet for?
TREASURER:
There is no proposal before Cabinet. There has been -
PRESENTER:
Is he going to bring one to Cabinet?
TREASURER:
He may well do - but I just want to emphasise, there are currently agreed exceptional circumstances payments available, where there is land that has been declared exceptional circumstance and drought affected, which is a partnership between the States and the Commonwealth. That continues until July this year. Then there is a new package that has previously been agreed between State and Commonwealth Government. That will apply even if there isn't a drought and that is helping the bush to restructure or some in the bush to restructure.
PRESENTER:
There's something wrong with that scheme, isn't there? I think that scheme had a very low take-up rate; in the first round of applications less than 40 farmers were successful for funding as I understand it.
TREASURER:
I'm not sure what scheme you're particularly referring to.
PRESENTER:
The Federal/State joint scheme.
TREASURER:
Exceptional circumstance comes about when an area is drought declared and there is funding available for farmers that made the request at that time. The new scheme, that is starting up on 1 July, is the equivalent of Newstart payments to farmers, whether they're drought affected or not, but where they are deemed to need the help for restructuring. Let me come back to the basics, the difference between a drought and what's happened at SPC Ardmona or any one-off grant is the fact that a drought, at its worst is a complete natural disaster – and, appropriately, State and Commonwealth Governments work together to help those that are affected by natural disasters.
PRESENTER:
Drought is a natural part of environmental cycle in Australia.
TREASURER:
There is that argument.
PRESENTER:
There doesn't seem to be any long-term planning for drought policy. There is no real long term planning - yet we've been living with drought ever since Dorothea McKellar was a girl and wrote a small little poem about Australia.
TREASURER:
It's a tough country, there's no doubt about it.
PRESENTER:
But where's the tough drought policy planning?
TREASURER:
There has been in the past – for example, farm deposit accounts are very attractive investment instruments for farmers, if they have the money. [They allow] during good times to be able to put money aside, gain a financial advantage out of that money and then access that money during the tough times. Now, a number of farmers legitimately say that they never actually catch up. So if they have a good season now and if they have bountiful produce now, usually the revenue that comes in is paying for the bills from the last drought. That makes it very hard to save money for the next drought. That's a legitimate concern. I think Barnaby Joyce is absolutely right. We need to have a proper debate about sustainable agriculture in Australia. Importantly you can't divorce that from water management, which Barnaby Joyce is very astute on; nor can you divorce it from the massive change in global markets for food and food production.
PRESENTER:
So where is it? I think in 2008, the previous Labor Government scrapped the exceptional circumstances program, they announced it in a review of drought policy. Nothing has come of it. The Productivity Commission was quite critical of the previous exceptional circumstances model, but there's nothing else that anyone has put in its place.
TREASURER:
The new scheme starts on 1 July. I think people legitimately have a right to expect that with a new Government - and look we've been in just over three months - you will have another look at better ways to enhance agricultural production in Australia. That's what we're going to do. The last Government didn't have a single farmer in its ranks - not one farmer. This Government has a multitude of farmers in its ranks and a number of farmers in the Cabinet. So we are very aware of the challenges that are being faced but there is no silver bullet to address the challenges that agriculture faces in Australia.
PRESENTER:
One more question, do you support the idea of a rural reconstruction bank? I think Barnaby Joyce wants to explore the idea, Bob Katter has spoken about it for years. Do you see any merit in a rural reconstruction bank? The farmers don't want hand-outs; they actually want someone to help them restructure the debt that they have. They don't want the debt to be written off, they just want it to be restructured.
TREASURER:
Instinctively, you always have a good look at proposals, that's a starting point. You never rule anything in or out, until you have actually seen the details of what is proposed.
PRESENTER:
When Barnaby Joyce brings that idea to you, you will look at this?
TREASURER:
We always look at these things but I want to emphasise, the problem with debt is - the answer to the problem of debt is not to have more debt, and interest rates historically now are at all-time lows. If people are having problems coping with interest rates now, then there is a bigger systemic issue at play, because interest rates now are at an all-time low.
PRESENTER:
I don't want to be boring; I'm just after some further clarity -
TREASURER:
You're asking me to commit to something, Steve, that I haven't seen.
PRESENTER:
The farmers need help now. They want debt restructuring help now.
TREASURER:
They should speak to the people that they owe the money to as a starting point.
PRESENTER:
They're doing that with the State Government.
TREASURER:
They don't owe the money to State Governments. They owe it to their banks. I do understand agriculture. I am familiar, as you know, with Queensland agriculture. I have a property in Far North Queensland, which I should declare.
PRESENTER: Whereabouts?
TREASURER:
Malanda in Far North Queensland. I'm familiar with the challenges that people and Australians face. I also know, for example, that live cattle export prices are at very good levels for farmers who are sending cattle offshore. There are swings and roundabouts in agriculture, all the time. I think it is hugely important that people understand that you've got to try to smooth out the swings and roundabouts but you just can't look at the problems when things are tough, because they can be good.
PRESENTER:
So 70% of Queensland is in drought, despite the fact it's raining on the coastline. We've had a cyclone on the coast.
TREASURER:
A drought is measured in relation to the usual level of water.
PRESENTER:
They're shooting cattle up in Far North Queensland.
TREASURER:
Far North Queensland - where my property is - gets somewhere between 1,400 and 2,000mm a year in rain. Sometimes areas round there are drought declared because they didn't reach that amount of rain, even though they did receive substantial rain. It's measured on what would be the usual level of rain.
PRESENTER:
I don't want to misrepresent you. You don't be doing anything for farmers today, but something will kick in on 1 July.
TREASURER:
Today, if the area is properly drought declared by the State and the Commonwealth Governments, and there are certain criteria for that - I haven't got it in front of me - but if it is declared as it has been under existing programs for an extended period of time, then exceptional circumstances payments kick in immediately. That process, if it is to be under way, it has a usual means of going under way. What I'm saying is that there is a new program established by the previous Government, in partnership with the State Governments, that starts on 1 July. Now, Barnaby Joyce is appropriately looking at these programs. He will come to the Cabinet, we will discuss those programs, but if we are going to make Australia sustainable as an agriculture food bowl for Asia and particularly in a market that is changing enormously in relation to agriculture, then we've got to look at medium and long-term challenges as well.
PRESENTER:
My guest is Federal Treasurer, Joe Hockey. Steve Austin is my name. SPC Ardmona is in serious trouble, yet it seems to reflect what happens to lot to good Australian companies. They are built up by local people and get to a high level of profitability, then sold to someone with a lot of capital, bled dry of profit, money is not reinvested into the company properly, and they eventually either shutdown or ask for Government hand-outs. This is what has happened with SPC Ardmona. I spoke earlier on with the man who restructured it in the 1990s, quite successfully. He says that you as Treasurer would be helping a whole range of Australian businesses by setting a standard or benchmarks for Australian companies. I know you're frustrated about this - when you gave your End of the Age of Entitlement speech a couple of years ago in London, you alluded to this. It's the end of time for hand-outs. We thought you meant for pensions, but it turns out you mean for companies as well. Isn't part of that setting benchmarks for companies and saying this is what we need you to it achieve. Don't come to us with a hand-out. Lift your corporate game then we'll look at things.
TREASURER:
It's not for the Government sitting in Canberra to tell people how to run their companies.
PRESENTER:
But you can set them something to aim for.
TREASURER:
I set the national economic goals.
PRESENTER:
Correct.
TREASURER:
We aim for a growth figure, we aim for a level of unemployment, we aim for a level of inflation, but I'm not going to be in the business - and I hope my colleagues are not in the business - of setting goals for individual companies, or without discussion with the industry setting them for particular industries.
Now, the case of SPC Ardmona is an interesting case, because Coca-Cola-Amatil is an Australian-owned company. It has a market capitalisation of over $9 billion. It is an incredibly successful company; it had a profit of over $215 million for the first six months of [last] year – that is terrific. They paid a lot of money for SPC Ardmona some years ago. I think it was well over $600 million. Even by their own admission, they haven't run it properly. So they came to us, in fact they came to the previous Government and asked for help. The previous Government didn't do anything, it didn't make a decision, didn't want to deal with it. It left it to us to have to deal with the issue, and the bottom line for us was they were asking the taxpayers for $50 million, $25 million from the Victorian Government, $25 million from us, to buy new plant and equipment in their factory. So taxpayers' money would be buying new plant and equipment in the SPC Ardmona factory so that Coca-Cola-Amatil could make a larger profit.
PRESENTER:
Is it money they should've invested when they were making the profit?
TREASURER:
That's a starting point, is it not? How many business people who are listening to you today would say "I would love the taxpayers to buy me a new truck for my plumbing business or to buy me new equipment?". This is not the proper use of taxpayers' money and that's the decision the Cabinet came to. I notice the Labor Party says "give people the money for that sort of thing" well that's why they got all the economic parameters wrong.
PRESENTER:
That's the corporate side. Is it true that the workers negotiated nine weeks' paid annual leave at SPC Ardmona?
TREASURER:
I haven't looked specifically at the enterprise agreement, I was interested in the Financial Review today, some of the terms and conditions are listed there. If that is correct, then that is astounding.
PRESENTER:
We heard about this some time ago. What often seems to happen here is that the corporate side drops the ball and the union side seems to be able to negotiate highly lucrative arrangements, which is what a union is for. But the end result is, I think it's what Gerard Henderson calls "the industrial relations club". The employers are just as culpable as the unions in the slow death, the slow strangling of these good Australian companies that somehow think they're not in the world that everyone else has to deal with. They all end up coming to you or whoever is the Treasurer, they did the same thing with the previous Treasurer – Ford, Mitsubishi, Holden.
TREASURER:
You're absolutely right
PRESENTER:
It's the industrial relations club of the employers and the unions seem to have this remarkable ability to run down good Australian companies.
TREASURER:
Ultimately if there is an agreement, two parties willingly agree to the terms and conditions. Now, Toyota, for example, has now said to the AMWU that "We need to go back to Tokyo and make it clear that we are prepared to undertake workplace reform in Australia, if Tokyo is going to continue to subsidise our operations". Toyota exports, I think, around 70% of their production to the Middle East. At the moment, their plant closes for 21 days - 21 days over Christmas. Well, self-evidently, the Middle East does not close over Christmas. They still want motor vehicles. And Toyota legitimately has gone back to the workers and said "Instead of closing for 21 days, can we just close for 10 days, because we need to continue supply if we get this guaranteed market in the Middle East?". The AMWU took them to court and said "No, we want to stop this". So they're biting off the hand that feeds them.
PRESENTER:
So you agree with Gerard Henderson's argument that there is an industrial relations club in Australia that slowly strangles Australian companies?
TREASURER:
Ultimately it comes down to the partnership between employers and employees. And if that is what they negotiate, than please do not come to the Government asking for other taxpayers' money when those agreements fail. I say to you, emphatically, everyone in Australia must do the heavy lifting now. The age of entitlement is over. The age of personal responsibility has begun. We need to help those people, who are most vulnerable in our community. That is our duty. We will do that, but we can only do that on a sustainable basis. It can only be done if everyone who has the capacity to lift, does indeed lift.
PRESENTER:
Forgive me for pushing this but that means Gerard Henderson's argument is right, that there is an industrial relations club in Australia and it's the cause ...
TREASURER:
I can't pass commentary on Gerard Henderson's definition of a club. I have seen lots of clubs over the years and I think it was Groucho Marx who said "I don't want to be a member of a club that would have me as a member".
PRESENTER:
Steve Austin is my name. Federal Treasurer, Joe Hockey is my guest. You believe in a completely free market?
TREASURER:
No, I'd love to see free markets, but I also recognise there needs to be safety nets.
PRESENTER:
Can you tell me who gets caught? This is an old argument… [inaudible] David Gonski won't suffer from the loss of SPC because he's a wealthy man and he can get a job easily.
TREASURER:
Firstly Steve, I don't accept the day of SPC Ardmona are over. That is a starting point.
PRESENTER:
Is there something you can tell us?
TREASURER:
No, I can't. But I can say to you, for example, that people have been saying "Dairy farming is too hard in Australia". Well, just look at the incredible prices paid for an investment in dairy and cheese making production in Australia in recent weeks and you will see agriculture production is alive and well in Australia. It just needs to be well managed.
PRESENTER:
Before I let you go, I just want to ask you one thing about this organisation. Isn't it wasteful to have another review of the ABC, when you already have a KPMG report, which I don't think was ever released publically, shows the ABC is a very efficient organisation. Why have another review?
TREASURER:
Well, Malcolm Turnbull quite properly is the new Communications Minister, and is someone who has an immense understanding of communications. He has initiated this review. He looked at the efficiencies of SBS, and obviously wondered how the ABC could do things better. I want to look at every aspect of Government. I have an obligation as a new Treasurer - having inherited deficits from Labor of $123 billion, and debt rising to $667 billion - if I have got around $1.5 billion going to ABC, SBS and NITV, than we have an obligation to have a look and see if we can do things better.
PRESENTER:
But you've got a KPMG report
TREASURER:
I haven't seen the KPMG report
PRESENTER:
No one has – it has never been released publically.
TREASURER:
It was obviously initiated by the previous Government. I don't know who initiated that report. Steve, we can all do things better. We can all be more efficient. In the modern world, when we are using other people's money, be it taxpayers or shareholders money, we will be constantly under review.
PRESENTER:
I have been in this organisation since 1987.
TREASURER:
And you've seen the wonderful construction of these beautiful new premises.
PRESENTER:
And since, 1989, I have not known a year when local radio was not cut back. One of the things I've noticed is the ABC has been able to absorb the entire arrival of the online world. I was here when Bob Johnson developed www.abc.net.au, with his team of people.
TREASURER:
Which is an incredibly comprehensive website.
PRESENTER:
We're now absorbing ABC News 24. I have worked in private enterprise. This is the first Government funded organisation – it' the most efficient organisation I have ever seen in my life - to the point where dangerous corners are cut, for the sake of money. The Government must have some inkling of where we can save money.
TREASURER:
You are in ABC local radio. And I love my local radio in Sydney. Even News Radio and a range of others.
PRESENTER:
Do you think we are biased?
TREASURER:
Well – one question at a time. So it doesn't mean there aren't efficiencies that can't be made in other parts of the organisation. As I said to Tony Jones on Q&A before the election "Can you put your hand on your heart and say to me to me that across the entire ABC organisation that there is no waste?", and he couldn't. It is not about running a jihad against any particular part of the organisation, or any policies of the organisation. It is how can we get the best value for taxpayers' money, whilst the ABC retains its editorial independence. Now you asked me about bias, there have been moments when I have changed channel because I have been frustrated at the ABC. There have been moments when I have clicked on other websites, when I have been upset with the ABC. There have been moments where I have rung Mark Scott to say "this is outrageous". That was before the election, and there was one occasion after the election. But I also recognise that the ABC is not controlled by Members of Parliament, nor should it be. The editorial independence of all the media - whether it be News Limited, Fairfax, the TV's, - I think the editorial independence of all the media, including the ABC is something for those organisations.
PRESENTER:
I'll let you go and work the streets of the electorate of Griffith, thanks very much for coming in.
TREASURER:
Well it's great to be here, and I'm doing everything I can for that great guy Bill Glasson too.
PRESENTER:
Joe Hockey, Australia's Treasurer.