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Transcript of interview with Fran Kelly: ABC Radio National Breakfast: 27 July 2015: political donations; Labor Party Conference; marriage equality; ETS; electricity prices; 'Buffet tax'; Taxation White Paper; GST
HON J.B. HOCKEY Treasurer
TRANSCRIPT RN BREAKFAST MONDAY, 27 JULY 2015
Federal Treasurer Joe Hockey joins me in the breakfast studio, Treasurer welcome to Breakfast.
Good to be with you Fran.
I will come to climate change and tax reform in a moment but can I ask you first about the issue
of political donations, because the Fairfax newspapers this morning have revealed that Clubs
New South Wales donated $20,000 to Kevin Andrews’ electorate fund. This was when Kevin
Andrews was drafting Coalition policies on pokie reform before the 2013 election. Is it
appropriate - was it appropriate for the Shadow Minister on pokie reform, Kevin Andrews, to
receive a donation from one of the most influential gaming groups in the country?
Well he didn't receive that money personally, so let’s…
It went to his electoral fund.
Well, let's be very clear about it. He did not personally receive the money...
No, no not in his pocket…
It went to his local campaign fund. All the information that I saw on the front of the Herald
today was in fact public information. So there has been public disclosure and the policy that
went to the last election was disclosed two years before the last election. So the electorate had a
good look at our policy on that beforehand. Having said all of that, this is an issue that the
Special Minister of State, Michael Ronaldson, discusses regularly with the Labor Party. I know
Gary Gray moved a particular motion I think at the Federal Conference of the Labor Party on
the weekend. The parties are always in discussion about it, but the bottom line is if you decrease
private fundraising, then you have to increase taxpayer funded election campaigns, and there’s
Or wind back how much you spend on the campaigns I guess.
Well, we’d all love to do that Fran. I can tell you we’d all love to spend less. But when you’ve got
85,000 voters per electorate, to spend $2 per voter either in a letter, or two letters or brochures is
a very easy thing to do.
But it is a serious issue at the moment and has been for a while and we have had stories on Four
Corners about mafia links with political donations. I think, you know, it looks bad. Of course
Kevin Andrews has declared that the Coalition policy absolutely was not influenced by these
donations, but the thing is people can't make up their own mind because they don't know at the
time. You mention Gary Gray's proposal at the ALP Conference. The first part of that was for
real-time reporting of donations and contributions. Is that a good idea? So when the donation
happens we can all know about it?
Look Fran, these are the issues that come out before parliamentary committees, there’s been
inquiries on it…
Is it a good idea?
You are asking me for an opinion about something that is not in my particular area of
responsibility. I am in charge of the economy, I’m in charge of the tax system. I'm sure we can
answer questions in that regard, but please feel free to direct questions to the Minister of State.
But, political donations though, it’s an important part of our democracy. Even if donations
ended today, the influence of the gambling lobby for instance would still exist. Some Liberal
Party officials have been linked with the Australian Hotels Association. The New South Wales
Chief Executive of the AHA Paul Nicolaou has remained at the helm of the Liberal Party’s
Well Fran we can keep talking about this the whole interview. I can point out to you that we just
saw the biggest donors to the Labor Party control the policies of the Labor Party over the last
three days. The unions were the ones that delivered control for Bill Shorten on a turnbacks
policy that is now compromised by the left in relation to refugee programs. You've had the
Labor Party have mixed messages on gay marriage now as a result of the weekend. You can see
the influence of the fee paying and funding union movement on the rank and file of the Labor
Party. If you’re suggesting the same applies in the Liberal Party I would say to you absolutely
not. The Liberal Party cannot be bought.
Let's go to the Labor Party Conference and some elements of it before we go to tax reform. You
mentioned marriage equality, same-sex marriage. There won't be a binding vote for Labor MPs,
they will stay with a conscience vote. We don't know what’s going to happen in your party. Do
you support a conscience vote on marriage equality?
Well, these matters are matters for our party room. Our party room decided back in 2006-07 that
marriage was between a man and a woman. I remember that - it was particularly in relation to the
ACT where there was a proposed change. Now, if there is to be a free vote, if there is to be a
change of policy, it is a matter for the party room and the party room has to make that decision.
It is not solely…
I’m just wondering what you think, you’re a senior Liberal politician obviously, a senior member
of this government. Can you see why there would be any reason not to allow a free vote on this?
Well, I will leave that to the party room. I am a member of the party room. I will have my say in
the party room as will everyone else should it come up.
Let’s go to some other issues. On the sidelines of the ALP Conference, frontbencher Joel
Fitzgibbon was almost taunting the Government to mount a scare campaign over Labor's
climate change policy. He says a scare campaign would be fine when it comes to an ETS as far as
he is concerned. Does the public deserve better than a re-run of your Whyalla wipeout attack on
Labor’s proposed ETS?
Well Fran, it’s Joel Fitzgibbon’s words that echo loud here. He said it's a tax…
He said you can call it a tax if you want to mount a scare campaign.
And Bill Shorten said it's definitely not a tax. So, one of his own senior frontbenchers has belled
the cat, recognised an Emissions Trading Scheme is in fact a tax, and Joel Fitzgibbon has a long
record of being one of the few truth tellers in the Labor Party and he is being fair dinkum. Of
course it's a tax, it increases the cost of electricity and that is its design, it is meant to increase the
cost of electricity. Bill Shorten wants to increase the cost of electricity and he's doing that at the
next election. Now…
You're a Treasurer. You are the Treasurer of this country. Is a market-based mechanism with a
floating price, not a fixed price model, is that a tax?
When it has to be applied in retail prices, of course it is. Because it's a government mandated
So when you proposed it in government it was a tax then?
Hang on, the fact that it floats, the fact that it floats, simply means it's a floating tax, but it's
applied and it flows directly through to electricity prices. Now, under freedom of information,
the Treasury released documents last week that showed that electricity prices have come down
$550 per household as a result of us abolishing the carbon tax. Labor wants to reintroduce a
carbon tax. It's all part of their emissions reduction program. Now, we will be announcing an
emissions reduction program without a new electricity tax.
Because once you supported an ETS and now you don't? You, Joe Hockey.
Well, because we have made significant strides forward in other areas to reduce our emissions.
And therefore I am satisfied that we can reduce emissions, carbon emissions, without hurting the
Australian economy with a new electricity tax which is what Bill Shorten wants.
It's 16 to 8 on Breakfast and our guest is Federal Treasurer, Joe Hockey. We’re talking taxes. Just
one last question on the ALP Conference, your view on the so called ‘Buffet Tax’? A new
minimum tax rate for anyone on more than $300,000 a year, proposed by Anthony Albanese at
the Conference who says it’s about fairness and not the politics of envy. Is there merit in this
Well, I would want to consider it in the context of our current Taxation White Paper process,
and I say to you why. I’m not saying it is particularly a good idea because I want to see the details
that Mr Albanese is - apparently has in his hands. But I would say to you this; fifty per cent of all
income tax in Australia is paid by ten per cent of the working population, fifty per cent. It is by
far our largest tax, personal income tax, and ten per cent of workers pay half of it. If you don’t
get the formula right, you’re going to see mobility in that ten per cent of the workforce where
they can go and work overseas in a way that our parents and grandparents could never have
imagined, and this is one of the challenges going forward on the taxation system. How do we
ensure that we have a fair taxation system where people pay their fair share of tax, but at the
same time we ensure Australia is competitive. This is the balancing act the Prime Minister and
the state leaders are trying to achieve at the moment.
And as you look at that, trying to get income tax cuts so you can put back that money from
bracket creep. The Tax Office…
Well the reason why we’re doing that Fran, why we do need to give back income tax to people
on middle income, is it starts to slow the Australian economy when people move into higher tax
brackets. It’s a disincentive for them to earn more money. Particularly when it interrelates with
the welfare system. So…
So you’ve got to pay for it that’s the issue, you’ve got to rearrange. This ‘Buffet Tax’ is one idea
for that, the Tax Office apparently says 75 Australians earning more than a million dollars paid
no tax in 2011-12…
Well it depends how it’s structured. I want to find out more about it, because the bottom line is
of course Labor had six years to deal with it, they didn’t. Right, okay, they’ve raised it now, I’m
happy to look at it. But, if it means that they’re putting money into new investments, maybe
start-up investments, maybe innovators, maybe they’re buying new plant and equipment for their
businesses, I don’t have the answers to that, but we will consider all of that in the context of our
Taxation White Paper.
What about as you come up with a way to pay for these income tax cuts, will you look to the
GST? Will that be the trade-off? You’ll go to the next election saying the GST is going up but
middle Australia is going to get tax cuts?
Well, I don’t want to see tax reform simply end up as tax increases…
Well that would be a trade-off [inaudible].
If you have trade-offs and the end result is that you’ve got a taxation system that has lower,
simpler and fairer taxes, that’s a good outcome. It’s a good outcome because it means more jobs.
But if you simply increase taxes to meet the increased level of expenditure by governments, you
are going to see the Australian economy pay a price and people pay a price with fewer jobs into
the future. So what we’ve got to do is get the balance right. We’re having a detailed discussion
with the states and territories about it, but there’s still much work to be done.
But the states are pretty clear, we had South Australian Premier Jay Weatherill say it here and I
know he said it around the table at the tax retreat. That the states as Mike Baird said, need
billions of dollars more to fund the health gap that is emerging and the GST is their answer to
that. Jay Weatherill says the proceeds of that GST increase if there was one, should be held
exclusively for health costs.
Well it’s no surprise that state leaders may say we’ve got a spending problem and we want you to
raise the taxation revenue…
Well they’ve got a health funding problem because you’ve taken $80 billion out of their budgets.
No, no, no, I don’t accept that at all. There’s two issues there. Number one is we spend more on
health than the states, each year, so we have the same challenge in health that the states have.
Let’s be fair dinkum about it, we cover the aged sector…
But you’re trying to shift that balance, that’s the whole point of the discussion isn’t it?
No we’re not shifting it. Kevin Rudd had bonus payments to the states, we said those bonus
payments were not properly funded, and they weren’t funded at all. We honoured that
commitment for four years, we met that commitment. But we have similar challenges, we have a
National Disability Insurance Scheme that Labor introduced, that we support, that is not fully
funded for example. So there are lots of pressures - spending pressures for governments.
Governments need to be more careful with the way they spend taxpayers money, but at the same
time you can’t just keep defaulting to increased taxes because ultimately, fewer and fewer people
pay the increased taxes and ultimately, those people are going to get fed up one day and look at
other ways to try and increase their wealth outside of Australia.
Treasurer, just finally and very briefly if you can. The leaders gave in principle support last week
to lowering the GST threshold for goods bought from overseas, it’s currently $1,000. How low
could it go, could it be as low as $20?
It could, it may well go to zero as well, so we are currently discussing the matter. It is something
that the state treasurers and myself have been working on for more than twelve months. I’ll tell
you why Fran, the dynamics have changed. So previously, the challenge was how do you impose
the GST when it comes across our borders into Australia? That was going to be incredibly
clumsy and logistically a nightmare. What we’ve identified is a new way through Australia’s
leadership of the G20 to be able to impose the GST on the supplier overseas. Other countries
have passed those laws as well. So now we can go to the Amazons, we can go to the various
retailers overseas and say, you have to apply the GST to goods that you are selling into the
Australian market, and they will do so. And that’s how we’re going to collect it.
Joe Hockey thank you very much for joining us.