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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

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HON J.B. HOCKEY Treasurer




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

fundraising body.


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.


Thanks Fran.