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Joe Hockey discusses economic growth -

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The Opposition's Treasury spokesman, Joe Hockey, joins Lateline to discuss Australia's economic
growth and whether or not the Government's stimulus spending is responsible.


LEIGH SALES, PRESENTER: Now back to our main story - Australia's economic growth. Wayne Swan claims
it's all due to the Government's stimulus spending but the Opposition certainly doesn't share the
same view.

The Shadow Treasurer Joe Hockey joined me earlier in our Sydney studio.

Mr Hockey, thank you for coming in.

JOE HOCKEY, SHADOW TREASURER: Great pleasure, Leigh.

LEIGH SALES: Today's growth figure is three times what the market had been anticipating. Wayne Swan
says that strong performance is due to the Government's strong stimulus package. Correct?

JOE HOCKEY: Of course Wayne Swan would claim that. What a surprise.

No, he is not correct. And there have been a number of factors that have delivered Australia a very
strong economic performance. Firstly, unquestionably the Government inherited a very strong
economy. We had economic growth last year as the world economy was hitting an iceberg, economic
growth of around 4 per cent, unemployment of just 4 per cent, and the Government had $40 billion in
the bank with no debt. That's a great starting position.

Secondly, we had no massive financial collapses. In fact, our banks went into the top 12 performing
banks in the world.

Thirdly, even today, Leigh, the Government has stronger terms of trade than the last days of the
Howard Government. And Australia was the beneficiary of having an exchange rate that went from
parity with the US dollar to 60 cents - that delivered a windfall.

Fourthly, you had monetary policy. The Reserve Bank cut interest rates more aggressively than any
other country in the world bar New Zealand, and in Australia because of variable home loan rates it
went straight through to people's hip pockets.

LEIGH SALES: Surely all of those factors were secondary to the billions and billions of dollars
that were pumped into the economy?

JOE HOCKEY: No in fact they weren't. They were the main factors. But of course the Government's
massive spending program had to have some impact and it did. But as today's GDP numbers reflect,
the fact is that a lot of the money hasn't even hit the economy yet. All this school funding hasn't
yet hit the economy. We've had the cash splash which has hit and unquestionably the tax rebate for
equipment has hit as well. But the fact of the matter is most of the stimulus hasn't hit the
economy yet and what it is is proof that the Government has committed to too much spending.

LEIGH SALES: On your first point, that the Government inherited a strong economy; on that point,
around the rest of the world there were economies that started in good shape and economies that
started in bad shape and they've all been pummelled by the global financial downturn. Australia has
withstood that better than anyone else. Therefore, doesn't the Rudd Government's management of our
economy deserve some credit?

JOE HOCKEY: Well in fact, Australia started in a far better position than almost anyone else.

LEIGH SALES: Other countries started in good positions as well.

JOE HOCKEY: Nothing like Australia's position. Obviously having the most significant benefit of the
terms of trade, favourable terms of trade and China's economic stimulus. I mean, I heard tonight a
societe generale expert from Hong Kong identify that China's very focused fiscal stimulus - massive
expansion program - helped to deliver a massive commodity boom to Australia during this period and
he discounted the claims of the Rudd Government that they had made a difference.

If anything, the problem is that all the money the Rudd Government has spent is leaving us with a
burden that is going to impair our economic recovery over the next few years. We've now got seven
years of deficits for what appears to be five minutes of economic downturn with one negative
quarter and it's a massive price to pay for a new school hall.

LEIGH SALES: How far should the stimulus be wound back, then, in your view?

JOE HOCKEY: It should be wound back significantly.

LEIGH SALES: What does significantly mean?

JOE HOCKEY: When you actually look at the entire package that the Rudd Government rolled out from
the Budget in 2008, they committed over $100 billion of new extra-spending initiatives over the
forward estimates. Forty per cent of that money kicks in after the 1st of July next year. And
Australians need to ask themselves: why will interest rates go up, why will interest rates go up
whilst the Rudd Government is continuing to spend money?

LEIGH SALES: So does that mean that you want, that 40 per cent of funds, to be cancelled?

JOE HOCKEY: We want the Government to take the same approach to all of its spending that it has
taken in the last week, where in the blink of an eye it was able to identify $1.3 billion in
savings in pink baths and in social housing, that instead of taking off the massive debt burden
it's leaving it's re-channelling into a funding shortfall in its school hall program.

LEIGH SALES: I want to try to pin you down specifically because it's not enough to just say, they
have to wind it down. What areas do you want them to cut then?

JOE HOCKEY: You have to look everywhere, across the whole budget.

LEIGH SALES: What are your suggestions?

JOE HOCKEY: Every time I suggest something they steal it. I am not going to give it ... if the Rudd
Government wants to engage the Liberal Party as consultants on the economy, we're available to

LEIGH SALES: But you have to convince my audience that you have good ideas so they will vote for
you in the future. So where should the money be cut?

JOE HOCKEY: Before they go to lodge their ballot paper they will have a very clear understanding of
where we will take the Australian economy and what we will do with the Budget. But let me tell you,
over the next four years the Government is going to spend over $1.2 trillion and if someone were to
suggest that there's not $5 billion or $6 billion of savings over those forward estimates they're
kidding themselves. They're there. The Government can find them. They've got all the resource of
finance, all the resource of Treasury.

My main concern is they inherited an economy where the Government was spending 24 per cent of GDP,
they've taken it up beyond 28 per cent of GDP, but by 2013 we 're still over 26 per cent.

LEIGH SALES: If you think the Government needs to cut spending then presumably you would also hold
the view that the Reserve Bank should raise interest rates sooner rather than later?

JOE HOCKEY: Well, the Reserve Bank would not have to move so quickly on interest rates if there
wasn't so much fiscal stimulus. It's pretty obvious. We still have amongst the highest cash rate in
the world - central bank cash rate in the world. The question is: why didn't the Reserve Bank go
further than 3 per cent? Because they had enormous capacity to do so, most of the developed world
is at zero per cent or the equivalent, or they have what they call quantitative easing where
they're printing money.

The Reserve Bank didn't go that far and it was because the Government had the second biggest fiscal
stimulus in the developed world - second only to the United States which is in far deeper trouble
and had massive banking collapses. This Government has spent so much money. It is second biggest in
the developed world.

At the same time, the Reserve Bank cut interest rates second only to New Zealand in depth, 4.25 per
cent, a massive cut in interest rates and in Australia - because most people on variable rates, the
transmission factor to the average household has been far more significant.

So Australia, arguably, overreacted - massively overreacted but the problem we have is that that
overreaction, with the Reserve Bank it might be corrected and it might be arguable that the Reserve
Bank acted entirely appropriately to go to 3 per cent but the Government has got seven years of
spending, Leigh. Seven years of deficits to fund for this package.

LEIGH SALES: You were asked today about John Della Bosca and you didn't want to talk about it in
detail in courtesy to his family. That's fine. So let's put the specifics of that aside. But can I
ask you generally what do you think about politicians' private lives being exposed when there's not
a rock-solid case of conflict of interest or breach of duty?

JOE HOCKEY: Look, I've always aspired to be a minister of the Crown, not a minister of the church.
And I think morality is something that belongs to an individual but as a leader you have a
responsibility to behave in an appropriate way. And quite frankly what that appropriate way is, is
a matter of judgment. It's for the public to judge, it's also a matter of judgment for the
individual. And I think, you know, when someone's life is exposed like that, my first thought is
always for their family, for their children. Their children didn't ask for that. They didn't sign
up to it. Even their wives or husbands didn't sign up to it.

I think sometimes there's an element of voyeurism in our community that is unnecessary. Having said
that, if someone is distracted from doing their job, then they shouldn't be in that position.

LEIGH SALES: Reading various blogs and websites today, though, some people make the argument that
issues like infidelity should be reported because they go to the heart of a person's character.

JOE HOCKEY: Well, I am not so sure about that. I think there are lots of ways to judge a person's
character without prying into what happens in their home.

LEIGH SALES: Are you worried that we're seeing something new in Australia in the way that
politicians lives are reported, that we could be going down that British press model, where pretty
much anything in someone's private life is open slather?

JOE HOCKEY: In politics you have to assume that your private life is going to become public. You're
asking me whether it's right or wrong, I suppose the community will form a judgment on that.

LEIGH SALES: Do you think politicians have always had to make that assumption, or is that something

JOE HOCKEY: You can't go into public life without expecting that everything will become public. And
whether that's right or wrong, others will form a view.

I would hope that you always judge a person on what they do in their professional life and how they
live their lives is a matter for them and their God and their family.

However, having said that, I think what's happened with John Della Bosca is the state of NSW has
been in despair for a long period of time. It has now turned to anger. And quite frankly I cannot
believe that Nathan Rees hasn't got the courage to call a general election in NSW because finally
the people of NSW have had enough.

LEIGH SALES: If I can just stick with this issue about the way politicians are reported, the
private lives of celebrities and Hollywood stars have always been open slather. We heard today that
the Queensland Premier Anna Bligh is going to be going on Celebrity Master Chef. Is part of the
problem here that there is increasingly a blurring between politicians and the type of people
traditionally considered celebrities?

JOE HOCKEY: Absolutely, absolutely. Look at the whole Kevin '07 campaign. I mean, does anyone
really believe that Kevin Rudd is something who is really hip? I mean, it's not his nature. Nor was
it John Howard's nature. Different people have different natures.

LEIGH SALES: But because Kevin Rudd did that, does that mean that his private life should be -

JOE HOCKEY: No, no and whether it's Kevin Rudd or John Howard or anyone else, I think they are
perfectly entitled to have their privacy. For example, in the case of Kevin Rudd, my view has
always been consistently that his family is off-limits and I take that view very strongly. And in
politics it should be the case.

You know, quite frankly you always have to try to debate ideas and even though we all are guilty
from time to time of attacking the person on the other side, I think it's important to recognise
that you've got to try to get back to ideas and debating policy. And I think that's a measure of
good politics rather than personality politics.

LEIGH SALES: Are politicians scared to criticise the media for the way it sometimes reports these
things for fear it could make one's self a target?

JOE HOCKEY: Well I saw Peter Costello was very critical of the ABC the other day.

LEIGH SALES: I am coming to that.

JOE HOCKEY: Full of political bias! Look, there is a reluctance among politicians because, you
know, you can have your shot today and journalists always have the right of reply. They've always
got control of the camera or the microphone. Having said that, I've had enough blow torches in my
political career over the years to recognise that the sun always comes up the next day. And you can
have some terrible front pages, cartoonists can be the most brutal of all players, but the sun does
come up the next day.

LEIGH SALES: Briefly, a 10-year study into media bias was released by the Australian National
University today and it found that ABC TV News has significant slant towards the Coalition. Do we
give you an easy run?

JOE HOCKEY: You're always too easy on us! Look Leigh, it is I believe audiences are very good at
judging these things.

LEIGH SALES: Do you agree with Peter Costello that the ABC's hostile territory?

JOE HOCKEY: No, I think overall there are some people who carry a bias. There are some people that
inadvertently carry a bias. It is very hard to be very even-handed as a journalist, I understand
that. But a good journalist always gets their guest to say things that they don't want to say. And
I find that the most difficult interviews for me are the relaxed interviews where I am not on my

LEIGH SALES: Hopefully you've made a few stumbles tonight.

JOE HOCKEY: Sure. If I have, I doubt the ABC will pick up on it.

LEIGH SALES: Joe Hockey, thank you for joining us.

LEIGH SALES: Thank you, Leigh.