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Transcript of interview with Fran Kelly: ABC Radio National: 23 October 2012: MYEFO 2012-2013



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TRANSCRIPT

THE HON JOE HOCKEY MP

SHADOW TREASURER

RADIO NATIONAL BREAKFAST TUESDAY 23 OCTOBER 2012

E&OE…………………………………………………………………………………

FRAN KELLY:

Joe Hockey, good morning.

JOE HOCKEY:

Good morning Fran.

FRAN KELLY:

Joe Hockey, delivering a surplus this financial year will require something like a $47 billion turnaround, one of the biggest fiscal corrections we’ve ever seen. Now, if the polls stay as they are, you could be Treasurer this time next year. Are you happy that Labor is doing all the heavy lifting?

JOE HOCKEY:

Well, they’re not doing the heavy lifting because of the $47 billion turnaround, more than $30 billion is actually increased taxes and there’s another $7 billion that comes from things like special dividends out of Medibank Private - where for the average policyholder it’s an extra $250 being taken out of Medibank Private by the Government - $500 million out of the Reserve Bank, $200 million out of Australia Post…

FRAN KELLY:

So would you prefer the Government not do that and instead cut spending more? Penalise…

JOE HOCKEY:

Yes, that’s right. They’ve got to cut spending. Absolutely. Absolutely. For example, we said that the School Kids Bonus was wasteful and yet the Government didn’t believe us, they

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wouldn’t accept that and we said that there would not be the revenue there from the mining tax that the Government was budgeting and they laughed at us and they scoffed at us. Now they’ve revised down the mining tax again so as Ken Henry - the architect to the original mining tax - says it’s hardly worth the effort. Well it’s damn right that it’s not worth the effort, it’s actually creating some sovereign risk across Australia and it’s an insidious tax.

FRAN KELLY:

So you can’t argue though that the global economic outlook is having an effect on our budget situation. Commodity prices have plummeted and the Government is responding to that. If you think the Government should have cut more, you’d be supporting their cuts to the Baby Bonus, the paring back of the private health insurance rebate, their cuts to higher education research.

JOE HOCKEY:

Well we don’t support blanket cuts because the Government has determined that’s the way they are going to do it. Part of the deceit from the Government has been Wayne Swan’s claim that this is not going to affect lower income people. There are a million Australians earning $24,000 or less that have private health insurance. I don’t see that as middle class and they’re overwhelmingly people who are trying to pay their way in their older years. The changes to the Baby Bonus are not means tested changes, they’re just blanket changes. So no matter how poor your household is, there’s going to be a reduction in the payment. So, frankly, I think the suggestion that it is about middle class welfare is actually inaccurate, because they are widespread cuts, but there’s no sense in it…

FRAN KELLY:

But you just said the Government needs to cut harder…

JOE HOCKEY:

But they are also deferrals Fran and this is the thing. For example, the Government says it’s not cutting Trade Training Centres, which by the way we said we’d abolish. They’re not cutting Trade Training Centres, they’re just ‘rephasing’, ‘realigning’ it and that is $304 million. So they’re not actually cutting in some circumstances.

FRAN KELLY:

Ok, but just trying to get to the heart of this then. I mean you’re the one who earlier this year gave a speech declaring the age of entitlement is over, suggesting a Coalition Government would look at cutting some welfare, some entitlements. Let me ask you again, given that speech, given that sentiment, given the pressure on the Budget, will you support changes announced by the Treasurer yesterday, cuts to the Baby Bonus, the paring back of the private health insurance rebate, when they come into the Parliament?

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JOE HOCKEY:

Well we have always supported the private health insurance rebate. We have always supported it because it is an incentive for people to invest far more than the rebate in their own private health cover. So to lump that in as an entitlement…

FRAN KELLY:

It’s a very costly programme, so do you support it holus bolus to never touch that?

JOE HOCKEY:

No, Fran, to be in a position where you say you want to cut back entitlements, Tony Abbott and I said we will not keep the School Kids Bonus. That is an example. When the Government started handing out cash and some people out there were cheering about it, we said this is something we cannot support and we will repeal it. Now that is an example of entitlement, where instead of it being a directed payment to compensate and the people have to show receipts associated with school, the Government in a political year just says ‘Ok, we’re just going to send out cheques to people, whether they want them or not’. Well that’s an entitlement.

FRAN KELLY:

What about the change that would require businesses to pay their company tax in monthly and not quarterly instalments? You’re critical of that, is that a change you’d reverse in Government?

JOE HOCKEY:

Well we’re still yet to find out what the impact of this is. We’ve been speaking to the business community…

FRAN KELLY:

Well you’ve been really critical of it.

JOE HOCKEY:

Well understandably Fran. Everyone has because no-one knew it was coming. I mean the Government’s has a Henry Review into taxation. It’s had a whole lot of tax hand holding summits. It has a Business Tax Working Group, which meets regularly now to identify changes to business tax. Not once has the Government raised this anywhere that anyone can find. This has come out of the blue and it is going to affect cash flow, it is going to affect the capital costs of business and it’s not just the impact on them, it’s the impact on shareholders. I’d say to you Fran, if you and I were asked to pay 14 months of mortgage repayments by our banks instead of 12 months it would affect us. Well, it is going to affect business in Australia.

FRAN KELLY:

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The fact is the Commonwealth has had to write down more than $160 billion in revenue since the start of the GFC. That is a massive adjustment to make.

JOE HOCKEY:

It’s a meaningless figure, Fran. Seriously, if we go back to before the Asian Financial Crisis then the Howard Government would have had to write off hundreds of billions of dollars of revenue, if we go back to pre-depression.

FRAN KELLY:

But we’ve been through this before, you cannot compare the GFC in scale and the impact of that [inaudible] globally.

JOE HOCKEY:

At what point in time are you going to say these are the numbers we’re dealt with? That is a meaningless figure that Labor keeps rolling out because we are five years away from the Global Financial Crisis, Australia has been blessed because of our minerals and resources and the state of the budget inherited from the Coalition by Labor. So, I do not cop that Wayne Swan is going to keep using this as an excuse. He frames a new budget every year. The new budget has new assumptions every year. Each of the last two years Fran, I have said that the expectations about the terms of trade are heroic. I get criticised in my Budget-in-reply speech when I say the Government has been overly optimistic about the state of revenue and then people criticise me. And then what does Wayne Swan do? He revises it down. So, last year instead of having a forecast $22 billion deficit the Government had a $44 billion deficit. Five months ago…

FRAN KELLY:

If the forecasts are heroic and that’s been your view and I think it’s still your view… The Government here, I think there’s a slight change of language suggesting that you know, it won’t necessarily keep cutting if the global outcome keeps deteriorating. It may be prepared to give up the surplus eventually. It hasn’t said that outright but if that was the position the Government came to because of the deterioration of the global outlook, would you support that decision?

JOE HOCKEY:

Well, the Government has got to stop making unfunded promises. This is the problem, they’re trying to appease everyone. They’ve made $120 billion in new promises, on Gonski for educational reform, and last night Peter Garrett on Q&A said the same, ‘we’re absolutely committed to Gonski’. That’s $6 billion a year. The National Disability Insurance Scheme, a great concept, but what is the Government doing? It raises expectations and it puts no money towards it other than a billion dollars, which is nothing compared to the $8-10 billion a year it’s going to cost.

FRAN KELLY:

But this is the role of Government to look forward and look at major reforms, isn’t it?

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JOE HOCKEY:

Yes, but it’s making promises it cannot deliver. This is the problem. They’re building monuments to their own Government without actually finding a way to pay for it and now when they can’t pay for it they have, you know, put together a hodge-podge document like yesterday, fiddle with the numbers and try to reassure everyone it’s all going to be fine, ‘don’t look here, there’s a train crash here, just move on’. I mean it is, it does leave me sleepless, if I’m to become the Treasurer at the next election, if that’s what the Australian people decide, I keep thinking to myself, this mob is just making life harder and harder every day. And the amount gets bigger and bigger.

FRAN KELLY:

Joe Hockey we’ll leave it there. Thank you very much for joining us.

[ENDS]