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Transcript of interview: MTR: 20 January 2011: flooding; insurance; return to surplus



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Joe Hockey, MP Shadow Treasurer Member for North Sydney

INTERVIEW - MTR WITH STEVE PRICE - THURSDAY 20 JANUARY 2010

20TH JANUARY 2011

E&OE………………………………………………………………………………………

Subject: Flooding, insurance, return to surplus.

STEVE PRICE:

Joe Hockey is on the line, good to talk to you again.

JOE HOCKEY: Good day Steve.

STEVE PRICE:

These floods of course have caused massive damage in Queensland, $20 billion they have put the price tag at, but they haven’t even added it up yet. I’ll get to what the opposition thinks should be the plan to pay for the rebuild, but what did you see there and how bad was it?

JOE HOCKEY:

I was just helping out a mate in Rochester and, as you know, the whole town of Rochester went under and this mate of mine has his home on the Campaspe River and he got in a few hours before we got there and back into his house. It is inconceivable to people who haven’t seen the impact of flood on a house to understand exactly what it does. Just take a picture of your house as it exists at the moment - bed sheets and family photos and food in the fridge - everything has to go out. You are piling it out on the front for the tractor to come along and pick it up and put it out in the dump.

STEVE PRICE:

All your food?

JOE HOCKEY:

Everything. I don’t want to go too far here, but we pulled out all the carpet, volunteers turned up from everywhere to help Wayne. We pulled out the carpet, the carpet falls apart in your hands because it is so wet, it is a fibro house and, of course, the floorboards are gone,

probably the walls are gone, you pick up the furniture - that has to all go out, the fridges, the freezers. I went looking for somewhere to dump the food because obviously there is the risk of disease with food lying around. Then you run into all the shopkeepers, like Adam at the Criterion Hotel in the middle of Rochester who couldn’t get flood insurance. This raises a big issue, and the issue is that if you have a town and the town is subject to flooding and businesses in the town are unable to buy flood insurance then the question is: who is responsible (inaudible). Where people can buy insurance, and they choose not to, there is a legitimate issue that they have responsibility for the losses, but where they are unable to buy insurance and yet our community expects towns to continue to operate with businesses in the main street, then there is a moral hazard for the government to step in and help them.

STEVE PRICE:

The Australian spirit we have seen in the last couple of weeks is incredible. I was talking this morning to one of the local mayors who had been up all night helping to walk out 300 head of dairy cattle out of a dairy that was about to go under. He took them next door and, unbelievably, that dairy was empty because the owner had to walk off the property a couple of years ago because of drought, so they fired up the diary equipment that was still there and they managed to milk the cows. That was just a small example from Max Fehring, the Gannawarra Shire Mayor - that is happening everywhere.

JOE HOCKEY:

It is. It is a tough country. I have a mate up there with a farm and he was battling drought and late last year he was dealing with locusts - a plague of locusts - and now he has lost lots of fences and half his paddocks are underwater. We helped to muster to get the cattle away but there is also that unrecognised damage on all those dirt back roads that are so necessary to farmers. We got bogged numerous times trying to get around to Rochester and the roads that we were going on were just two foot deep crevasses running through the middle of them. It makes it almost impossible for trucks to get through there to get access to farm produce. I think there is a massive rebuild involved.

STEVE PRICE:

You are the Shadow Treasurer, how do we now pay for the rebuild? Let’s put the figure at $20 billion in Queensland, but no one really knows, we don’t really know what the damage bill will be in Victoria. Where is that money going to come from? Should the government go into debt? Should they scrap the NBN? What should they do?

JOE HOCKEY:

Well the starting point is that insurance will kick in. The question is how much money will flow from insurance policies and no one knows at this stage. But there is a safety net of the state and federal governments, in particular the federal government.

Steve, the Coalition believes emphatically that the government has to cut other programs to pay for these repairs. The government should not impose another tax, and I will tell you why: this is a Gillard government looking to impose a tax on carbon, it is imposing a tax on

mining, if you are going to have another tax on floods then it is too much. What they have got to do is start pulling back on spending in other areas because the challenge for the economy is that you will have a negative quarter, maybe a negative quarter, I should qualify that. You’ll have some loss in GDP in this quarter because of the floods but there will be a surge of activity because of the repair job which stimulates the economy and unemployment will come down, which will create longer term inflationary pressures. Now hopefully the Reserve Bank will look through the inflationary pressures and not increase interest rates so rapidly but ultimately the government has to cut back on its expenditure in other areas including stimulus programs because this now will be a massive stimulus to the economy. It is the equivalent of spending another stimulus package.

STEVE PRICE:

Should they change the NBN plan?

JOE HOCKEY:

Our view is that the NBN is a project that is wasteful at this point in time without having a proper analysis and a proper business plan. We have been emphatic about that, obviously the NBN spend is over a number of years, the government has the capacity to cut back on existing spending, to reprioritise other spending and if the government doesn’t do that it is going to lose control of the economy towards the end of this year.

STEVE PRICE:

Penny Wong says she the government is going to deliver on their promise of a budget surplus. Do you intend holding them to that promise.

JOE HOCKEY:

Absolutely.

STEVE PRICE:

You don’t think it is acceptable that the country goes into debt to pay for Queensland?

JOE HOCKEY:

There are only two ways the government can now deliver on its budget surplus. One is to have cuts to its existing spending or the other way is to introduce a new tax - that is the only way it can get back to surplus if the numbers are as big as Wayne Swan is predicting.

Unless they are prepared to cut spending, they are going to introduce yet another new tax - this is on top of all the other taxes, cigarette taxes, alco-pop taxes, car increase taxes, reductions in the amount of deductions people can claim. Now they are going to introduce a carbon tax, they are going to introduce a mining tax and they are talking about a new tax to deal with this.

The government sees the only solution as higher taxes. They don’t understand that the economy is going to be at high speed at the end of the year dealing with stimulus packages. So the government is going to be employing people to roll out school halls at the end of this year. They will be spending money to roll out an NBN. It is going to be spending money to roll out a repair job in Queensland and probably Victoria. What that does is it means the private sector - people renovating their homes, people building homes for population growth - it means they are going to find it incredibly difficult to get plumbers, to get brickies, to get concreters, all of those things and therefore you are going to have inflation and then higher interest rates.

STEVE PRICE:

Good to talk to you, thanks.

STEVE PRICE:

Thanks Steve.

[Ends]