5 February 2015
Transcript - #2015014, 2015

Doorstop interview, Queanbeyan

TREASURER:

[Inaudible] I am here with Peter Hendy, who is an outstanding local Member here in Eden-Monaro. You know, when I come to a family business, it reminds me of the fact that I grew up in a similar family business. It is the family business that allows the next generation to have an education; to have hope that tomorrow is going to be better than today. People migrate to this country in the hope that they can work hard and get rewarded.

I pay great tribute to your family. You know, there are 20 people employed here from seven different countries, here in Queanbeyan. And it just says a lot about the responsibility of a government to focus on the future, to make sure that when people do have a go they can get the reward for it. As Liberals we are absolutely committed, absolutely committed, to ensure that we do everything we can for small business to reduce the tax burden, to give people lower costs by getting rid of the Carbon Tax, by ensuring that everything we do is focused on them and helping them to grow prosperity.

Now, Tony Abbott is absolutely committed to this. As he said in his speech on Monday, this year we are going to be focused on small business, on jobs, on families. That will help to deliver greater prosperity for Australia. We're engaging with the community – engaging in a conversation with the community about how we can make Australia stronger. Now, in the last few days alone, we've seen the benefits flow through of getting rid of the Carbon Tax, of lower petrol prices, which has given the Reserve Bank room to move. Today, I call on the banks in Australia to pass through, to all small business borrowers, the full 25 basis-point drop in interest rates. We expect them to pass it through in full and fast because every single dollar that can go to help the bottom line of small business means more jobs for Australians.

REPORTER:

Mr Hockey, is the surplus plan dead? 

TREASURER:

No, not at all. We are absolutely committed to a surplus. We're absolutely committed to getting back on track, and I'd say to you, the challenge we have at the moment is that the Government is spending $100 million more a day than it receives in revenue. Now, here I am in a small business. This business would not survive over the long-term if it had to continue to spend more than it receives in revenue. This is the position of the Government. We are currently spending $100 million more every day than we are collecting in revenue. That's why we need to fix the Budget, and we have a steely determination to continue with our difficult decisions, but appropriate decisions, to ensure the Government lives within its means.

REPORTER:

Treasurer, can you tell us how cutting taxes and fixing the Budget add up?

TREASURER:

It depends who you cut taxes for. The fact is that revenues will rise over time. The challenge is that when it comes to spending, you have to get the trajectory of spending growth down. That's what we did in our last Budget. We got the trajectory of spending growth down. Eighty-six per cent of Government expenditure is locked into legislation. So again, I call on the Senate to sensibly help us deal with the challenge of the legacy left by Labor, which is just burgeoning expenditure.

REPORTER:

Can you confirm what type of businesses will get this tax cut? Will they get special arrangements for those that pay income tax only?

TREASURER:

That will apply to small business, obviously with the changes to the Paid Parental Leave Scheme – we will have more to say about the taxation arrangements in relation to companies. But I say emphatically, we will deliver the 1.5 per cent cut in taxation for small business and we want to do more. Now clearly, for example, we have said that we are changing the employee share scheme, particularly for start-up businesses. Last year, we saw the biggest growth in new business start-ups in Australia's history – in Australia's history! More than 220,000 new companies established last year. We think we can do even better this year and that's why we are focused on how we can reshape the employee share schemes to provide more incentives to start up home-based businesses and start up microbusinesses using new technology.

REPORTER:

Treasurer, what do you say to the average Australian taxpayer who probably, within months, will be paying the second-highest tax rate? What do you say to them about the unfairness of that because it is a regressive thing?

TREASURER:

In our last Budget, we gave a commitment that we would look to pass back to Australian taxpayers, the bracket creep that is coming into the taxation system over the next few years. Now, that's a package; it relies on savings being delivered as well. So, you've got to reduce expenditure. Tax will obviously increase but it comes through bracket creep. Now, we want to hand that back to the community to give taxpayers a tax cut. After all, it's only the Liberal Party that delivers tax cuts that are affordable for the nation and therefore are sustainable for the nation. Now, we are still absolutely committed to doing that but, obviously, we face challenges with the Budget, because we've had falling revenue ourselves as a result of massive drops in commodity prices, but also, we've found it very difficult to deal with a Labor-controlled Senate. Again, I ask the Labor Party and the Opposition in the Senate to help us deal with the massive growth in expenditure that was a legacy of Labor.

REPORTER:

We’re at a small business today and you're talking about small business tax cuts but what about big business? What about the proposed 1.5 per cent levy that was going to pay for the PPL scheme? Do you accept that it's causing some uncertainty for these big businesses, that we don't know what's happening to that?

TREASURER:

We will have more to say about the 1.5 per cent levy in the next few weeks after we've consulted with colleagues and stakeholders, but I can give this guarantee to larger businesses: they'll not be paying any more tax than they are paying today.

REPORTER:

Mr Hockey, Chris Bowen says the Intergenerational Report is past that 5-year deadline and you're in flagrant breach of the law. What is your response to that and how do you think it will reset your agenda?

TREASURER:

We will be releasing the Intergenerational Report around the end of this month. The Labor Party, for some odd reason, actually brought their last one forward. Now, I think there was lot of politics behind that, as usual under the previous Government. We wanted to use the very latest data, particularly given that we had to write down revenue substantially in the Mid-Year Economic and Fiscal Outlook released just before Christmas. Using the latest data gives us a better Intergenerational Report and that's what I want to do, carefully and methodically deliver credible documents and that's exactly what it will be.

REPORTER:

Do you not concede that you could argue that the warning you've received from the Reserve Bank about economic growth could suggest that you haven't managed the economy well and that further austerity measures would cramp growth?

TREASURER:

We haven't had austerity measures for a start. We are endeavouring to have a Government that lives within its means. We have been very prudent, we've been careful with taxpayers’ money. The second thing is, when Governor Stevens came to the Cabinet a couple of days ago, the focus was on the global outlook with Governor Stevens, and that's what he talked to us about and also about the overall Australian economy. Now, we are facing global headwinds. There's no doubt about that. Europe is facing significant difficulties, and of course, the European economy is the single-biggest economy in the world. The United States is doing very well. China has come off obviously, and Japan is still struggling. That has an impact on us. Now, we've got to be as robust as we can domestically. That means getting the Budget back to surplus, living within our means, and that means that we're better able to cope with whatever headwinds are in our way. Obviously Governor Stevens has had the room to move on interest rates because we have been able to control the inflation genie. We've been able to get it back in the bottle.

REPORTER:

Treasurer, just to clarify on the surplus, are you still committed…

TREASURER:

Absolutely…

REPORTER:

… To returning to surplus by 2018?

TREASURER:

We have never ever put a date on it the way Wayne Swan did but we said we are determined to get back to surplus. We have a credible trajectory. Now, we always have to deal with difficult weather – that's true – and of course, I've had to write down iron ore revenues on a scale that I don't think any previous Treasurer ever has and it's our biggest export. We saw a massive drop, the biggest fall in the Terms of Trade in modern Australian history in the last eight months. That had an impact on the Budget but we are determined to continue to deliver a predictable and credible path back to surplus.

REPORTER:

Will you make more cuts [inaudible]

TREASURER:

No, we have to make savings to pay for our commitments – we have to make savings to pay for our new commitments.  If you save the money, then you can spend the money but our structural savings remain. The Budget will never get back to surplus; we will never begin to start to pay down our debt, unless we actually start to deliver the changes in health, in education and in welfare that were in our last Budget. Those things need to be delivered. Some of them have but there is more work to be done. There is no easy path to surplus. There is no easy path to living within your means and obviously there are great negotiations that have to be held with our friends in the Senate but if anyone thinks that there is an easy way to get back to surplus, well please show us the path. There are no alternatives.

REPORTER:

Treasurer, does the comments of Senator Sinodinos late yesterday and the Trade Minister this morning on ABC [inaudible] claim that there were only a couple of rogue backbenchers who are dissatisfied with Tony Abbott. Surely now you would concede that the dissatisfaction with the Prime Minister [inaudible] than you were saying a couple of days ago?

TREASURER:

You know, there has been a lot of gossip, a lot of talk over the last few days on leadership. When I came into politics, I did it for my country. I did it for people like you – small business people that are actually trying to have a go, to have a better county – a better life. There is no way people like Peter Hendy, myself and others, are going to trade away the national interest for self-interest. I would say to everyone: put the country first. Put Australia first. Put Australians first. Focus on the job you have to do to build prosperity. Stop engaging in commentary on colleagues. Stop engaging in commentary on the leadership. Focus on fixing the country because by god, that is the job we have been elected to do and I am determined, determined to do it for my country. Thanks very much.