31 March 2014
Transcript - #2014019, 2014

Interview with Chris Uhlmann, AM, ABC Radio

SUBJECTS: Budget, WA Senate election

PRESENTER:

In seven weeks the Coalition will hand down its first Budget and it’s promising to be tough. Treasury figures have been splashed across the pages of today’s papers showing that without significant structural changes to the Budget, government spending will outpace tax receipts every year for the next decade and that would leave the Budget in deficit for at least 16 years. And there are only two ways to bridge a Budget deficit – raise more tax or cut spending. So this is all part of a process of getting the community ready for pain. Joe Hockey is the man in the hot seat. Treasurer, good morning.

TREASURER:

Good morning, Chris.

PRESENTER:

Can you lay out the future for us in these Treasury documents? What happens without changes to Government spending?

TREASURER:

Well without changes to Government spending, the Budget is in deficit for at least a decade; it would be the longest period of continuing deficits in modern history. And the fact is that Labor locked in beyond what was published for four years – Labor locked in the highest expenditure on record, certainly since World War II. Now, the fact is, we have to make the decision to reduce government expenditure and we have to find ways to try and increase revenue as well.

PRESENTER:

Those increases were all known knowns before the election on disability insurance and on school funding, so why did you sign up for them?

TREASURER:

Well, we didn’t anticipate that everything else would be of equal or larger scale as a tsunami coming across the water. The fact is Labor’s left us with a massive forecast increase in foreign aid, a massive increase in defence – for example in one year, there’s meant to be a real increase in defence spending of 13 per cent, a 66 per cent increase in foreign aid and a…

PRESENTER:

You signed up for the defence spending as well though didn’t you and in fact are promising to increase it even further?

TREASURER:

Well this is the bottom line: we didn’t know what those fifth year numbers were in Opposition and of course in relation to the National Disability Insurance Scheme, there’s been a report out recently – an independent report – which likened the National Disability Insurance Scheme to a plane that had taken off and is still being built in the air which indicates that potentially, if we don’t get on top of the proper management of the National Disability Insurance Scheme, not only would it not be sustainable, but it could end up as big a farce as the pink batts programme or the $900 test programme.

PRESENTER:

But again, you may not have known the scale of all these things but certainly you were concerned about all these things before the election; you were saying that Labor had been spending like a drunken sailor, you’d have to fix the Budget, there was a Budget emergency, so why on top of all of that did you add another $5.5 billion a year in a paid parental leave scheme?

TREASURER:

Well, the paid parental leave scheme is not only fully funded, because we are imposing a levy on big business, but it is a very significant driver of productivity growth. It will certainly help with participation increases and it is a great advantage for small-medium sized enterprises who at the moment cannot afford to provide paid parental leave at a level equivalent to big business and therefore have significant challenges in recruiting staff to compete with big business. But also, it is a driver of participation, particularly for women, which we need, which every country with an ageing population needs and that is, we’ve got to increase workforce participation by women.

PRESENTER:

So all of this adds up to you saying that the Budget cuts that are coming have to be hard and they have to be deep?

TREASURER:

Well, they’ve got to be fair too, and that’s the bottom line. It is about making sure that everyone – everyone in the community – helps to do the heavy lifting on repairing the Budget, because this is not an ideological drive, Chris, this is about whether we want to simply sustain our quality of living, not even improve our quality of living, it is about whether we can sustain our current quality of life with an ageing population and with significant offshore competition for our markets. How do we do it? Well, we’ve got to make sure that we live within our means.

PRESENTER:

Well looking at that and the ageing population – 8 per cent of people over 65 with more than $1 million in assets are still getting a part pension – is that sustainable?

TREASURER:

Well, that’s something obviously that needs to be taken into account. The aged pension is growing at a massive rate and part of that is obviously linked to the increase in the aged pension by something higher than the inflation rate, it’s [inaudible] average weekly earnings and that means it keeps growing faster than a lot of other payments. But also, it’s about our ageing population and the fact is that we’re living longer and we should celebrate that, the question is how do we sustain these sorts of payments and ensure that they are sustainable in 10, 20, and 30 years’ time, not just about tomorrow?

PRESENTER:

So would you be pushing up the age at which people should get the pension? Would you be cutting the number of people who are getting the pension now?

TREASURER:

Well look Chris, I’m not going to speculate on the Budget. I mean everyone’s looking for answers, the first thing is we’ve got to identify the significance of the problem.

PRESENTER:

Sure. I’m just looking at how we look at some of these things though. Given what you’re saying and the absolute emergency of it, shouldn’t you set means test every Government entitlement?

TREASURER:

Well I’m not going to speculate on where the Budget lands at. We are working through all of those issues. We are endeavouring to be as fair and as reasonable as possible, but we have a mandate and there is an expectation in the community that we are going to fix the structural problems of the Budget and the economy and we’re getting on with the job.

PRESENTER:

Should you scrap the rebate for private health insurance?

TREASURER:

I promise you Chris, I’m not going to respond. We can go through every line item in the Budget, but you won’t get an answer because we’re not going to be announcing or revising policy on the run.

PRESENTER:

Sure, but aren’t these conversations that the community needs to have, because as you say, some areas of spending are unsustainable and those areas need to be identified and they shouldn’t come as a shock to people?

TREASURER:

Well I think that’s right and over the next few weeks as we are able to firm up what the Budget looks like, we’ll be able to engage in that public discussion. But the fundamental point is we want to ensure that what is sustainable is delivered in the Budget – that’s our key focus, Chris. It is essential – it is essential – that the Budget deals with the structural issues, not just the short-term issues.

PRESENTER:

And you’re heading off to Perth this morning. Is the Government losing ground there as we head into the weekend’s Senate election?

TREASURER:

Oh not at all. I think the people of Western Australia know that the only way to get rid of the Carbon Tax, the only way to get rid of the Mining Tax is to vote for the Liberal Party – it’s so obvious because Labor’s now voted against the removal of both taxes in the last two weeks of Parliament.

PRESENTER:

And finally, briefly, flying Virgin – voting with your feet?

TREASURER:

Oh, I try and fly Virgin and Qantas, Chris, I don’t have a preference other than the fact that I want to support airlines that employ Australians and both of them do.

PRESENTER:

Joe Hockey, thank you.

TREASURER:

Thanks Chris.