13 February 2015
Transcript - #2015024, 2015

Interview with Chris Smith, 2GB

CHRIS SMITH:

Treasurer, good morning.

TREASURER:

Good morning Chris.

CHRIS SMITH:

It’s not a good morning though; it’s not a good look. Can we start with the jobless figures? More than 12,000 jobs were lost last month. The jobless rate is at a 13 year high. What’s behind this? Why has the rate risen so much?

TREASURER:

The fundamental point is that you need to have the economy growing at what they call trend rate, which is it needs to grow in real terms at around three per cent in order to create enough jobs to satisfy the needs of the new entrants into the workforce. Now, the economy is not growing fast enough to create those jobs but because we got rid of the Carbon Tax, because we got rid of the Mining Tax, because we actually did still deliver those tax cuts, the economy is still performing quite well and certainly has generated 600 jobs a day on average over the last year, which is three times the speed of the previous Labor Government. Now, you know Bill Shorten says 100,000 jobs –people have lost jobs – in that time. If the same economic settings were in place as Labor had, the unemployment rate wouldn’t be 6.4 it would 7.5.

CHRIS SMITH:

However, the trend for January this year flies in the face of what you’ve just said –I know what you are saying 4, 200 jobs per week.

TREASURER:

[Inaudible] Yeah, yeah. It does bounce around, Chris. I mean, we’ve had some pretty wild gyrations in the numbers from the Australian Bureau of Statistics. I’ll have more to say about that with the Chief Statistician in the new few weeks. I’ve been alarmed at the volatility in the numbers but having said that, the numbers are the numbers. We’ve got to deal with it. Now, there is good news around; there is good news on the job advertisement front – the ANZ job advertisement data is at near-record highs. You are starting to see some green shoots in the economy – some strong green shoots…

CHRIS SMITH:

Like what? Like what?

TREASURER:

Unquestionably housing construction, unit construction is surging. We’ve got all-time record levels of new startups in Australia – more than 220,000 new companies were started up last year and what we’re seeing is a restructure of the economy. We had a massive amount of expenditure on mining and resources and we were basically in the position where the world had almost unlimited demand for our resources. We’ve faced the biggest fall in what’s known as the Terms of Trade in 50 years. I have had to deal with iron ore prices dropping from around $90 a tonne to around $60 a tonne and that’s our biggest export…

CHRIS SMITH:

Not to mention coal and gas as well, which compound the problem…

TREASURER:

Correct, yeah, yeah but there has been upside too. I mean, petrol prices coming off has been a very significant benefit for families and businesses. That’s the equivalent of around a half a per cent cut in interest rates; so, that flows through. The Reserve Bank cutting interest rates has helped those that borrow money. For those that save money, it hasn’t been helpful at all – I am totally aware…

CHRIS SMITH:

And when you think about it Treasurer, you’ve got around a third of people have home loans – only a third, which might surprise some people. So, only a third are very happy with low interest rates. The self-funded retirees for something - who are trying to live off their savings – they’re doing it tough.

TREASURER:

And that’s one of the reasons why even though we got rid of the Carbon Tax, we kept the Clean Energy Supplement, and even though we got rid of the Carbon Tax, we kept tax cuts that were meant to be the compensation for the Carbon Tax. So, that story that you referred to in the Australian – I haven’t seen it, but yes we have cut taxes because I have never seen an economy strengthen by increasing taxes. You don’t actually strengthen the economy and create more jobs by significantly increasing taxes, which is the Labor Party’s formula…

CHRIS SMITH:

But it doesn’t do anything about paying off a debt, does it?

TREASURER:

No and what you have got to do is you reduce your spending and the challenge that we have is that the Budget today – the Government’s Budget, we have to borrow $100 million every day just to pay our bill. Just to pay our bills, $100 million. Now, that’s the equivalent of 14 kilometres of new road every day. It is the equivalent of two brand new schools that could be built every day. It’s over a week, the equivalent of building a new Royal North Shore Hospital. So, it is – it is unsustainable, anyone who runs a family budget, or anyone that runs a small business knows it is unsustainable to have to keep borrowing money to pay your daily bills.

CHRIS SMITH:

This business about $1 trillion in debt. The Daily Telegraph screams that headline today and it is from a PricewaterhouseCoopers report. It’s not fabricated calculations. Are we going to stop hearing Bill Shorten and Clive Palmer tell the country that we don’t have a debt crisis?

TREASURER:

I shared some information with Clive Palmer yesterday…

CHRIS SMITH:

Good.

TREASURER:

…that clearly shows – in a meeting that went on for a while – and I shared the information with him to address that specific concern…

CHRIS SMITH:

Good.

TREASURER:

…and you know, I’ve endeavoured to do it with Bill Shorten. I have been around to see his Ministers. I have gone around to their offices saying, ‘please work with us to fix the mess’. Now, they blandly refuse to respond. They’re indifferent to the challenge, and I say to them, ‘well, even if there were a change of government, you’d have to deal with it and they just shrug their shoulders. I find it quite frustrating that the Labor-controlled Senate is not helping to fix the mess but we are determined to do it, Chris, we are absolutely determined to do it, because if we do not continue down the path – and I dispute the arguments put that nothing has happened, when I release at the end of this month, the Intergenerational Report, people will see that we’ve made very good progress but there is still much more to be done and we have a plan to deal with it.

CHRIS SMITH:

So, back to $1 trillion by 2037 – grim stuff. You’ve got to get the crossbenchers, you’ve got to get Labor – although Labor seems to be deaf to this subject – you’ve got to get them to come with you on policies this time round, not club people over the head like you did last Budget.

TREASURER:

I’m not sure we were clubbing people over the head. I think we were actually…

CHRIS SMITH:

Well, you bit off more than you could chew and you didn’t bring these people with you…

TREASURER:

Well, we were trying to get on with the job of fixing it, and yes, we did not spend enough time explaining why. I think when the Intergenerational Report comes out and people see what the trajectories are over the next 40 years, like what PWC have released today, when people see the challenge of the years ahead, they will understand why we have been doing what we have been doing and why we need to continue with our plan. I just say this, Australia is still on the threshold of its greatest ever era – it really is – and why? Because you know, the majority of our economy is actually in services – health services, education services, communication services and so on, yet it is a fraction of our exports, and we actually have the capacity to export our services into our Asian region, which is the fastest growing region obviously not only in the world, but probably the fastest growing region in modern humanity. We can become an incredibly rich country by servicing our region – selling our expertise to the region, and that’s why we signed the trade agreements with China, with Korea, with Japan. This is a world of opportunity for not only our children but for ourselves and out of that, out of that Chris, we can become a much richer nation but we’ve got to do the structural change now. We’ve got to strengthen everything now and if we strengthen everything now, we cannot only cope better with the future, we can actually make sure we get the best out of our future.

CHRIS SMITH:

Okay, two quick matters while we have got you this morning: we’ve had a stack of calls about Human Rights Commissioner Gillian Triggs and the politicisation of her position. People are saying she should be sacked, saying Tony Abbott should do it today. He can’t actually do that, can he?

TREASURER:

Look, I believe – I have endeavoured to check that but I understand she is a statutory appointment [inaudible] may well require the approval of both houses of Parliament to be able to do that…

CHRIS SMITH:

Well, that’s not going to happen.

TREASURER:

Well no, and look, what it does highlight is that we are actually the ones that have got the children out of detention…

CHRIS SMITH:

Yeah…

TREASURER:

That’s what the comments have done. They have highlighted that Labor created the problem, Labor allowed the boats to come in – 50,000 people came on boats under the Labor Party. We’ve not only stopped the boats but we are getting the children out from detention.

CHRIS SMITH:

Yeah, she has copped a ricochet here trying to bash you guys up and at the same time it has allowed the media and others, including yourself, to explain the situation and to compare this incredible figure – 1900 as opposed to 192.

TREASURER:

Exactly right. I mean, we did it before when we were in government, Chris. It was John Howard that got the children out from detention. No one wants children in detention.

CHRIS SMITH:

No.

TREASURER:

I mean, let’s be fair dinkum about it, right? We always get blamed for – or it is always suggested that we’re the ones without compassion. We are the ones with compassion because we’re the ones that not only stop the boats and stop the deaths at sea, but we get the families and the children out from detention centres that were originally set up by the Labor Party.

CHRIS SMITH:

Exactly. One last one, things are looking even grimmer for Bali Nine members Chan and Sukamaran. Apparently they are heading for the island – maybe as early as the weekend – for their executions. Time has virtually run out to stop this barbarism, hasn’t it?

TREASURER:

I mean, I came back and looked at my children last night asleep in bed and I thought to myself, how would I feel if it were my children going off? But I also thought about the fact that how would I feel if my children were addicted drugs. There is no justification, there is no excuse for state-sanctioned execution. I mean, I am totally opposed to the death penalty. It is a very difficult issue in Indonesia. They’ve got 4.5 to 5 million drug addicts in Indonesia and you have got a President that was elected on the basis of taking a no-comprise stand on drugs.

CHRIS SMITH:

Yeah.

TREASURER:

Having said that, I know that the Prime Minister and all the Government and the Opposition have done everything we can to try and stop the executions and I feel most for the families – not only the families of the young men that are about to be executed but I also feel for the families of anyone that has had a child that has died as a result of drugs because I’m sure they’ll be suffering great mixed feelings over the next few days and I think we all grieve at the thought that there would be any state-sanctioned executions because ultimately, one death never justifies another.

CHRIS SMITH:

Very, very true. I’ll leave you with all of that. Have a great weekend – if you have good weekends now with all these figures on your shoulders, and they are on your shoulders. All the very best with whacky Jacqui too as you try to explain to her we’ve got a debt crisis. Anyway, a topic for another time. Thank you Joe.

TREASURER:

Thanks Chris.