2 May 2014
Transcript - #2014028, 2014

Interview with Alan Jones, 2GB

SUBJECTS: Budget, Commission of Audit

ALAN JONES:

The Treasurer is here, good morning.

TREASURER:

Good morning, Alan.

ALAN JONES:

I’ll share this point - we were talking off air there, and in light of everything you’ve had to endure in the last couple of weeks putting this budget together you said that, listening to the program this morning, Engelbert Humperdinck, sounded very good.

TREASURER:

That’s right; I grew up listening to Engelbert Humperdinck every Sunday. My parents would play it on the record player in those days and it just brought back a flood of memories as we were driving in and I started singing it and the guy who drives me around in the hire car, he said, ‘you should be a singer’. I said, ‘well it’s looking like a pretty good option at the moment actually’.

ALAN JONES:

Absolutely.

TREASURER:

I’ll end up singing in RSLs on Friday nights, anyway.

ALAN JONES:

You’ve got to be able to still laugh haven’t you?

TREASURER:

You do Alan, it keeps the oxygen in your body.

ALAN JONES:

Before we get on to things like Budget. A question that I guess the nation wants to know, who is paying for this Malaysian flight rescue operation?

TREASURER:

It is our search zone and we are there. Obviously we are in discussions with China and with Malaysia and those discussions are ongoing. We think given how important it is and given that Australians were on that plane, that we need to take the lead and it is our legal responsibility.

ALAN JONES:

So there is an international obligation because the search is in our search zone for us to pick up all the tab?

TREASURER:

Well, we are picking up the tab at the moment.

ALAN JONES:

Millions of dollars.

TREASURER:

We will work it out. I mean, we are being a good international citizen. Given the size of the tragedy, we think now is not necessary to start trying to negotiate.

ALAN JONES:

But does it go on and on and on, do we just keep searching? Is there a time at which we say, ‘Look?’ You know, there is a new word in the vocabulary: closure. we want to have closure with everything. I mean this can’t go on for months and months and years and years.

TREASURER:

I think we have to find the plane; and why? Because for a start if there was any mechanical failure, given there are a vast number of people flying on these planes every day, I think there needs to be an understanding of what caused the problem. I mean, even if we find the plane, I suspect we won’t find out what the motive was because that’s not going to be revealed by anything I wouldn’t have thought.

ALAN JONES:

But too bad if the plane is not in our search zone?

TREASURER:

Well, I’ve got great confidence in our team but as a good global citizen I think we have got an obligation to keep at it.

ALAN JONES:

The Commission of Audit - I’m not going to go into that in any detail, other than to say to you, I mean it is not a report by the Government it’s a report to the Government. You do accept my concerns here that, and nor should it, but it doesn’t bear any relationship to the promises that you made. Nor the need, the political need to be re-elected. What are you going to do with it?

TREASURER:

Well it has fed into our Budget deliberations. The first thing is, it confirms everything we have been saying about the problems that we have inherited, that is what the report does.

ALAN JONES:

Basically it says that you will have to achieve a $60 billion reduction in annual spending by 2023 if you are going to get into surplus, $60 billion. Do you know where that will come from? You’re not going to have a debt levy are you?

TREASURER:

Well, Alan…

ALAN JONES:

Where did that come from, a debt levy?

TREASURER:

I’ll just say to you, the Government spends money on people essentially under a certain income level, in health and welfare services and so on. This deficit that we have inherited is being borne by the whole country, we are going to all have to make a contribution. Now, from our perspective the more people that contribute to fixing the problem, the less each individual has to contribute and that’s what we are very focussed on. Now, we are going to fix the problem. What the Commission of Audit doesn’t do is, it doesn’t look at the whole picture. It looked at the 15 biggest programs, which happen to be the fastest growing as well. Most of them growing at more than the speed of the economy. So clearly, when you have a spending program growing at faster than the economy it creates problems, structural problems for you. But it doesn’t look at the challenge that we have for growth and the Budget is overwhelmingly going to focus on how we can grow the economy. How we can expand the economy and at the same time we have got to deal with some of the issues that were raised by the Commission.

ALAN JONES:

At the end of the day though, you know, you can get money from somewhere now, there were two words, I’ve tried to read all this, there are two words in one instance I can’t find in here and that is ‘Climate Change’ and yet you’ve still got seven climate change agencies, 33 climate schemes in seven departments, they seem to be protected in all of this. But because of all this nonsense about climate change and global warming we have a clean energy regulator and we have got renewable energy certificates.

TREASURER:

Well they say, ‘get rid of the Clean Energy Regulator’, and we are.

ALAN JONES:

And the Renewable Energy Centre?

TREASURER:

And as for the…

ALAN JONES:

You and I should be in the business of wind turbines because they’re subsidised. You say we’re not going to chase SPC Ardmona and Toyota, and rightly so, down the road with a cheque book. Why are we chasing Thai and Chinese wind turbine proprietors down the road with subsidies of $400 000 a year for 75 years?

TREASURER:

Well, if I can be a little indulgent, I drive to Canberra to go to Parliament and so on, I drive myself, and I must say I find those wind turbines around Lake George to be utterly offensive and I think they are just a blight on the landscape.

ALAN JONES:

When are you going to knock them off?

TREASURER:

Well, we can’t knock those ones off.

ALAN JONES:

You can knock the subsidies.

TREASURER:

Well they’re in the locked-in schemes and there is a certain contractual obligation, I’m told, associated with those things. But you will see in the Budget that we have addressed the massive duplication that you have just talked about, the vast number of agencies that are involved in doing the same thing. We are addressing that in the Budget. We have considered that very carefully. And look, when I say, Alan, that we are seeing the end of the age of entitlement that applies to business as much as it applies to each of us.

ALAN JONES:

Does it apply to politicians?

TREASURER:

Yes.

ALAN JONES:

The gold pass will go?

TREASURER:

I can’t confirm where we are heading with that because that is a matter for the Budget, but I hear what you say and we hear what you say.

ALAN JONES:

Parkinson, your Treasury Secretary, whom you were going to get rid of, forget that, that’s irrelevant, but supposing you get rid of him, to talk about the age of entitlement. As I said earlier this morning, he would be on say $600-$700 000. These people are on twice your salary, twice your salary, the Secretary of Treasury. But if he were to leave because you moved him on and whatever, he takes with him a benefit. Now many of these people are on a superannuation scheme called a Defined Benefit Scheme, which provides for them, a multiple of final average salary. His final average salary would be approximately $700 000. His multiple may well be 7, 6, 7, 8 times in a defined benefits scheme. How do you explain to people out there that when he leaves he may well take with him a benefit of four point what is six times $700 000, $4.2 million. 7 times $700 000, $4.4 million. We admitted that is what the Future Fund was about, do people listening to you, talking about belt tightening, how the hell do we reconcile that with these people walking away with millions of dollars?

TREASURER:

Well, you’re right, Alan, and that’s why the Defined Benefits Schemes have been closed.

ALAN JONES:

Well, they’re still available for these blokes.

TREASURER:

The problem is, that people have contributed over their working career to a certain superannuation scheme. You can only close the scheme for new entrants going forward. You can’t retrospectively change.

ALAN JONES:

Quite, but that’s why we are where we are today isn’t it?

TREASURER:

Absolutely right, there are a range of things that need to be done. And a lot of them are structural. I want to emphasise that. For example. Increasing the pension entitlement age to 70, we are intending for that to occur in 21 years’ time.

ALAN JONES:

If you read the papers here you’d think it was going to happen tomorrow.

TREASURER:

Well that’s right. In 21 years’ time, that is when you will be entitled to the pension when you turn 70, right. The previous Government said 67 from 2023 increasing from 65 today. So, you know, anyone who is entitled to the pension now is certainly not going to be effected. It is hugely important that we have long term planning out of this Budget. And in having long term planning we can address the long term issues. But in the short term we have got to have an agenda for growth. Now we are going to spend money on infrastructure which is going to help to drive the economy and we are going to focus on getting more Australians into work. We don’t just want people to work, we need Australians to work – of all ages. You can’t assume that you’re going to retire when you reach pension age.

ALAN JONES:

But you have got to be sure, politically,  that you’re not going to cop the pain without the gain. Now, the Palmer United Party, Labor, and the Greens are not going to support a debt levy. But whether we think it, people ringing here say, ‘I’ll tighten my belt, if that’s what they want, if it’s going to get us out of trouble: yes.’ But Palmer and the Greens and Labor are not going to support a debt levy.

TREASURER:

Well we are not going to be intimidated by threats in the Senate. We need to lay down an agenda that is going to grow the Australian economy and ensure that the Budget is sustainable.

ALAN JONES:

Does that include a debt levy?

TREASURER:

We have to do what is right for the nation, Alan.

ALAN JONES:

Does that include a debt levy?

TREASURER:

I say to you again, I will do what is right for the nation,  I am prepared to pay. I am sure you’re prepared to pay. Well, the only way we can pay, the only way people on incomes above a certain level can contribute is through the tax system.

ALAN JONES:

But see you can draw from a debt levy the fact that we cannot get the money via savings so we have got to then have a new tax, now the number of taxpayers earning $80 000 or more.

TREASURER:

Don’t assume its $80 000.

ALAN JONES:

Sorry, it will be higher than that I’m saying, but I’m just taking $80 000. It’s 10% of all tax payers earn $80 000 or more of taxable income, they pay, 62% of all the income tax now.

TREASURER:

And we are going to go to the next election with a new tax agenda for the approval of the Australian people that will ensure that we have a sustainable tax system. The Commission of Audit looked only at expenditure and only in the 15 largest programs. So it is only a part of a part of the total challenge. On the revenue side, we are going to have to have a new agenda in taxation and the best way to lay out that agenda is to ensure that those that have the capacity to pay, pay their fair share, but we have enough incentive in the system so that people can get off welfare and go into work. This is a call to arms for the nation. We need everyone to contribute to the heavy lifting in the short term but the long term benefits will flow to the entire economy and the entire community.

ALAN JONES:

Right, so you’ve had the Remuneration Tribunal, Eric Abetz says, ‘Look, hands up, it wasn’t us, this has been in the line for two years’, and so again your Treasury Secretary gets an increase from the Remuneration Tribunal effective July 1 of $42 000.

TREASURER:

We hear you on this, Alan, we hear you.

ALAN JONES:

He’s on $800 000. Does he need the other $42 000? It’s our taxpayers’ money.

TREASURER:

I hear you. We hear you and I know these are the sorts of things that are very difficult in politics because when you set up independent tribunals, because they say politicians and public servants shouldn’t set their pay, we set up the independent tribunals, then the independent tribunals make a finding then everyone wants us to interfere.

ALAN JONES:

Yes but you said that, Tony Shepherd, it’s a report to Government not of Government. Some tribunals report to you not by you, there are too many of these statutory authorities. For example, we learnt yesterday that we are paying $100 million every year to thousands of disability pensioners living overseas. Now a disability pension paid in Australian dollars to someone in Croatia enables them to live in luxury. They are getting a pension, they’re living overseas, they’re not contributing back into the economy, should that continue?

TREASURER:

Well this is definitely something we are looking at and when I read that report yesterday I asked for some information on it.

ALAN JONES:

The seniors health card was established to help asset rich but cash poor farmers. That’s what it was for in 1994. 33 000 people then, now 318 000. Do you have the capacity to root out where people have got their hand out when they’re not entitled to it?

TREASURER:

You know what, Alan, in this entire review process that the Government has been involved with, I have been stunned and I think Tony has been stunned at the failure of the previous Government to update the infrastructure of Government. What does that mean? It means Centrelink waiting times when I was there, Minister for Centrelink, were 6.5 mins. The previous Government funded it at 17.5 minutes. Someone waiting on the phone for 17.5 mins,  Someone rang Centrelink the other day and waited 82 minutes, a pensioner, 82 minutes to get through to Centrelink. Now, what we’ve found is not only are the systems broken but the systems are unable to cope with change. They can’t give us the information we need to be able to fix the policies. So this been one of the great challenges in the Budget process. I, on behalf of taxpayers, am going to have to spend more than $1 billion just fixing the computers at Centrelink in due course. The system, the infrastructure of Government has been smashed by the previous mob. These are some of the things we have to fix first.

ALAN JONES:

Why don’t you go - we could talk forever, you have got a very difficult job. I’m sure the bulk of the electorate support you in what you’re trying to do to repair what is unbelievable damage.

TREASURER:

Well we are doing it for the community, this is the motivation.

ALAN JONES:

Thanks for your time.