13 May 2015
Transcript - #2015108, 2015

Interview with Kieran Gilbert, First Edition, Sky News

KIERAN GILBERT:

Mr Hockey, thanks very much for you time. Now what do you say to the analysis, that while the spend for big business sounds a lot, it won’t actually shift the pendulum when it comes to economic growth?

TREASURER:

Well it’s not a spend for big business. We’re giving small business up to $2 million of turnover the chance to reinvest in their businesses, to grow their businesses. We see small business as the engine room of the Australian economy and it’s certainly going to be the big driver of innovation and growth over the next few years. Importantly, Kieran, we have great faith in Australian small businesses, because in the past they’ve done some heavy lifting, we’ve opened up new trade corridors in China, Japan, Korea, we’re working on India and a range of other countries, to give those small businesses the chance to grow.

KIERAN GILBERT:

Given it’s targeting, what some industry groups are saying, microbusinesses, with turnovers of $2 million and less, are you confident it will still have the desired impact on economic growth that you hope, that this $5 billion plus spend will have?

TREASURER:

Well, it’s hardly microbusinesses alone, because 96 per cent of Australian business is actually under $2 million in turnover each year. And every big business started as a small business once, if you look at some of those companies like Facebook, or Uber, or Airbnb, or Alibaba, or Google, or Microsoft. At some stage in recent times, you know, they were, within 30 years, they were basically small businesses that became big businesses. I am absolutely confident that we have those sort of businesses in Australia. We have that potential, but we’ve just got to give them a helping hand to go, and you know what, this is going to be the big driver of growth, Kieran, over the next few years.

KIERAN GILBERT:

What do you say to businesses with turnovers of upwards of $2 million, and not much over, medium sized businesses, and if you’ve got a turnover of $2.1, $2.2 million, you employ four or five staff, you don’t get [inaudible] from your Budget.

TREASURER:

Well, we can’t do everything for everyone. It’s just impossible given what we inherited from the Labor party. We inherited $123 billion of deficits, we had to borrow $133 million a day just to pay the bills. We’ve got that down to $96 million a day, we’ve still got a long way to go. Having said that, what we’re doing is we’re helping those small businesses with their cash flow, less than $2 million turnover a year, which in turn will help them to become bigger businesses. Now there’s no business that is going to stop growing as a result of what we’re doing. In fact, they’re going to go out there and have a go, and by the way, if businesses under $2 million go out and have a go, they’re going to be buying from big businesses. They’re going to be buying from those businesses over $2 million of turnover every year, and this becomes a virtuous circle, which in turn helps to lift the Australian economy and create more jobs.

KIERAN GILBERT:

Isn’t it a confused message when it comes to families? On the one hand, looking to increase the rebate on childcare, welcomed by everyone, certainly those with kids in childcare, and I declare an interest with a 2 year old in day care. But in terms of the families’ payments, for those of low to middle incomes, you’re reducing their payments as planned in the last Budget through the Family Tax Benefit Part B.

TREASURER:

Well, we have to pay for additional childcare, more flexible and affordable childcare one way or another, Kieran. I mean, it’s not easy, and Labor just wants to spend, spend, spend. They complain about spending, but they want to spend more. Well, what we’ve said is if we’re going to spend more in one area, we have to make savings in another area. Now the amount we spend on Family Tax Benefits is almost three times what we spend on childcare. So, what we’re doing is re-weighting it a bit so that people who do want to work, and we’ve estimated there’s 165,000 parents that want to work more or want to go to work, we give them greater flexibility and more affordable childcare, which will help them in turn go to work. Which at the end of the day, helps us to get more tax revenue, which in turn allows us to help other families.

KIERAN GILBERT:

To those on the part pension, 90,000 or there abouts, going to lose the part pension. Your message to them this morning, given they might be sitting there thinking, why are we copping it? And still the Government’s giving those with generous superannuation funds enormously beneficial tax treatment.

TREASURER:

Well, hang on, a lot of the people who are on part pensions are also getting some form of superannuation. They’ve got other income, Kieran, and the Labor Party wants to hit that other income. And what we’ve said is, we want to provide more support for people on lower incomes and the pension. We’re going to continue to increase the pension, for people with incomes in the case of a couple of, well they’ve got assets, liquid assets beyond the family home, of over $1.1 million. We can’t continue to give you a part pension, we can give you a card that gives you the entitlements associated with the pensioners card, but we can’t give you that part pension. Instead we’re not going to introduce new taxes on your superannuation, which is what Bill Shorten wants to do. And ultimately Kieran, one of the challenges those people face is that the returns on their investments aren’t as good as what they would have been in the past, so now is not the time to apply new taxes to superannuation. We won’t do it, and Labor will.

KIERAN GILBERT:

Why should we be confident about those growth forecasts in the out years, at 3.5 per cent?

TREASURER:

Well, because they’re a consensus view. When you’ve got a number of individual banks, that are saying yes, they’re credible, yes they’re in line with their own forecasts, and they are broadly in line with the Reserve Bank. Who’s disputing them? Who’s disputing them, Kieran? The Labor Party - really? If it’s the Labor Party disputing our forecast, then maybe they’ll go back to explaining why they never delivered a surplus that they promised, and why they got every forecast wrong. I mean, my forecast, from last year, the mistake I made was I expected iron ore to be much higher. At the time, the Labor Party criticised me for understating the iron ore price. Thank God I did, I took a conservative approach last year, and in fact we’re taking a conservative approach, a reasonable approach, but a conservative approach this year. For example, the iron ore price is around $58 a tonne now. We’ve taken a $48 a tonne forecast, it bounces around, but we’re being measured and careful in the way we approach these things.

KIERAN GILBERT:

Two quick questions before I let you go, you’ve still got that fight looming with the states, haven’t you, over the $80 billion you ripped out of health and education, including with your friend Mike Baird.

TREASURER:

Well, the money was never funded. This was another pie in the sky promise from the previous Government that was never funded. Over the next four years we’re going to see real growth in funding, in health of 6 per cent, in education of 6 per cent, but we can’t give out bonus payments, Kieran, there isn’t the money there. And Labor can’t complain that we’re spending too much money, and then want to go and reinstate those bonus payments that they never funded. And in addition, they never fully funded the National Disability Insurance Scheme. So we’ve still got to find more money for that, so we’ve got an unfinished job, yes we’ve got an unfinished job,  but you can’t keep spending the way the Labor Party wanted to spend, and you certainly can’t tax your way to prosperity.

KIERAN GILBERT:

Mr Hockey we’re out of time, good to chat, appreciate it.

TREASURER:

Thanks very much Kieran.