27 May 2015
Transcript - #2015137, 2015

Interview with Patricia Karvelas, RN Drive

PATRICIA KARVELAS:

Hi Joe Hockey.

TREASURER:

Patricia, great to be with you.

PATRICIA KARVELAS:

Good to spend some time with you Joe. Today we saw developments on a couple of issues. You introduced legislation to create the $20 billion Medical Research Future Fund and we’ll talk about that in a moment. But can I first find out whether the GST is coming off tampons and pads? I’m confused by the differences between you and the Prime Minister. Here’s Tony Abbott speaking to journalists yesterday.

[PLAYS CLIP]

PRIME MINISTER:

Look, I understand that there has long been a push to take the GST off goods which are one way or another regarded as health products. It’s certainly not something that this government has a plan to do.

[CLIP ENDS]

PATRICIA KARVELAS:

So no plans to remove the GST. Yet, barely a couple of hours later you put out a statement saying you’ve asked Treasury to cost the model. What’s going on?

TREASURER:

Well, the bottom line is this. The GST, even though it was introduced by the Federal Government, every dollar goes to the states. We have repeatedly said that the states, any changes in the GST require the unanimous agreement of the states. States have raised this previously, it’s been around for quite some period of time.

PATRICIA KARVELAS:

It has.

TREASURER:

What I undertook to do was to go to the states with the costing proposal and if their view, as the Prime Minister said today, is unanimous that they want to remove the GST from sanitary products, then we’re happy to facilitate that through the Parliament.

PATRICIA KARVELAS:

Why not remove it on nappies?

TREASURER:

Well that’s the issue you see, as soon as you open it up. There’s always an argument for…

PATRICIA KARVELAS:

I pay tax on my nappies, that’s annoying too…

TREASURER:

So do I, I still do, or I pay them on pull-ups these days rather than nappies. But look, that’s the issue. If it’s going to be used as an issue to open up the GST and have a big broad debate about what should be in the GST or not, well we actually have a tax paper that is out for discussion at the moment. A process for discussion on the reform of the taxation system. That’s the appropriate place to do it and that’s where it should remain.

PATRICIA KARVELAS:

But what is your preference? Personal preference?

TREASURER:

Well, obviously when I was asked the question on Tuesday night there is a common sense around the issue in relation to sanitary pads, if you compare it with the taxation treatment of condoms and a range of other things. But look…

PATRICIA KARVELAS:

So, what I’m trying to…

TREASURER:

I’m happy to facilitate it, you’re trying to get something out of me which is not…

PATRICIA KARVELAS:

I’m just trying to have a conversation, I’m enjoying myself immensely.

TREASURER:

[laughter]

PATRICIA KARVELAS:

I am actually. But I’m just wondering if you said it in haste on Q&A because, you know, you wanted to be popular with the women?

TREASURER:

No, no, no because it’s been around for years. No.

PATRICIA KARVELAS:

Maybe?

TREASURER:

Look, I remember the original debate and you might as well? I can’t remember you’re very young so I don’t know…

PATRICIA KARVELAS:

I am, I’m a spring chicken I wasn’t here for the GST debate but I watched it closely.

TREASURER:

Well, what happened during the GST debate was obviously the GST was applying to everything. Then in the negotiations with the Democrats there was, I’m not totally familiar with the details, but there was a negotiation about certain gazetted health products and there was a list and it ended up that as a result sanitary products had the GST applied, but there were other things that didn’t. You could argue that over time there’s been a morphing of different products into different types of [inaudible]…

PATRICIA KARVELAS:

Okay, but what the Prime Minister has said and what you have said has not been identical, it hasn’t.

TREASURER:

Well we used different words to make the same point. Which is – at the moment in politics, unless you use exactly the same words, with exactly the same comma in the middle and exactly the same pause, people say there’s a difference. Well there isn’t. We’ve always said consistently that changes to the GST are a matter for the states. How Bill Shorten brought the Netflix tax into this, or the so-called Netflix tax as he called it, is bizarre. Because this has been on the table for – when they were in government, about whether you apply the GST to intangibles, or to low-value goods and changing the low-value threshold. These are all anomalies that are being addressed and if the argument about sanitary products turns into a debate about what should be in the GST or outside the GST, that’s not about addressing an anomaly, that is about a much broader issue which is better suited to the taxation paper.

PATRICIA KARVELAS:

On RN Drive, my special guest is the Treasurer, Joe Hockey. Our number here at RN Drive is 0418 226 576 if you’d like to text us your views and I am very happy to read your views out and also to ask the Treasurer any questions you might text in. 0418 226 576. Arthur Sinodinos was on RN Drive last night, on a political panel, and said that the government should be broadening the base of the GST, not actually narrowing it. Here’s some of what he had to say to me.

[PLAYS CLIP]

ARTHUR SINODINOS:

We should be careful about focusing on a particular product at any one time, because this GST debate has got to be in the broader context of tax reform, where probably what we should be doing is broadening the base…

[CLIP ENDS]

PATRICIA KARVELAS:

That’s Senator Arthur Sinodinos there. Aren’t you running contrary to the whole thrust of the debate on the GST? I mean, we do need to broaden it don’t we?

TREASURER:

Well, people are putting submissions in. I released a taxation discussion paper a few weeks ago. We’ve invited submissions from the public and we’ve had a number of forums around the country about the future of the taxation system. Look, there are many different views.

PATRICIA KARVELAS:

That’s right, changing the GST isn’t seen as particularly popular…

TREASURER:

But, we need to have a taxation system that deals with all the needs of a 21st Century economy. For example, on Budget night when I tabled the draft legislation in relation to digital goods and services, it was barely contemplated that that would be necessary when the GST was originally introduced, because there was hardly any market for the purchasing of movies or games, video games, whatever the case might be, interactive games or other technology over the internet. You just didn’t do it when the GST came into play. So, there has been a shift in the economy. Now, the big issue in tax is that we are in a very different economy now and it’s going to change again in the next few years. So, is our current tax base going to meet our needs and importantly, given that various parts of our taxation system were structured in the 1950s and 60s, how’s it going to cope with a world where money is far more mobile, where capital moves in the blink of an eye and where labour is increasingly mobile? And how are we going to ensure that Australia doesn’t have taxation leakage as a result of new technology? So there are many questions to be answered.

PATRICIA KARVELAS:

The Financial Review reports that there is a growing group of Liberals who are despondent. They feel like there’s a price that they’re paying for the government’s political recovery, as your second Budget no doubt is more of a political document, more of a document, you know it’s more of a vote-pleaser, you’d have to concede that. Things like changes to the GST, superannuation being off the table, negative gearing you won’t go there; don’t you have to start looking at some of these reforms if you want to be a genuinely reforming Treasurer?

TREASURER:

Well, there’s a number of things there. Firstly, when some gossip is just reported in the paper I just don’t respond to the gossip. I mean it’s all it is, it’s gossip…

PATRICIA KARVELAS:

But it’s kind of not, because some of the reporters I know…

TREASURER:

Well if people put their names to it, like you know, Arthur came on your program yesterday I’m happy to respond. But when it’s a journalist reporting gossip or journalists interviewing journalists then I’m not responding to that. I’d rather deal with factual statements. So, your statement about reform, it’s a good question. In our Budget, in our first Budget, we had a lot of reform and some of it went through the Parliament, quite a bit actually went through the Parliament, other parts didn’t, like higher education reform. In this Budget we do have reform. You can see for example Sussan Ley announce the negotiation of the new pharmaceutical [inaudible].

PATRICIA KARVELAS:

We had her [inaudible].

TREASURER:

Yeah, that’s right. There is significant reform in that as well. We have the pension reform, which was in the Budget. We have big childcare structural reform, which is a big reform in the Budget. Even today, the Medical Research Future Fund that I introduced into Parliament, is a very substantial reform in the area of medical research. So, you know, we have had a lot of reform as a government in a relatively short period of time.

PATRICIA KARVELAS:

But there are some things you’re afraid of going near. I mean, superannuation, it doesn’t seem logical.

TREASURER:

We’re not afraid, it is the case that superannuation currently has – is providing a lesser return than many people would have expected, because we have a global economy where returns are comparatively low and certainly low compared with what people might have expected. So now’s not the time to impose a new tax or changes on superannuation. We’ve got to give people stability and certainty, and that’s what we’re endeavouring to do. That is a sharp contrast, we freely admit, with the Labor Party who are determined to not only have change in superannuation, but to increase the taxes on superannuation and they’re poorly thought through. They’re poorly thought through changes because they fail to look at the interaction with the pension system, with the aged care system, the private health insurance system and so on, so…

PATRICIA KARVELAS:

But how about some of your other reforms; you’re going to have a lot of unhappy participants at the leaders retreat with state and territory leaders. You’re pushing for this $80 billion worth of cuts in health and education, we know that Mike Baird is unhappy, how are you going to resolve that? I mean, you know, the Premier of one of your biggest states, a Liberal, not happy?

TREASURER:

Well you’ll remember Patricia when we came to government there were two states and a territory that were getting no Gonski money at all. Queensland, Western Australia and the Northern Territory weren’t getting a zac. Not a dollar out of Gonski and never factored it into their Budgets. We went to the last election saying that we would fund the first four years of Gonski, but after that we couldn’t see where the Government, the Labor Government then, was getting the money. In fact there was no money. In fact, what the Labor Party did was they back-ended huge costs into the Budget that were never funded.

PATRICIA KARVELAS:

Yeah but you have built in new cuts…

TREASURER:

Hang on, so you had education. No, no, you had education bonus payments, you had health bonus payments for hospitals, and then you had the NDIS on top of it, which was unfunded. And you also had a pipeline of defence spending that was put off into the never never but was essential, for example submarines.

PATRICIA KARVELAS:

Alright, even now though, you’re the Government. You’re the Treasurer of the national Government, that’s definitely who you are.

TREASURER:

Absolutely, yep [laughter]

PATRICIA KARVELAS:

I’m pretty sure of it…

TREASURER:

I saw the name on the plate outside the door.

PATRICIA KARVELAS:

It’s a good way to figure it out. Here we have the Chair of the Council of the Australian Federation, Mike Baird, saying he’s not happy over the $80 billion worth of cuts.

TREASURER:

But we’re still increasing spending. So, over the next four years…

PATRICIA KARVELAS:

It’s not growing at the level it was meant to.

TREASURER:

Well hang on, we’re still increasing spending on health by six per cent in real terms over the next four years. Even though, apart from Mersey we don’t run any hospitals. We are still increasing funding in education by six per cent in real terms over the next four years, even though we don’t run any schools.

PATRICIA KARVELAS:

Alright, not going to the level it was meant to Treasurer. Let’s move…

TREASURER:

But hang on Patricia, it was never funded, so it was never real. I mean unless Labor was going to introduce a doubling of the GST or…

PATRICIA KARVELAS:

But the voters thought it was real and Australians thought it was real.

TREASURER:

I don’t believe that, because they elected us on the basis that we were only funding it for four years and we couldn’t afford to pay bonus payments in the years after that.

PATRICIA KARVELAS:

I want to get to some other issues because I know that you are busy and Family Tax Benefit is something that I take a great interest in. What compromises will you make to pass your childcare bill? Family Tax Benefit B cuts from last year’s Budget; you’ve coupled them with your childcare package, it doesn’t look like it’s going to get through the Senate. No one seems interested in really doing a deal with you on this. Are you going to dump it?

TREASURER:

Well, no. I’d say to you that Scott Morrison is negotiating appropriately as the Minister responsible, with Senators. I’m not going to pre-empt the outcomes of those negotiations. But unless we have savings we can’t spend new money. We have had to spend in the existing childcare system, nearly $5.5 billion extra, which we never anticipated 18 months ago, because the current system is blowing out in cost. Then on top of that, we had a Productivity Commission review. That identified 165,000 parents that want to have more accessible, more affordable and more flexible childcare. We’re responding with another $3.5 billion on top of that…

PATRICIA KARVELAS:

You are, but if you can’t get the savings from the cuts to Family Tax Benefit B, what do you do?

TREASURER:

If you can’t get savings you can’t get the extra spending.

PATRICIA KARVELAS:

Okay, so do you modify your childcare package? Because it’s pretty generous at the top end, I was surprised by how generous it is at the top end.

TREASURER:

Well, I – let’s see how negotiations go…

PATRICIA KARVELAS:

But are you perhaps willing to…

TREASURER:

Well Patricia, I’m not…

PATRICIA KARVELAS:

Rich families getting $10,000 a kid.

TREASURER:

But I’m not going to pre-empt what the outcomes are of discussions…

PATRICIA KARVELAS:

Are you leaving it open then? Potentially bringing it back?

TREASURER:

We are prepared to negotiate, but let me – well, we are prepared to negotiate about how to fund it. Scott is appropriately conducting negotiations.

PATRICIA KARVELAS:

On RN Drive, my guest is the Treasurer, you probably can tell, he has a very distinctive voice, Treasurer Joe Hockey. I think you do. 0418 226 576 is our number. Two other issues we’re going to get to, including the one I know that you’re very, very excited about today. But first to marriage equality which has been put on the agenda by – well, it’s been put on the agenda for a long time. It has really, let’s be honest here. Ireland voted on it this weekend and it’s really put it on the agenda, and Bill Shorten obviously with his private members bill seconded by Tanya Plibersek. Do you agree that it’s time to have this debate now?

TREASURER:

Well, I’ll leave that to others. I mean my focus obviously…

PATRICIA KARVELAS:

But I want your view.

TREASURER:

Well, my view is I’ve got to get the Budget through. There are limited sitting days before the end of this financial year. We’ve got to get through the Parliament, given that the Senate is only sitting is it, two weeks before the end of the financial year? We’ve got to get through all the tax initiatives in relation to small business and a raft of other measures.

PATRICIA KARVELAS:

You can walk and chew gum.

TREASURER:

But can the Senate?

PATRICIA KARVELAS:

I don’t know, in the Lower House, the debate beginnings, no one’s…

TREASURER:

I don’t think the issue is the House of Reps. I’m focused on the Senate, the House of Reps is sitting…

PATRICIA KARVELAS:

Okay, in the next two weeks no one is voting on anything Joe Hockey, all we’re talking about it your Party having a conscience vote. Should you have one?

TREASURER:

But that’ll be an issue to be resolved by the Party Room in the appropriate way. Now, I know where you’re going with this.

PATRICIA KARVELAS:

I want your view.

TREASURER:

You know my view in relation…

PATRICIA KARVELAS:

I don’t, I want you to restate it.

TREASURER:

My view is that a marriage is – and look I want to emphasise, I am very aware and something I’ve learnt in politics is you’ve got to remind people that you are absolutely understanding and respectful of differences of opinion. As I’ve said previously, my view is a marriage is between a man and a woman. Now, I am very aware of the views of many friends that have a very different view and want to marry their partners. I’ve got plenty of friends that are same sex partners. I’m also aware of the views of my own family and, like the Prime Minister, there is a division of views in my own family.

PATRICIA KARVELAS:

Who in your family is pushing you?

TREASURER:

There’s a division of views…

PATRICIA KARVELAS:

Your wife?

TREASURER:

There’s a division of views in my own family. My parents have a view, my siblings have a view, everyone has a view. I want to respect their opinions and obviously the respective views of my colleagues and other parliamentarians. The best way for this to be dealt with fairly, is to ensure that it’s not owned by any one political party or owned by any one person. This has got to be a community response - a genuine community response in both the Parliament and across the broader community.

PATRICIA KARVELAS:

But the community appears to have a pretty strong view. Mark Textor has done research, he says it’s overwhelmingly popular. He’s your own pollster.

TREASURER:

You don’t always just – look, can I promise you I mean, there are lots of good opinions out there about public views. There are a lot of people that come up to me in the street and have a different view to what any one pollster might say either way.

PATRICIA KARVELAS:

But either way, you say a lot of your gay friends want to get married. Do you feel comfortable saying to them no, you shouldn’t be allowed to?

TREASURER:

Well, they don’t really, I don’t say that to them. I’m respectful of their views and they’re respectful of mine.

PATRICIA KARVELAS:

But they know that you’re one person voting against it so do you feel comfortable with that position?

TREASURER:

Well, yeah, look I’ve rationalised it in my own head and thought very deeply about it. But again, I emphasise that others have different views and I’m one voice in this.

PATRICIA KARVELAS:

So you can’t be shifted?

TREASURER:

Afraid not.

PATRICIA KARVELAS:

Because there’s going to be a strong campaign, I’m just wondering. There’ll be a big lobbying [inaudible].

TREASURER:

Well, you can’t change your views on the basis of a campaign that’s run against you on a particular issue.

PATRICIA KARVELAS:

Fair enough.

TREASURER:

I think on these sorts of issues if you have your view which might be based in faith, it might be based on your own values, it might be based on your perceptions or your beliefs. Again, I’m not being judgemental of others, other than the fact that I have to have a personal view and I do have a personal view in this area.

PATRICIA KARVELAS:

Let’s move on to the last thing before I let you go, the Medical Research Future Fund. The Government has tabled legislation to create the Medical Research Future Fund. This was going to be funded by this GP co-payment…

TREASURER:

No, no, it was much broader than that. It was based on a whole range of savings out of health over a long period of time. Those savings are still going to be – we’re still going to appropriate from the Budget in to the fund. So the Budget bottom line doesn’t change. It doesn’t detract from the Budget bottom line at all. But what the money is going to do that is going into the fund, and there’s currently an old hospital fund that was setup under the Howard Government that has a billion dollars in it, and we’re immediately putting that into the Medical Research…

PATRICIA KARVELAS:

So are hospitals being robbed for this?

TREASURER:

No, no, no. Because, it’s not robbed because the greatest [inaudible] – you know the thing that is going to change our lives Patricia, and the thing that is going to build a stronger health system, is to have medical research breakthroughs that give us the drugs, the machinery and equipment that actually can reduce the times that people have to spend in hospital. Or, it can improve longevity and quality of life. These are the things. When we’re in trouble, when a loved one is dying, we always live in hope, search out, say we’ll do anything we can to get the cure, the miracle cure, the miracle response that’s going to save our loved one’s life. Well here we are legislating it. Here we are today in Parliament legislating it. I mean, I’m disappointed it hasn’t got more coverage. I mean, people are more interested in the gossip in the Parliament House than the landmark initiatives that are going to probably save our children, your children Patricia, mine, or grandchildren as yet unborn. This fund has the capacity to back Australian research and innovation that can save millions of lives into the future and they may well be our own. That’s why today was such an important step forward. You say what have you done in government in 18 months, two years? I’d say this is one of the proudest initiatives I’ve been involved with in nearly 20 years.

PATRICIA KARVELAS:

You say it hasn’t got much coverage, we’ve just given it a little Treasurer.

TREASURER:

Well, that is – I really appreciate that Patricia, thank you.

PATRICIA KARVELAS:

Thanks for joining me in the studio, in this tiny little studio, we’ve had fun. Thanks Treasurer.

TREASURER:

Thank you.