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HOCKEY
Treasurer
TRANSCRIPT
HARDTALK BBC WORLD NEWS
TUESDAY, 14 OCTOBER 2014 AEDT
LONDON
E&OE.
STEPHEN SACKUR:
Joe Hockey, welcome to HARDtalk.
TREASURER:
Great to be with you, Stephen.
STEPHEN SACKUR:
You made some very big promises about how you were going to manage
the Australian economy when you were in Opposition. It is proving pretty
hard to keep those promises, isnt it?
TREASURER:
Well, its always challenging but were determined to do it. Were
determined to deliver continuing prosperity and Australia is now in its
24th year consecutive year of economic growth. We havent had a
recession for 24 years. We are the custodians of that legacy; weve got to
keep it going.
STEPHEN SACKUR:
Everything is relative though, your growth is slowing from the highs of
three, four, five years ago, but not only that, youve got real problems.
Youve got a Budget deficit which is far higher than you said it was going
to be when you took office and it is also proving to be impossible for you
to keep the promise of balancing the books within a year or two you
said.
TREASURER:
Well no, thats not right, we didnt say that. We said we would have a
credible path back to surplus, were delivering on that. We said we would
get rid of the Carbon Tax, we delivered that. We said wed get rid of the
Mining Tax, we delivered that. We said we were going to have a big
infrastructure program, were rolling that out. Weve got unemployment
stabilised at around six per cent with a higher participation rate.
STEPHEN SACKUR:
Six per cent, which is, I believe, the highest in the Asia Pacific region
except for the Philippines. Thats not a great record for Australia is it?
TREASURER:
Well, no, it isnt, and thats what we inherited from our predecessors
twelve months ago. Now, were starting to see some good employment
growth and Im not as pessimistic as you might be about where the
Australian economy is heading at all. We are certainly at close to trend
growth but there is enormous opportunity in Asia we are going to
capitalise on.
STEPHEN SACKUR:
Well talk plenty about Asia but before we get there, lets just look at the
state of the economy in a bit more detail: you say, Look, there is no
cause for pessimism, but if youre one of the 17 per cent of Australians
who live below the poverty line and you see the priority that your
Government has put on austerity measures which appear to many people
to hit the poorest hardest, it is hard to be optimistic isnt it?
TREASURER:
Well, no, because the best way to give people on lower-incomes the
chance to get ahead is to give them a job, and well paid jobs, create an
environment where employment can prosper and one of the ways weve
done that in just 12 months, apart from abolishing the taxes and a range
of other things, weve signed two new Free-Trade Agreements with Korea
and Japan and we are certainly in advanced stages with China before the
end of the year.
STEPHEN SACKUR:
Well, I promise you, I do want to talk a lot about your relationship with
China in particular and Asia generally, but I just want to pick away a little
bit more about what is happening to the livelihoods of ordinary
Australians. For example, this austerity Budget, I guess I could call it,
that you presented
TREASURER:
No, its not austerity. I mean, thats a ridiculous term in the context of
Australia.
STEPHEN SACKUR:
Its a focus on cuts.
TREASURER:
Well, that doesnt make it austerity.
STEPHEN SACKUR:
Youre making major cuts across the public services, youre also trying to
find new ways to raise revenues and if you could just bear with me for a
second, lets just take a few of them: first, the excise duty that youre
raising on fuel, you said, Listen, poor people dont need to worry about
that because they dont have cars and they dont drive far. That
produced howls of anguish from ordinary Australians low-paid workers,
who travel every single day in their cars to low-paid jobs.
TREASURER:
STEPHEN SACKUR:
(Inaudible) pay a flat rate fee which is regressive, as opposed to paying
through income tax which is progressive. So, again, youre switching the
focus in the way that youre handling the tax policies of your country to
hit the lower-paid and the less fortunate harder than the rich.
TREASURER:
Stephen, I dont accept what youre suggesting because I also introduced
a deficit reduction levy which increased the top marginal tax rate in
Australia. Now, the fundamental point is this, everyone has to contribute
in order to fix the mess that we have inherited. We cannot expose
ourselves to global volatility, we need to pay our way and if that means
that everyone has to make a modest contribution to the best health
system in the world, then so be it.
STEPHEN SACKUR:
Well, you know, its a mantra we hear in many different governments in
the western world, were all in this together, but the figures suggest
that inequality is rising across western democracies and I dare say, you
are concerned about that too, and if you are, does it make sense, as was
reported by a recent index study of corporate taxes, does it make sense
to continue to allow corporate Australia to avoid paying the 30 per cent
corporate tax rate to the point where this report suggested one third of
Australias top 200 companies only pay, in effect, 10 cents in the dollar of
corporate tax?
TREASURER:
Well, as a proportion of total income to the Australian Government,
company taxes actually represent more of a proportion than most
countries in the OECD.
STEPHEN SACKUR:
Of the top 200, 30 per cent are effectively only paying 10 cents in the
dollar.
TREASURER:
The data was wrong in that report. That was an independent report.
There was actually (inaudible) on the basis of incorrect data. The
fundamental point is (inaudible)
STEPHEN SACKUR:
Tell me what the real figure is then, if its not 10 cents in the dollar what
is it? Because it sure isnt 30 per cent which is what the corporate tax
rate is supposed to be.
TREASURER:
Well, the largest companies in Australia are paying the most tax. Thats
the fundamental point. Now, what our taxation
STEPHEN SACKUR:
(Inaudible)
TREASURER:
No, I am answering your question.
STEPHEN SACKUR:
Well, (inaudible) 10 cents in the dollar that so many of these companies
are actually paying, with all of their off-shore tax havens and their
complicated tax structures, what is the effective rate of corporate tax
(inaudible)?
TREASURER:
We have a 30 per cent company rate.
STEPHEN SACKUR:
Yes I know, theyre not paying it.
TREASURER:
The starting point is, one company that they cited as not paying 30 per
cent company tax rate actually doesnt make a profit. So, that is one of
the reasons why the report youre relying on is flawed. Now, to come
back to what is actually the case, the fact is, we get more of our income
as a percentage than almost any other OECD country. So, we rely heavily
on company taxes. Having said that, we want to make sure that wherever
companies are in the world, that they pay tax on the profits they earn in
that country.
STEPHEN SACKUR:
STEPHEN SACKUR:
Every independent analyst says you are really going to struggle to deliver
on your promises to reduce, and then pretty much eliminate the deficit in
your term in office. You again, just to look at priorities, have decided that
one way you could do it is by imposing really quite severe cuts on higher
education. Given what youve told me about your commitment to
investment and infrastructure, does it make sense to be cutting the
investment in Australias people, in their higher education?
TREASURER:
Well, direct government investment is going to be reduced but the total
funding for universities will increase because we are de-regulating our
university sector so it is better able to compete with the rest of the world.
STEPHEN SACKUR:
And youre raising university fees and youre making the students pay
them back quicker. So, youre putting an awful lot of pressure on
Australias students at a time when youre actually saying the
Government is going to fund their courses to the tune of 20 per cent less.
TREASURER:
Actually, what we do is, instead of funding 60 per cent of the university
degree, itll reduce to around 50 per cent of the university degree. Bear
in mind that most Australians dont go to university and they are helping
to pay for those fees. Second point is, we give every student in Australia
a very generous loan scheme, where they borrow the money for the
university degree and they only start to repay it when they earn more
than $50,000 a year; it comes out of the tax system. Thirdly, we are
introducing the most generous scholarship scheme Australia has ever
had for those most disadvantaged as a result of it. Fourthly, we are
increasing the number of students that are actually going to attend
university and making that loan scheme available to people that might
not be able to go to university but want to undertake sub-prime degrees,
and finally, we are facing the challenge of universities emerging in Asia
with a quarter of a million students. Now, those universities can buy the
best academics in the world. We havent got a campus in the top 20 in
the world. We need to compete.
STEPHEN SACKUR:
And it helps, does it, to cut what youve said, is the Federal Government
university funding? It helps you compete to get yourself into the top 20
universities in the world? I am just struggling to see the logic.
TREASURER:
Because the growth in funding is going to come from students and the
growth in funding from students is sustainable. The growth in funding
from governments is not. So, the predecessor Government to us cut the
university (inaudible) but didnt allow universities to charge what they
need to, to be able to compete with the rest of the world.
STEPHEN SACKUR:
TREASURER:
Well, it sends a message to Beijing that we cant control our press and we
cant control what people say but Mr Palmer did say that. He then
apologised for it. The fact is, he is involved in a very deep and very
acrimonious dispute with a Chinese business partner and obviously
(inaudible).
STEPHEN SACKUR:
This is what the Global Times in Beijing said afterwards, it said, these
remarks are a symbol that Australian society has an unfriendly attitude
towards China.
TREASURER:
Well, that is just dead wrong.
STEPHEN SACKUR:
You have got a problem though, havent you?
TREASURER:
No.
STEPHEN SACKUR:
Well it is not me saying it; it is the Global Times in Beijing (inaudible).
TREASURER:
Well, that is wrong. (Inaudible) there are you know, probably more than
half a million Australians that speak a Chinese language every night at
home. There has been a significant increase in direct Chinese investment
into Australia in the last two years. There is a deepening of ties with
China but it is not only China. The story of Asia is not just China, it is
STEPHEN SACKUR:
(Inaudible) the worlds dominant economy. If you are so sure that
Australias economic relationship with China is the future for your
country, is that why many people noticed your Government really didnt
get involved at all with the pro-democracy protests in Hong Kong, didnt
express any support for them, didnt condemn the Chinese Government
and the Hong Kong authorities for, essentially saying that there couldnt
be genuine democracy in Hong Kong by 2017? Is that why you just
avoided that issue altogether?
TREASURER:
No, we didnt avoid it. We obviously called for calm like many other
countries around the world called for calm, but fundamentally, it is an
issue for the Chinese Government.
STEPHEN SACKUR:
(Inaudible)
TREASURER:
(Inaudible) But just a final question: when your own Prime Minister, Tony
Abbott opened a coal mine, I think just yesterday in Queensland, he said,
Coal is the future. It is good for humanity and you can bet it is good for
Australia. Is that the kind of Prime Minister that you think is going to
deliver a better, cleaner future for not just Australia, but for the world?
TREASURER:
Well, because we are exporting coal so that nations can lift their people
out of poverty, and that is a fundamental point, we are exporting gas, we
are exporting coal, we are exporting uranium. I mean, it is easy to sit in a
nice studio here in Britain and reflect on you know, what climate change
is and what energy is but fundamentally, when people havent got
electricity, they havent got clean water, they want what Australia has
and we stand prepared to get it to them.
STEPHEN SACKUR:
We have to end there. Joe Hockey, thanks for being on HARDtalk.
TREASURER:
Thanks very much.
STEPHEN SACKUR:
Thank you very much.