Hockey tells Kiwis there is no economic crisis in 
Australia
Australia
Lisa Owen began by asking him how much trouble the Australian economy was in given his drastic measures in the recent Budget.
Joe Hockey: The Australian economy is not in
trouble. We’ve had 23 years of consecutive economic growth. We want
another 23 years of economic growth, and as a result, the reforms you
undertake today will build the growth tomorrow. So we need to undertake
these reforms.
But there’s no crisis at all in the Australian
economy. The fact is you need to move on the budget to fix it now, and
you need to undertake structural reform to structure the economy in the
years ahead.
Lisa Owen: So if there is no crisis, and
a number of economists in your country have said that there isn’t one,
is this budget about ideological changes, trying to push through some
things that might have been highly unpalatable unless you told people
there was a real need to do this?
Well, no, I don’t accept the premise of your
question because the fact is if you make decisions now, you’ll get the
prosperity in the future. And that’s one of the ways we’ve been able to
deliver low unemployment, high economic growth, a diversified economy
that has built, unquestionable, advantages for everyday Australian
families into our daily living.
Now, if you undertake the reforms, and this is a
good lesson out of New Zealand, if you undertake the structural reforms,
the benefits flow.
But I’m just wondering, you’re our
second biggest trading partner; should we be concerned about the status
of that relationship, given you feel that there is a need for quite
significant changes in your economy?
Well, our economy is undergoing change. We’ve had a
massive mining boom, and the mining boom has involved a huge amount of
resources for construction of new mines and gas projects, and so on. Now
we are into the production phase so we’re exporting our socks off in
coal, in gas, in iron ore, so that requires, obviously, far less labour.
Mining and resources represents 10% of our economy,
but just 2% of employment. And agriculture is around 2% and 2 ½% of our
economy, so how do we stimulate the other 88% of the economy to pick up
the slack? And that is exactly what we are focusing on. We’re shifting
resources from mining and gas into new areas of the economy that help to
grow the pie. And, frankly, it is a transition, but that means we will
have sustainable growth into the future, and like New Zealand, we’ll
capture the huge trading opportunities in the Asian region that lie
before us.
So we don’t have anything to worry about in terms of our trading partnership with you?
No. No, not at all. You’re highly competitive. We’re
like brothers and sisters. There might be a little competitive tension
in the family, but there’s no doubt in my mind that, you know, we’re
shared blood.
I want to look at some of the changes
that you have made and are making – you’ve raised taxes. Your top tax
rate is now 45 cents in the dollar. Ours is just 33 cents. How worried
are you that some of your best and brightest might think that New
Zealand is the better place for them now?
Well, they may well do, and this is one of the
challenges that we have because other jurisdictions, not just New
Zealand, but company tax in the United Kingdom is 21%, and far less than
that in Hong Kong and Singapore. There are lots of competitive
advantages that other countries have, that’s why we need to live within
our means. When we start running surpluses instead of massive deficits,
we have the capacity to further cut taxes. But the only way we can cut
taxes is if we start to generate more income and start to live within
our means. And that’s why we’ve had a hard budget.
So do you accept, then, while you are
rebalancing like that, there is prospect,… you accept that some people
could jump across to New Zealand because they see it as a better option.
Of course. Yeah, yeah.
Does that worry you? Your best and your brightest.
We’ve just got to manage. We’ve got to manage the
challenge. Never take it for granted. There are other advantages that we
have. I’m rolling out, in partnership with state governments, around
$125 billion of new additional infrastructure over the next six years.
That is a massive, a massive stimulant to the Australian economy, and
that will obviously attract businesses to Australia.
We’re undertaking significant reforms in health and
welfare and education. That will act as an incentive for people to come
to Australia. So there’s twists and turns.
Super. That’s another change to the age
of 70. Isn’t it inevitable that New Zealand will have to match that, do
you think, over time?
Well, it might be a priority for the people in New
Zealand to keep a lower pension age. That’s up to the people of New
Zealand. But in Australia, when the aged pension was introduced in the
early 1900s for men and women aged 65, life expectancy was 56. Life
expectancy now is heading towards 100,, so, obviously, in our case, we
had to make the change.
If we stick with 65, do you think older Australians might jump the ditch to get an extra five years of pension out of us?
Well, no, because there’s other things that might
cause them to jump the ditch or perhaps stay on the other side. There
are many factors…
But what would stop them doing that, because we treat them exactly the same as our own citizens?
Well, there might be the argument that we may have a
better health-care system and a better age-care system for people over
65. I’m not saying that is the case, but there might be an argument
about it. So there are many reasons why people might not suddenly flood
the New Zealand marketplace to get an extra five years of aged pension.
You’ve had a really strong housing
market, has your capital gains tax kept those housing prices lower than
you would otherwise expect them to have been?
Uh, well, no. There are many factors that play in
the Australian housing market. There is arguably an under-supply, and
we’ve got a big immigration programme, so our population does grow
significantly every year. So there are many other factors at play in
Australia.
Our housing market is robust. There is a big…
So capital gains hasn’t done a lot?
Capital gains tax is, you know, … it varies. You’ve
got to have a competitive capital gains tax regime, but if you’re
fishing for with a comparison to New Zealand, I’m not familiar with the
New Zealand regime at this moment.
Well, for the
first time since 1991, we’ve got migration figures that show New Zealand
migrants to Oz have levelled off. Are you relieved by that?
Well,
we welcome New Zealanders coming to Australia, and they make a massive
contribution in many areas. The fact that they’re choosing to come home
is a lot about the strength of the New Zealand economy, and if New
Zealanders are coming home, it means that they’re voting with their feet
for a strong New Zealand economy and strong future for New Zealand. You
should be proud of that.
But the
ones who do choose to stay, since 2001, New Zealanders can’t collect
welfare in Australia. Most of them can’t access student loans. They
can’t vote. I’m wondering, does the Anzac spirit mean anything any more?
Oh, it means a lot. It means a lot. It’s just…. We’re…
So why not treat them the same way?
Because
they are not Australian citizens. And the fact is there are a lot of
countries that would find it attractive to access all the entitlements
that are afforded to the Australian people, but, ultimately, we’ve got
to strike a balance when we’re running out of money, and at the moment
we are running big deficits. We’ve got to live within our means.
But
you said we’re like family. We’re like brothers and sisters, and we
treat Australians like brothers and sisters in terms of welfare and
benefits and what have you.
Well,
that’s right. We are. But if my brother and sister were in very
desperate financial trouble, I wouldn’t be asking them for money, and
similarly, given that New Zealand’s doing very well, and Australia is
not in desperate financial trouble, but we’re short of a quid at the
moment because we are running deficits, I think it’s not unreasonable
that we both live within our means.
So do you see a time then, if it’s a problem at the moment, do you see a time in the future when that could change?
Yeah.
Look, the Prime Minister raised with me… Prime Minister Key raised with
me a number of issues. I think we can move on some, but let me go back
and speak to my colleagues…
Could you share with us what are the ‘some’ things?
There were a couple of initiatives in welfare that I think the Prime Minister put forward a pretty convincing case…
What are they, Treasurer?
Let
me speak to my colleagues first. I want to know what the cost if, but
in deference to John Key, I will go back and have a good look at it.
So, maybe unemployment benefit?
I said I would have a look. I’m not going to go through the shopping list.
OK, so do you have any concerns that perhaps there might be an underclass of New Zealand citizens in Australia?
No,
not at all because New Zealanders know how to stand on their own two
feet. They don’t need to rely on Australian welfare to get ahead.
Then
that leaves me to the thought. Is this policy actually not about
blocking New Zealanders coming into Australia, but is it a means of
stopping citizens from other places, like Pacific Island migrants,
coming to Australia through New Zealand?
Well,
it’s about placing limitations on the amount of money that the
Australian government, the Australian taxpayers, pay out, and the first
priority is to Australian citizens. It’s pretty understandable.
But is part of that stopping people from the Pacific Islands coming into Australia?
Well,
no, because we’re a very welcoming nation for people from the Pacific
Islands, and New Zealand is a great leader in the region. So… Look, it’s
a balancing act, and you can afford to be more generous when you have
more money, and in Australia, gee, I wish our budget was in the position
of the New Zealand government. They’ve done the hard yards. They’re
getting to surplus. At the moment, we are a long way from surplus.
There
was one thing in your budget which suggested that your government was
actually going further than previous governments in terms of excluding
New Zealanders. It was this work commitment bonus. The 2500 if you stay
in employment for a year. You have specifically excluded New Zealanders
from picking up that bonus, haven’t you?
Look,
I’m not familiar with any specific exclusion of New Zealanders. I’m
going to follow that up. I didn’t know there was… I would be surprised
if it was specific to New Zealand, but let me have a look at that.
OK,
so, overall, would you be happy if we treated Australians, coming into
our country, the same way New Zealanders are treated when they move to
Australia?
Well, look, the
relationship is much more sophisticated than any one area of activity,
and, look, Australia has a deep and enduring relationship with New
Zealand, and will continue to do so. How New Zealanders treat
Australians I would hope is to your benefit, and I don’t want to get
into it tit-for-tat sort of arrangement…
But as part of that enduring relationship, it sounds like you’re going to give it a nudge for us when you go home, are you?
Well,
I’ll tell you what. If you send Richie McCaw over to play for the
Wallabies, then I’m prepared to do a deal in other areas.
Oooooh. We’ll have to weigh that one up. Thank you so much for your time today. Very appreciated.
Thank you. Thank you.
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