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Hockey-Robb Joint Press Conference Coalition Savings

Wednesday, 28 August 2013

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transcript

The Hon Joe HOCKEY MP

SHADOW TREASURER

 

The Hon ANDREW ROBB AO MP

SHADOW FINANCE MINISTER

 

PRESS CONFERENCE

CANBERRA

WEDNESDAY, 28 AUGUST 2013

 

E&OE…………………………………………………………………………………

 

JOE HOCKEY:

Well, thank you very much for coming along today, ladies and gentlemen.  The Coalition is absolutely committed to living within its means.  After six years of Labor getting every single budget number wrong, enough is enough. 

Today the Coalition is announcing the great bulk of its savings to pay for our election promises and to leave the budget in slightly better condition prior to the election.  The fact of the matter is most of the $31 billion of savings that we're announcing you already know about.

The mining tax package has been a disaster for the budget.  It was initially expected to raise more than $40 billion, more than what it has raised.  The package is leaving the budget $18 billion worse off. 

Secondly, the carbon tax package as it stands leaves the budget $7.5 billion worse off over the forward estimates.  In contrast, the Coalition, with its Paid Parental Leave Scheme together with the offsetting savings to pay for the scheme, leaves the budget slightly better off.

Now, the Coalition will accept the savings announced by the Government in the updated economic statement released prior to the election.  We do accept the savings.  We don't like a number of them.  But we have to do it to be prudent. The only identifiable savings is that we will not accept are the changes to fringe benefits tax for motor vehicles which we will not proceed with in government.

We have gone through a process now for three years.  We have worked with the Parliamentary Budget Office which has, as I understand it, more than forty staff, many of them former Finance and Treasury officials.  We have submitted policies to the Parliamentary Budget Office, received them back, gone through the process and we have submitted them to our independent verification panel, which is made up of three eminent Australians. When we release the final figures at the end of the campaign, that verification panel will certify in writing that they believe the numbers to be accurate.

So there are no great shocks here.  The great shock is that Kevin Rudd is being proven to have made hysterical and unsubstantiated claims about the Coalition.  There are no cuts to health and education, there is no increase in the GST, there is no $70 billion black hole.  In fact, so much of what we're doing is trying to fix Labor's black hole.  But, that will take some period of time.

What we've done is have a thorough process.  We have released costings during the election for our policies where it involves money.  We are releasing the great bulk of our savings today, nearly three quarters of the way through the campaign.  No Opposition has ever done this.  No Opposition has ever released the great bulk of its savings three quarters of the way through the campaign, no one.

We're doing it.  And we're doing it because we need to re-establish on behalf of public, of the public service, on behalf of those people that seek to go into office, we're the only ones who can rebuild trust, we're the only ones that can put in place the initiatives that actually help to rebuild the relationship between the community and their elected officials.  And we do so because it is the proper way to go about delivering confidence and stability in the economy more broadly and confidence in the budget position specifically.

Now, I am going to ask my colleague Andrew Robb to say a few words and then we'll come to questions and deal with some of your more substantial questions. 

 

ANDREW ROBB:

Thanks ladies and gentlemen, just a few concluding comments again about the process. To date we have released around forty policies and we have on our website now some five hundred pages of detail about those policies. Now by contrast our opponents the Labor Party have released barely twenty policies, and five of those are actually press releases. No other detail, just press releases, and secondly that detail is just seventy pages on their policy announcement section of their website. Now the key point is that compared to Labor we've got some 400 pages of comprehensive policy detail.

So we have the vast majority of our policies out and now we have fully costed all those policies, everyone that is out there has got a full costing, as Joe said it’s been through the parliamentary budget office, but now all of those policies out there are fully funded, fully funded with the detail that we have released today.

Now the process that we have gone through is that we have undertaken, and I have been in and around politics thirty years, this is the most rigorous, the most comprehensive process ever undertaken by an Opposition party in the lead up to an election. And there are some four key elements to what we have done. Firstly we've had systematic internal scrutiny, this has gone on for nearly three years now, a series of processes, I’ve had the policy committee, I’ve fed things through to the expenditure review committee which Joe chairs, this has been an iterative process, we've gone backwards and forwards for three years, a very systematic internal process of scrutiny. Secondly we've had extensive contact with stakeholders. All of our front bench, all of our front bench have been there for the whole three years and their feedback from stakeholders, any questions we have they know who to go to, how to get the information, again it has been a very rigorous process.

The third thing and very importantly is the parliamentary budget office, now this organisation remember was established by this government. This government appointed the head of the parliamentary budget office, it’s an independent, intended to be independent parliamentary budget office, a costing organisation. They appointed the head, a former senior finance official and as Joe said there are some forty professionals, many of them out of treasury and finance. So we have gone with hundreds of policies to the parliamentary office, then have submitted those policies to our panel of review, three of the most eminent Australians, expert in public policy and public finance.

Right, you've got Geoff Carmody, who was a senior Treasury official who then went and was principal of Access Economics, one of our, if not our premier independent economic organisation in the country for twenty years, and following that or including that he has done the costings for at least five campaigns including both sides of politics, he did it for us in 1996, he did it again for Kim Beasley in 2001 and several other campaigns.

Len Scanlan - who is the former auditor Queensland, Auditor-General - worked with both sides of politics. And finally Peter Shergold who is the former secretary of the Prime Minister and Cabinet and now the chancellor of Western Sydney University and all of these people, their credentials I think are second to none.

Finally I'd say to you that the contrast has never been greater, we are being far more open and transparent about our policies [inaudible] $70 billion its going up each and every week since Kevin Rudd's been in office, by $1.5 billion and we've got to the point where this Government is borrowing to pay the interest on the debt. Now you say to any family, you know, you are at a point where you are borrowing to pay the interest on your mortgage and you've got a problem. Labor must come clean how they'll fund their promises and not wait until the day before the election as they have done both in 2010 and 2007, thanks.

JOE HOCKEY:

Ok, we'll go through. Ladies first.

JOURNALIST:

You said that in your opening remarks that this will leave the budget slightly better off, what's your estimate to date of the cost of policy spends and revenue cuts that you've announced to date, you've said that they're out there?

JOE HOCKEY:

We are releasing our savings adding to the savings we've already announced, but in total our saving are $31.6 billion. We will release the full aggregate of our expenditures when we release all of our policies. We are three quarters of the way through the campaign, we've released the great bulk of our policies all of our policies that have a cost associated with them, have costs associated with them which we've identified. Today after Mr Rudd's been calling for this for months and weeks and days and hours, we are responding with $31.billion of savings, now you'll see our total expenditure and our total savings and the fact that it leaves the budget in net terms in better position prior to the election that's when we'll have a proper verification.

JOURNALIST:

On the paid parental leave of $1.1 billion that you come out ahead I assume that is because you're not franking that levy, what do you say to investors who investing in companies that will still be effectively paying 30% company tax but they lose an income tax credit?

JOE HOCKEY:

I don't accept the premise. The bottom line is what we are doing is going to make the economy stronger and you've got to look at the package of policies, our package of cutting company tax by 1.5% means 199 of every 200 companies will have a tax cut. Getting rid of the paid parental leave schemes that the companies have means that their balance sheets will be better off including those that pay the levy. We are getting rid of the carbon tax which is a cost to those companies in everything they do and from the first of July, it's a cost in their logistics when it applies to fuel. We are getting rid of the mining tax. Now a number of those companies do have mining tax liabilities, and they're going to not have to pay any mining tax after this, and I want  to say directly to the investors and self-funded retirees of Australia you will be better off under the Coalition. Do not believe the Labor Party's claims about franking credits. You will get franking credits. But this idea that somehow an individual initiative will make life for people worse off when it’s not taken in the context of everything else we're doing is deliberately misleading from the government. The economy will grow, companies will be more profitable, and dividends will be higher.

JOURNALIST:

The list of savings here to offset the mining tax, some of those were also claimed three weeks ago to justify the spending, the outlays, in terms of the income tax and company tax cut, so doesn't that prove that you're double counting some of your savings here? And a follow-up question which is you’ve been saying that you release costings in good time, we're only ten days from the election now. Why can't we see the actual PBO analysis of your costings so that we can absolutely confident that the numbers add up?

JOE HOCKEY:

The verification panel that we have set up which I don't think anyone has criticised the integrity of the three individuals, they will see all of the working papers and they will certify that the numbers are absolutely right. Now Labor has no such process, Labor hasn't even launched its campaign yet. Mr Rudd is running around with thought bubbles all over the country, not putting any numbers out there.  I heard this morning that he claimed that all of his policies are costed.  That will come as news to everyone else in the Labor Party because there were no costed policies in relation to Garden Island yesterday. There were no costed policies in relation to his statement in the Northern Territory that there are going to be 3 different tax rates in 2 different jurisdictions in a one hour press conference.  We have carefully thought through everything, and the tally that I am releasing today - there is no double-counting, you can see it all there.  $31.6 billion of total savings, and you'll see the consolidated balance sheet of our savings.

JOURNALIST:

Will we ever see those PBO documents?

JOE HOCKEY: 

I'm happy to release PBO documents when the Government releases all the working papers from the Treasury.  Happy to do that, and if the Government releases all of the working papers from the Treasury, then I'm happy to do so but, but we've got an extra layer of certification and that comes from the independent panel.

JOURNALIST: 
Couple of quickies.  Firstly on the franking credits, you said that retirees would get franking credits but just to be sure, they would get 28.5% as opposed to 30%, that's right?  Secondly, there seems to be some dispute at PBO level, depending on when they've done it, with regards to the effect of getting rid of 12,000 public servants.  I know that there's a suggestion that one of the PBO documents was prepared before May.

JOE HOCKEY: 

That's right, but look...

JOURNALIST: 

Why don't you just release it?  If you're proud of it and it's a good service, just release that ...

JOE HOCKEY: 

I'm happy to stand by all of our numbers and the claims made by the Government are false.  What a surprise. They've got every number wrong for 6 years and now they're claiming to get our numbers right but again they're wrong.  If Labor can't get their numbers right, how do you expect them to get our numbers right.? I mean, it's quite absurd - so I'm happy to prove our numbers.

JOURNALIST: 

Two quick questions:  In your list of savings, you have one that says: “abolish other carbon tax measures no longer needed at $1.5 billion”.  What are those measures?  And the second one:  The PBO working documents when they costed the 1.5% levy for the Greens, which I think is the same as your policy in that regard ...

JOE HOCKEY: 

No, it isn't the same.

JOURNALIST: 

In terms of the levy they said that there would be, that businesses would rearrange their finances and their accounts in the first years and so the revenue would be much lower in the first couple of years - did they say the same thing to you?

JOE HOCKEY: 

You'll see again our final four year numbers prior to the election. That's perfectly responsible approach to take.  Secondly, please don't judge us on what someone else has submitted to the Parliamentary Budget Office.  I saw the ABC fact checking service was doing that last night which was kind of unreal.  But I only state it because our assumptions and our numbers are absolutely correct, absolutely correct, and we have 3 eminent Australians verifying that.  Now, again, no-one has done what we have done here.  The numbers we are presenting today are correct. 

JOURNALIST: 

As I understood it, their 1.5% levy were virtually the same and the PBO said to them it wouldn't raise as much in the first years because companies would rearrange their finances - did they say that to you?

JOE HOCKEY: 

No. The starting point is that we are not going to have a package that leaves the Budget worse off.  Labor did that with the mining tax.  They spent more than they collected and then they had a black hole in the Budget. And the carbon tax - they spent more against the tax than they collected and then they leave a black hole in the Budget.  We will not do that and we've proven that with the paid parental leave scheme.

JOURNALIST: 

 On the $1.5 billion?

JOE HOCKEY:

Sorry, $1.5 billion. The Clean Energy Finance Corporation funding costs, the Australian Renewable Energy Agency, together with a range of fuel tax credit reductions, ozone depleting substances payments and so on - that makes up the great bulk of the $1.5b.  And it is presented on an accrual basis because that is the most comprehensive way to present the numbers. 

JOURNALIST: 

Just briefly, the Government has pointed out your claims that your 3 eminent people, guardian angels or whatever you want to call them, are not the Treasury, and what we're seeing from the Coalition this time is a dismantling of the Charter of Budget Honesty, by not submitting to those rules.  What's the answer to that?

JOE HOCKEY: 

The Charter of Budget Honesty was actually amended by the Government to give you a choice between the Parliamentary Budget Office or the Treasury. We chose the Parliamentary Budget Office because we could be interactive with the Parliamentary Budget Office in the lead up to an election.  The Treasury is only available to an Opposition.  When you go into an election campaign, and even then, you need to submit all your policies to the Prime Minister's Office who then sends them to the Treasury.  Now I know I'm being a little tough on the Prime Minister's office but I suspect that if we sent all of our policies to Kevin Rudd's office before we actually announce the policies I suspect he wouldn't keep them confidential.

JOURNALIST: 

So the three wise men aren’t?

 JOE HOCKEY: 

The answer on that is, the Parliamentary Budget Office was set up by this Government as an alternative to the Treasury during the election campaign and it's actually staffed by members of the Department of Finance and the Treasury and then we have an additional verification process.  Even if you don't believe me, Paul, and I find that hard to believe, even if you don't believe me, believe three people who the Labor Party's always believed. Peter Beattie gave glowing endorsements for Len Scanlan and the Labor Party used Geoff Carmody and Dr Peter Shergold, so you know we're happy to do it.

 JOURNALIST: 

Two questions.  One on the technical thing, you've claimed a saving from the amount the states would save under their schemes.  How do you get that into the Commonwealth Budget?

JOE HOCKEY:

We will arrange with the states to top up their PPL schemes.  State public servants have a choice - taking the existing scheme of the states or taking the Federal scheme.  But the states won't be worse off.  And whilst we're feeling generous towards the states, we're not going to pay for their schemes and allow them just to pocket the benefit.

JOURNALIST: 

How will you bring those savings into the Commonwealth Budget?

JOE HOCKEY: 

It is a saving to the Commonwealth. It is a saving because last time we were more generous and agreed to pay the states and they could keep the benefits of losing their schemes.  So you see this is the thing; companies that already have paid parental leave schemes won't have to pay it out under our scheme, therefore they pocket the benefit, the wage benefit of not paying it out.  Now that's a great benefit to companies and it'll add to the bottom line which helps to make them more profitable and deliver better dividends.

JOURNALIST: 

I still don't understand how it ends up as a Commonwealth budget savings.

JOE HOCKEY: 

Well, I'll come back to that. 

JOURNALIST: 

My other question was just to say in terms of the carbon tax and mining tax measures because there's so many of them now that have been discontinued and Labor's already discontinued half of them.  What are you keeping of all those measures that were announced, from the spending measures, that were announced and supposed to be paid for by the mining tax and the carbon tax?

JOE HOCKEY: 

We have said that we are keeping the household assistance measures which are the personal income tax increases and the fortnightly pension increases.  Now my strategy is to deliver a stronger economy over the next few years.  Now the way to do that, on the first of July next year, we get rid of the carbon tax, so we get rid of the ball and chain, but it effectively turns the current tax rates into a stimulus because we're not taking away the compensation associated with the carbon tax.  And we're getting rid of the mining tax on the first of July.  And then the following year on the first of July, our company tax cut kicks in as well and the PPL, paid parental leave program, kicks in as well which we believe will help to drive productivity and workforce participation.  So you can see a clear strategic plan to grow the economy.  That's what we're focused on.

A lot of the programs that are associated with the carbon tax and the mining tax, they were band-aids, trying to fix a problem and the level of desperation in Kevin Rudd in saying that he's terminating the carbon tax when in fact he wasn't and it's going to continue to rise illustrates that fact. 

JOURNALIST: 

Two questions. Does the PPL, your costing go from 2013-14 to 2016-17 or because your budget, once this is introduced it will fall into the 2014-15 budget year and so it will push out to 2017-18.  Can you guarantee that these costings then mean that there's no impact, negative impact, once you fall into 2017-18?

JOE HOCKEY: 

Well we don't believe there is any negative impact and that's why we don't believe there is any negative impact at all.  And we're going for the four years' estimates, I'd just say to you that's a hell of a lot better than anything Labor does.

JOURNALIST:

And just subsequently, something else. Tony Abbott mentioned Direct Action today and said, effectively said, there's no difference between 2010 and 2013 in terms of the costings but all of the assumptions and all of the predictions on how it would affect are three years delayed.  You haven't, that doesn't come into any of this.  How can you be sure that that policy 3 years on is going to work, given that the times have changed in those 3 years?

JOE HOCKEY:

Well we're very confident it will, and the original assumptions about the reductions in emissions and the effort that would need to go into it to reduce emissions by 2020 on both sides of politics has been changed.

JOURNALIST:

Mr Hockey, you're putting a lot of emphasis on your eminent men to verify all this, but it's a very complicated exercise.  What resources have they had in order to be able to double check any of the Parliamentary Budget Offices?

JOE HOCKEY:

Everything they have demanded we have given.  And they would not put their name to the numbers if they are not satisfied.

JOURNALIST:

And what have they asked for?

JOE HOCKEY:

There's been a vast amount of engagement with the three eminent Australians, and it's been going on for months.  This isn't a thought bubble 10 days out from an election campaign.

JOURNALIST:

So they've had some separate resources from the Budget Office.

JOE HOCKEY:

No they haven't. We've given them all the support they need.

JOURNALIST:

You say the budget will be slightly better off under you.  Would you concede that if we're talking about 2016-17 and you're $2 billion better off, that's so small as to be insignificant, and that would be by your own judgment in the past that, you know, a $2 or $3 billion over that length of time is really nothing?

JOE HOCKEY:

We leave the budget in net terms in a better position than Labor.  You know, every time Labor comes up with a number they get it wrong and it deteriorates.  We're going to turn around the budget and get it heading in the right direction.  Now, we can't do that all from Opposition.  But we are determined to climb the mountain and get rid of Labor's black hole.  We'll do the heavy lifting, but it's got to be measured, and careful, and properly thought through. That's what we're doing with our numbers today.

JOURNALIST:

Mr Hockey, how many of your policies has the Parliamentary Budget Office said it cannot cost?  And what are they?  And how can the eminent panel cost them if the PBO can't?

JOE HOCKEY:

Because in some cases what you identify is that you're going to take a certain amount of money out of a program and it's a fixed figure, therefore it's quite obvious.  And the Panel's entirely relaxed about that.  The second thing is there are some things that the Parliamentary Office can't do and one great example is state infrastructures.  Now we go to the state governments as we've said and ask them what are the funding needs for particular road projects.  They come back with a figure, and we agree with that figure.  Our verification panel is satisfied with that.  Obviously where it comes to state infrastructure the PBO can't give you a number.  Compare that with Kevin Rudd in 2007 who said 'I'm going to spend $1 billion on computers in schools' without consulting the state governments, and the computers in school program blew out by $1.2 billion on a $1 billion program.  So that's how thorough we are being.

JOURNALIST:

So what other policies can't they cost?

JOE HOCKEY:

That's the great bulk of them.

JOURNALIST:

You've said you won't, you'll unwind the hit on the car industry that the fringe benefits tax changes, I think it was about $1.8 billion.  But you've got about $900,000 or almost $1 billion worth of savings that will affect the car industry in here, so you're really only giving about half of that.

JOE HOCKEY:

No. The car industry not only will do better under us, it will survive under the Coalition.  We are their only friend.  And why?  Because these changes to fringe benefits tax are having a massive negative impact on the car industry.  You've just got to speak to people involved in the industry to identify that, and just go and speak to the Ford workers at Geelong, who have been stood down for 6 days because of falling production associated with Kevin Rudd's FBT changes.  That's why we are the only friends of the car industry and Labor, Labor has simply got it wrong.  Now, when you are borrowing money to provide subsidies on the supply side of the equation, it is unsustainable if you are taking a baseball bat to the demand side of the equation, and that's exactly what Labor's doing with its approach to the car industry.

JOURNALIST:

Do you have any guarantees that the 3000 companies won't just pocket savings from their own parental leave schemes and also pass on the cost of the levy to consumers?

JOE HOCKEY:

On the one hand it can't be claimed that the companies are going to be massively financially penalised and their shareholder massively financially penalised by our paid parental leave policy and on the other hand complain about them pocketing the benefits of not having to pay their own parental leave. The fact of the matter is, we are in the business of lifting productivity, lifting economic growth, lifting profits, lifting dividends. And our entire package not only pays for itself in relation to the paid parental leave policy, but our entire package actually is good for the economy.

JOURNALIST:

But you can't guarantee that they won't throw enough on the levy to consumers?

JOE HOCKEY:

I'm not getting into that. In the same way for example, Virgin Airlines said that it had to absorb the carbon tax on their balance sheet and they're making a loss. It depends on the circumstances of individual companies. I want all companies to be profitable.

JOURNALIST:

Question of principle... Ken Henry said a few weeks ago that there's a structural problem with the budget and we actually need to look at revenue as well as cutting. Do you think, because it seems from this, you know your plan is to cut in terms of cutting away taxes, cutting away spending and cutting away red tape; do you believe that that as a strategy will get us to a structural surplus or do you accept that we need to raise new revenue in some parts?

JOE HOCKEY:

Can I give some context here.

JOURNALIST:

Without talking about Labor,  I just want to ask one question - do you think there is revenue?

JOE HOCKEY:

We cannot repair the budget overnight. And we can't repair the budget from Opposition. But we can start. And this is what we're doing. We're levelling with the Australian people; no other Opposition has done this. We are levelling with the Australian people about how we are going to pay for our policies. I think that is a massive step forward when you talk about the scale of cuts, the $31.6 billion that we are confirming today. Only a few weeks ago, Labor was boasting about $156 billion of cuts they’ve imposed, on the budget, over the last few years. The problem is that they've spent it all and more. And from our perspective that is unsustainable behaviour. You can't keep borrowing for spending. And we're the only ones that are going to get the budget back to surplus and start to pay down Labor's debt. We're the only ones that are going to do it. We've done it before, it's a heroic task, but we'll do it again.

JOURNALIST:

Without raising revenue?

JOE HOCKEY:

We'll do it again.

JOURNALIST:

You say that $31.6 billion is the great bulk of your savings. How late in the piece will we see the rest of them? The government says that you're still trying to hide the bottom line.

JOE HOCKEY:

I now call on the Labor Party to come clean with the Australian people. They haven't even launched their campaign. They haven't announced any costings. They haven't announced any savings. They're having thought bubbles every day, without any numbers behind them. We have put more information on the table than any other Opposition in Australian history and we're not waiting to the last day of the election to do it, as Labor did in 2007 and 2010. I look forward to seeing you all at the Press Club.

 

JOURNALIST:

There are about $5 billion worth of measures under further mining tax measures which essentially affect business. And I suppose it’s an extension of Jacob's question.  They will have some impact won't they? And particularly withholding tax measures supposed to be about encouraging the financial system. Also what's the difference between accruals and cash? Have you got a cash number for these savings?

JOE HOCKEY:

We will provide a cash variation in our final numbers where it is appropriate. Accrual is the most comprehensive way of doing it. And the Budget numbers released at Budget time - the individual portfolio statements - are on accrual basis. So in order to get to the detail, we've taken an accrual approach. And there are swings and roundabouts but the bottom line is...

JOURNALIST:

Is it a higher or lower cash number?

JOE HOCKEY:

You will see the variations. We will be totally transparent as we are with everything about that. And look in relation to the mining tax, again we've been saying this since the mining tax came in - these things are not sustainable if you are borrowing money. There is nothing particularly startling about what I am announcing today, because we have railed against the carbon tax package since it was first announced. We've voted against initiatives in Parliament when we've been openly transparent and said we can’t afford them, particularly in relation to the mining tax. And there's some initiatives, and you'd say, well, you know they're pretty attractive, but the Budget can't afford them. And we're not going to go down the path of gilding the lily and pretending to say to people something that isn't honest. Labor does that, we don't do that. Now I'll see you at the Press Club.

Thank you very much.

 

[ENDS]