The 2009 Budget depending on your take on it, it’s either a life bone to guide us out of the recession or a documents that’s saddles us with enormous debt for many years to come.

There will be a deficit of $57.6 billion they say in this budget rising to $188 billion by 2012.

Shadow Treasurer Joe Hockey is in our Canberra studio and his on the line, good morning.

Good morning guys.

Good morning.

In this sort of recession in these sorts of times is there any other way to deliver a budget, is there anything else that you would have done"

I would have had a plan for recovery, I would have had a plan to get out this and we wouldn’t have spent this much money. It is extraordinary, last night, was the first time anyone could remember when a Treasurer got up and actually didn’t tell the Australian people what the deficit was.

What do you mean, he told us what the deficit was, it was $57.6 billion.

He actually didn’t say that in the speech. He actually - nowhere in the speech did he have anynumbers and it’s the first time anyone can remember and that’s because this is the biggest spending government since World War II, the biggest debt since World War II, the biggest deficit since World War II and no plans for recovery.

What would your plan for recovery be?

I think Sandy, that you’ve have got to grow the pie, not simply reallocate the portions. I think it’s very important that you actually grow the pie by focusing on how you can stimulate small business. Small business is the engine room of the recovery. There is nothing here to help small business with their cash flows, there’s nothing that going to give them incentives tokeep people in jobs.

Yeah, but that’s marginal stuff, you are faced with this global economic crisis, if you don’t go into deficit, what would you do?

Well, you know -

You’ve either got to raise taxes or cut spending or both.

Well, the fact is, yes, you would have had to go into deficit, no doubt about that, because of the enormous reduction in revenue, but the debt that comes because of that deficit, so you start to borrow money, the government borrows money. The more money the government borrows from banks, the less money is available for the banks to lend to small business for the recovery.

But could you have avoided such a deficit?

Absolutely.

How?

Well, for a start, we wouldn’t have spent $3 billion on pink batts. We wouldn’t have handed out what is effectively $22 billion in cash splashes, now -

But that was designed to stimulate the economy. Don’t we need that stimulus?

Well, what have we got for it? You know the interesting thing Sandy, all the cash splashes, in total around $22 billion, the whole centrepiece of this budget, is infrastructure spending which is $22 billion. So the same amount of money that they are claiming is going to get us out of the recession, they have handed out in cash in the last few months.

Again, you’re not saying what you would do, you are saying “oh, it’s shocking all, this deficit”, you’re not saying what you would do, the only alternative you would have is to raise taxes or slash services.

No, no, no.

Well, what else could you do?

All right, well, that’s not a plan for economic growth & recovery, its nice for small business, but it’s not -

Well, mate can I tell you, there are 2.4 million small businesses out there. 2.4 million business out there - they are the engine room of the economic recovery, and if we are fair dinkum about getting out of this we have got to grow the pie, Mike. We can’t just reallocate the pieces.

Well, the Government would argue its doing just that with infrastructure spending. The good old fashioned pump priming. It’s starting the economy.

Well, we have always supported infrastructure spending, that’s a good thing, but the bottom line is, you can have all the infrastructure spending you want - you’ve got to give small business an incentive to grow.

So, let me get this straight Joe your whole premises would be on growing small business and on that would lie our recovery.

No, it’s a starting point Sandy, well, we will outline over the course of the next few months, I mean, fair dinkum -

You shouldn’t be saying that, you can’t just bash the government without offering us an alternative.

Well, you’re not going to do it so I’ve gotta try and give it a shot! I think it’s important, I think it’s really important, that we focus on a plan for recovery. The first thing is do not spend, do not spend, too much money. That’s the first step. And the Government – you know, I looked at the figures carefully yesterday - net debt is $188 billion Kevin Rudd has -

Well, not for five years, it’s not.

Well, the total net debt, there’s $188 billion. Kevin Rudd has committed $124 billion of new spending initiatives since he was elected. A massive amount - two thirds of the net debt is actually Kevin Rudd’s spending.

And that debt will only be 13.8 per cent of GDP in 2030 which is nothing it will be 80 per cent in the US and 40% in the UK, nothing.

But you know what Mike? We actually started with assets! Net assets! These countries have been in debt and deficit for years. We actually started at the head of the table. We actually started -

And we are still there!

No, we’re not! Canada’s just passed us, New Zealand is on the way to passing us. Do you know New Zealand has been in recession far longer than Australia, and unemployment in New Zealand is less than Australia?

Joe can I ask you, some specifics of which you can answer yes or no? Would you raise the retirement age from 65 to 67?

Well, we’ll have a good look at it, but I tell you 2023 how old will you be in 2023, Sandy?

38.

We’ll all be in a home for the terminally confused.

That’s right, 2023!

You’ll have a look at it? Will you consider it?

This is the toughest decision in the whole budget, I tell you and they’re saying they’re going to have it in 15 years. Fair dinkum. This is Labor they are big on spending, they are not big on the hard decisions.

Do you agree with giving the single pensioners the amount of money they’ve got?

Well, look I think, I think the greatest problem the Government has its run out of money. How can you hand out more money if you haven’t got it?

But you would use it for pension increases?

Yeah, absolutely. Let me be very clear. Last year we said instead of handing out cash we would’ve increased the base rate of the pension. And we introduced a Bill in Parliament to try and get that. And they knocked it back. And this year they are doing it and we welcome it.

And Joe for the unemployed and single parents, nothing in this budget, what would you do?

I would be focusing on creating jobs. That’s what I would be focusing on. We had unemployment down to 4%. That’s what you’ve got to do. Look, the Government can never be the safety net that a good, well paid job is.

Very correct.

The Government can never be a substitute.

Last question, should Matthew Johns keep his job?

In my view no, I’m sorry, I’m always a bit reluctant to get involved in these things. But quite frankly, I think rugby league is in the business of eating its own at the moment.

And I’m with you on that – Joe, thank you for your time.

Very good way of putting it, Joe thanks a lot. Joe Hockey, the Opposition Shadow Treasurer there, in our Canberra Studio.

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