Transcripts

SKY AM AGENDA INTERVIEW WITH DAVID SPEERS

4th June 2009

DAVID SPEERS:  

Welcome back to AM Agenda.  We are looking this morning at how Australia dodged a bullet, avoided a technical recession at least even though it perhaps may feel like a recession for those who are now on the jobless queue or indeed about to join the jobless queue because the forecast is that unemployment will keep going up.  We’ve just heard from Treasurer Wayne Swan, joining us now in the studio the Shadow Treasurer Joe Hockey. 

Mr Hockey thank you for you time.  Do you now concede the Government’s stimulus packages helped the Australian economy at all"

JOE HOCKEY: 

Well I think it’s fair to say that if you spend enough money there will be some impact.  The question is whether it was money that was well spent and the…

SPEERS: 

The positive impact though?

HOCKEY:

Well yes it must have some impact but ultimately the long term impact may be more significant and that is the debt that is associated with the stimulus.  I mean the government can spend money and it might change the numbers for one quarter but ultimately someone is going to have to pay for all this and that will inhibit Australia’s growth as we come out of recession.

I mean the fact of the matter is that we are arguing in part, there’s a debate in part about how deep the hole is.  Well we know the hole is there and we’ve got to climb out of it.

SPEERS: 

But on that argument it would seem to suggest that it’s better to have a recession now rather than an undefined level of debt down the track.

HOCKEY:

Well the challenge is… Look David, Yesterday’s number, who would have picked…  In fact you know before the export numbers came out on Tuesday, only 2 out of 20 economists surveyed predicted a positive quarter.  And then when the economic, the export numbers came out, 13 out of 20 economists picked it.  So they had a profound impact.  2.2 per cent contribution to yesterday’s number was the drop in imports and the increase in exports.  Terrific! 

Australia through the free market is tied to the Asian region and we’re exporting and that’s great.  But imports fell away which is alarming, particularly imports of major equipment – so business investment has dropped significantly which is alarming because it is that investment by business that is going to create the jobs tomorrow.

SPEERS: 

But on the Government’s stimulus packages, your leader Malcolm Turnbull has been saying that not one single job was created through these packages. Are you now saying he was wrong?

HOCKEY: 

Well did the Government live up to its expectations of creating 70,000 new jobs?

SPEERS:

 But just on Malcolm Turnbull’s line that it didn’t create on single job?

HOCKEY: 

Well obviously, obviously if the Government is spending enough money it will have some impact at some point.

SPEERS:

So Malcolm Turnbull was wrong on that?

HOCKEY: 

Well there can be expectations about jobs too.  I mean a lot of people may have spent money in expectation of further stimulus measures.  You see the thing is you’ve got to look at a whole lot of factors.

One is the massive cut in interest rates.  That had a big impact in Australia.  How big, we don’t know.  Secondly, the Government put out $12 billion before Christmas and it provided cash after Christmas and a significant amount of money, in total around $22 billion.  The net impact of that, if you hand $22 billion to the Australian economy, it will have some impact of course it will.  But the question is would it have been better spent on infrastructure or the things that are going to create jobs tomorrow, than buying a positive quarter of economic figures.

SPEERS: 

But if it’s infrastructure spending as a great deal of it is – that’s not going to hit until down the track, until later this year at the earliest. Not in those first three months where we were really hitting the worst of the global downturn.

HOCKEY:

But if it is – if you accept Treasury’s forecasts or Treasury’s assessment and Lord knows there’s lots of reasons why, you know, Treasury is unable to get it right at the moment but let’s say we accept that.  The argument is about 0.4, 0.6 of 1 per cent right and it’s, you know to suit the media definition of recession, that’s fine.  Go and ask that are losing their jobs what’s happening and they will say to you, “Hang on, I lost my job, tell me there’s no recession”.  I mean it’s an academic debate.

SPEERS:

Sure, sure and we’ll get to whether you think we’re in recession.  But you are arguing that it would have been better to spend those billions of dollars all on infrastructure not on cash handouts.  What I’m suggesting it that wouldn’t have helped in those first three months when the global downturn was at its sharpest.

HOCKEY:

Well we put up another solution which was to give small business some relief from the superannuation guarantee levy.

SPEERS:

But you wouldn’t have spent as much.

HOCKEY:

No, no we wouldn’t have spent as much.

SPEERS:

But you won’t tell us how much you would have spent.

HOCKEY:

No, we did. We were actually explicit about it.  We said $15-20 billion instead of $42 billion. 

SPEERS:

So under that plan would we have avoided a recession?

HOCKEY:

What? A technical definition  of two quarters? We don’t know because it can be based in part, in many ways can be based on confidence.  People have to believe that the Government knows what it is doing.  If the Government keeps sending you out a cheque, why is there widespread misgiving about the $900 cash handout?  People took it but they said “hang on this just can’t be right”.  What was the benefit of that? What was the long-term benefit of handing cash to people?

SPEERS:

So are we in recession Joe Hockey?

HOCKEY:

Well for those people who have lost their jobs, it certainly feels like it.

SPEERS:

But do you buy the technical definition that two consecutive quarters of negative growth is a recession?

HOCKEY:

I’ve always focused on trends.  Trend unemployment, trend growth.  You know what, all the numbers will bounce around David.  You can be sure of that.  Anyone that banks their whole political capital on one number, like the Prime Minister did yesterday – I mean fair dinkum, that is crazy stuff. 

What you have to do is focus on the long-term impacts and the biggest long-term impact is debt.  All the numbers will bounce around but one number will stay the same, if not increase and that is Kevin Rudd’s debt.

SPEERS:

What about Treasury’s forecasts?  You suggested that there is some concern about their ability to forecast accurately.  Do these latest figures cast any more doubt on that ability?

HOCKEY:

Look to be reasonably fair to Treasury, the environment is so volatile that you couldn’t get the numbers right but the fact that the Prime Minister said that we’re going to pay off all of his debt by 2022 and that is his “plan” to get the nation back on track makes a laughing stock of all the assumptions that are in the budget.

SPEERS:

But you’ve been attacking these Treasury forecasts being heroic, too optimistic and yet the growth figures have been as good as, if not better than expected.

HOCKEY:

Well that’s yesterday’s figure, let’s see how we go.  Let’s see how we go.  If all was rosy, why are people still losing their jobs?  If everything is ok and mission is accomplished for the Rudd Government, why are people still losing their jobs?  And why is there going to be, in a few years, a $300 billion debt?  I mean if everything is done, why is the Government still borrowing more than it’s receiving over the next few years?  I mean this is a joke.

SPEERS:

Just on a final issue.  The emissions trading scheme has been debated overnight in the Lower House, it’s likely to, well it will go through the Lower House today.  But in the Senate it’s still facing likely defeat there.  Is there any more room for compromise here from the Coalition’s point of view? If the Government were to offer more industry compensation?

HOCKEY:

Look David the Government is not interested in speaking to the Opposition about this.  There’s no dialogue. The Government says it’s our way or the high way.

SPEERS:

But if it did sit down with you?

HOCKEY:

Well we’re always prepared to talk with the Government but quite frankly they’re more interested in political outcomes than they are in long-term economic benefits.

SPEERS:

But when you say you’re always prepared to talk, does that mean that if there were more compensation there’s an opening there?

HOCKEY:

Look they’re not offering anything.  They’re not offering any compromises. They’re not offering any negotiations.  The Government has walked away - was never at the table, so no surprise there.  They ram the biggest reform of the Australian economy, Government-initiated reform of the Australian economy in the last decade.  They’re ramming it through Parliament in two days.  This is the way Kevin Rudd does it.

SPEERS:

Alright Shadow Treasurer Joe Hockey, thank you.

HOCKEY: 

Thanks David.

[ends]