Joe Hockey Sky News Australian Agenda

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7th November 2010, 01:09pm - Views: 954

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Australian Agenda

7th November 2010

Joe Hockey

Sky News

Australian Agenda

Joe Hockey

7th November 2010

Interview with Shadow Treasurer, Joe Hockey

Australian Agenda program, 7th November, 2010

Peter Van Onselen:  Joe Hockey, just before we start, I’ve got a comment by the Prime

Minister on Channel 9.  I’d just like to play that and then get your thoughts.

Julia Gillard:  I understand why Australians paying mortgages are angry.  And as the

Reserve Bank has said, there is really no justification for interest rate movements above

and beyond what the Reserve Bank independently decides our economy needs.

Peter Van Onselen:  So what can we do about it?  I mean if there is no justification for

interest rates to rise more than the cash rate adjustment, what can any politician do to

stop them doing it?

Joe Hockey:  The best thing to do is to have more competition.  I’ve been singing this

tune for some period of time, in fact specifically since 8th July 2009 when I supported the

calls of a number of economists to have a new successor to the Wallis enquiry.  The

Campbell enquiry which was a first major external investigation into the banking system

was 1981.  The Wallis enquiry was 15 years later in 1996.  It is time, particularly after the

financial crisis, and now that we are having a very, very comprehensive debate globally,

in part being led by the governor of the Bank of England, it is now time to have a

substantial enquiry into the future of the banking system.

Paul Kelly:  But I’d like to ask you what you expect to come from such an enquiry?  In

particular I want to ask you whether you agree with the comments made by Reserve

Bank governor, Glenn Stevens, that the finance sector internationally needs to be

thoroughly reformed, it needs to be less complex, less exciting, less ambitious for profits

and geared more to the needs of business and industry?  That’s a very substantial

change.  Is that your philosophy?

Joe Hockey:  I’m not so sure it’s my philosophy.  I just have a problem when it is clear

that taxpayers are on the hook for risk.  We have seen a redefinition of moral hazard out

of this financial crisis.  Whilst previously governments used to proudly claim that they

would let financial institutions fail, in fact the Americans did in the case of Lehman

Brothers, they’re picking and choosing those that they’re covering.  In the end, everyone

ends up covered, with effectively a taxpayer guarantee.  From my perspective, there are

just a whole lot of contradictions around in the debate about financial services at the

moment.  For example, people have been lauding the fact that our Australian financial

institutions didn’t have exposures overseas, and therefore that’s one of the reasons why

we weren’t caught in the slipstream of the financial crisis.  Yet two banks have now

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stated emphatically that in order to maintain current return on investment, they need to

expand even aggressively offshore.

Paul Kelly:  What’s your view of the comments being made by the bank chief

executives?  We’ve now had two bank chief executives come out over the last fortnight

attacking politicians.  The fact of the matter is, as you say, that the banks are

underwritten, the banks are too big to fail.  Do you think that there is a sense of

arrogance here and a lack of recognition of these realities on the part of these bank chief


Joe Hockey:  Well, I find it quite amazing really.  Maybe I’m just getting old!  But it seems

as though I’ve been around in politics longer than they’ve been in banking in Australia.  I

was there for the Wallis enquiry and there wasn’t any flight of capital out of Australia at

that time.  I find it rather bemusing when chief executives of companies say that a public

debate about public policy is going to have an impact on commercial reality, when in fact

they weren’t around for the last debate.

Michael Stutchbury:  Mr. Hockey, you referred to the Bank of England governor leading

the debate, but isn’t the Australian situation a lot different than in the UK, Europe and the

US?  The Australian banks are one of the main reasons that we didn’t have a recession

in Australia, along with the miners.  The banks’ profits have held up and that’s been

good for keeping Australia getting through the recession.  Their profits have gone up in

the latest round, but that’s because the bad debts have come off.  The profits are up, but

returns on equity, returns to shareholders are less than they were before the crisis.  The

margins have widened, about to where they were before in 2006.  But you’d expect that

to happen in the wake of a crisis and with risk being repriced.  Isn’t the danger that the

opposition, by getting on the front foot as you have in this debate, is really leading quite

a populist bashing of the banks, which doesn’t really address the real issues?

Joe Hockey:  No.  We have a very, very good financial system.  I was a minister there

that helped to put in place things like the Financial Services Reform Act, and I was there

when HIH collapsed.  I’m very familiar with moral hazard and what it really means.  From

my perspective, this is not about re-regulation; this is about more competition.  This is

real economic reform.  If you’re going to have real economic reform, what you’re doing is

you’re freeing up the marketplace, you are allowing for greater competition in the

marketplace, but more specifically you are clearly setting down the rules of the game. 

From my perspective, I’m thinking about the guy out there who earns $50,000 a year,

who underwrites a bank where the chief executive might earn $50,000 a day, but is

taking risks that he can walk away from.  Now Basel 3 is not going to address too big to

fail issues.

Michael Stutchbury:  We’ll just get into that in a second.  But on regulation and re-

regulation, aren’t you proposing to bring in some re-regulation with your proposals

coming through the ACCC to ban banks signalling interest rate rises?

Joe Hockey:  But that’s about anti-competitive behaviour.  

Michael Stutchbury:  Would this apply just to banks?

Joe Hockey:  No, no, of course not.

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Michael Stutchbury:  Or would it be across the board?

Joe Hockey:  Across the board.

Michael Stutchbury:  So you’re saying to any business out there, if they signal that their

prices might have to go up or the department stores might not be able to have bigger

sales this year, or anything that might have the effect of lessening competition, which is

what businesses are out there to do, to beat their competitions, is this something that

can in practice actually be regulated?

Joe Hockey:  It is.  Firstly, it is a procedural test.  So price signalling leading to collusion,

leading to anti-competitive behaviour.  It is a procedural power.  At the moment the

ACCC does not have the power to investigate price signalling as a starting point on the

road to collusion.

Michael Stutchbury:  But can you see that ever actually getting through the courts and

you’ve got to show that they were doing something, they were meaning to reduce

competition and so forth?  If an analyst comes up to a bank boss and says, your margins

are being squeezed, what are you going to do about it?  And they say, well there’s

pressure on our funding and maybe our rates are going up, are you going to say that’s

going to be illegal?

Joe Hockey:  No.  Michael, I flagged in May this year that I thought the Trade Practices

Act needed a routine branch review.  People will say we’ve had numerous reviews of

part four of the Trade Practices Act, there have been every year enquiries into pricing in

petrol and banking even.  But from my perspective, the Trade Practices Act is not a

perfect instrument.  But you can have powers in the hands of the ACCC that allow them

to obtain more information in relation to anti-competitive behaviour.

Paul Kelly:  I know you’re introducing this ACCC bill, but beyond that what are the

measures you think can be taken in the near term to improve competition?  Because it

seems to me essentially you can’t do much overnight, you can’t do a lot in the near term,

this is a more a longer term issue.  Do you think that’s right or not?  And how can you

make a difference in the near term?

Joe Hockey:  The longer term issue, I really do want a broad financial system enquiry,

which is recommendation number nine.  But the other recommendations, which I’ve

been calling for, for example in relation to the residential mortgage backed security

market, last year I called for the government to look at extending its AAA guarantee to

AAA rated bonds in the RMBS market, which is similar to what Canada did, and the

RMBS market in Canada has remained liquid throughout the financial crisis.  Whereas in

Australia the government said, with our support, let’s buy bonds.  That hasn’t delivered

the liquidity that we need.

Michael Stutchbury:  But should we really be looking to extend government guarantees

over the financial system, where your critique says that there is a guarantee now and

that’s producing all sorts of perverse outcomes such as more risky behaviour?  Are you

wanting to extend the guarantee?

Joe Hockey:  It’s a good point, Michael, and this is the problem with getting into

guarantees in the first place.

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Michael Stutchbury:  Can I ask, what would you do at the moment with the $1 million

government guarantee on bank deposits that’s going to come up for review next year? 

Would you reduce that?  Malcolm Turnbull said, when this came up, it should be

$100,000.  There was talk about $5 million, unlimited, it ended up at a million.  Would

you get rid of the deposit guarantee or would you bring it down to $100,000 say?

Joe Hockey:  I don’t want to be prescriptive on that, because I know that when the

government intervenes, it creates distortions.  That’s the very best illustration of a

distortion in the marketplace.  The government went in there, put in an unlimited

guarantee, which I understand Treasury and the RBA did not advise on to have an

unlimited guarantee, but the government went unlimited.  It created massive distortions

in the cash management trusts and so on.

Michael Stutchbury:  What would you bring it down to?

Joe Hockey:  I know where you’re going, but I’m not going to buy into it.

Michael Stutchbury:  Well you’d presumably bring it down substantially, would you?

Joe Hockey:  From my perspective, this is one of the reasons why I want to have a

general review, because at the moment we have a significant distortion in that market

place.  Now the big players would say get rid of the guarantee totally, which would

mean, because they’re AA rated, they’re pretty happy about that.  But smaller institutions

may well have a flight of money to larger institutions, so I don’t want to create further

distortions in the marketplace.

Michael Stutchbury:  So the guarantee is actually improving competition in the banking

market, you’re saying?

Joe Hockey:  No.  It depends where it’s applied.  But the fact is that there is also the

tapering off of the wholesale funding guarantee, which the major banks were able to get

access to, but the smaller players just couldn’t get into the marketplace.

Paul Kelly:  Mr. Joe Hockey, at the moment we’ve got a real conflict between what the

banks are saying about their costs and their margins on the one hand, and what the

government and the opposition and the Reserve Bank are saying on the other hand. 

How do we sort this out?  How do we resolve this sort of conflict to work out who’s right

and who’s wrong?

Joe Hockey:  One of the recommendations I made was that the Reserve Bank have a

regular reporting mechanism, at the moment it’s irregular, on net interest margins. 

Because we as taxpayers are shareholders in these banks, whether we like it or not, and

effectively in being shareholders, as being the people that guarantee the banks are too

big to fail, we need to have a public revelation on a regular basis.

Paul Kelly:  How often?

Joe Hockey:  I’d go monthly at the moment, until the matter’s resolved.  I’ll tell you why,

because, Paul, at the moment banking analysts in investment banks and stockbroking

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firms put out this sort of analysis on a monthly basis or quarterly basis.  If you look at the

entire market, the private sector gets that information, but we as taxpayers don’t.

Peter Van Onselen:  But Mr. Hockey, can I bring you back for a moment to the politics of


Joe Hockey:  I’m enjoying the banking side!

Peter Van Onselen:  We’ll come back to that, no doubt.  But on the politics, you say this

is about economic reform.  The banks are bashing you and saying it’s populism.  If it’s

not populism, presumably the Liberal Party hasn’t done any polling on this and it hasn’t

done any focus group work on this.  Is that correct?

Joe Hockey:  You need to ask the Liberal Party about that.  But from my perspective,

I’ve been talking about this since 8


July 2009.  There is a paper trail.  I’ve raised

previously a Wallis enquiry.  Last year I said let’s extend the guarantee to the RMBS.  

Peter Van Onselen:  But what’s driving what on this?  Is it populism being driven by

research?  Or is it economic reform and then doing some research?

Joe Hockey:  I have also raised a Financial Services Reform Act, and the reform of that. 

These are things that I’ve talked about previously over the last 12 to 18 months.  In fact

on 8th July 2009, Julia Gillard as Deputy Prime Minister said we’ve done it all on banking

competition – 8th July 2009 on ABC News.

Peter Van Onselen:  But are you aware of any research internally as to whether this is

popular in the public or not?

Joe Hockey:  I can say to you emphatically, this was not research driven, this political

debate.  It was not.  I have been on about this for more than a year and a half, it’s just

people haven’t listened until I was criticised last week.  Then all of a sudden everyone

said, well Joe’s a buffoon – well not everyone, my mum didn’t!  But people were critical,

and this is how debates start.

Paul Kelly:  I think we need to get you on the record in response to the head of the

Commonwealth Bank, who criticised the politicians, basically warned about the danger

of public policy here, warned about populist responses.  Now what is your response to

the head of the Commonwealth Bank and those criticisms which go to the heart of the

political system?

Joe Hockey:  I would ask him to take the public commentary on political debate out of his

vernacular, and focus on good public policy.

Paul Kelly:  How serious a blunder is it for the banks to talk like this?  To what extent do

they risk a backlash from the political system?

Joe Hockey:  There’s foolish public comment.  I mean for the head of ANZ to describe

me as Hugo Chávez is the introduction of personality into the debate.  

Peter Van Onselen:  And Ralph Norris compared this whole debate to Argentina. 

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Joe Hockey:  Yes, that’s right.  I’m not going to engage in that sort of thing.  I haven’t

attacked Ralph Norris personally.  Mike Smith I haven’t attacked personally.

Paul Kelly:  But what does this tell us about the banks, that they are resorting to this sort

of language?  What does this tell us about the banks?

Joe Hockey:  It tells us that their chief executives of the banks are paid to liaise with all

the stakeholders, including the parliament.  I would say to them, the best counsel I could

give each of them, is to participate in the public policy debate and not to get into

personality politics.

Peter Van Onselen:  But politically you must enjoy the heads of the bank coming out and

attacking you?

Joe Hockey:  No.

Peter Van Onselen:  Because when they do, it makes you more popular and it makes

this an issue that mainstream Australia thinks Joe’s doing the right thing by them.

Joe Hockey:  I know it’s going to be hard to believe, this is not about Joe.  This is about

a debate about more competition in banking in Australia.  I have spent my entire

professional career dealing with banks, involved in selling banks, working as a banking

and finance lawyer.  I understand banking.  I love competition – that’s what I thrive on.  I

am seeing a market that is now more centralised than it has been in 20 years.  There’s

more concentration now in banking than there has been in the last 20 years, and I say to

you the best way to handle it is more competition.

Michael Stutchbury:  Just on the point about publishing interest rate margins for

example, and the matter of competition, as you just said, concentration more than 20

years ago, the interest rate margins are still much lower than they were ten years ago. 

In terms of publishing information, the Reserve Bank on Friday, its monetary statement

showed that in the past six months’ half-year, the banks’ margins had actually fallen, and

bank analysts are talking about a squeeze on margins occurring.  Do you want to drive

down bank margins further?  And is there a risk though that the result of that would be

the banks not lending as much money into the Australian economy and holding back the


Joe Hockey:  Michael, the larger the institution, the more varied the sources of funding

for lending.  From my perspective, there are distortions, obviously, in the funding

sources.  It depends on the funding profile; each bank will have a different funding

profile.  I think that needs to be properly revealed.  My argument is that there have been

previously two major sources of competition.  One is the mortgage originators which

were funded by the RMBS market, which has calcified, and those independent players

are not there.  The second is that there was more aggressive intervention in business

banking by international operators, and they’re not as active as they were.

Michael Stutchbury:  But would you concede that the bank margins have actually been

narrowing in the last six months?

Joe Hockey:  Well it varies, because there was a dramatic drop obviously in interest

rates and they were funded 30%, 40% offshore, so they were getting cheaper funding for

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a period of time.  But it varies.  The net interest margins are back to basically pre-crisis

levels.  That’s the argument that we’re having at the moment.

Peter Van Onselen:  Joe Hockey, hold that thought.  We’re speaking to the Shadow

Treasurer, I almost said Finance Minister there, Shadow Treasurer, Joe Hockey.  We’re

going to take a break but when we come back there’s a lot more in his portfolio area to

discuss with the panel.  This is Australian Agenda.

Peter Van Onselen:  Welcome back, this is Australian Agenda, where Michael

Stutchbury, Paul Kelly and myself are speaking to the Shadow Treasurer, Joe Hockey. 

Mr. Hockey, we’ll move on from banking in a moment.  But is this issue really a cost of

living issue more than anything, and that’s why the Coalition’s so focused on it?

Joe Hockey:  No, the Coalition’s focused on it because it’s good reform.  It delivers more

competition.  More competition eases the burden of the rising cost of living.  I think

people are losing touch.  I think the government’s losing touch.  Even the bank CEOs

are losing touch.  I challenge Wayne Swan and the bank CEOs to come to a public

forum in Western Sydney and look people in the eye and hear about the rising costs of


Peter Van Onselen:  So if we at Sky say that we’ll host a public forum in Western

Sydney, if the Treasurer comes along and if we can get the big bank CEOs along, you’ll

be there and we can do it?

Joe Hockey:  I’ll be there, absolutely.  I think sometimes in the cacoon of Canberra or in

Martin Place, people can lose touch with what Australians are really going through.  I’d

say let’s have a public forum, let’s do it.

Peter Van Onselen:  We’ll get in touch with Wayne Swan’s office and we’ll get in touch

with the offices of the big banks.  I’m not sure whether all four will be there, but certainly

if Wayne Swan’s there and some of the banks as well, we’ll do that.  We’ll host that here

on Sky.

Paul Kelly:  But this is just a stunt, isn’t it?

Joe Hockey:  No.  

Paul Kelly:  You want the bank chief executives to come to this forum and do what?

Joe Hockey:  To listen.  If they feel that we shouldn’t have a public debate about more

competition in home lending and more competition in credit cards or small business

lending, then they can say that in front of the audience that I deal with every day as a

member of parliament.  Quite frankly, I think it would be good for some of them.  I think

some of them may not have engaged in those sort of public forums before and it will be


Paul Kelly:  I just want to ask you about official interest rates.  The Reserve Bank

governor said this week when the cash rate went up that he expects inflation to increase

over the next couple of years.  How bad will this get?  How high will interest rates go in

this country?  How high do you think mortgage rates will go?

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Joe Hockey:  It all comes down to the ability to control inflation.  The fact that the

government is still running an expansionary fiscal setting means that demand is

increasing, supply is not being increased, and that is creating inflationary pressures. 

The government has ridiculed us for 12 months.  In fact in another speech last year I

warned that we were facing a certain number of pressures with the Reserve Bank doing

the heavy lifting on contracting the economy, whilst the government was expanding the

economy with its fiscal expansion.  I warned about this.  I warned about the higher

Australian dollar and the impact that would have.  This government does not understand

that if it does not pull back on spending, then it’s going to continue to put upward

pressure on inflation.

Paul Kelly:  How do you think the Australian public will in fact respond if it faces more

increases in interest rates over the course of the next 12 to 18 months?

Joe Hockey:  I think the public reaction will be toxic.  I think this government fails to

understand that when it talks about a carbon tax, when it talks about increasing the cost

of water, when it talks about continuing to deliver stimulus out to 2012, when it does

those sort of things it has an impact on everyday cost of living.  This government does

not understand that.  It’s a government with no core.  It has no soul.  It actually does not

understand what people are going through.

Peter Van Onselen:  But do you believe that the Liberal Party or the Coalition has to do

more to develop an alternative platform, so that it’s not just incompetence or problems in

the government that become the issue, but also the viability of the alternative

government status of the opposition?

Joe Hockey:  I say to you, Peter, we developed an alternative platform.  We went to the

last election with it.  No opposition in political history has ever had the courage to outline

$50 billion of savings measures, $50 billion.  No opposition; even John Hewson didn’t do


Peter Van Onselen:  So you’re comparing this opposition to the Hewson opposition?

Joe Hockey:  No, but we laid down in detail $50 billion of savings.  All our expenditure

was against those savings.  Normally people just bet on future surpluses or future

expansion of the budget.  We didn’t.  We had effectively a contractionary fiscal setting. 

That’s the first thing.  The second thing is, if you want to improve productivity, and that’s

a word that’s been lost in the debate about economic reform over the last certain period,

12 months, if you want to improve productivity you have to improve participation.  There

is not a single thing this government is doing about improving participation in the

workforce.  We were the ones that went to the election with an under 30s policy to get

people off welfare and into work, particularly an over 50s policy.

Peter Van Onselen:  IR reform back on the agenda?

Joe Hockey:  The fact of the matter is, as I’ve said previously, we’ve had three different

systems in the last few years.  But having said that, as each day passes I think there is

more and more evidence that the Fair Work system is creating distortions in the

marketplace, and far from improving productivity, it’s actually detracting from it.

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Paul Kelly:  That means presumably you accept that the opposition has got to have

another look at the Industrial Relations system this term and come up with a new policy,

and walk away from the Tony Abbott commitment last election?

Joe Hockey:  No, no.  Tony Abbott’s commitment was that we will not be changing the

system in the three years of our first term of government.  That’s entirely correct, and we

are being entirely consistent about that.  We’re in opposition, we’re not moving private

members’ bills in that regard; we are being entirely consistent.

Paul Kelly:  So it’s okay in opposition to devise new policy?

Joe Hockey:  But of course we do!  If the election is in three years, we have to go to that

election with an Industrial Relations policy.  I might say, we said we’re not changing the

Fair Work Act.  The thought that you’re going to have an Industrial Relations minister sit

on the porch of Parliament House and smoke a cigar for three years is just ridiculous!

Peter Van Onselen:  That was the idea virtually ahead of the last election though?

Joe Hockey:  No.  We actually were specific in talking about the Fair Work Act.

Paul Kelly:  We need to just clarify this, so we’ve got this exactly right.  What you’re

saying is that during this current term in opposition, the Coalition will review and revise

its Industrial Relations policy and go to the next election with a different policy?

Joe Hockey:  Paul, we will have a detailed policy in the lead-up to the next election. 

People will see it, and of course we’re going to work on a policy.  We’re going to work on

policies in all areas.

Paul Kelly:  Sure.  But you’re talking about productivity all the time, so presumably this

means you’re going to have a modified IR policy designed to generate higher


Joe Hockey:  You have to.  You cannot give up on any area for productivity

improvement.  I accept what the government’s been saying for ages about infrastructure

stimulating productivity.  But one of the things I did mention, which has been lost as well,

is a full reform of the Trade Practices Act.  I believe improvements in the access regime,

and this will be another marker which people turn to in the future, the improvements in

the access regime for infrastructure will deliver productivity that is so absolutely

necessary for the future, because we cannot afford as a nation the $700 billion bill on

infrastructure coming out of the public sector.  

Paul Kelly:  What about the WorkChoices scare that you’ll get from Labor?

Joe Hockey:  You know what, the reality, Tony Abbott and Joe Hockey set about

changing WorkChoices.  Tony Abbott argued in cabinet against the removal of the no

disadvantage test, and Joe Hockey did get it removed.  I’m not sure that’s in John

Howard’s book!  I’ll have to look that one up.  

Michael Stutchbury:  You talk about distortions in the labour market re-regulation under

the government.  In what areas do you think the distortions are greater?  Is this unfair

dismissal for small business?  Is this the modernised award system that Julia Gillard

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brought in?  Is this the increasing powers for the trade unions under the new IR system? 

What are the sort of areas?

Joe Hockey:  I’m not going to be specific.  But I can say to you, in fact your newspaper,

The Australian, has highlighted a number of areas such as the minimum number of

hours that people can work.  That’s ridiculous.  Unfair dismissal laws for small business

are complex.  I think small business is growing increasingly anxious about it.  The

modern awards, I can tell you, even at the local childcare centre, pre-school, they’re

having problems with the new modern awards where they’re expected to pay staff less,

not more.  

Paul Kelly:  So all these things are on the table?

Joe Hockey:  I think if you’re going to present yourself as an alternative government,

you’ve got to have policies in each area.  We are going to work through all the policy

areas.  But as it stands, as of today, our policies are the same as they were at the last

election.  In that regard, we’re not changing the Fair Work Act.

Peter Van Onselen:  In a general sense, you acknowledge and you realise that Industrial

Relations reform is an article of faith for the Liberal Party faithful?

Joe Hockey:  Well, they’re your words.  I think a stronger economy, reward for hard work

and enterprise, innovation, these are the principles that drive our economic policy.  I see

policy settings as facilitators for economic growth and productivity improvements, and

reward for effort.  I don’t see it as the other way around.

Michael Stutchbury:  Mr. Hockey, next week we’re probably going to have the mid-year

budget outlook released by Wayne Swan.  The government’s got pressure of providing

savings for the money that they handed out post-election, $200 million plus over the four

years.  Wayne Swan is signalling the higher dollar is supposedly stripping $10 billion out

of revenue over the next four years.

Joe Hockey:  It’s $2.5 billion a year out of $320 billion . . .

Michael Stutchbury:  I presume you’d say the government next week has to make up

and show how they’re going to make up the supposed cost to revenue out of all of this?

Joe Hockey:  Yes.

Michael Stutchbury:  But are you saying that because of the pressure on interest rates

and the dollar, that the government should be forecasting and should be aiming for a

larger budget surplus in 2012/13 than they are now forecasting?

Joe Hockey:  Absolutely.  If you want to deliver a surplus in three years’ time, you have

to over-prepare, not under-prepare.

Michael Stutchbury:  Orders of magnitude, under the previous government it was around

about 1%, a little bit more, of GDP.  Do you think in the current circumstances with this

mining boom that we should be building up surpluses larger than 2% of GDP during the

boom times?

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Joe Hockey:  The starting point is to have enough to start to pay off the debt as quickly

as possible.  I know there are lots of economists out there that say the debt as a

percentage of GDP is small.  I don’t buy that argument.  Apart from Peter Dutton, I’m the

only member of the Coalition to have sat in an Expenditure Review Committee in the

cabinet, putting together a budget where you are going through issue by issue.  What

you discover is that of the total federal budget, only about 3% is truly discretionary.  Out

of that discretionary amount of money comes the interest on your debt.  Therefore you

actually lose a lot of budget flexibility when you are running Commonwealth government

net debt.  From my perspective, it is hugely important that we have flexibility for the

challenges in the years ahead.

Michael Stutchbury:  So should we be building up surpluses bigger than say 2% of


Joe Hockey:  Absolutely.  Well 2% of GDP, you’re identifying a number.  

Michael Stutchbury:  Well the government’s committed to 1% of GDP.  I’m not sure if the

opposition has even matched that.

Joe Hockey:  Can I tell you, Stutch, they’ll never deliver a surplus!  That’s the starting


Michael Stutchbury:  But that’s their target.  Would you aim for more?

Joe Hockey:  The Rudd and Gillard Labor governments, and if it’s Shorten and Rudd

again, I don’t know, but they will never deliver a budget surplus.  Labor will never deliver


Paul Kelly:  Surely you’re going to regret that comment?  

Joe Hockey:  No.  Everyone’s been saying that.  I’ve been saying it for three years and

I’ve been proven right.

Paul Kelly:  I know you have, but they are committed to getting back to surplus in three

years’ time.

Joe Hockey:  They never will.

Paul Kelly:  Do you think this is a myth?

Joe Hockey:  In order to deliver a surplus, when you’re running a $41 billion deficit, you

have to have courage.  This is a government without courage.

Peter Van Onselen:  Joe Hockey, can I just move us onto an entirely different subject? 

During the weekend, the Labor Party powerbroker Mark Arbib came out and said that as

a personal view he supports gay marriage.  He would find it hard, were one of his

children to end up being gay, to say to them that they don’t have the same rights that he

has.  What’s your view personally on this issue?

Joe Hockey:  About gay marriage?  I don’t agree with gay marriage.  

Misc Miscellaneous Sky News 12 image

Australian Agenda

7th November 2010

Joe Hockey

Peter Van Onselen:  You’re often described as the spiritual leader of the moderate

meeting of the Liberal Party.   

Joe Hockey:  Be careful where you’re going!  I was wondering what you were going to

say then, Peter!  I think a marriage is between a man and a woman.  That’s been my

consistent view.

Peter Van Onselen:  That’s not just because you’ve got a conservative wing of a party to

deal with?

Joe Hockey:  No.  I’m being consistent.  If that was my goal in life, I’d probably be a

monarchist and support capital punishment and a range of other things!  But, no.  From

my perspective, a marriage is between a man and a woman, and there are various

commitment ceremonies and so on.  I know it’s unpopular.  It’s unpopular with some of

my friends.  But quite frankly, it’s what I believe in.

Paul Kelly:  Do you think the politics of this will work for the Labor Party?  Because

increasingly there are more and more Labor Party people saying, given the election

result, given the rise of the Greens, that Labor should look towards supporting gay

marriage or allowing a conscience vote on gay marriage in order to change the law.  Do

you think that will work for them?

Joe Hockey:  No.  From my perspective, the more the Labor Party talks about non-

mainstream issues, and when I talk about mainstream I’m talking about the economy

and productivity and a range of other things, the more they talk about other issues, the

less Australians are going to listen to them.

Peter Van Onselen:  Shadow Treasurer, Joe Hockey, we will let you go.  You’ve been

very generous with your time.  We appreciate you joining us here on Australian Agenda.

Joe Hockey:  Thank you for having me.

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