19-October-2011
Portfolio Media Releases
E&OE
JOE HOCKEY:
I am here with Andrew Robb. Today the Coalition calls on the government to come clean about its own Clean Energy Finance Corporation. After revelations in Senate Estimates yesterday it is now perfectly apparent that there is now a $14 billion hole announced in the carbon tax package announced by this government.
The $14 billion hole includes the government’s own forecast of a deficit of over $4 billion in relation to the carbon tax collections versus expenditure. On top of that we have the $10 billion Finance Corporation that the government is going to try to treat off Budget.
I will say to you that we are writing to the Chief Statistician of the Australian Bureau of Statistics and we are copying the letter into the Auditor-General because, quite clearly, there are distinct similarities between this fund, which they are going to try and treat off Budget, and a number of other AusIndustry funds and Clean Energy Funds that the government is allocating through direct payments.
The bottom line is this, if the projects are going to get a commercial rate of return then financial institutions will back them. What is the purpose of this fund if it is not to compete directly with the private sector and it ends up handing out another $10 billion to projects.
This is a very significant issue; the government has to find the $14 billion somewhere. If it doesn’t find the $14 billion in higher taxes – and they are not telling the Australian people about it – then they are going to have to find the $14 billion in additional borrowings. Ultimately you have to pay the interest on that and therefore the government is going to run short as well.
I’ll ask Andrew Robb to say a bit more about this.
ANDREW ROBB:
The Deputy Secretary of Finance yesterday exposed the fiscal gymnastics this government is using to try and fabricate a surplus next year and to try and fund the significant funding commitments going out four, five, six or seven years. This government is incompetent in terms of its financial management. It is seeking to mislead the public. The Deputy Secretary of Finance yesterday said quite clearly and unambiguously that: “I would think it” (the ten billion slush fund) “would be in the Budget.” That was what he said, quite plainly, it is on record. He did bell the cat about what the government is up to. Ever since there has been a mad scramble from the government.
They have to come clean on this thing. How are they going to fund that $10 billion? It is the price that Julia Gillard had to pay to get Green support. This is a $10 billion Bob Brown bank, Bob Brown slush fund and is going to cost taxpayers. It is deferred taxation and will mean more wasted money, like this government has done with the Building the Education Revolution, the pink batts and so many other things.
JOURNALIST:
The IMF has called on the government to reconsider having a surplus by 2012-13, in account of the world facing economic uncertainty. Why shouldn’t the government delay it?
JOE HOCKEY:
The government should not delay any surplus because the government is enjoying the best terms of trade in 140 years and the government also has an economy with an unemployment rate of 5.2%. If you are not running surpluses when you have an unemployment rate of 5.2% and the best terms of trade in 140 years then you are not doing the hard work. The challenge is, as Andrew knows, and we all know, this government is a big tax and big spend government. The best way to get to surplus, the easiest way to get to surplus is to stop wasting money. For example, they announced a carbon tax that Wayne Swan claimed was going to be broadly Budget neutral. It now is apparent that he will have to find $14 billion on top of the carbon tax collection to make up for that broadly Budget neutral claim. Similarly they have a mining tax that they are spending against and it is leaving them with an estimated $4-5 billion hole over the next four years. Whatever the government claims, the bottom line is this, if they pull back on their wasteful spending they can get to surplus, no excuses.
ANDREW ROBB:
It is because the government is engaging in all this borrowing and wasteful spending, as Joe has said, their funny money, that millions of Australian households and many businesses are not investing and saving. They are making households and businesses nervous, there is a crisis of confidence because this government is seen to be incompetent. The reverse is if they did save, if they did live within their means then households and businesses would think that we did see some sensible economic management for a change.
JOURNALIST:
So, Mr Hockey, you are saying you disagree with the IMF’s call?
JOE HOCKEY:
I think when it comes to Australian politics and managing the Australian economy then it is quite clear. There are a number of mechanisms that can be used to stimulate the Australian economy. One of them is, obviously, an easing of cash rates by the Reserve Bank. What we saw before was that the Reserve Bank stopped at 3% cash rate during the Financial Crisis because the government was spending so much money. It is a combination of monetary and fiscal policy that should be available as a stimulus. The bottom line is this government is still spending money as a percentage of GDP that is well above that of the last year of the Howard Government. Quite frankly I will not give the government a get out of jail free card, at all, on a Budget surplus. The interest rate burden of the debt they have already accrued is about $7 billion to the Budget. That is $7 billion a year just on interest that Labor has accrued. This could be used on schools, hospitals, or any number of things. The bottom line is that is coming straight out of the Budget paying interest.
JOURNALIST:
A Federal Court Judge has ordered News Ltd to publish a correction to an Andrew Bolt column. Do you have an opinion about the Andrew Bolt column?
JOE HOCKEY:
I don’t.
JOURNALIST:
Why not?
JOE HOCKEY:
Because I am not spending a lot of time looking at it I might say.It is something of great interest to the media.
JOURNALIST:
With the Queen’s visit do you think it is time to not push for a republic? Or to reopen the issue?
ANDREW ROBB:
We have got major issues that this country has to focus on. The government would love a diversion. It is trying to find one at every turn. We have had another boat arrive today. That is out of control. They have lost control of our borders. They have lost control of our economy. There is a crisis of confidence because of the government’s incompetence and the dysfunctional nature of this government. Ministers are making their own decisions outside of cabinet. The whole normal functioning of government, the discipline of government has collapsed. We need not more distractions like a debate on the republic but we need a government that will try, for once, to live within its means.
JOURNALIST:
Are you saying the Queen’s visit is only a distraction?
ANDREW ROBB:
A debate on the republic would be a distraction.
JOURNALIST:
But is the Queen’s visit only there to distract the public from other things?
ANDREW ROBB:
No, I didn’t say that. You asked me about a republic, and I answered that question. There is no case – whether it is a republic or some other issue that might be of interest to the population. What needs to happen now is for the government to focus on the major vulnerabilities that it has created within our economy and to give some confidences back to people and to businesses so that we can see ourselves not dragged into the potential mess that is happening around the world in terms of the economy.
[ENDS]