14 April 2015
Transcript - #2015044, 2015

Interview with Kieran Gilbert, Sky News Agenda

SUBJECTS: Budget, exporting and FTA seminar, tax, Harper review, Peter Costello

KIERAN GILBERT:

Bruce Billson good to see you. I guess an interesting balancing act that the Treasurer is talking about here: On the one hand he is saying that the Government is still reducing the deficit heading into his second Budget, but he is talking about an iron ore price of possibly as low as $35 US dollars a tonne.

How does all that work?

MINISTER BILLSON:

You know the saying, you plan for the worst and you work for the best - and that is what we are doing.

We need to be optimistic. There are great opportunities, delicious possibilities for our economy and our people and we need to prepare and make sure we can win those opportunities. At the same time, deal with the reality that there are influences outside our control such as the iron ore price that has profound impacts on our budgetary position.

KIERAN GILBERT:

Obviously the iron ore price in China, so important to our future but the Treasurer there really wanting to highlight a couple of other areas like gas as an opportunity...

MINISTER BILLSON:

Yes- energy is a big one….

KIERAN GILBERT:

…but also services. So what exactly are you talking about?

MINISTER BILLSON:

I will give you an example. In our economy, 70% of the domestic Australian economy is services, yet in our export earnings, it is only 1 in $7 so there is a huge gap there.

In terms of China as their economy becomes more sophisticated, you are seeing the cities like Shanghai transforming itself from a high volume commodity type manufacturing city into something that is more sophisticated, higher up the value chain.

They are wanting our professional services, they are wanting our financial services, they are wanting our legal expertise, they are wanting our architectural and design providers.

They are wanting those knowledge based services that we do well in this economy and in this country. They are needing that to go to their next stage of transformation.

KIERAN GILBERT:

A lot of those Australian entities are still redescent about doing business in China. There has been a bit of blow back for multinationals in China let alone second tier companies.

MINISTER BILLSON:

Lots of learnings there.

We just had a free trade workshop in that great Southern Hemisphere city of Frankston in my own electorate where we were saying these trade agreements open the door to hundreds of millions of new prospective customers.

We know Australian businesses big and small have secured those opportunities. What are the learnings from their journey? How can you go about, in a surefooted way, drawing from the experience of those that have succeeded to bring more and more businesses into engaging with China?

It is a great opportunity for us. We do it well. There is a demand and an appetite for it. It sits neatly with other strengths of our exports to China and when people talk about the growth rate in China coming off, which it is, it is still extraordinary but it is also an extraordinary growth rate off a larger base.

You look back 10 years ago, the size of the Chinese economy was much smaller so those growth rates in percentage terms looked impressive. Today, a much larger economy, a slightly slower growth rate – still enormous additions for the economic activity of China.

KIERAN GILBERT:

So much about that though and Australia realising those potentials is the confidence issue. A confidence of a company to head to Beijing or to China and take that risk.

When this Government is copping flak from even Peter Costello, the longest serving Treasurer in the nation’s history, your former colleague…

MINISTER BILLSON:

A distinguished Treasurer.

KIERAN GILBERT:

But he is criticising your approach to tax. Why should we have confidence in this Government?

MINISTER BILLSON:

I think he was making the clear point that is in our minds every day: That whilst we are looking at preparing our economy for the future- lower, simpler, fairer taxes are important.

But I think it was Peter that made the great statement that debt and deficit is simply deferring tax to be paid somewhere down the track. So we have got to do both.

We have got to embark on the tax reform agenda – that is why we got rid of the Carbon Tax, that is why we got rid of the Mining Tax - because those taxes harmed the economy.

And we have managed to do that and then improve our competitive position so that with those export opportunities into those north Asian markets, they are there – we have still got to win them. We have still got to win them.

KIERAN GILBERT:

He says that is why you have got to be framing this debate through the prism of reducing tax basically as opposed to finding ways to introduce new taxes or boost the tax revenue.

MINISTER BILLSON:

And his point is a good one and made well by a distinguished Treasurer, but it is one of a number of points that we need to weigh up and balance.

Tax reductions are only achievable when the Budget can sustain it.

Tax reductions need to be focused, very much focused on growth and opportunity in our economy and that is why our small business package that we have talked about for the upcoming Budget is all about energising enterprise.

We have still got to fund it. We have got to find offsets so that we can afford to pay for that adjustment in our tax take that is geared toward growth and opportunity, jobs and a stronger economy.

KIERAN GILBERT:

Mr Hockey is clearly frustrated or at least annoyed by Mr Costello’s free advice as he put it this morning, saying that he wished he had the revenue that Peter Costello had during the latter years of the Howard Government, but he does not have that luxury.

MINISTER BILLSON:

And your point is Kieran?

KIERAN GILBERT:

My point is that Joe Hockey is clearly annoyed at this feedback from the longest serving Treasurer. What would you say to Mr Costello then?

MINISTER BILLSON:

Peter, you have been a great Treasurer, I value your wise counsel, I value your experience, so does the Government - and we are getting on with the job that he knows we have to do of not only getting the tax system right…

KIERAN GILBERT:

Joe Hockey does not look like he is going to value it too much….

MINISTER BILLSON:

A lot of people give Joe advice. I confess I give Joe advice as well and I have got to pick my moments but that is part of being a Treasurer. Everyone has got ideas. There is no shortage of people contributing - because to get this right, is to get a win for the country and a win for the economy.

The best hope for our nation is for a success in this Government’s term to set us up for the future, tackle the issues.

That is why the tax white paper is there, that is why the federation work is there, that is why the Harper Review that I have spearheaded on productivity and competition reform to lift our performance – they are all key foundations and building blocks for our Economic Action Strategy.

KIERAN GILBERT:

Speaking of advice, some advice from Tony Shepherd the former chair of the Audit Commission; he says the Government has not made the case well enough, that it is an expenditure problem facing our economy and our Budget as opposed to a revenue problem.

He says we are spending too much, the Government has not made the case effectively enough and you need to basically maintain the rage on that.

MINISTER BILLSON:

And Tony has got good insights as well but you cannot possibly suggest the Government has not been talking about the need for prudence in our spending. You cannot possibly suggest that.

We have been making that case. That is why even with those tax measures that are about lower, simpler, fairer taxes – we have got to find offsets within the Budget. We have got to do both.

The PnL, income is important; we want to raise that as fairly and as simply and in a just way as we can.

Our expenditure needs to be prudent and targeted.

We have got to do both. That is the agenda that we are working on. We are working harder on it every day and input is welcome but we have got the job to do and we have got to make sure the other place in the Senate shares our passion for getting our Budget in order and getting our finances in the straight.

KIERAN GILBERT:

Do you think the business community is helping though in this sense as well with further free advice on the front page of the newspaper as opposed to phoning you?

MINISTER BILLSON:

I welcome the business community’s engagement but it cannot be an event. You cannot have one day of headlines and the business community pats itself on the back for putting a good line out there.

They need to engage day in day out. That is what we do. We turn up every day and go into the fray to make the case for Budget repair and the work we need to do to prepare our economy and our country for the future. I am happy to see any number of people join us on that task- not just a headline now and then.

KIERAN GILBERT:

Mr Billson thanks for your time. Thanks for being on the programme.

MINISTER BILLSON:

Good to be with you. 

And nice tie Kieran – very confident choice.